Maritime Memos                                                                                October 2011


AMERICAN FEEDER LINES TO SAVE AVONDALE?

Fifteen months ago, AFL executed letters of intent for five ships at Aker Philly and five more at Bay Shipbuilding, but nothing happened.  Now they want to build all ten at Avondale.  Read the story in the New Orleans CityBusiness here Oh dear.  You know that a deal at Avondale is not going to happen and even if, by some miracle, it did, the ships would be expensive, poor-quality and late.  It seems that there's nobody at AFL who knows anything about the U.S. shipbuilding industry.  They've probably got one of those consultants who always tells the client what the client wants to hear.  Maybe they should talk to Joe Pyne of Kirby.  He knows more about the U.S. maritime industry than almost anybody and Kirby has even tried its hand at the coastal container shipping biz, with Osprey Line.  And he's related to Percy Pyne, the fourth-generation Manhattan real estate mogul who's Chairman of AFL.  October 27, 2011.

MATSON MOVES IN ON HORIZON'S CARGO

No sooner had Horizon made its announcement about dropping its USWC-Guam-China service than Matson was in there shilling for the cargo.  Read its news release here.  Yes, Matson can handle Horizon's Guam business.  It would be nice to see someone new, but unlikely.  The bigger and much more interesting question is how Matson, TOTE and the others will handle all Horizon's business, come the inevitable day when that great company folds.  And there's the secondary question of what's going to happen to Trailer Bridge.  October 25, 2011.

NO CHANGES, SAYS PEO LCS

Admiral Jim Murdoch, the PEO for the LCS program, recently told a press briefing “We don’t introduce any changes we don’t absolutely have to.”  Read the story in Aviation Week here.  Well, that's refreshing.  Let's hope he can withstand the usual Navy pressures for more and more bells and whistles.  October 25, 2011.

HORIZON LINES TAKES ANOTHER STEP TOWARD THE EXIT

The world's most incompetent liner operator is closing down its four-year-old USWC-Guam-China service - the Five-Star Express, they called it - and will lay up the five Korean-built ships that they bareboat-chartered for it.  Read the announcement here.  It's hard to imagine that they were losing more with the ships in service than it will now cost them in charter payments and lay-up expenses, but that's Horizon Lines for you.  Down and out.  October 25, 2011.

IT'S NOT JUST ME

Some of you may have noticed me binding on about the Navy messing around with ship type designations and class naming systems.  Apparently I'm not alone in my frustration with the lack of consistency shown both by the Navy and its congressional overlords.  The Congressional Research Service joined me on October 7, when Secretary Mabus gave an LST's name to a JHSV.  Read its report hereOctober 24, 2011.

SECDOT GIVES KP ALUMNI THE FINGER

The Kings Point Alumni Association has published a video report of its recent meeting with Secretary LaHood.  Click here to see it.  Unfortunately, it doesn't tell us anything new, because the message from the Secretary was clear: (1) Admiral Greene will not be reinstated under any circumstances, and (2) the Secretary refused to provide any reasons why Admiral Greene was dismissed.  In other words, eff off.  Wonderful!  Such inspiring leadership!  Such warmth, such charm!  Is everybody from Peoria like this?  Somehow I doubt that the alumni are going to go quietly.  Trafalgar Day, 2011.

MARAD TO APPROVE AFL'S USE OF FOREIGN-BUILT SHIPS

Reliable sources say that our brilliant Maritime Administrator is planning to approve a waiver of the Jones Act that would allow American Feeder Lines to bring four foreign-built containerships into the domestic-trade fleet.  The deal supposedly includes a requirement to replace them later with US-built ships, but don't hold your breath.  Remember Norwegian Cruise Lines?  Everyone please call up Matsuda and/or LaHood and yell at them.  Oh, right, you were going to do that anyway, weren't you?  Trafalgar Day, 2011.

DOESN'T THE COAST GUARD HAVE ANYTHING TO DO?

I thought the Coast Guard was overworked and underfunded.  But apparently there are those who have both the time and the budget to attend the USCG Innovation Expo in Tampa next week.  After all, they wouldn't want to miss this session:

"Elevation Knowledge Management as a Critical Service Capability"

Learning organizations value institutional KM systems and culture facilitated by an organizationally appropriate portfolio of robust KM tools over isolated research initiatives, data repositories, and isolated knowledge pools. Effective and efficient enterprise wide KM embraces an overarching organizational strategy, broad organizational commitment, sufficient resources, and measurable links to core business processes and mission execution. This panel will explore the Coast Guard’s project to improve internal KM processes and elevate federated program centric tools into a service enabling enterprise-wide discipline that recognizes the inter-relationship of people, process and enabling technologies.

Important stuff.  October 20, 2011.

HALIFAX AND VANCOUVER WIN CANADA'S SHIPBUILDING HANDOUT

The Canadian Government has followed through on its really stupid shipbuilding policy by selecting Irving's Halifax Shipyard and Seaspan's Vancouver Shipyard for C$33 billion of non-compete contracts to build ships for the Canadian Navy and Coast Guard.  Although only marginally qualified, Halifax will build 15 frigates and 6 Arctic patrol ships, collectively valued at C$25 billion.  The even less qualified Vancouver Shipyards will build 2 logistic support ships, an oceanographic research ship, 3 fisheries research ships and a polar icebreaker, collectively valued at C$8 billion.   Read the announcement here.  Read the reports in the Halifax News here, the Vancouver Sun here and the Montreal Gazette here.  This result was entirely predictable: the only outstanding question is, what now for Davie?  Is this the end for the venerable Quebec shipyard with much better shipbuilding credentials than either of the winners?  Note that there is provision for another C$2 billion in contracts for 116 ships of less than 1000 displacement tons, to be competitively procured.  October 20, 2011.

HORIZON BOUNCED FROM NYSE

In another step toward oblivion, Horizon Lines has been chucked off the New York Stock Exchange and is now traded over the counter.  Read the announcement here October 20, 2011.

LOUISIANA TO HELP HII WITH THE AVONDALE PROBLEM

The State of Louisiana has committed $214 million to workforce training and facility upgrades if HII can find a partner to join with it in keeping the Avondale facility operating.  Read the story on NOLA.com here.  It seems that HII is being very patient and cooperative, considering that there's nothing to stop them from just walking away.  Note that, except for Senator Landrieu, nobody says anything about keeping Avondale operating as a shipyard, although that is probably what many people are thinking.  It seems that the message is finally sinking in: Avondale no longer has a future as a shipbuilder, but there are a whole lot of other industrial activities that might be successfully pursued in that facility.  October 19, 2011.

GULFPORT BACK IN THE BARGE BUSINESS

In yet another example of an aggressive shipyard penetrating a market which it had not previously messed with, Trinity Offshore has secured a contract from Florida Marine Transporters for four 30,000-bbl tank barges, with options for six more.  Read the announcement here.  Of course, Trinity's shipyard used to be a barge builder, back when it was Halter Gulfport.  October 19, 2011.

KINGS POINT MESS GETS WORSE AND WORSE

Every day brings new revelations.  Click here to go to the USMMA forum on gCaptain.  Scroll down to the third posting - at 0730 yesterday - and read the timeline.  This is really outrageous to the nth degree.  Matsuda and several others need to be canned immediately and Secretary LaHood and Deputy Secretary Porcari have some explaining to do.  October 19, 2011.

LAHOOD LEAVING

Complicating the problems associated with getting rid of and replacing Matsuda and of replacing Admiral Greene, is the news that Secretary LaHood plans to quit at the end of President Obama's first term.  So he's a lame duck already, with no further interest in getting anything done.  Read the story in the Chicago Tribune here He says he expects there will be some “wonderful opportunities” for him in the private sector.  I guess that means he's going to work for Caterpillar.  October 17, 2011.

MATSUDA ON GOVERNMENT

Be sure not to miss the Maritime Administrator's recent interview on the The Business of Government Hour, a program I know is right up there in popularity with Monday Night Football.  Find it here.  Actually, it's not bad, if a bit hard to take.  Well, it could be worse.  October 17, 2011.

DAKOTA CREEK GETS AGOR CONTRACT

The Navy has awarded a contract to Dakota Creek Industries, of Anacortes WA, for design and construction of the new AGOR (Ocean).  The contract value is $74 million, with completion by October 2014, and there's an option for a second ship.  Read the DefenseLink announcement here.  This is something of a surprise.  Dakota Creek beat out Marinette Marine for this job, the two having been selected for Phase One contracts back in January 2010.  (Anyone know what Marinette's price was?)  And it's a huge step forward for Dakota Creek, which is an excellent small yard, currently building the 16,000-hp tugs for Crowley's 330,000-bbl ATBs, but with virtually no experience of working for the Navy.  October 14, 2011.

RYAN IN FOR GEHEGAN AT U.S. SHIPPING

U.S. Shipping Corp. has appointed Mike Ryan, who was until recently the President and CEO of American Commercial Lines, to replace Joe Gehegan as its President and CEO.  Read the announcement here.  Ryan used to work for CSX and before that for CN, so he has lots of transportation industry experience, but none that's particularly relevant to U.S. Shipping.  October 14, 2011.

THE MARAD MELTDOWN

I'm told that SECDOT has received so many complaints about the MARAD triad - Matsuda, Gotay and Krepp - that they actually hired an "executive coach" to help them improve their management techniques, but Matsuda refused to meet this person.  (Is Matsuda related to Charlie Sheen?)  Why hasn't he been fired?  Where's John Graykowski when we need him?  October 14, 2011.

MORE ON THE USMMA SITUATION

It seems clear that Admiral Greene was finding it impossible to work with Matsuda and Gotay, which is entirely understandable, seeing that that's the experience of many in the maritime industry.  Read the view from the Alumni here.  So, how come it was the admiral who got reassigned and not the nitwit Matsuda?  KPers should be outraged and should let LaHood know that they are outraged.  October 13, 2011.

FISHING VESSEL CONSTRUCTION RECOVERING?

There are just over 20,000 commercial fishing vessels in the US-flag fleet but last year we built only 77 new ones.  Well, that's the fishing vessel construction industry's 60-year business cycle for you: it plateaued at over 600 boats a year back in the late 1970s and early 1980s, and bottomed out at just 66 boats in 2009.  This year, we're at 84 after only nine months, so things are beginning to look up, in this market sector at any rate.  It's also interesting to see some of the Bayou La Bâtre yards which have been building OSVs and towboats for the past ten years, building fishing vessels again.  See the updated table of Deliveries from U.S. Shipyards in 2011.   October 12, 2011.

KINGS POINT SUPERINTENDENT REASSIGNED

Rumors were flying this morning about the sudden departure of Rear Admiral Philip H. Greene, Jr., USMS, who has been Superintendent of the US Merchant Marine Academy for only just over a year.  SECDOT has now announced that Admiral Greene has been appointed to the DoT Chair at the National Defense University.  Feedback from the Alumni Association says that this move was a reassignment and not Admiral Greene's decision, i.e., he didn't quit, he was pushed, so rumors continue to fly.  October 11, 2011, amended later the same day.

ONLY THE STRONG WILL SURVIVE

Trinity Offshore is said to have beaten out Signal International for the Harvey contract, which makes the award doubly interesting, since neither yard has ever built an offshore service vessel of any type.  It seems that we are entering a period of increased competition for shipbuilding contracts.  This is to be expected, of course, as we go down the slope of the business cycle.  Only the strong will survive.  Remember where we were at this point in the cycle last time around?  Half of all U.S. shipyards closed in the 1980s and one third of all shipyard jobs were lost.  It may not be that bad this time but it won't be good.  October 8, 2011.

MABUS MESSES WITH NAVY NAMES

Military Sealift Command has announced that the sixth JHSV will be named USNS Choctaw County, after Choctaw County, Mississippi, which has the dubious honor of being the Secretary's birthplace.  Read the announcement here.  So, let's leave aside the inappropriateness of personalizing the naming process and  see what we have.  The first Navy JHSV is to be the Vigilant, an adjective with positive characteristics; the second is to be the Fall River, a town in Massachusetts with a population of 90,000; and the third is to be the Choctaw County, a county in the middle of Mississippi with a population of 8,500.  What exactly is the naming convention in use here?  Of course all the JHSVs are now going to be Navy ships, but the first five odd-numbered ones were all named by the Army before that decision was made.  What would have been so hard about adopting the Army's convention, or, alternatively, picking a convention that's acceptable to all parties and applying it to all the ships?  Sometimes it seems as if nothing the Navy does makes sense any more.  Oh, well.  October 7, 2011.

HARVEY GULF PICKS TRINITY OFFSHORE

Marine Log reports that Harvey Gulf Marine has selected Trinity Offshore to build its two STX Marine-designed, 10,500-hp, LNG-fueled PSVs.  The price is said to be about $55 million each, with deliveries in November 2013 and March 2014.  The only actual announcement on this topic is from Wärtsilä: read it here.  Read Marine Log's report here.  For those unfamiliar with Trinity Offshore, it is a sister company to megayacht builder Trinity Yachts, sharing the facility that used to be known as Halter Gulfport.  The yard has been significantly upgraded by Trinity Yachts and now includes, among other things, a 3,700-ton Syncrolift.  October 7, 2011.

S/R WILMINGTON SOLD FOR SCRAP

The S/R Wilmington, which was withdrawn from service in July, has now been sold for recycling.  October 5, 2011.

LPD 22'S "SUCCESSFUL" BUILDERS' TRIALS

The official story is that the Builders' Trials were successful and the ship is on track for delivery this year.  Well, that's good news.  No mention, however, of the relief valve that was installed backwards, resulting in damage to three ballast tanks and the side shell, damage that sources say will take four months to fix.  October 5, 2011.

ANOTHER TANKER HEADING OUT

I'm told that Valero has terminated its charter of the Delaware Trader, one of the three remaining single-hulled tankers in the Jones Act fleet.  October 1, 2011.

Or maybe not.  Authoritative sources deny this report.  October 10, 2011.

McCREARY HEADS TO BAE SYSTEMS

BAE Systems Ship Repair has appointed Richard McCreary, former President of Marinette Marine, as its VP of Commercial Business Development.  Read the announcement here.  This tends to confirm suspicions that BAE might be planning to grow its commercial business.  Maybe they will buy a commercial yard, such as Signal.  October 1, 2011.