Tim Colton's

Maritime Memos

A somewhat opinionated commentary on U.S. and Canadian maritime matters.

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HII Teams Up with Kinder Morgan

There's hope for Avondale yet.  HII announced today that it is teaming up with Kinder Morgan Energy Partners in its search for something to do with the now idle New Orleans shipyard.  Read their release here.  A good move.  Kinder Morgan is active in a whole bunch of markets that could generate the sort of work that would suit Avondale well.  Visit their web site here and see for yourselves.  And maybe there's a hidden agenda here.  Maybe, if it turns out that there are business opportunities here, KMP might be persuaded to take the yard off HII's hands.  April 11, 2014.

Saltchuk Goes Tropical

Saltchuk Resources, the parent company of industry leaders Foss Maritime and TOTE, among other things, is buying Tropical Shipping for $220 million.  Read the announcement here.  Tropical operates a fleet of 14 relatively small ships, mostly LO/ROs, mostly St. Vincent-flagged.  Their network of services links the U.S. and Canada to the Bahamas and just about every one of the Caribbean islands.  Visit Tropical Shipping here.  Sounds like a good move to me.  And, even though Saltchuk says that Tropical will continue to operate as an independent entity, i.e., serving the non-Jones Act trades, while TOTE continues to handle the Jones Act routes, it will be interesting to see what synergies (horrible word) result.  April 8, 2014.

In Case You Were Wondering

You will recall that, almost exactly two years go, the floating dry-dock at Vigor Industrial's Everett shipyard capsized, dumping Crowley's Invader, the first of the 35-boat Invader class of tugs, built by McDermott in 1974.  In case you were wondering, Crowley subsequently sold the Invader to AMIX Recycling, in Vancouver BC.  April 4, 2014.

GLDD Switches to Eastern

Now that their dispute with Signal International has been resolved - read Signal's release here - Great Lakes Dredge & Dock has contracted for a modified version with Eastern Shipbuilding.  Read Eastern's announcement here.  Let's hope that Eastern gets on better with this customer than Signal did.  April 1, 2014.

The Jones Act Conundrum (Revised)

One of these days, we'll all get together and straighten out the Jones Act, but I'm not holding my breath.  It was passed in 1920, when the maritime industry was struggling to survive in the years after World War I, and here we are, 94 years later, pretending that it's still relevant, when it obviously isn't.  Or is it?   Does it still make sense or doesn't it?  The  Cold War is long over and, in this era of world trade, it isn't coming back.  What wartime scenario requires the availability of a huge fleet of inland hopper barges?  If you lived in Hawaii, wouldn't you resent the requirement to support our inefficient and costly non-contiguous operators?  What have OSV and crewboat operators got to do with national defense?  Now don't yell at me.  I'm not proposing any change, I'm just pointing out the obvious, that the anti-Jones Acters have a legitimate point, and postulating some topics for discussion.  Me, I'm with Adam Smith, one of the greatest economists of all time - well, he was a Professor at my alma mater - who made it clear in his manual of free trade, The Wealth of Nations, that the maritime industry was the sole industry that should be protected.  But would he say the same today?  Oh and then there's the second question.  Even if, hypothetically of course, we were to agree that we don't need the Jones Act any more, how exactly would we go about phasing it out?  If half the operators in a particular market have just renewed their fleets with modern, expensive, US-built ships, is it fair that, post repeal, the other half gets to replace their old crocks with new, inexpensive, foreign-built ships?  It would be great if we could recognize that there's a problem here that we should do something about, but no, it's much easier to pretend that there's no problem and to continue on down the same old hypocritical trail.  March 18, 2014.

P.S.:  I'm told that the second MARAD conference on maritime policy is going to focus on the Jones Act.  Excellent.  The conference needs to address the Jones Act with an open mind, identifying ways in which its coverage might be either expanded or reduced, and any changes needed in the ways in which it is enforced.  And the organizers need to solicit suggestions in advance, so that everyone can dive right in at the outset.  March 19, 2014.

P.P.S.:  The second MARAD conference will be on May 6th.   Read the notice in the Federal Register here.  March 27, 2014.

Ingalls Can't Dock an LHA! (Revised)

The future USS America, (LHA 6), is due to be delivered next month, so she's in the big dry-dock at BAE Systems Mobile this week.  Huh?  What's wrong with Ingalls' dry-dock, do I hear you cry?  Well, no surprise, but an America-class LHA is a lot heavier when complete than when launched.  But it raises again the issue of the BAE dock not being Jones Act-qualified.  Docking and undocking a ship on this dry-dock requires a coastal movement, even if it's only from the pier to deep water and back again.   This is cabotage and requires a Jones Act-qualified vessel.  The BAE dock is not a Jones Act-qualified vessel: not only is it not US-built but its operator is not a U.S. citizen.  Once again, it seems that the Coast Guard is bending the rules.  Mind you, it's the only rational way of doing the job, but should there not be some kind of quid pro quo?  We'll let them use a non-Jones Act vessel if, in return, they agree to do ..... what?  March 18, 2014.

P.S.:  By the way, the BIW dry-dock also has to make a coastal movement to launch a ship and it's not a Jones Act dock either.  Sometimes it seems that our great leaders believe that the Jones Act is fine in principle, but if it gets in the way of current requirements then it can be ignored.  March 18, 2014.

P.P.S.:  OK, I'm wrong (I'm often wrong but I don't usually admit it.)  First off, BAE's big dock does not have to leave the pier to lift LHA 6, so the question of a Jones Act movement doesn't arise.  Second, even if it did, I am reliably informed that BAE has a blanket Jones Act waiver for movements inside Mobile Harbor.  March 19, 2014.

Whose Tank Barges? (Revised)

So, Kirby just announced that it has ordered 29 tank barges from Trinity.  Well, good, but not the hottest news of the month.  The intriguing thing is, however, that they say that only 11 of the 29 are new orders for Trinity: the other 18 are previous orders canceled by the company that ordered them.  Huh?  Somebody ordered some tank barges but is now walking away?  In this market?  Does anyone know who this company is?  E-mail me at timcolton@aol.com if you know, using one of your kids' e-mail addresses if necessary.  March 18, 2014.

P.S.: The general opinion seems to be that there is no one company which gave up 18 slots - the figure 18 is just the aggregation of ones and twos from multiple contracts.  I guess we can conclude that tank barge options should not be left unattended, in case someone from Kirby comes by.  March 19, 2014.

Tank Barges by the Yard (Revised)

In the item below about pipelines, I never meant to suggest that nothing was happening in the tank barge sector.  Quite the contrary, as you can see from the table below.  The total number of tank barges built in the U.S. in 2013 was 341, 36% more than in 2012 and 88% more than in 2011.  With Trinity switching Caruthersville to tank barges and all those smaller players getting in on the game, who knows how many we might produce this year?  March 5, revised March 7, 2014.

Vancouver SY to Build a Cable Ferry

British Columbia Ferries has awarded a contract to Vancouver Shipyards for construction of a cable ferry.  The contract price is CDN 15 million and the delivery is scheduled for the first quarter of 2015.  Read the announcement from BC Ferries here and that from Vancouver Shipyards here.  Note that this monster contract apparently fills VSY up and they won't be bidding on anything else for a while.  Huh?  Anyway, it'll be good practice for all those billion-dollar RCN and CCG contracts that are coming down the pike.  February 27, 2014.

Who Needs Pipelines?

Those folks who are opposed to the Keystone pipeline need their heads examining, but, however that argument turns out, we still have the challenge of getting all that crude out of the Dakotas safely and efficiently.  Let's consider the alternatives.  The cheapest and safest solution is pipelines, but nobody seems to like pipelines.  The next cheapest and safest is barge transportation, but nobody's talking barges, they've skipped ahead to rail, which is significantly more expensive and apparently not all that safe.  So, why not barges?  The Missouri River rises in western Montana and comes pouring down through the Dakotas until, two thousand miles later, it runs into the Mississippi.  At one time it was navigable pretty much the whole way but now it's described as navigable only from Sioux City on down: what would it take to extend the waterway up to Pierre, or even to Bismarck?  Has anyone looked at that?  Anyway, why wait?  Let's start moving crude on barges.  We don't need to move it all: start modestly and demonstrate that barges beat railcars any day of the week.  So, ok then.  February 27, 2014.

Ingalls and VTHM Protest

The two shipbuilders that were not selected for the U.S. Coast Guard's OPC Phase I contracts, Ingalls Shipbuilding and VT Halter Marine, have filed protests with the GAO.  Read the Defense News story here.  If you are interested, the docket number for both is B.409541.1.  Do they have a chance?  Probably not.  Protests are rarely successful, especially these days, when Contracting Officers have much less independent authority than they used to have: sometimes it seems that they can't go to the bathroom without permission from the lawyers.  In this case, however, the PCO is Carl McGill, who has been there for ever and knows what he's doing: small chance of any mistakes.  The other thing is that the cost of a protest is rarely justified by the size of the contract.  In this case, however, the contract is clearly big enough to justify the cost, so why not?  But that does not mean that this protest is necessarily valid.  My bet is that both protests will be rejected.  February 27, 2014.

It's Going to Be a Smaller Navy

It's been obvious for ages that our armed services were going to have to get smaller, what with the Cold War being over and most of the services' missions being focused more on smaller-scale challenges.  But none of the services seem to be capable of making rational plans involving affordable weapons.  The Navy may or may not be the worst offender, but its ability to burn up huge quantities of the taxpayers' money designing and building ridiculously gold-plated boats (like the one on the right) has certainly been impressive.  Is it not astonishing that we've got to the point that the Secretary of Defense has to tell them what they need to do?  All three service secretaries should have resigned or been fired.  Read SECDEF's statement here and the Defense News report here.  Now, as far as the shipbuilding sector is concerned, where do we go from here?  First, the Congress needs to back DoD on the planned reductions - 11 cruisers, 3 amphibs and probably one carrier - and on the planned shift from the LCS to a new class of some kind of corvette or OPV - which needs, of course, to be a standard, off-the-shelf design.  Second, everyone needs to get on board with fully-funded multi-year procurements for every program.  Third, the Navy needs to give serious consideration to single-sourcing: carriers at NNS, subs at EB, DDGs at BIW, amphibs at Ingalls and auxiliaries at NASSCO.  The absence of competition will be seen as a problem, of course, but this can be handled (a) by restructuring the form of contract to provide real incentives for cutting costs and delivering early, and (b) by managing the programs with zero changes - if changes must be made, they can do them post-delivery.  None of this will happen, of course.  The Congress and the Navy will continue to stumble along from one unstructured decision to the next, in that ongoing demonstration of incompetence which we have been living with now for 25 years.  Depressing.  February 25, 2014.

Don't Miss Sting's "The Last Ship"

A musical about the decline of shipbuilding?  Yes, indeed, and why not?  Almost all of us in this industry have experienced the misery and the pain associated with the shift of big-ship shipbuilding to the Far East and the dramatic ups and downs of the small-ship markets, all made so much worse by the fact that in so many communities the shipyard is the major employer and when it goes, nothing replaces it.  Sting grew up in Wallsend, on the Tyne, in the shadow of the cranes and shops at that great yard, Swan Hunter, where his father worked.  He's created an amazing musical about Swan's decline, a work of art, something everyone should see.  Click on the logo on the right to go to the web site and learn more.  And Sting himself is doing a concert performance on PBS at 9 pm tomorrow evening.  February 20, 2014.

Seabulk Goes to the Lakes

Seacor's ocean shipping subsidiary, Seabulk Tankers, currently owns and/or operates seven product carriers - five of the six Double Eagles and the two Avondale-built ships that were so notoriously double-hulled in China a few years ago.  Recently they ordered three new ships from NASSCO.  And now, for a change of pace, they have ordered a 185,000-barrel ATB.  Read their announcement here.  The barge will be built by Donjon Shipbuilding, in Erie: Donjon has never built a tank barge and apparently needs over two years to build this one.  Donjon built a dry-bulk ATB a coupla years ago, in which Seabulk was involved, and I'm told that a follow-up project had been expected.  But why would Seacor pay for Donjon to learn how to build tank barges?  And, although Donjon built the tug for the dry bulk ATB, the tug for this combo will be built by BAE Systems Jacksonville.  All very strange.  Finally, I'm told that BAE's contract includes an option for a second tug, so maybe there's an option on Donjon's contract too: nothing about options in Seabulk's announcement though.  February 12, 2014 (expanded and amended several times).

Bath, Bollinger and Eastern

The U.S. Coast Guard has awarded firm-fixed-price contracts for the Offshore Patrol Cutter (OPC) program to Bath Iron Works, Bollinger Shipyards and Eastern Shipbuilding.  Not selected were Ingalls and VT Halter Marine.  (Earlier casualties were Marinette, NASSCO and Vigor.)  Read the FedBizOps announcement here.  Read the Coast Guard's announcement here.  These are Phase I contracts, each for just less than $22 million, covering Preliminary and Contract Design: one of these three shipbuilders will be selected to continue to Detail Design and Construction of up to 11 cutters, with another 14 or so up for grabs after that.  The choice of contractors is interesting.  Bath - one of the "Big Five" and one of the best builders of surface combatants in the world.  Bollinger - one of the "Second Tier" and the yard that knows better than anyone what the Coast Guard wants.  And Eastern - an outsider in many ways but a yard which has increased its productivity, its output and its average ship size in recent years, which has moved into more complex and more valuable market sectors, and which has had the nous to team for this program with STX Marine USA, possibly the best naval architects in North America.  Who will win?  Well, it should be Bollinger: logic says that Bath is too expensive and Eastern too inexperienced, but there are a lot of conflicting factors at work here and early chicken-counting would be most unwise.  February 11, 2014.

Irwin the Droll

Ingalls Shipbuilding has announced its acquisition of a 12-acre property in Moss Point, to be used for warehousing, as part of a "strategy to consolidate facilities."  Read their release here.  Buying a facility that is several miles away from their ludicrously over-sized monster of a shipyard could hardly be described as consolidation, but they talk a different language in HII.  This story is, of course, a non-event of a news item, one that I wouldn't normally bother to comment on, but it also contains this burst of humor from Mr. Edenzon:  "Improving efficiency and reducing leasing costs will help us make our ships more affordable so we can sell more ships."  This from the world's most expensive shipbuilder!  Really, who knew old Irwin could be so witty?  February 6, 2014.

Forrestal Heads South

The first of the big-deck carriers, the former USS Forrestal, (CV 59), left Philadelphia this morning on the first leg of the long 17-day tow to Brownsville TX and the recyclers' torches.  Built by Newport News, she was delivered in 1955 and retired in 1993.  Read the Philadelphia Inquirer's story here.  She's being towed by the 8,000-hp ocean tug Lauren Foss, and is currently zipping along at an average speed of about six knots.  February 4, 2014.

Bollinger Sells Bee Mar 2

Back in 2007, Bollinger Shipyards started building a series of ten PSVs on spec. for a related entity called Bee Mar and then, in 2009, sold them en bloc to Harvey Gulf International.  If it works once, it'll work again, right?  So, in 2012, they created another Bee Mar and are currently building seven PSVs on spec.  And yesterday they sold them en bloc to Edison Chouest.  Good move.  February 4, 2014.

Vigor to Buy Seward Shipyard

A further addition to the Vigor Industrial group was announced yesterday.  An agreement has apparently been reached for the acquisition of Seward Ship's Drydock, of Seward AK.  Read  Vigor's announcement here and visit the Seward yard's web site here.  See the shipyard from the air on Google hereJanuary 31, 2014.

HII Reopens Avondale's Waggaman Plant

An internal memo advises HII employees that the new Commercial Energy Division is reopening the old Avondale modular construction facility in Waggaman.  This is a very small plant - 200 employees, tops - that's only a short distance to the west of the shipyard itself and not on the river, so it's limited in the size of module it can produce.  What's going on?  What can they do at the Waggaman plant that they can't do in the shipyard?  Could they be going to move the few workers remaining at the shipyard to Waggaman and close the shipyard?  Surely not.  All very sad.  January 30, 2014.

P.S.: Read the Time-Picayune's coverage of this story here.  Apparently Avondale is now down to 644 employees.  January 31, 2014.

P.P.S.:  Read today's article in the Times-Picayune here.  LPD 25 will leave the Avondale yard on Monday.  February 1, 2014.

MetalShark Boats Moving Up

MetalShark Boats, who are currently building up to 500 Response Boats (Small) for the Coast Guard and up to 350 High-Speed Maneuverable Surface Target (HSMST) boats for the Navy, is developing a new shipyard on a 25-acre site on the Charenton Commercial Canal, in Franklin LA, where they can build vessels up to 250 feet.  Read the story here.  Interesting location: Gulf Craft, one of the companies MetalShark will be competing with in these new markets, just moved its Patterson operation to a 25-acre site on the Charenton Commercial Canal.  See MetalShark's existing Jeanerette plant from the air on Google here and the Charenton Commercial Canal area hereJanuary 29, 2014.

Note to HII and Louisiana

Finland's YLE News reports that STX Finland has sold the Rauma shipyard to the City of Rauma.  Read the story here.  When STX bought Aker Yards Finland and created STX Finland, they had three shipyards, all building high-value ships but each focused on a different market sector.  The Turku yard built big cruise ships, including the 220,000-GT Oasis-class monsters; the Helsinki yard built icebreakers, mid-sized cruise ships and other high-value ships; and the Rauma yard built large ferries, offshore patrol vessels and the like.  None of the three were competitive, even by Western European standards, so STX's first move was to put the Helsinki yard into a joint venture with Russia's United Shipbuilding, to build icebreakers, which are, of course, government-financed.  Now they have dumped the Rauma yard, for the trivial sum of 18 million.  The City plans to turn it into an industrial park, with Rolls-Royce Marine already signed up as a tenant.  Does this theme sound familiar?  January 22, 2014.

Sotiris Emmanouil Arrested

Remember him?  He's the MIT graduate who created Massachusetts Heavy Industries and persuaded the Massachusetts congressional delegation to force a reluctant Maritime Administration to finance the reconstruction of the Quincy shipyard, using $55 million of Title XI funds.  When MHI defaulted, he went back to Greece and disappeared.  Well, now he's been arrested by the Greek authorities, for allegedly taking $31 million in bribes relating to a contract for the construction of German-designed submarines by Hellenic Shipyards, of which he used to be Chairman.  Read a splendidly comprehensive account of this saga in Defense Industry Daily, here January 19, 2014.

Austal Steps Up the Pace

The future USNS Fall River, (JHSV 4), was floated yesterday, using Austal's uniquely complicated system.  Read Austal's announcement here.  It may be that the interesting thing here is that Austal is really stepping up the pace, with four ships now in the water and four launches scheduled this year.  They just launched LCS 6 last month, so they must be planning on launching LCS 8 this year, which would definitely represent an increase in the construction rate for that program.  They started their LCS program ten months behind Marinette, who just launched LCS 5 last month, and now appear to have at least caught up.  And launching JHSV 5 in the summer and JHSV 6 before the end of the year mean an increased pace on that program too.  Excellent!  January 18, 2014.

OSG Turns to V.Ships for Help

Overseas Shipholding Group, still working its way through bankruptcy, has turned over the management of its international fleet to V.Ships, the Monaco-based company that is the world leader in managing other people's ships.  Read OSG's announcement here.  OK, this is good news, not only because V.Ships are really good at what they do, but also because it should free up OSG's guys to concentrate on managing the domestic fleet, where their leadership position has been taken over by Crowley and Kirby.  January 18, 2014.

MLP 2 Completes Trials

The second Mobile Landing Platform, the future USNS John Glenn, (T-MLP 2), has completed Builders Trials and will be christened on February 1, with delivery in March.  Read NAVSEA's announcement here.  Pretty quick work on the part of NASSCO, all things considered, but these are pretty basic ships.  The problem is that the third ship is not far behind the second.  Although NASSCO has a healthy backlog of commercial work - seven product carriers and two containerships - it's never healthy to have to shut down the government product line and the T-AO program continues to move at NAVSEA's now standard snail's pace.  In fact, snails are positively cougar-like compared to NAVSEA.   January 18, 2014.

US Shipping in Trouble Again

Reliable sources report that US Shipping's 30-year-old T-5 tanker Houston, (ex-Gus W. Darnell), dumped contaminated ballast water recently, while discharging at Sun's Nederland terminal.  The contamination was apparently caused by crude leaking from the cargo tanks into the double bottom and, as a result, she is now in Gulf Copper's Port Arthur shipyard.  Significant cost and loss of revenue, of course, and it may not be all that simple to get the clearances needed to get her back in service.  Who would charter this old boat, anyway?  And all this follows on the problems US Shipping has been having trying to keep that other 30-year-old relic, Charleston, in service.  What an embarrassment US Shipping is to the US flag.  January 18, 2014.

Aker Starts Work on Crowley's Ships

Earlier this month, Aker Philadelphia started work on the first of the four product carriers they are contracted to build for Crowley.  Read Aker's announcement here.  Now my question is, can they improve their productivity?  On the first 14 product carriers, Aker reduced construction time initially but its later record was surprisingly erratic, especially for a yard that was specifically designed for series production.  Now they will be building in direct parallel with NASSCO and it will be interesting to make comparisons.  January 18, 2014.

Kirby Pushes Further into Ocean Trades

In the past three years, Kirby Corporation has transformed itself from being primarily an inland tank barge operator to being as big a player in the ocean trades as in the inland trades.  Apparently 6.3 million barrels of capacity is not enough, however, and this week Kirby ordered an ATB with a capacity of 185,000 barrels from Gunderson Marine, with a 10,000-hp ATB tug from Nichols Bros.  Both contracts include an option.  Read Kirby's announcement here.  An interesting order: this will be the biggest barge ever built by Gunderson and, I think, the biggest tug ever built by Nichols.  January 18, 2014.

DoD Cuts the LCS Program 

Back in 2002, the original plan was for 56 littoral combat ships, (LCSs), in a 375-ship Navy.  That held for a couple of years but in 2005 the goal was increased to 84 LCSs in a 325-ship Navy.  Wow! Shades of the Gary Hart Navy!  Of course, in those halcyon days, almost ten years ago, we didn't know what an LCS was going to cost.  Then in 2006, the number dropped back to being closer to the original plan: 55 LCSs in a 313-ship Navy.  That held good until last year's relatively minor adjustment to 52 LCSs in a 306-ship Navy.  But now here comes the big, bad DoD with an order that says 32 LCSs max.  So where does that number come from?  If we only build 32, how do we cover the missions that would have been covered by the other 20?  Isn't it amazing how fuzzy our fleet planning process is?  I wouldn't mind if we couldn't make up our minds about how many saucepans to buy for the Pentagon's kitchens, but we are talking about tens of billions of dollars of the taxpayers' money.  Of course, I'm always on the wrong side on this and similar issues.  I keep reminding people that the Cold War has now been over for 25 years and there is little prospect of another one any time soon, so why do we need all those submarines and carrier battle groups?  (Don't write and tell me: this is a column, not a blog.)  If we really feel the need to maintain a presence in every corner of the earth, why don't we do it in multinational task forces, instead of charging around like bullies in the playground?  This means more LCSs, not fewer.  Cut one carrier group and build more LCSs.  Cut some submarines and build more LCSs.  Cheaper ones, maybe, but still more.  Grrrr.  January 18, 2014.

 

Click HERE to read earlier editions of "Maritime Memos", going back to 2001