2001 Maritime

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October 4, 2001

U.S. may face severe tank vessel shortage
America could face a severe U.S.-flag tank vessel shortage unless the pace of double-hulled vessel construction increases dramatically, according to an analysis just released by the Shipbuilders Council of America.

Under Oil Pollution Act of 1990 (“OPA 90”) requirements to phase out single-hulled tank vessels to reduce the risk of oil spills, the U.S. will lose as much as 28% of its total existing tank vessel capacity, including 45% of all large, ocean-going tank barges, by the end of 2004.

The analysis, which takes into account existing construction and orders, projects that at the current rate of double hull construction, domestic tank vessel demand will exceed supply by 24% by the end of 2004 and by 34% by the end of 2009

“This information should be a wake up call,” said Allen Walker, president of the Shipbuilders Council of America,. “It confirms what many in the industry have realized for some time – that the U.S. will face a severe tank vessel capacity shortage beginning in 2005 when the OPA requirements kick in, unless the pace of construction increases dramatically.”

A shortage in tank vessels would have military and commercial implications. Virtually 100% of all petroleum products have historically moved to a war zone by waterborne transportation, and U.S. vessels are the backbone of this sealift requirement. U.S. tank vessels are also crucial to meeting America’s commercial transportation needs for petroleum products.

Other maritime industry groups have also raised concerns about U.S. tank vessel capacity. Recently, both the Maritime Cabotage Task Force, and the Sealift Committee of the National Defense Transportation Association, have expressed concerns about projections of a lack of tank vessels, which would significantly diminish the nation’s ability to meet its domestic transportation demands and its military sealift obligations.

Walker said, “The inability of the U.S. to move petroleum products domestically could have a devastating impact on economic and national security, particularly in light of recent events.”

In addition to double-hull construction already underway, according to the analysis, more than 500,000 deadweight tons (dwt) will need to be constructed by 2005 to simply meet growing demand for domestic waterborne transportation of petroleum products. That could equate to construction of approximately twenty-five 20,000 dwt tank barges over the next three years.

While there has been an increase in double-hull construction, construction falls far short of capacity demands in the coming years. Operators waiting until the eleventh hour to order ships could find insufficient shipyard capacity to meet new building demand – a problem that could be more acute as construction in the offshore and dry cargo segments develops.

The U.S. Coast Guard, at the request of the U.S. Congress, is undertaking a more comprehensive assessment of the progress to replace the single-hulled tank fleet with double-hulled tank vessels. Its report is anticipated to be released shortly.