GULF STILL MAJOR SHIPBUILDING REGION
The interest shown in Halter by possible Singapore buyers is evidence that the U.S. Gulf is still seen as a highly desirable location by international shipbuilders. And the latest MarAd survey still shows the Gulf as ahead of other regions in terms of numbers of most types of shipyard facility. Even so, there are yards on both the West and East Coasts that are well able to compete against the Gulf.

WEST COAST YARD SET TO ROLL OUT RO/RO
National Steel and Shipbuilding Company (NASSCO), a subsidiary of General Dynamics will christen the Midnight Sun, the first of two roll-on, roll-off (RO/RO) ships for Totem Ocean Trailer Express, Inc. (TOTE) on Aug. 3.

The ships are being built for TOTE's Tacoma-to-Anchorage service. The ships will be delivered Oct. 2002 and April 2003 and are the first commercial dry cargo vessels to be built in the United States in 10 years.

The Orca Class ships are 839 ft x 118 ft x 90 ft. The ships will each carry 600 cargo trailers and 200 autos, a 50% capacity improvement over existing ships. The ships are designed for Alaskan service and powered by twin propulsion plants, each having its own propeller and rudder system. They will be the first ships built in the U.S. powered by an integrated diesel-electric propulsion system, and will achieve speeds up to 24 knots.

The propulsion plant is composed of four MAN B&W 9L 58/64 and two MAN B&W 9L 27/38 medium-speed diesel engines. The diesel engines are designed to operate on both heavy fuel oil, ISO 8217 Grade RMH 55 or marine diesel oil, ISO 8217 Grade DMC.

The electric propulsion plant is an Alstom 6.6 kV system. Each motor is synchronous, variable speed, reversible, brushless, double-wound and rated at 19.75 MW at 125 rev/min.

KVAERNER PHILLY GETS A BOX SHIP BUYER

Matson Navigation Company, Inc., the ocean transportation subsidiary of Alexander & Baldwin, Inc., today signed a contract with Kvaerner Philadelphia Shipyard Inc. for the purchase of two 2,600 TEU containerships. The ships will cost approximately $110 million apiece, including owner's costs, and will be deployed in the company's Hawaii service when construction is completed in late 2003 and in 2004, respectively.

"These two new ships will help ensure that Matson continues to provide Hawaii with efficient, dependable ocean transportation services of superior quality and value," said Matson president and CEO C. Bradley Mulholland. "This significant investment in our Hawaii service underscores our long-term commitment to remaining the state's leading ocean carrier. The vessels are similar in size and speed to Matson's flagship MV R. J. Pfeiffer, the fastest and biggest containership currently operating in the U.S. domestic offshore trades. They will be equipped with a number of features specifically designed to meet Hawaii's current and projected market requirements, particularly bigger container sizes for both refrigerated and dry containers. This will allow us to efficiently accommodate the diversified mix of cargo needed to support the state's island economy."

In addition to being a good match for the Matson fleet, the Kvaerner ships offer the company a unique opportunity to purchase high quality, U.S.-built Jones Act vessels at a relatively low cost. The two ship construction project has been underway since 1999 and is part of an overall plan by Aker Kvaerner Yards, the Philadelphia Shipyard Development Corporation (PSDC), the Delaware River Port Authority (DRPA), the Commonwealth of Pennsylvania, and the City of Philadelphia to rebuild the former Philadelphia Naval Yard as a world class commercial shipyard.

"We are pleased to be working with Matson Navigation on its fleet renewal program," Ron McAlear, president and CEO of Kvaerner Philadelphia said, "and we are proud to have the historic name of Matson on the side of the first ships built at Kvaerner Philadelphia Shipyard. This contract confirms Matson's confidence in Kvaerner's ability to build high quality ships. The Kvaerner Philadelphia Shipyard was built to provide U.S. shipowners with robust ships at realistic prices for the dedicated trades of the U.S. Jones Act. This contract will be the first of many for those trades and proves the value of combining European shipbuilding technology with American management."

"The acquisition of these two new vessels is part of Matson's overall strategy of maximizing the value of our investments in our Hawaii service by providing superior and continuously improving service levels to our customers," Mulholland added. "Matson historically has modified and enhanced its fleet to meet the changing needs of our customers. Examples of this include the SSs Lurline and Matsonia mid-body replacements, which increased their capacity, and conversion of the steamships Maui and Kauai to open-top vessels. We have also purchased suitable Jones Act vessels as opportunities have arisen. These measures have allowed Matson to maintain a high level of service while concurrently maximizing the overall value of these assets."

The new diesel-powered ships replace two 30-year-old steam-powered vessels, and will improve reliability and fuel efficiency, as well as lower operating costs for Matson's fleet. Matson expects to put the first ship into its Hawaii service in late 2003, and the second in 2004. To finance the purchase, Matson will tap its existing Capital Construction Fund of $170 million, supplemented with external borrowings of approximately $50 million.

DEMAND FOR TANKERS
There are no ships for export on order at U.S. shipyards, but there are a number of ship types needed for Jones Act service. One of those is tank vessels. The Oil Pollution Act of 1990 established a phase-out schedule that began Jan. 1, 1995 for all existing single-hull tank vessels based on the vessel's age and gross tonnage. This means that some 35-40 product carriers and 90 tank barges will be phased out of U.S. waters. About 10 product tankers and 65 ocean tank barges will need to be removed from service in U.S. waters by Jan. 1, 2005, based on their tonnage and age. Because of the Jones Act, any replacement tank vessels must be built at U.S. shipyards—and there only a handful of yards capable of doing so. Alabama Shipyard, Mobile, Ala., Bay Shipbuilding Co., Sturgeon Bay, Wis., Bollinger Shipyards (Bollinger Gretna and Bollinger Marine Fabricators), General Dynamics (NASSCO), Halter Marine (Gulfport, Moss Point and Port Bienville, Miss), Northop Grumman Ship Systems (Avondale shipyard) and SENESCO are all constructing tank vessels.

ECO-EL PASO DEAL
But there could be a new player. Back in Jan. 2002, Edison Chouest Offshore, Galliano, La., and El Paso Marine, a wholly owned subsidiary of El Paso Corp., to design, build and operate U.S.-flagged tankers in the Jones Act. Called Energy Maritime, LLC, Houston, the new venture acquired two older tankers, and is evaluating designing and building new tankers, likely in the 630 ft, 45,000 dwt range.

TITLE XI is KEY
Bender Shipbuilding is still awaiting Title XI approval for two containerships for Santa Maria. And MarAd still has two partially completed cruise ships on its hands. Meantime a $1.6 billion application for loan guarantees to build three cruise ships has just turned up in the MarAd in tray. ML

PREVIOUS