June 2014 Marine Log by Marine Log

SHIPYARDS: Keeping up with the Jones Act

MARINELOG Reporting on Marine Business & Technology since 1878

JUNE 2014

www.marinelog.com

2014 ANNUAL YEARBOOK & Maritime Review

CRUISE SHIPPING The allure of China ENVIRONMENT ECA chaos? OPINION Lessons from the Sewol

*Based upon field testing of Mobil Delvac 1â&#x201E;˘ ESP 5W-40 in high-speed, 4-stroke marine engines, and compared with conventional heavy-duty diesel engine oil. Actual results may vary by engine type, maintenance, operating conditions, environment and prior lubricant use. Drain intervals should be established through routine used oil analysis. ÂŠ 2014 Exxon Mobil Corporation. The Mobil logotype and Mobil Delvac 1 (and any other trademarks) are trademarks of Exxon Mobil Corporation, or one of its subsidiaries.

From grain to coal, together we tow it all

You keep entire economies moving. Mobil Delvac 1â&#x201E;˘ ESP fully synthetic diesel engine oil can help you operate more safely and effectively. It delivers up to ten times the drain intervals*, which means less vessel downtime and more efficient operations. To learn more, visit exxonmobil.com/mobildelvacmarine.

CONTENTS

JUNE 2014 VOL. 119, NO. 6

10 departments 2 EDITORIAL A glimpse of the future

Marine Towing has added a new harbor tug from Washburn & Doughty. Read more about it in our Tug & barge report

features 17 OPINION

The sinking of the Sewol: Lessons already learned

NAMEPA chairman Clay Maitland discusses how the Korean ferry tragedy is already leading to reforms

19 FINANCE

Shore up your capital now to prepare for the growth ahead

A leading banker provides insight on gaining access to capital

23 SHIPBUILDING

The roller coaster ride continues

6 WATERWAYS COLUMN WRRDA is a win!

8 UPDATE 35 CRUISE SHIPPING

The allure of China

By 2017, China will emerge as the second largest cruise market and cruise ship operators have clearly taken notice

40 FERRIES

Search for green operations

Hybrid propulsion systems are gaining popularity among European ferry operators

42 TUGS & BARGES

Crude oil reenergizes demand for tank barges

• Vigorous expansion • Signet Maritime acquires Harvey Gulf’s offshore towing assets • U.S. DOT awards $123.5 million to improve ferry projects • Innovative mobile BTWS launched by Damen • TOTE’S Chiarello to provide keynote address at All About Marine

15 WASHINGTON DoE proposes changes to its LNG export procedures

50 NEWSMAKERS VADM Neffenger named Vice Commandant of U.S. Coast Guard

Private equity is helping plump up the world order book

Growing crude oil production is creating a demand for new coastal and inland and tank barges

51 TECH NEWS

29 ENVIRONMENT

45 OFFSHORE

ABB to power up next generation OSVs

A lack of policing could hinder the effectiveness of Europe’s ECA

Thirty-five floating rigs will be delivered to the world fleet this year, making it one of the highest years ever

31 LNG

48 COMMUNICATIONS

Bunkering is the next hurdle for widespread LNG use

Access to communications is vital to crew retention and mental health

Chaos reigns as Europe’s new ECA-based fuel regime approaches

Embracing LNG as a fuel

Energized

Staying connected

52 CONTRACTS Gunderson Marine awarded Kirby Offshore tank barge project 56 SHIPBUILDING HISTORY The sub chasers

June 2014 MARINE LOG 1

EDITORIAL

A GLIMPSE AT THE FUTURE PREDICTING THE FUTURE is, well, unpredictable. But to be human is to be curious. We want to know. We need to know. In the climatic scene of the time-traveling comedy Back to the Future, Dr. Emmett Brown, so adeptly played by Christopher Lloyd, pleads with Marty McFly (Michael J. Fox) not to tell him what happens 30 years in the future. Brown goes so far as to rip up a note that Marty has written warning him about the future. We later find out, however, that Brown’s own curiosity gets the best of him. For the last six decades or so, we’ve been publishing our Annual Yearbook issue to get a glimpse into the future. The Yearbook issue highlights the trends across the major marine sectors—shipping, shipbuilding, cruise ships, offshore, tugs and barges, finance, LNG, the environment, and ferries—in an effort to provide you with a clearer picture of the global marine market.

It’s not a sleek DeLorean nor a crystal ball, but I think you’ll find the coverage in the Yearbook enlightening. One clear, driving force now and the future is the environment. Even while vessel operators are trying to figure out what technology is best to comply with current and pending regulations, more are in the pipeline. Contributing Editor Paul Bartlett writes about ship operators concerns over the regulation of European Emission Control Areas in “Chaos reigns as Europe’s new ECA-based fuel regime approaches.” As of January 1, 2015, ship operators are going to have to burn bunkers with 0.1% sulfur content or install exhaust gas scrubbers. While the North American ECA will be well monitored by the U.S. Coast Guard, there appears to be much less confidence that the European playing field will be level. Meanwhile, our web editor Nick Blenkey

John R. Snyder, Publisher & Editor jsnyder@sbpub.com

writes about the role private equity is playing in the placement of new ship orders in our global shipbuilding article, “The roller coaster ride continues.” You’ll also want to read Clay Maitland’s opinion piece on lessons learned from the Sewol ferry disaster. It is really the type of coverage that you won’t see in any other marine B2B pub. Marine Log’s 30,000-plus subscribers—54 percent of whom are executives in vessel ownership, operations or management— need to know. We hope that they can use the content in this issue, on our website, in our app, and at our conferences as vital tools to help you do your job better. Thank you for being part of our marine community and being a loyal reader. Let us know what coverage you would like to see more of and what topics you’d like to see covered in the future. Most of all, stay curious.

MARITIME TRIVIA Trivia Question #15 Why was the launch of the five-masted schooner Carroll A. Deering considered so unlucky? The first sailor or lubber who correctly answers the Maritime Trivia question will receive a color J. Clary collector print. Email your guess to: marinearrt@jclary.com.

Answer to last month’s trivia question, “Why is it believed that Capt. James Cook was killed?” It was believed he was killed by Sandwich Island natives in 1779, after eating an albatross that his associate Mr. Banks had shot.

Ecochlor, Inc. has closed on $10 million in private placement equity financing. Verrill Dana’s Maritime and Business Law Groups advised and represented Ecochlor, Inc. in this transaction.

Boston, MA • Portland, ME • Augusta, ME • Stamford, CT • Providence, RI • Washington, DC www.verrilldana.com

2 MARINE LOG June 2014

VERD.18926 EcochlorAdforMarineLog.2014.FR.indd 1

5/2/14 2:43 PM

MARINELOG JUNE 2014 VOL. 119, NO. 6 ISSN 08970491 USPS 576-910 PRESIDENT Arthur J. McGinnis, Jr. amcginnis@sbpub.com

INTERNATIONAL SALES DIRECTOR Louise Cooper lcooper@sbpub.com

PUBLISHER & EDITOR-IN-CHIEF John R. Snyder jsnyder@sbpub.com

NATIONAL SALES DIRECTOR Jeff Sutley jsutley@sbpub.com

ASSOCIATE EDITOR Shirley Del Valle sdelvalle@sbpub.com

REGIONAL SALES MANAGER Ian Littauer ilittauer@sbpub.com

CONTRIBUTING EDITOR William B. Ebersold wbeber@comcast.net

SALES REPRESENTATIVE KOREA & CHINA Young-Seoh Chinn jesmedia@unitel.co.kr

CONTRIBUTING EDITOR Paul Bartlett pbmc@gotadsl.co.uk WEB EDITOR Nicholas Blenkey nblenkey@sbpub.com CREATIVE DIRECTOR Wendy Williams wwilliams@sbpub.com ART DIRECTOR Sarah Vogwill svogwill@sbpub.com MARKETING DIRECTOR Erica Hayes ehayes@sbpub.com 1761_shipmoPC_FINAL_TO_PRINT.pdf

14-02-17

8:28 PM

ShipmoPC

Seakeeping Prediction Software

ShipmoPC is a widely used and validated software providing comprehensive motion and load prediction analysis for ALL shapes and sizes of monohull ships.

CLASSIFIED SALES Jeanine Acquart jacquart@sbpub.com CONFERENCE DIRECTOR Michelle M. Zolkos mzolkos@sbpub.com CONFERENCE ASSISTANT Katelyn Lombardi klombardi@sbpub.com COLUMNISTS/CONTRIBUTORS Michael Toohey, Waterways Council, Inc Clay Maitland, NAMEPA Sebastien Solar, Bank of Texas Hon. William P. Doyle, FMC

PRODUCTION DIRECTOR Mary Conyers mconyers@sbpub.com

A SIMMONS-BOARDMAN PUBLICATION EDITORIAL AND BUSINESS OFFICES 55 Broad Street, 26th Floor New York, N.Y. 10004 TEL: (212) 620-7200 FAX: (212) 633-1165 website: www.marinelog.com e-mail: marinelog@sbpub.com

CIRCULATION & SUBSCRIPTIONS Call toll free: (800) 895-4389 Monday–Friday, 9 am–5 pm CST e-mail: marinelog@halldata.com

ShipmoPC is compatible with all major operating systems offering a wide range of features and reporting capabilities: ■ Predict ship motions and loading, deck wetness, slamming occurrence, pressures and accelerations ■ Consider hull appendage and vessel stabilization features ■ Assess human tolerance using seasickness indices ■ Enhanced interface for model development and results presentation ■ Updated context sensitive on-line help

fleet@fleetech.com

CMY

www.fleetech.com

+1 613 592 2830

MARINE LOG Magazine (Print ISSN 0897-0491, Digital ISSN 2166-210X), (USPS#576-910), (Canada Post Cust. #7204654), (Bluechip Int’l, PO Box 25542, London, ON N6C 6B2, Agreement # 41094515) is published monthly by Simmons-Boardman Publishing Corp, 55 Broad Street, 26th Floor, New York, NY 10004. Printed in the U.S.A. Periodicals postage paid at New York, NY and additional mailing offices. PRICING: Qualified individuals in the marine industry may request a free subscription. Non-qualified subscriptions Printed OR Digital Version: 1 year US $98.00; foreign $213.00; foreign, air mail $313.00. 2 years US $156.00; foreign $270.00; foreign, air mail $470.00. BOTH Print & Digital Versions: 1 year US $147.00; foreign $320.00; foreign, air mail $420.00. 2 years US $235.00; foreign $406.00; foreign, air mail $606.00. Single Copies are $29.00 each. Subscriptions must be paid for in U.S. funds only. COPYRIGHT © Simmons-Boardman Publishing Corporation 2014. All rights reserved. Contents may not be reproduced without permission. For reprint information contact: PARS International Corp., 102 W 38th St., 6th Floor, New York, N.Y. 10018 Phone (212) 221-9595 Fax (212) 221-9195. FOR SUBSCRIPTIONS, & ADDRESS CHANGES: Please call (800) 895-4389, (402) 346-4740, Fax (402) 346-3670, e-mail marinelog@halldata.com or write to: Marine Log Magazine, Simmons-Boardman Publishing Corp, PO Box 1172, Skokie, IL 60076-8172. POSTMASTER: Send address changes to Marine Log Magazine, PO Box 1172, Skokie, IL 60076-8172

4 MARINE LOG June 2014

The Energy Flows Through Us

HEAVY DUTY WORKBOAT SOLUTIONS

WORKBOATS WITH SINGLE ENGINE RATING FROM 1100-8200 HP CUSTOM MARINE APPLICATIONS WITH SINGLE ENGINE RATING UP TO 18,000 HP The marine industry demands reliable performance, extreme power and exceptional mechanical integrity from a propulsion system. Lufkin specializes in the design and manufacture of high-quality marine gearing, providing customers with the most cost-effective, dependable and timely solutions for critical propulsion applications. QUALITY MANAGEMENT SYSTEM CERTIFIED BY DNV

ISO 9001:2008

W W W. L U F K I N . C O M

速

INLAND WATERWAYS

WRRDA IS A WIN! ON MAY 15, WATERWAYS COUNCIL, Inc. (WCI) praised the final conference agreement reached on the Water Resources Reform Development Act (WRRDA) of 2014, which contained four major recommendations of the Capital Development Plan (CDP). The bill (H.R. 3080) passed the House overwhelmingly by a vote of 412-4 on May 20, 2014, and the Senate by a vote of 91-7 on May 22, 2014. The CDP is a comprehensive consensus package of recommendations to improve the continued vitality of the inland waterways that was developed in concert with the Congressionally-chartered Inland Waterways Users Board and United States Army Corps of Engineers. The CDP elements in WRRDA were: OLMSTED FEDERALIZATION: permanent cost-sharing for the remaining cost of the Olmsted project will be 85% General Fund, 15% Inland Waterways Trust Fund, freeing up approximately $105 million per year for funding other Trust Fund priority projects with Olmsted funded at $150 million per year. DEFINITION OF MAJOR REHABILITATION PROJECT ELIGIBLE FOR INLAND WATERWAYS TRUST FUND: increased from current

law level of $14 million to $20 million and adjusted annually for inflation. PRIORITIZATION OF PROJECTS: based upon risk of failure and economic benefit to the Nation (as proposed by the CDP). PROJECT DELIVERY PROCESS REFORMS:

based upon CDP-recommended reforms to achieve on-time and on-budget performance. The WRRDA bill also established annual target appropriations levels for increased spending of funds from the Harbor Maintenance Trust Fund (HMTF) leading to full use of HMTF funds by 2025. WCI’s members, the nation’s towboat operators, shippers, labor, port, conservation and agriculture group members that rely on an efficient, modern, viable waterways system, were deeply grateful for the news of this strong, long-awaited WRRDA bill. They particularly recognized the strong, bi-partisan leadership of Senate Environment & Public Works Committee Chairman Barbara Boxer and Ranking 6 MARINE LOG June 2014

Member David Vitter; House Transportation & Infrastructure Committee Chairman Bill Shuster, Vice Chairman Congressman Jimmy Duncan, and Ranking Member Nick Rahall; House Water Resources and Environment Subcommittee Chairman Bob Gibbs and Ranking Member Tim Bishop; RIVER Act (S. 407) sponsors Senators Mary Landrieu, Lamar Alexander, Amy Klobuchar, Tom Harkin, and Al Franken, led by lead sponsor Senator Bob Casey; and WAVE 4 (H.R. 1149) lead co-sponsors Congressman Ed Whitfield and Congressman Dan Lipinski, along with 31 co-sponsors. This WRRDA bill will create American jobs, increase exports, keep our nation competitive in world markets, and enhance the reliability of the nation’s waterways transportation mode and supply chain. Fiscal Year 2015 appropriations levels, which will be announced later this month,

Last month, the Water Resources Reform Development Act of 2014 passed both the House and Senate by an overwhelming majority

Michael J. Toohey, President/CEO, Waterways Council, Inc.

must be robust to implement the policies of the WRRDA bill, and WCI will continue to press for appropriate funding for the Corps’ important Civil Works mission. The last major element of the CDP that must be addressed by Congress is an increase to the diesel fuel user fee. House Ways & Means Committee Chairman Dave Camp included a 6-cent increase to the user fee in his February 26, 2014 discussion draft of a tax reform bill. Senate Finance Committee member Senator Bob Casey introduced an amendment to increase the user fee by 9 cents in the tax extenders bill in early April, but withdrew it when it was ruled non-germane. He and others will seek to add the amendment to the first appropriate revenue bill. Finally, we can say that the inland waterways industry—and the nation—has won with the passage of WRRDA. We urge and expect President Obama to sign it into law. ■

ULTIMATE STABILITY. ULTIMATE LTIMATE PROFIT.

Seakeeper Gyro stabilizers eliminate exhausting ®

and dangerous vessel roll. Imagine a fully stabilized vessel while in port or offshore—providing you

Eliminate 70-90% of exhausting and dangerous boat roll

and your team with an onboard safety experience

No drag-producing external appendages

like no other. Increase hours on the water, minimize crew fatigue, improve fuel economy, reduce

Simple installation, quiet operation and low power consumption

insurance claims, and retain the best crew. Experience the Seakeeper Gyro and gain the ®

Patented bearing, vacuum and cooling technology

ultimate advantage by minimizing vessel roll and maximizing operating profits. | seakeeper.com

EXPERIENCE IT AT SEA!

T H E

W O R L D

L E A D E R

I N

G Y R O

S T A B I L I Z A T I O N

UPDATE ARAB SHIP MANAGEMENT FINED, HIT WITH A TWO-YEAR BAN FROM U.S.

VIGOROUS EXPANSION

VIGOR INDUSTRIAL ACQUIRES OREGON IRON WORKS PACIFIC NORTHWEST SHIPBUILDING powerhouse Vigor Industrial is growing stronger thanks to its recent acquisition of Oregon Iron Works, Portland, OR. Under the merger agreement, which will be finalized at the end of the month, Oregon Iron Works (OIW) will become a wholly owned subsidiary of Vigor. Vigor says that bringing OIW into the group will create “the critical mass of innovation, infrastructure and financial strength needed to pursue even more complex projects, enter new markets and win more work than either could separately.” The acquisition comes at an opportune time, as well, since OIW has been looking for ways to evolve to the next level, according to Terry Aarnio, Chairman of the Board, Oregon Iron Works.

OIW brings its unique fabrication abilities to Vigor, and combined with the latter’s shipbuilding, heavy lifting and marine launch capabilities will allow the group to complete large-scale, complex projects that neither could do alone. “This combination positions the company to meet upcoming demand from various industrial and marine sectors,” said Vigor CEO and Owner Frank Foti. “Not only will diversification allow us to better weather the ups and downs of the marine industry, incorporating good fabrication genetics from non-marine sectors is great way to achieve world-class shipbuilding standards in the U.S.” Once the merger is complete, Vigor’s employee-base will be 2,300 strong, in Alaska, Oregon and Washington.

BIZ NOTES NASSCO can use “Asian angles” in Jones Act tankers THE USCG National Vessel Documentation Center (NVDC) recently issued a determination letter stating that construction of eight product tankers at NASSCO’S San Diego shipyard with much of the equipment and material necessary to construct each vessel—with the exceptions of most steel plate, flat bar, weld rod, and paint—being obtained from a Korean source or its foreign suppliers, will not adversely affect the status of the ships as having been built in the U.S.

8 MARINE LOG June 2014

Among other things, the letter gives the shipbuilder the nod to use “certain metricsized structural shapes ... generally referred to as ‘Asian angles’ or as ‘unequal angles’ and ‘inverted angles.’” These are unavailable from U.S. sources and will be received at the shipyard as rolled raw stock from the supplier steel mills. All processes that create unique parts or preparing the steel for use in the ships will be performed at the shipyard.

JORDAN-BASED Arab Ship Management Ltd. pled guilty to one count of violating the Act to Prevent Pollution from Ships. In accordance with the terms of the plea agreement, Arab Ship Management Ltd. was sentenced to pay a criminal penalty totaling $500,000 and be placed on probation for two years, during which time ships operated by the company will be banned from calling on ports of the United States. According to court documents and statements made in the Wilmington, DE, court, on March 28, 2013, the U.S. Coast Guard boarded the M/V Neameh, a 6,398 gross ton oceangoing livestock carrier operated by Arab Ship Management Ltd., to conduct an inspection. The inspection and subsequent criminal investigation revealed heavy oil sludge inside the piping on the discharge side of the pollution prevention equipment leading directly overboard, where no oil sludge should be if the pollution prevention equipment is operated properly. Inspectors also discovered that the vessel’s piping arrangement had been modified in a prohibited manner so as to allow oil sludge to be pumped directly overboard. (This prohibited piping arrangement was removed prior to the vessel’s arrival in Delaware.) Al s o dur in g the in s p e c t ion, Co ast Guard officers were presented with two oil record books that contained different and contradictory entries for the time period of November 30, 2011, through January 2, 2012, as well as fake oily waste disposal receipts. “The defendant violated environmental laws that protect our marine environment from harmful pollution,” and the ruling ensures the defendant is held accountable, said U.S. Attorney for the District of Delaware Charles M. Oberly III. “The message to the shipping industry is clear: environmental crimes at sea will not be tolerated.”

UPDATE BOEM TAKES STEPS TOWARDS NEW YORK OFFSHORE WIND ENERGY

SIGNET MARITIME ACQUIRES HARVEY GULF’S OFFSHORE TOWING ASSETS TEXAS-BASED SIGNET MARITIME Corporation will expand its presence in the ship assist and escort and offshore towing markets, following the acquisition of eight offshore towing vessels from Harvey Gulf International Marine (HGIM), New Orleans, LA. Ranging in size from 75 to 153 metric tonnes bollard pull, the vessels are part of a sale that encompasses all Harvey Gulf ’s offshore towing vessels (OTVs), spares, business and supplies. Signet has committed to retention of all crewmembers and plans for Tier 3 Generation of power onboard all eight tugs with conversions starting immediately. Upgrades and refurbishment will take place at Signet Shipbuilding & Repair, Pascagoula, MS. The deal was completed with financing by Wells Fargo Equipment Finance as part of a $209 million syndicated financing facility. Signet will continue to maintain its Offshore Towing Division operations from Port Fourchon, LA. The purchase expands Signet’s vessel classes and allows it to broaden its service, offering over 38 ASD tractor and

10 MARINE LOG June 2014

conventional vessels to customers in the Gulf of Mexico and worldwide. Furthermore, the addition of the ocean-class OTVs will enable it to provide ocean towing of semi-submersible, jack-up drilling rigs, TLPs, anchor handling, and subsea pipeline installation support. When combined, the fleet will average 11 years of age. “The combination of Harvey and Signet follows a thorough due diligence process and is fully consistent with our strategy of being a ‘one-stop turnkey’ source for all our customers’ needs,” says Signet President J. Barry Snyder. “This acquisition will accelerate our growth plans and we are very excited to welcome the talented and hardworking employees of Harvey OTVs to the Signet team,” says Snyder. HGIM Chairman and CEO Shane J. Guidry says both companies “share a strong culture of entrepreneurship and a focus on quality and service to the customer. I look forward to seeing the talented people of Harvey and Signet work together as we continue to fulfill our commitment to meet all our customer needs.”

THE BUREAU of Ocean Energy Management (BOEM) has published a Call for Information and Nominations (Call) to obtain nominations from companies interested in commercial wind energy leases offshore New York. The move indicates that the bureau is moving ahead with its wind energy plans on the Outer Continental Shelf (OCS) offshore New York—an area located 11 nautical miles south of Long Beach, NY. Additionally, BOEM is seeking public input on site conditions, resources and existing uses of the area that would be relevant to BOEM’s wind energy development authorization process. More specifically, BOEM is seeking public comments on two issues—the first being a liquefied natural gas facility that is proposed to be located in the same area; and the second, existing commercial/recreational fishing activity in and around the area. BOEM is also publishing a Notice of Intent (NOI) to prepare an Environmental Assessment (EA). The current proposed location is approximately 127 square miles large and contains 132 whole OCS blocks and 19 partial blocks.

UPDATE

THE U.S. DEPARTMENT of Transportation announced the award and distribution of approximately $123.5 million for passenger ferry projects and ferry operations throughout the United States and selected territories. The funds were administered separately through the Federal Transit Administration’s (FTA) Passenger Ferry Grant Program and the Federal Highway Administration’s (FHWA) Ferry Boat Formula Program. The FTA is providing $60 million in competitive funds for 26 projects in 13 states and Puerto Rico. Meanwhile, the FHWA is providing $63.5 million to 114 operators in

12 MARINE LOG June 2014

37 states, Puerto Rico and the U.S. Virgin Islands. The funds will help support existing ferry service on the nation’s waterways, as well as establish new ferry service where it is needed most, and help repair/modernize ferries, terminals and related facilities. “Passenger ferries play an important role in our nation’s transportation network by connecting people with the jobs and services they need to reach across the river, the bay, or other local waterway,” said U.S. Transportation Secretary Anthony Foxx. “We need Congress to pass a long-term transportation bill so we can continue to invest in ferry boat

services that provide ladders of opportunity for hard-working families.” Among the projects being funded by the FTA is the expansion of multiple ferry service routes to New York City’s outer boroughs. The $6 million awarded to the New York City Department of Transportation, in partnership with the New York City Economic Development Corporation, will fund multiple ferry projects that will serve “multiple passenger ferry projects serving transit riders in Queens, Brooklyn and Staten Island.” The program will also provide funding to the Washington State Department of Transportation (WSDOT)—$4.7 million will go to replace the aging ferry terminal in Mukiltero, WA. WSDOT will also receive a $2.2 million grant to stabilize an aging seawall at the Edmonds ferry terminal. Under the FHWA’s Ferry Boat Program the states of Alaska and Washington will receive the most funding, with $18.2 million allocated to Alaska ($17.8 million will go to the Alaska Marine Highway System); and $15.5 million going to Washington (Washington State Ferries will receive $14.1 million). You can learn more about the funds at www.marinelog.com

LehaKoK / Shutterstock.com

U.S. DOT AWARDS $123.5 MILLION TO IMPROVE FERRIES, TERMINALS AND SERVICES

Inland • Coastal • offshore • deepsea

EASTERN DELIVERS THIRD BRAVANTE VESSEL TO BOLDINI

INNOVATIVE MOBILE BWTS LAUNCHED BY DAMEN

EASTERN SHIPBUILDING GROUP, INC., Panama City, FL, has delivered the M/V Bravante VII, the third in a series of STXdesigned 4 ,500 dw t Plat form Supply Vessels (PSVs), to Boldini S.A., Bravante Group of Brazil. The PSVs are being constructed by Eastern with the assistance of a $240.8

million Title XI shipbuilding loan guarantee. Eastern is the only U.S. shipyard building offshore support vessels for export. The ABS-classed, 284 ft Bravante VII is based on the STX SV290 design. The vessel is capable of reaching maximum speeds over 13 knots, with a cruising speed of 12 knots.

DAMEN SHIPYARDS GROUP has launched an innovative alternative ballast water treatment (BWT) system that enables ballast water to be treated at the point of discharge, rather than by a fixed system aboard ship which would require ballast water to also be treated at intake. The new in-house technology complements Damen’s Ballast Water Center of Excellence, which advises fleet managers on total BWT solutions for retrofits and newbuilds worldwide. Developed in-house, the fully containerized, mobile Damen InvaSave BWT unit provides owners with an alternative to retrofitting fixed BWT systems. Damen can deliver the system as a separate mobile containerized unit, that can be put on board or moved around a port on a truck. Each Damen InvaSave container unit handles 300 m3/h of ballast water and can be scaled up by using multiple container units. Damen has also developed the world’s first mobile treatment vessel to operate in ports and support ship deballasting operations, with the first customized Damen barge, fitted with Damen InvaSave units. The vessel, which is currently under construction, will provide service in the Dutch ports of Eemshaven and Delfzijl. “We have been looking into what we can do to help our customers regarding ballast water treatment and finding alternatives for those owners that may not want to retrofit a ballast water treatment system, perhaps because their ships operate on fixed routes or their ships are too old...” says Gert Jan Oude Egberink, Damen Manager Ballast Water Treatment. Essentially it is a plugand-play system in one container.” Clarification In our May issue in a story titled “From Space Ships to Supply Ships,” we incorrectly reported that the Maritime Simulation Institute had facilities at Texas A&M in Houston. MSI’s facilities are in Rhode Island and at the Massachusetts Firefighting Academy in Stowe, Mass.

www.smsllc.com

www.classnk.com

June 2014 MARINE LOG 13

UPDATE TOTE’S CHIARELLO TO PROVIDE KEYNOTE AT ALL ABOUT MARINE SEPT. 4, 2014 | BEAU RIVAGE CASINO & RESORT, BILOXI, MS– Marine Log is proud to announce that Anthony Chiarello, President & CEO TOTE, Inc., will provide the keynote address at its ALL ABOUT MARINE Conference & Expo, which is scheduled for Sept. 4, 2014. “We’re very excited to have Mr. Chiarello keynote this new conference,” said John R. Snyder, Publisher & Editor in Chief, Marine Log. “The Saltchuk organization, TOTE and Mr. Chiarello have all shown strong leadership in pushing the best practices and best technologies in not only the Jones Act trade, but also the global shipping market. TOTE is the vanguard of environmental stewardship, with its construction of the world’s first LNG-powered containerships. I can think of no better marine executive to deliver the keynote address for ALL ABOUT MARINE. A long-time industr y veteran and a fourth generation member of the shipping and logistics community, Chiarello was one of 11 transportation executives honored in 2014 as a “Champion of Change” by the White House. TOTE is not only building the first LNG-fueled containerships for the Puerto Rico trade, but also investing in converting two of its existing ships to burn LNG for the Alaska trade. All About Marine will include four tracks: All About LNG, All About Shipyards, All About The Jones Act, and All About Environmental Compliance. The conferences will occur simultaneously, but will share common coffee and energy breaks, a luncheon, and a cocktail reception. Each one-day conference will provide practical real world advice and discussion, with insightful presentations from some of the foremost experts in their respective fields. Whether you are interested in LNG as a marine fuel, opportunities in the Jones Act trade, regulatory compliance issues such as ballast water discharge, or best safety practices at shipyards, you’ll find the answers at All About Marine. Further announcements regarding the conferences tracks will be released shortly on marinelog.com/events. Additionally, details regarding registration, exhibition, and sponsorship, are available by contacting Michelle Zolkos at conferences@sbpub.com or 212-620-7208. 14 MARINE LOG June 2014

INSIDE WASHINGTON

DoE proposes changes to its LNG export procedures THE BIG NEWS IN WASHINGTON last month was clearly the passage of the Water Resources Reform and Development Act of 2014 (WRRDA) by Congress as noted by Waterway Council Inc. President & CEO Mike Toohey in his column, “WRRDA is a win!” in this issue. The legislation is now on the desk of the President, who is expected to sign it. While that’s the best maritime news to come out of Washington in a long time, there were some other notable developments. Just a few years ago, the U.S. was focused on the development of Liquefied Natural Gas (LNG) import terminals. The U.S. shale gas boom, however, has turned that picture on its head. The U.S. Department of Energy (DoE) has received applications for 26 LNG export terminals to non-Free Trade Agreement (FTA) countries. Now, the DoE proposes to act on applications to export LNG only after the review required by the National Environmental Policy Act (NEPA) has been completed, suspending its practice of issuing conditional decisions

prior to final authorization decisions. The DoE says the proposed changes “will ensure our process is efficient by prioritizing resources on the more commercially advanced projects, while also providing the Department with more complete information when applications are considered and public interest determinations are made.” In addition to an authorization from the DoE under the Natural Gas Act, an applicant intending to export natural gas from a new or modified LNG terminal must also obtain approval to site, construct, and operate the terminal. For LNG terminals located onshore or in state waters, the applicant must obtain approval from the Federal Energy Regulatory Commission (FERC). For LNG terminals located offshore beyond state waters, the applicant must obtain approval from the U.S. Maritime Administration. To date, all but two of the 26 large scale non-FTA LNG export applications to DoE have proposed exports from LNG terminals located onshore or in state waters and therefore have fallen within FERC’s

jurisdiction. In most cases, these applicants have applied to DoE and FERC in parallel, which has enabled the two agencies to conduct concurrent reviews under the Natural Gas Act. The DoE has issued a notice in the Federal Register requesting public comment on the changes by July 21, 2014.

Coins commemorating the Coast Guard A Senate bill, S. 2303, has been introduced that would authorize the Secretary of the Treasury to mint coins commemorating the United States Coast Guard. The bill has been referred to the Senate Committee on Banking, Housing and Urban Affairs. The Treasury would be authorized to mint $5 gold coins, $1 silver coins and half dollar coins. Older than the U.S. Navy, the Coast Guard was created as the Revenue Cutter Service on August 4, 1790. The bill would also authorize the establishment of a National Coast Guard Museum in New London, CT.

The unexpected happens. While unloading a container from a ship, the crane operator noticed an odd substance dripping from the container onto the deck of the ship. What happens next? Find out at wqis.com/cargo

June 2014 MARINE LOG 15

OPINION

THE SINKING OF THE SEWOL: LESSONS ALREADY LEARNED MORE THAN THREE HUNDRED LIVES were lost when the Korean ferry Sewol capsized and sank at about 8:48 AM local time on April 16. This terrible tragedy, in which the great majority of the 304 victims were young, has prompted calls for a major revision of international rules applying to passenger ferries, including those that operate within the waters of a single country. A great many facts are still unclear. Until the ship is salvaged, conjecture will as usual prevail over technical and forensic analysis. We can, however, begin to focus on what the authorities call areas of concern. One such area is that passenger vessel design must take account of the need to better organize the evacuation of a vessel in distress. In particular, in the case of the SEWOL, the ship’s officers apparently had no idea of what was happening in the passenger areas, or, indeed, the condition of the ship. As also seems to have been the case

with Costa Concordia, the arriving rescue teams and other responders had great difficulty in locating passengers. In the same vein, it is obvious that in cases like Sewol, prompt evacuation, even if it is rough and ready, is often of great necessity. “Stay put” is only sometimes the best policy —by no means always. Another lesson: there must be adequate emergency procedures and protocols, aboard the stricken ship, and for the rescuers. There is already ample evidence that valuable time was lost because of poor communication ashore and afloat. Why can’t international rescue methods, and standardized methodology and training, be prescribed and adopted? We know that each accident is unique, but certain response problems and issues repeatedly arise, and can be mitigated with proper preparation, planning, equipment and training. An international ISO standard, embodied in an

In the wake of the Sewol accident, South Korea’s President has targeted lax safety standards and enforcement, going so far as to disband the country’s Coast Guard

By Clay Maitland, Chairman, NAMEPA

international passenger rescue convention, is long overdue. Also overdue is the mandatory application of the Safety of Life at Sea (SOLAS) convention to domestic ferry operations. The argument that national sovereignty trumps safety doesn’t hold water. It has been suggested that cargo overloading and structural alterations may have caused instability. It is clear that water rapidly entered the hull as the ship heeled over, but there is no clear explanation as to why. The sinking of the Sewol is one of those rare maritime disasters that may change the future course of a nation. South Koreans have started a sweeping examination of the linkage between businesses and their regulators, and the collusive culture of government job-to-industry employment, and often back again. President Park Geun-hye has targeted what she describes as South Korea’s entrenched system of lax safety standards and enforcement, to the extent of disbanding its Coast Guard. The rest of the world should show the same willingness to embrace reform. A good place to start is SOLAS — in particular, the rules for passenger ship safety and stability, and their enforcement. ■

NAMEPA—the North American Marine Environment Protection Association—is an independent, marine industry-led association that engages maritime businesses, government and the public to “Save our Seas” by promoting sound environmental practices. NAMEPA operates as a NGO committed to preserving the marine environment through educating seafarers, port communities and students about the need and strategies for protecting this important global resource. NA M E PA i s l e a d b y i t s c h a i r C l ay Maitland, who along with Carleen LydenKluss, founded the organization. A vocal advocate of environmental responsibility and marine safety, a strong supporter of several charitable organizations, and an avid blogger, Clay’s maritime career spans more than 40 years. He currently serves as a Managing Partner of International Registries, Inc. June 2014 MARINE LOG 17

MARINE LOG CONFERENCE & EXPO

LNG | SHIPYARDS | THE JONES ACT | ENVIRONMENT

Early Bird Registration Save $100 until August 1

Sept. 4, 2014 Biloxi, MS

Four Conferences in One

FINANCE

SHORE UP YOUR CAPITAL NOW to prepare for the growth ahead

By Sebastien Solar, Senior Vice President of Maritime Lending with Bank of Texas, a subsidiary of BOK Financial Corporation

he maritime industry is poised for dramatic growth in the coming years. Smart operators know that the time to get growth capital lined up is before it’s needed. Let’s face it, the maritime industry is extremely capital intensive. Access to capital for new f leet additions, existing f leet maintenance, and working capital is the lifeblood for any successful operator. Here are a few tips to ensure that you have everything shipshape from a banking standpoint, as the industry continues to grow.

LINE UP YOUR CAPITAL TODAY The risk profiles of many top operators have changed dramatically over the past 5 years. Companies have closed strategic acquisitions, grown their fleets in response to increased demand, and at the most basic level, addressed the need to replace aging fleet assets with new boats and barges. As a result, marine operators are now finding themselves better prepared to service their existing clients, but could potentially face increasing challenges to service new debt and/or access growth capital as lenders evaluate higher levered credit profiles. Although most marine credits continue to find willing lenders, it appears that many non-marine focused lenders are now beginning to show signs of resistance, largely due to the “high levered” nature

of many marine transactions. Several reasons why a banker might resist lending may include: New leverage exceeds the “traditional” 4x leverage “red line” of most commercial lenders. Every bank has its limit, and while an occasional case can be made for an exception to policy, the further a borrower gets above that limit, the more difficult it becomes to get an exception approved. Banks that have formal marine underwriting policies or in-depth knowledge of marine assets and industry trends are more likely to be better positioned to absorb the perceived risk associated with temporary spikes in leverage. Borrower exposure limits. Customer exposure limits are a reality of the banking world, and should not be perceived as a negative reflection on your company, but rather an opportunity to bring in an additional partner. Although multi-bank deals or syndications may not have been a reality for most operators, many companies are beginning to see their exposure limits tested and begin the process of evaluating new complimentary banking partners. Industry exposure limits. In many ways, the past three years have been the perfect environment for the U.S. marine industry. Day rates and utilization rates have been on the rise, interest rates have been at record lows providing inexpensive growth capital, and banks that are desperate for loans due to impish demand from June 2014 MARINE LOG 19

FINANCE other industries have been willing to “stretch” to get sizable marine credits done. As the economy recovers and loan demand from other more traditional industries comes back online, many non-marine focused lenders are beginning to show signs of approaching their industry exposure limit when it comes to marine debt. As a result, this supply of growth capital will need to be absorbed by existing marine lenders or new entrants into the market. Since it’s difficult to predict with certainty when these credit winds at your bank will shift, either because of your unique situation or industry events, it’s important to start having conversations with backup sources of credit long before fresh capital is needed to address a business opportunity.

BEGIN DEVELOPING NEW BANKING RELATIONSHIPS FOR TOMORROW Many top operators have already started the process of expanding their bank group and developing meaningful “complimentary” credit relationships. Banks with formal marine underwriting policies will not only offer consistently competitive terms when compared to non-marine focused banks, but should also provide a borrower with a higher degree of confidence and transparency that their source for growth capital will continue to lend throughout economic cycles, regardless of other industries. In addition, the need for additional new vessels is far from over. The marine industry is primed for considerable growth with the rise of offshore oil activity, increased shale production, and an expected $25+ billion of investment in Gulf infrastructure over the next five years. In order to achieve long term growth goals, operators will need to call upon the support of true marine lenders. Any opportunity

COMMERCIAL SERVICES

CIT COMPLETES BAREBOAT CHARTER DEAL CIT MARITIME FINANCE, a unit of the CIT Group, has completed a $49 million financing through a bareboat charter agreement with a subsidiary of privately held Grieg Star Group AS. The deal will provide Grieg Star with more capital flexibility and liquidity. CIT Bank, the U.S. commercial bank subsidiary of CIT, provided financing for the transaction. With corporate offices in Bergen and Oslo, Norway, Grieg Star operates a fleet of modern open hatch general cargo carriers. Forestry products such as pulp and paper represent about 50% of Grieg Star’s cargoes. Grieg Star also transports metal and steel coil, wind turbines, and containers. The bareboat charter was for the 50,700 dwt open hatch general cargo carrier Star Lygra, the ninth in a series of 10 L-class vessels built by South Korea’s Hyundai Mipo Dockyards for Grieg Star. The 670 ft x 105 ft ship has nine cargo holds and can reach a speed of 15.5 knots fully loaded. The L-class, which is the 12th generation in the Grieg Star Open Hatch concept, is equipped with four cranes with power swivel for steady cargo handling. Svein Engh, Managing Director and Group Head of CIT Maritime Finance, says the transaction was CIT Maritime’s “first financing through a bareboat charter and reflects our ability to structure a tailored financing solution that affords Grieg Star purchase options and increased capital flexibility.” Camilla Grieg, CEO and co-owner of the Grieg Group, said, the transaction “complements our existing portfolio of more than 30 owned ships and will allow us to service the increasing transportation demand around the world.”

MARINE SERVICES

S A LVA G E

Expert small boat handlers with the strength and expertise of a National fleet R A P I D M O B I L I Z AT I O N :

Boats for Hire Captains for Hire Salvage & Recovery seatow.com/marine-services 800-4-SEATOW

20 MARINE LOG June 2014

Government Contracts Transport Services Diving

Environmental Clean-up Dock Work Security

FINANCE to develop a new relationship with a potential banking partner should not be missed, as true marine lenders will likely be in high demand. It’s also easier to move quickly and lock up new capital for that next growth opportunity when you’ve already been through the credit approval process with a new banking team.

PREPARE FOR A RISING RATE ENVIRONMENT As borrowers take on additional debt, it will be critical that proper precautions are taken to evaluate exposure to interest rates and take the necessary steps to hedge the impact of rising interest rates in the coming years. With the Fed well into its sixth year of its widely publicized effort to keep short-term interest rates to near 0%, it is important to note that the credit environment many operators have grown accustomed over the past five years is far from normal—and more importantly, it’s unsustainable. In fact, both the level of short-term rates and the duration of the Fed’s Zero Interest Rate Policy have been unprecedented. Combined with the fed’s recent rumblings that the historic low interest rate environment could be coming to a close, experts are currently predicting interest rates increasing from 0 to 2.25% by the end of 2016, with the first rate hike occurring by mid-2015. Given these early indicators of future rate hikes, borrowers may want to consider fixing some portion of current or future borrowings, especially on longer-maturity borrowings. A very attractive way to do this is by the use of an interest rate swap as an alternative to a traditional fixed rate loan. The swap is a separate (but related) transaction from the loan that “layers over” the loan to effectively fix the rate of a floating rate loan (LBOR or Prime). Swaps are attractive ways to fix rates due to three fundamental characteristics of these instruments:

They are fully customizable, allowing users to fix the rate on all or a portion of borrowings with respect to amount and/or maturity. It can be put into place at loan inception, or at any point during the life of the loan, without having to completely redo the underlying loan agreement. The swap may be terminated in whole or in part at any time. Unlike traditional bank-fixed rate loan products, early termination in a rising rate environment may result in a cash gain for the party terminating the pay-fixed swap. Downside risk on early termination still exists in the event of a stagnant or down rate environment, thus the other side of the “two-way” yield maintenance. But the value element here is that the swap instrument offers upside participation, whereas traditional bank-fixed rate products typically do not. Swaps are “portable” and in many cases a swap may be transferred from one bank to another prior to swap maturity, without an early termination needing to occur. This provides the customer with the flexibility of choosing the most attractive banking relationship, without the concern of an out-of-pocket yield maintenance/make whole payment (loss) that would stem from an early termination in a lower rate environment. Interest rate swaps are not offered by all banks, and as potentially complex transactions, may not be appropriate for all borrowers. But for those borrowers that are willing to consider, swaps offer significant benefits as a way to fix rates on both term and revolving credit facilities when compared to traditional fixed rate loan products. These are exciting times for the maritime industry, and it’s a good time to be a maritime lender. By taking these few simple steps to shore-up on the financial front, savvy operators can assure full steam ahead during the growth for years to come. ■

MAKE THE CONNECTION

The global leader in ﬂexible couplings for marine applications. Trust the innovator-trust CENTA. • Over 20 unique designs • Torsional Vibration experts

CENTAFLEX for close coupled gear drives

CENTALINK for intermediate drive shafts

CENTAX-SEC for remote mounted gear drives

• Over 16 million sold • Carbon Fiber Driveshaft leaders

CENTA POWER TRANSMISSION L E A D I N G B Y I N N O VAT I O N 2570 Beverly Dr. #128, Aurora, IL 60502 T 630.236.3500 Catalog downloads at www.centa.info | Email inquiries to ml@centacorp.com

June 2014 MARINE LOG 21

The New MarineYellowPages.com

Explore 15,000+ marine businesses

• Browse thousands of commercial marine listings • Submit and manage your business listings for free • Search by four regions and ten market subsets • Get instant visibility for your brand with enhanced listings

Marine Yellow Pages

SHIPBUILDING

Orders are up, the question, of course, is how long will demand persist?

THE ROLLER COASTER RIDE continues Up we go again as private equity funds new ship orders

ne year ago, the world shipbuilding order book was at its lowest level since 2004. Since then, however, ordering has begun to pick up and newbuilding prices are currently around 15% higher than they were a year ago. China Rongsheng Heavy Industries—the third largest shipbuilder behind Korea’s Hyundai Heavy Industries and Daewoo Shipbuilding and Marine Engineering in terms of orderbook size—recently secured a contract for a series of 64,000 dwt bulkers worth a potential $1 billion. The announcement was less than one month after it disclosed a 2013 loss of $1.4 billion. On dissection of the contract, however, it turns out that the deal was essentially a renegotiation of an earlier one with the same undisclosed European owner. The order is for 24 ships, firm, plus 12 options. The 24 confirmed orders actually include 18 existing orders for which the shipbuilder has secured better contractual terms after renegotiation. So, the net addition to the Rongsheng orderbook is six ships, but all are at a more realistic price. Rongsheng chief Chen Qiang says that “in view of the current market condition, we will maximize sales efforts to and secure additional orders, and pursue better payment terms of certain existing orders.”

By Nick Blenkey, Web editor

Enter private equity This is the sort of market trend that sets shipowners thinking about hopping into the market to nail down building slots before prices climb further. Of course, to go shopping, they need funds. Enter the new villain, or maybe hero, in our story — the private equity investor. “A large portion of the new contracts during the past year was backed by ‘unconventional’ ship owners, i.e. private equity from institutional investors, taking advantage of low prices, attractive payment terms and short delivery time, along with the expectations for improved freight markets in 2015 -16,” wrote Ole Gustav Eriksen of RS Platou Economic Research, in the May 2014 Platou Monthly. “That took total new orders in 2013 above 45 mill compensated gross tons (cgt), far more than what we could expect from traditional shipowners based on their normal behavior historically under such rather poor market conditions.” Private equity being private, nobody has a clear idea of exactly how much such investors have put into shipping in the last year or so. One well respected shipping accountancy firm estimates $7 billion in private equity flowed into the market in 2013 and says this could possibly double this year. Another source, quoted by Reuters, set the amount at $35 billion. What seems clear is that the amounts June 2014 MARINE LOG 23

SHIPBUILDING

are large and that, having wet their beaks by buying up the debt of distressed shipping companies, private equity investors are now getting into joint ventures that involve newbuilding deals. And, by the way, private equity is a term that embraces any number of international investors beyond the major U.S.-based players such as Oaktree and Blackstone. Those who see such investors as villains believe that they will refuel a premature return to the newbuilding market that will simply propel the next over-tonnaging boom. Meantime, Platou’s Ole Gustav Eriksen has some interesting observations on where the market is headed and on yard capacity, noting that brokers report that interest from financial markets in shipping has slowed, indicating that ordering activity may calm. “We do not expect significant demand from traditional shipowners under the prevailing market conditions, and as such we may see annual orders dip back below yard capacity this year,” he writes. Eriksen says officially reported contracts—measured against estimated building capacity—indicate that most of 2015 capacity has been filled, but capacity remains available for 2016 and 2017. “Yards tell a different story, however,” says Eriksen, “Japanese yards claim to be covered in 2016 and most of 2017, while Korean and Chinese yards have filled most of 2016 and some of 2017.” He says that many slots have obviously been reserved for projects yet to be confirmed or that are under negotiation. “Yard capacity is a dynamic measure influenced, naturally, by profitability. There is currently much idle capacity around as work force has been reduced and facilities have been temporarily shut since the peak of activity in 2010-2012. Such idle capacity is there to be reactivated once newbuilding prices provide acceptable profits and the recent spike in prices has clearly triggered yards to reactivate capacity; we regularly see early deliveries being offered from yards previously reported full. “As we move into 2015 and 2016 fundamentals indicate that 24 MARINE LOG June 2014

ordering activity will be higher, and exceed estimated building capacity, as owners’ earnings are expected to rise. That would push prices further up until yards react to the scarcity of building capacity and decide to expand. Based on our segment analyses total tonnage demand is expected to grow by 5-6 percent annually in 2014-16, in line with long term trends. Similar growth beyond 2016 would mean that substantial volumes of new tonnage are required just to keep f leet growth on par. If correct, that means any downward pressure on prices in 2014 should be relatively shortlived, provided the industry is not tempted to bring back too much capacity too quickly and can wait until the next cyclical upswing in activity gets underway, most likely in 2016-2017.”

Getting perspective At this point, it may be salutary to put things into some historical perspective.The highest peak that world shipbuilding production hit in the 20th Century was 36 million gross tons (gt) in 1975. The highest peak since 2000 was 100.9 million gt in 2011. The chart for shipbuilding order intake is, of course, even spikier. It shows that while new orders booked in 1975 were around 13.9 million they followed a fairly sedate progression of bumps and jumps until 2000-2001 when demand hit 46.1 million to be followed by a climb to a whopping 169.6 million in 2007 followed by a plunge to 33.6 million in 2009 -2010, a dead cat bounce to 82.4 million the following year and a plunge to 38 million in 2012, then a climb to 101.4 million by the end of last year. The question now is how long will this demand phase persist. What has produced the explosive spurts in demand in the past decade has been the unleashing of the Chinese economy with its huge thirst for imports of energy and raw materials and, of course, its creation of a giant shipbuilding industry. Booms, however, do not go on forever. About the only thing certain about the expansion of the Chinese economy is that, though it

SHIPBUILDING

may continue strong, it won’t keep on at this pace. China is now operating under its 12th Five-Year Plan (2011-2015) and the government has set an annual GDP target at 7% for the five years. Industry analysts expect annual growth to actually exceed 8% —lower than the 11% achieved under the prior Five Year Plan. More significant for shipping, and hence shipbuilding, demand may not be the rate of Chinese growth, but its direction. With the deepening of China’s economic reform, Western countries should gradually adapt to the “new normal” of China’s economy, under which: first, China’s economy will slow down from rapid growth to moderate or high growth, second, there will be a shift in China’s economic growth model from intensive growth to innovative and consumer-driven growth, and third, precautions against risk should play a more important role, says Li Huiyong, an analyst at Shenyin Wanguo Securities. He is quoted in a recent article in the Government run “People’s Daily” that notes that, although “China’s economic growth will experience a slowdown, the quality and efficiency of the economy will be greatly improved, with a transition from the ‘world factory’ to the ‘world market’ — from ‘Made in China’ to ‘Created in China,’ China’s contribution to the world economy will continue to grow.” That might make it smarter to build cruise ships targeting affluent Chinese consumers rather than more humungous bulk carriers. That’s clearly on the mind of major cruise ship operators, who are repositioning new ships to Shanghai and Singapore. See this month’s feature on cruise shipping, “The allure of China.”

China, Korea and Japan: The Big Three For many years a highlight of our annual review of world shipbuilding was the listing of the top ten shipbuilding nations. These days, it’s scarcely worth publishing a “league table,” because, so far as large

standard ships such as tankers, bulkers and containerships go, there are only three significant players in the league—China, South Korea, and Japan. Here’s what their orderbooks looked like at the end of 2013:

China South Korea Japan

# OF SHIPS

GT (‘000)

PERCENT

2,161 890 825

73,039 60,624 26,089

39.9 33.2 14.3

The latest quarterly numbers from the China Association of the National Shipbuilding Industry (CANSI) underscore the sheer scale of the Chinese industry. In the January-April period of the current year, its aggregate shipbuilding output (from a total of 80 shipbuilding enterprises) amounted to 10.36 million deadweight tons (dwt), down 24.9% year on year. In the quarter, China’s new ship orders amounted to 30.30 million dwt, up 160% year on year. As of the end of April, ship orders on the books of Chinese shipbuilding enterprises totaled 150.15 million dwt, up 43.2% year on the prior year and indicating an increase of 14.6% compared to the end of 2013. In the January-April period, the aggregate shipbuilding output for export orders in China totaled 9.48 million dwt, down 17.2 percent year on year and accounting for 91.5% of the total shipbuilding output in China in the given period. Meanwhile, China’s new ship export orders amounted to 28.97 million dwt, up 174% year on year and constituting 95.6% of total new ship orders. As of the end of April, ship export orders on the books of Chinese shipbuilding enterprises totaled 140.84 million dwt, up 57.5% year on year and constituting 93.8% of total ship orders on the books of Chinese shipbuilding enterprises. June 2014 MARINE LOG 25

SHIPBUILDING Between them, the Big Three shipbuilding nations scooped up 87.4% of tonnage ordered last year. And, in fact, their dominance was even greater than that, because a significant number of the large ships built outside these countries was built in shipyards that are effectively satellite operations of Japanese or South Korean shipbuilders. The Philippines comes in at number four in the world orderbook league with 90 ships totaling 4,672,000 gt to give it 2.6%. It has two major shipyards, Japanese controlled Tsuneishi Cebu shipyard opened in 1994 and Korean controlled Hanjin H.I. Subic shipyard opened in 2006. And the Chinese domination of things would be even larger were we to be so insensitive as to count Taiwan in and add in things like the order by Seaspan/Yangming of five, 14,000 TEU containerships from CSBC Kaohsiung. As we are not insensitive, we therefore won’t put it into the Chinese total. What the statistics do not show is that those hef t y orderbooks have not been enough to fill all the capacity that was originally planned to come on stream in China in particular, leading to oceans of red ink, yard construction being put on hold and a large number of consolidation moves within various shipbuilding groups.

What happened to all those places that were to have become “the next China? ” Didn’t happen. At the end of last year Vietnam’s order book stood at 75 ships, totaling 542,000 gt to give it 0.8% of world orders. The biggest player there? Hyundai Vinashin Shipyard. And what about India? Away went a neat export subsidy and along came a case of “failed to launch.” At the end of last year the Indian orderbook stood at 42 ships totaling 252,000 gt, just 0.4% of the world total.

What’s happening in Europe? The past five years or so have been pretty devastating for many European shipbuilders with the only large commercial ships being built in European yards now being cruise ships. The European yards that have remained viable are those that have managed to carve out specialized niches for vessel types such as dredges, RoPax ferries, live fish transporters, ice tonnage, live fish transporters and wind farm installation jack-ups. Thirteen European countries that were historically lumped together as Western European collectively got orders last year for 260 ships totaling 3,446,000 gt and just 1.9% of world bookings. Three other European countries that were historically

Quality Commercial Vessels... Built by Burger to Your Requirements

60' (18m) Fisheries Research Vessel

Delivered May 2014, early delivery/on budget

Under Construction 78' (24m) Steel Research Vessel

Burger is recognized worldwide for quality custom vessels that provide years of dependable service. • Aluminum and Steel • Fast Supply Boats Fabrication • Wind Farm • Passenger Vessels Support Vessels • Research Vessels • Fishing Vessels • Fast Crew Boats • Other Vessels to 260'(80m)

New Construction | Vessel Haul-Out | Refit & Repair Services +1 920.686.5117 | sales@burgerboat.com | burgerboat.com/commercial Proudly built in the USA

26 MARINE LOG June 2014

tallied outside that total, Poland, Croatia and Romania, add 194 ships and 2,156,000 gt (1.1% of world orders) to the European total. Some, who do not know that anything east of the Bosphorus is in Asia, would massage the European total further by adding in Turkey, which last year won orders for 157 ships totaling 510,000 gt, or 0.3% of world orders. This does not mean that European shipbuilding is dead. It means that Europe is no longer the assembly site for large, basic ships. There is also an “invisible” European industry in the form of the intellectual and equipment content of many ships built in Asia. The challenge for the European industry will be to maintain exports of knowhow and hardware as local competencies grow.

The Jones Act market is strong Another lesson to be drawn from the world shipyard picture is that there is nothing wrong with protectionism as long as you’re among those being protected. American shipbuilders should spend a moment or two each day to give silent but heartfelt thanks to Wesley Livsey Jones (October 9, 1863 – November 19, 1932) to whom they owe the Jones Act. He was a U.S. Senator for Washington State and as the Jones Act stipulated that only American-built, American crewed ships could carry cargo between American ports, it made Alaska dependent on Seattlebased shipping. It might be inappropriate to offer a toast in his memory, however, as he was a lifelong supporter of prohibition. Be that as it may, the U.S. comes into the world league table way above most individual European countries with an orderbook of 67 ships totaling 659,000 gt or 0.6% of the world total. Among those ships on order are two 115,000 dwt crude carriers for SeaRiver Maritime, four 46,000 dwt product carriers for Crowley Maritime, and two 3,600-TEU containerships for Matson Navigation at General Dynamics-NASSCO in San Diego, CA; two 3,100-TEU containerships for TOTE, four 50,000 dwt product carriers for APT, and four 50,000 dwt product carriers for Seacor at Aker Philadelphia Shipyard, Philadelphia, PA; and two 2,400TEU container RO/RO vessels at VT Halter Marine, Inc., Pascagoula, MS. There’s a lso a hea lt hy orderbook of cruise ships, excursion vessels, offshore support vessels, Articulated Tug Barge (ATB) units, ferries, fishing vessels, tugs, towboats, and barges. Protectionism and cabotage are also giving Brazil another go round at being a significant shipbuilding power. That was supposed to happen more than 30 years

SHIPBUILDING ago when it was tipped to become “the next Japan.” Then along came “Lula,” President Luiz Inácio Lula da Silva, who thought that some of Brazil’s oil riches should be plowed into creating Brazilian jobs, including shipyard jobs. The rest is shipbuilding history. Brazilians may be “paying too much for their ships,” but Brazil finished up last year with 28 ships on its orderbooks totaling180,000 gt and accounting for 0.2% of world orders. This is one of those cases where what’s counted in the statistics doesn’t quite convey what’s happening on the ground and, after some notable growing pains, we find that Brazil’s major shipyards such as Estaleiros Atlantic Sul (EAS), Keppel Fels Brasil, Jurong, EEP and ERG have orderbooks filled by large offshore units (drillships, FPSOs), t he me d iu m si z e d sh ipy a rd s (M au a , Eisa) are concentrating on Transpetro’s oil tanker program and the small yards (Promar,Oceana, Alianca, Detroit, Navship) are all busy with OSV work.

WHAT’S AHEAD? If you want to believe that the current recovery in shipbuilding demand is sustainable you can certainly see indicators to support that view. Even outside of the state of the Chinese economy, there are things going on in the world that tend to make work for shipyards — not the least of these being that offshore development is going into ever deeper and more difficult places, including the Arctic. That aside, though, we seem to find ourselves in a classic situation where orders are being generated not so much by calculations of the tonnage that will be needed to carry world trade but by shorter term considerations of when to hop into the market. Though the following recent comment from Poten & Partners is about the tanker market in particular, it probably sums up what is happening overall: “The availabilit y of new and public money serves to compound the mounting orderbook. With asset prices near the bottom of the 10-year average, it becomes easier to make the case that prices will rise over time. It is important to remember that the marginal order and resultant incremental supply will chip away at the earning potential of the f leet at large. Today, the oversupply threat is exacerbated by the broad feeling that the market is at an inflection point. With limited availability in the secondhand market, owners will continue to look to knock on the shipyard’s gates, even if it could be to the long-term detriment of the tanker market at large.” ■

KVICHAK

REPEAT CUSTOMERS SAY IT ALL JOHN FLECK PHOTOGRAPHY

www.kvichak.com June 2014 MARINE LOG 27

Steering Toward the Future Nov 11-13, 2014 Delray Beach, FL

{

}

EARLY BIRD REGISTRATION

SAVE $100 until August 1

www.marinelog.com/ferries

SPONSORSHIPS & EXHIBITS: 212-620-7208 • conferences@sbpub.com

ENVIRONMENT

With no uniform system in place, Europe’s introduction, operation and policing of the ECA could be a nightmare for some operators

CHAOS REIGNS as Europe’s new ECA-based fuel regime approaches By Paul Bartlett, Contributing Editor

emperatures are rising among ship owners and operators in northern Europe. In a matter of months, the next round of swingeing cuts in the sulfur content of ships’ fuel will come into force in large areas on either side of the North Atlantic and North America’s Pacific coast. But there is a huge divergence between what is likely to be a highly effective Emissions Control Area (ECA) regime in the U.S., enforced by the U.S. Coast Guard, and a half-hearted patchwork of poorly implemented and inadequately policed regulations in Europe’s ECA. Already, there are claims that shipping companies abiding with the spirit of the IMO’s MARPOL Annex VI are putting themselves at a competitive disadvantage with others who have adopted a wait-and-see strategy. There is even talk that countries have no intention of enforcing the new regulations from January, giving more time to those who plan to fit scrubbers rather than burn marine diesel oil (MDO). The situation is now so grave, according to Jan Fritz Hansen of the Danish Shipowners’ Association (DSA), that some short-sea and ferry routes could close or even go out of business next year. This would undermine both European Union moves to get more cargo shipped by sea, as well as the IMO’s fundamental objective of cutting carbon emissions from shipping, says the DSA’s Deputy Director General. It would inevitably force cargo back to road and rail, both of which have higher carbon footprints.

From January, the sulfur content of bunkers burnt in ECAs will be slashed by 90% to a maximum of just 0.1%. Options available for ship operators trading in ECA waters will be to burn MDO or another qualifying fuel alternative other than heavy fuel oil. Alternatively, they can choose to install an emissions treatment technology – exhaust gas scrubbers, for example—in order to meet equivalent emission reductions. This ultra-low sulfur fuel to be used in ECAs from next January compares with all other regions of the world’s seas where heavy fuel oil with a sulfur content of 3.5% can be used until the beginning of 2020 when the sulfur cap will be cut to 0.5%. However, if sufficient supplies of low-sulfur fuel are not available in 2020, then the date could be pushed out to 2025. However, so far as the imminent new ECA regulations are concerned, there are marked contrasts between the US and Europe in their introduction, operation and likely policing. The MARPOL Convention, originally drafted to tackle pollution from ships and dating back to the 1970s, has been modified over time with a series of annexes. Annex VI tackles sources of air pollution including exhaust emissions, ozone depleting substances and volatile organic compounds. Whereas North America’s ECA encompasses most of the US and Canada’s coastal waters on both east and west coasts out to some 200 nautical miles, the north European ECA covers an area which June 2014 MARINE LOG 29

ENVIRONMENT effectively means that some countries are “ECA-blocked” while other countries in Europe’s north, south and west have coastlines both in and outside the ECA. A number of countries in southern Europe remain completely outside the ECA. ECA-blocked countries—those whose waters lie exclusively within the ECA including the Baltic states, Germany, Belgium and the Netherlands, among others—are at a distinct disadvantage, therefore. Coastal and short-sea shipping, and in some cases, deepsea imports and exports will become significantly more expensive in ECA-blocked states, sources predict. DSA has become increasingly concerned about the lack of fair competition between European shipping companies. In contrast, according to the DSA’s Hansen, there is no possibility of any distortion of competition in the U.S. on environmental grounds. “There,” he says, “it’s a fair situation because it’s the same cost put on all ship owners operating in the area.” In Europe, there is no uniform system for implementing the new regulations; for gauging compliance, or for policing. So, in a bid to try and establish a uniform inspection regime in Europe’s ECA, the DSA approached Port State Control (PSC) officials in Paris and asked whether a concentrated inspection campaign could be established to enforce compliance. The DSA was told that such a campaign was not really necessary or possible at the present time. On the other side of the water, however, things are very different. European industry representatives point out that no-one messes with the U.S. Coast Guard for fear of having their vessel detained. Various new technologies could be deployed in Europe to enforce the new fuel regulations, says Hansen, including drones. But he comes back to the fundamental point that the system has to be policed and seen to be fair to everyone. ■

NEW ECA RULES CAUSE DISMAY AT DFDS COPENHAGEN-BASED FERRY AND LOGISTICS FIRM DFDS has spent €80 million ($110 million) on scrubbers for 10 ferries in its fleet in order to comply with Europe’s new ECA regulations next January 1st. Another eight or nine ships will have scrubbers fitted over the next two years but will burn marine diesel oil from the beginning of 2015. However, some of the company’s older vessels could not be fitted with scrubbers, either on financial or technical grounds, or lack of space, according to President and CEO Niels Smedegaard. Without scrubber installations, he says the company’s annual bunker bill would have soared from €250 million ($342 million) to €360 million ($493 million). IMO’s regulations have fundamentally transformed the operating economics of the company, Smedegaard declares. Many of its long-established routes lie in ECA waters and companies like DFDS with complex networks in northern Europe, he says, are being unfairly penalized. The huge investment DFDS has made in scrubber technology simply cannot be passed on to customers who have other options on many routes including road and rail. And Smedegaard simply can’t understand why repeated attempts to raise financial support from the Danish Government and/or the European Commission have fallen on deaf ears. Their lack of support, he suggests, will have quite the opposite effect of that which the IMO intended. Shippers will choose the cheapest transport option and on some routes, that may well be road or rail. Inevitably ship operators will close down some services, forcing even more cargo back to landbased transport modes.

W&O INTRODUCES by GF Piping Systems YOUR SOURCE FOR THE ONLY USCG APPROVED MARINE THERMOPLASTIC PIPING SYSTEM W&O is the proud North American distributor for the groundbreaking SeaCor™ piping systems from Georg Fischer – the first and only commercially available United States Coast Guard-Approved (USCG) marine thermoplastic piping system in the world. SeaCor is also the only thermoplastic piping system that meets the requirements of Transport of Canada. Light in weight and long-lasting, the corrosion-resistant SeaCor piping system is a unique, cost-saving solution to optimize vessel performance.

800.962.9696 • wosupply.com No. 164.141/36/0

Pipe

30 MARINE LOG June 2014

Valves

Fittings

Actuation

Engineered Solutions

LNG

EMBRACING LNG AS A MARINE FUEL Under the Obama Administration, MARAD sponsored programs increase use of alternatives fuels and technology Hon. William P. Doyle, Commissioner, Federal Maritime Commission

he Obama Administration strongly supports LNG as a marine fuel and is investing in the utilization of the fuel on oceangoing ships. The Administration is also embracing LNG’s potential on vessels operating on the inland waterways. Natural gas has positive benefits both in terms of the environment and economics—since its a more cost effective fuel source than marine residual and distillate fuels; and there is an abundant supply of it in America.

U.S. SUPPORTING LNG AS A MARINE FUEL Totem Ocean Trailer Express (TOTE) President & CEO Anthony Chiarello was recently honored at the White House as a 2014 transportation industry “Champion of Change.” He was chosen for his role in leading the U.S. maritime industry toward natural gas as fuel. Under the Obama Administration, the United States Department of Transportation’s Maritime Administration is sponsoring a $1.4 million program for two projects supporting the increased use of alternative fuels and technology in the maritime industry. The first project is a public-private partnership between the Maritime Administration and U.S.-flag carrier Horizon Lines for the conversion and monitoring of one of its vessels to operate on LNG fuel. The second project includes a study being conducted by the U.S. subsidiary of DNV GL to analyze the issues and challenges associated with bunkering of LNG-powered vessels. With respect to the inland waterways, there is an ongoing Pittsburgh Marine Corridor Natural Gas Feasibility Assessment that is examining whether realistic opportunities exist for converting inland waterways vessels from diesel to natural gas propulsion. This assessment is being conducted through collaboration between

Life Cycle Engineering, 3 Rivers Clean Energy, Marshall University Rahall Transportation Institute, and the Shearer Group, LLC. Next, the Port of Pittsburgh is funding the assessment and requirements of potential fueling sites as well as a cost benefit analysis for the conversion of vessels to LNG. According to the U.S. Army Corps of Engineers, Pittsburgh is the third busiest inland port in the U.S. About 34 million tons of cargo move through the Port of Pittsburgh each year. Approximately 45,000 jobs are dependent upon this inland waterway transportation system. The U.S. Department of Energy and the U.S. Maritime Administration are involved in these projects along with the Pittsburgh Region Clean Cities non-profit organization, the Richard King Mellon Foundation, the Benedum Foundation, and other industry companies. The Pittsburgh Region Clean Cities is the designated regional organization for all U.S. Department of Energy Clean Cities initiatives. Clean Fuels/Clean Rivers is an initiative to build a natural gas marine corridor that includes the Pittsburgh river systems. Importantly, the private sector has expressed strong interest and there are ongoing discussions regarding a demonstration project to convert an existing towboat to LNG power.

ENVIRONMENTAL BENEFITS OF NATURAL GAS The use of LNG reduces sulfur oxide (SOx) emissions by between 90% and 99%. SOx is the major contributor to acid deposition otherwise known as acid rain. This reduction in emissions brings SOx emissions within limits mandated by the Emission Control Areas designated by the IMO. Using LNG reduces nitrous oxide (NOx) emissions by approximately 90%. NOx is a major contributor to June 2014 MARINE LOG 31

LNG smog. Finally, LNG has a lower carbon content than traditional bunker fuels, giving off up to 25% less CO2 emissions. Under MARPOL’s Annex VI, progressively more limits for NOx and SOx emissions are being placed on the global shipping industry over the next decade. Within U.S. waters, these requirements are implemented through the Act to Prevent Pollution from Ships (APPS). NOx emission limits are being imposed in a tiered approach, based on engine speed, while SOx is being limited primarily by regulating sulfur content in fuel.

ECONOMIC BENEFITS OF LNG AS A MARINE FUEL Based on the current forecasts, natural gas delivered for production of LNG in the U.S. is now more than 50% less expensive on an energy equivalent basis than marine residual fuel and marine distillate fuel. It is projected that this relative price advantage will continue, and even increase, through 2035. This has opened up an opportunity for significant annual fuel cost savings when converting marine vessels that use petroleum fuel to natural gas operation. About 70% of domestic shipping relies on distillate fuel oil and the remaining 30% relies on residual fuel oil. By contrast, over 90% of international shipping is fueled by residual fuel oil. In comparison to distillate fuel, residual fuel is cheaper, but much more viscous – and is essentially a solid at room temperature requiring the fuel to be heated to keep it in liquid form for transport and storage as a marine fuel. Residual fuel also has significantly higher sulfur content than distillate fuel.

LNG PROJECTS IN THE U.S. MOVING FORWARD In Februar y, Genera l Dy na mics NASSCO shipyard in Sa n Diego, CA, held a ceremony marking the first cut of steel for the

construction of TOTE’s new Marlin Class container ship—the first LNG-powered containership in the world. TOTE expects to build two of these LNG-powered vessels and homeport them in Jacksonville, FL, operating them from the U.S. mainland to Puerto Rico. The new Marlin Class vessels will create a reduction of SOx emissions by 98%, particulate matter (PM) by 99%, NOx and CO 2 by 71% over TOTE’s ships currently operating in Puerto Rico. TOTE intends to strategically locate LNG fueling stations that will be an integral part of its operations. To this end, in February, the company announced an agreement with Pivotal LNG and WesPac Midstream to provide LNG to the ships by developing a new LNG fueling facility in Jacksonville, FL. TOTE is also currently in the process of converting its two 839foot, MAN-powered Orca-class Ro/Ro vessels to mostly LNG operation. These vessels operate from Tacoma, Washington to Anchorage, Alaska. In 2012, the U.S. Coast Guard granted TOTE the waiver it needs to convert the vessels while they remain in service. TOTE said that its conversion program is the product of a public-private partnership among TOTE, the U.S. Environmental Protection Agency, and the U.S. Coast Guard. TOTE has selected Wärtsilä to supply the main engines, generators and integrated LNG storage and fuel gas handling systems for the conversion project. In November 2013, Crowley announced it had executed agreements with shipbuilder VT Halter Marine Inc., of Pascagoula, MS, to build two of the world’s first LNG-powered combination container – Roll-On/Roll-Off (ConRo) ships. The ships will operate in the United States mainland to Puerto Rico trade. The vessel design is the work product of Wärtsilä Ship Design in conjunction with Crowley subsidiary Jensen Maritime, a Seattle-based naval architecture and marine engineering firm.

Jotun Protects Property

A Global Provider of Coatings • 36 Production Facilities Globally • 71 companies represented in more than 90 countries • Uniform Standard of global service • Global Experience - Local Presence and technical support JOTUN Tel. (800) 229-3538 jotun.com

jotun.com

32 MARINE LOG June 2014

LNG Additionally, in September 2013, Aker Philadelphia Shipyard and Crowley announced a partnership to build up to eight tankers. Citing the monumental shale related activity in the United States, the parties are securing their respective positions due to the increased demand for U.S.-built tankers. These tankers are designed to allow the ships to convert to LNG power. In November 2013, Aker Philadelphia Shipyard announced it had been selected by Matson Navigation Company to construct two 3,600 TEU containerships. The containerships will be utilized in Matson’s service from the U.S. West Coast to Hawaii. The vessels will be built with dual fuel engines and will be ready for conversion to LNG propulsion. General Dynamics NASSCO shipyard currently has contracts and options to construct seven LNG conversion ready U.S.-Flag tankers. NASSCO has agreements with Seabulk Tankers and American Petroleum Tankers (now Kinder Morgan Tankers). At the beginning of 2014, Zeus Development Corporation identified approximately 42 vessels in North America that are under development or evaluation for conversion to LNG fuel.

LNG BUNKERING IN NORTH AMERICA LNG-powered ships will need to refuel. In February, the U.S. Coast Guard issued a notice seeking public comment on two draft policy letters regarding safety measures for LNG as a marine fuel. The first draft policy letter provides voluntary guidance for LNG fuel transfer operations on vessels using natural gas as a fuel and for the training of personnel. The second draft policy letter discusses voluntary guidance and existing regulations applicable to vessels and land based facilities conducting LNG marine fuel bunkering operations, and provides

voluntary guidance on safety, security, and risk assessment measures for these operations. In March, the ABS released a report entitled “Bunkering of Liquefied Natural Gas-Fueled Marine Vessels in North America.” The report provides guidance to potential owners and operators of gasfueled vessels, as well as LNG bunkering vessels and facilities, to help them obtain regulatory approval for projects. Last month, the West Coast Marine LNG Joint Industry Project Steering Committee in Canada issued a report stating that Vancouver is positioned to be North America’s preferred LNG bunkering destination. In February, Harvey Gulf International Marine broke ground for its $25 million LNG fueling facility at Port Fourchon, LA. Gulf Coast Shipyard Group (GCSG) launched the first of six Harvey Gulf International Marine Dual Fuel (LNG) Offshore Supply Vessels back in January. Last year, Texas-based Waller Marine announced it would build a small-scale LNG facility at the Port of Greater Baton Rouge, LA, to fuel vessels. This sector is new but growing—and there appears to be many opportunities available for those looking to operate LNG fueled vessels and/or enter into the LNG bunkering and fueling sectors. ■

Commissioner Doyle served over a decade as an officer in the U.S. Merchant Marine, serving aboard numerous classes of vessels. Combined, Commissioner Doyle has over 20 years of experience in the transportation industry, including both the maritime and energy sectors.This article is based on the Commissioner’s prepared remarks at the recent LNG Export & Infrastructure Conference

June 2014 MARINE LOG 33

Marine news on the go?

There’s an app for that. Introducing the new Marine Log app Marine Log App

https://itunes.apple.com/us/app/marine-log/id75...

• Up-to-the-minute daily marine news • Full access to all previous/archived editions of monthly magazine • Automatically receive new issues on IOS5 or higher • Download and save individual pages to enjoy offline or on the go

http://kaywa.me/5fVCt

• Social media integration to easily share news

Sponsored by

Download the Kaywa QR Code Reader (App Store &Android Market) and scan your code!

ENGINEERING

CRUISE SHIPPING

Royal Caribbean’s Oasis of the Seas and Allure of the Seas, the world’s largest cruise ships

THE ALLURE OF CHINA Growing Chinese tourism spells good news for cruise lines

hina’s emerging middle class—with its appetite for consumer goods and tourism—will figure prominently in the growth and globalization of the cruise industry in the years ahead. By 2017, China is expected to emerge as the second largest cruise market in the world. According to Richard Li, the Head of Retail Banking and Wealth Management at HSBC Bank in China, China has the world’s largest number of overseas tourists and the largest proportion of tourist spending. Chinese tourists made an estimated 98 million trips abroad in 2013, spending more than $120 billion on travel. Domestic tourism was also strong, with 3.3 billion domestic tourists spending 2.6 trillion yuan in 2013. Li expects outbound travel from China to reach 130 million this year, and exceed 200 million by 2020—three times the current number of departures from the U.S. All this is good news to cruise lines, since China wasn’t even in the Top Ten global cruise markets, according to the Cruise Lines International Association (CLIA), whose 63 members represent about 95% of the global cruise ship capacity. Just last month, Miami-based Carnival Corporation & plc—the world’s largest cruise company with more than 100 ships and 10 brands—announced it would be expanding its fleet based in China to four ships by 2015. Carnival’s plans call for the Costa Serena to join the Costa Victoria and Costa Atlantica in its Costa Cruises fleet in

Compiled by Marine Log Staff

Shanghai in April 2015. Additionally, P&O Cruises—another Carnival brand—has begun sailing the Sapphire Princess out of Shanghai. The Chinese cruise market is “growing by leaps and bounds,” Carnival COO Alan Buckalew recently told Bloomberg Businessweek. “It’s a market that can support that kind of growth.” The Asian Cruise Association estimates that annual cruise passengers from Asia will reach about 3.8 million in 2020, about 1.6 million from China. How important is the Chinese market to Royal Caribbean? Earlier this year, Royal Caribbean International said it would reposition its newest ship, the 4,180-passenger Quantum of the Seas, to Shanghai (Baoshan), China, in May 2015, pulling her out of the New York market. In China, Quantum of the Seas will join Mariner of the Seas and Voyager of the Seas in Asia, increasing the company’s capacity in the region by 66%. Royal Caribbean Cruises President & COO Adam Goldstein, says the move would “accelerate the growth of this vital market with a ship that will capture the imagination of travelers looking for a one-of-a-kind vacation experience.” Goldstein also notes that the move should please investors. “Every trend we are seeing in China tells us we can achieve real long-term competitive advantage and appealing returns on our investments in this fast-growing market by accelerating our presence there.” June 2014 MARINE LOG 35

CRUISE SHIPPING CRUISE SHIP ORDERBOOK THROUGH 2017 (As of January 1, 2014) Cruise Line/Vessel

Shipyard

Lower Berths

Est. Delvy

Est. Price* ($ Mil)

Mitsubishi H.I. Mitsubishi H.I.

125,000 125,000

3,250 3,250

Sep 2015 Mar 2016

$648 $648

Fincantieri

135,000

4,000

Apr 2016

$780

Fincantieri

11,000

260

May 2015

$150

Fincantieri

132,500

3,708

Oct 2014

$792

Fincantieri

99,000

2,660

Feb 2016

$520

STX France STX France Fincantieri Fincantieri

167,600 167,600 154,000 154,000

4,500 4,500 5,300 5,300

Jan 2017 Spr2019 Nov 2017 May 2018

$1,032 $1,400 $957 $957

Meyer Werft Meyer Werft

163,000 163,000

4,200 4,200

Oct 2015 Spr2017

$917 $917

Fincantieri

141,000

3,611

Mar 2015

$805

AIDA Cruises AIDAprima Unnamed

Carnival Cruise Lines Carnival Vista

Compagnie du Ponant Le Lyrial

Costa Cruises Costa Diedema

Holland America Line Unnamed

MSC Cruises Unnamed Unnamed Unnamed Unnamed

Norwegian Cruise Line Norwegian Escape Norwegian Bliss

P&O Cruises Britannia Source: Clarkson Research Services/Marine Log

SEA READY

•

SEA TOUGH

SEE SILVERSHIPS.COM

Providing the warfighters the platforms to fight, win and return! 251-973-0000 • silverships.com DESIGNERS AND BUILDERS OF ALUMINUM BOATS 36 MARINE LOG June 2014

CRUISE SHIPPING CRUISE SHIP ORDERBOOK THROUGH 2017 (As of January 1, 2014) cont. Cruise Line/Vessel

Shipyard

Lower Berths

Est. Delvy

Est. Price* ($ Mil)

210

Jun 2014

$90

54,000

738

Jun 2016

$450

Meyer Werft Meyer Werft Meyer Werft STX France STX France

167,800 167,800 167,800 227,000 227,000

4,100 4,100 4,100 5,400 5,400

Oct 2014 May 2015 May 2016 Jun 2016 Spr2018

$943 $943 $943 $1,350 $1,350

Fincantieri

40,350

604

Fall2016

$270

Meyer Werft Meyer Werft

150,000 150,000

3,364 3,364

Oct 2016 Oct 2017

$960 $960

STX Finland

99,300

2,500

Apr 2015

$607

Fincantieri Fincantieri Fincantieri Fincantieri

47,000 47,000 48,000 48,000

998 998 944 944

May 2015 Spr2016 Fall2016 2017

$365 $365 $365 $365

Pearl Seas Cruises Pearl Mist

Chesapeake Shipbuilding 8,700

Regent Seven Seas Cruises Seven Seas Explorer

Fincantieri

Royal Caribbean International Quantum of the Seas Anthem of the Seas Quantum Class 3 Oasis class 3 Oasis class 4

Seabourn Cruises Unnamed

Star Cruises (Genting Hong Kong) Unnamed Unnamed

TUI Cruises Mein Schiff 4

Viking Ocean Cruises Viking Star Viking Sea Viking Sky Unnamed

CUSTOM DECK MACHINERY FOR EVERY TYPE OF WORKING VESSEL

JOIN US FOR THE WORKBOAT SHOW DECEMBER 3 - 5, 2014 - BOOTH 1442

June 2014 MARINE LOG 37

CRUISE SHIPPING Following her debut in November 2014— sailing from Cape Liberty in Bayonne, NJ—the Quantum of the Seas will move to China in May 2015. Beginning late June 2015, the ship will begin sailing three- to eightnight itineraries year-round from Shanghai to Japan and Korea. To compensate for the loss of the Quantum’s capacity in New York, Royal Caribbean will add two new ships. The Freedom Class ship Liberty of the Seas will arrive to Cape

Liberty to sail to Bermuda, the Caribbean, and Canada and New England for the 2015 summer and autumn seasons. In addition, Quantum of the Seas’ sister ship, Anthem of the Seas, which launches in April 2015, will complete her inaugural European season from London (Southampton), U.K., before arriving to Cape Liberty in November 2015 to continue Quantum-class cruising to the Bahamas and Caribbean for the winter 2015-16 season.

Amping up the adventure onboard With its “extreme” adventure entertainment onboard, the Quantum of the Seas should do well serving the Chinese market, whose passenger demographics fall between 25- to 45-year-old cruisers with families. The Quantum-class ships will debut a new set of f irst-at-sea onboard experiences, such as the skydiving experience Ripcord by iFLY; the glass enclosed capsule North Star, which lifts guests more than 300 feet in the air for a spectacular view at sea; and the large indoor sports and entertainment complex SeaPlex, with bumper cars and roller skating.

Growing in Australia, too Meanwhile, Carnival is also picking up its game in Australia. It plans to add two more ships in November 2015 to grow its f leet to f ive under its P& O brand f leet in Australia. Over the last five years, the Australian cruise passenger has seen rapid growth, rising by 130 percent. In 2013, there were an estimated 800,000 cruise passengers. The number is expected to jump to 1 million by 2016. The t wo ships bei ng added to P& O Cruises are currently sailing as ms Ryndam and ms Statendam under Carnival’s Holland America Line brand. Once the ships are refurbished, they will join P&O Cruises’ Pacific Dawn, Pacific Jewel and Pacific Pearl already positioned in Australia. With five ships, P&O Cruises will have greater flexibility to offer short cruises. To replace the capacity of the repositioned ships, Holland America Line will add the new Pinnacle Class ship in February 2016. It will be HAL’s largest ship to date at 99,500 tons and carry 2,660 passengers. “By any measure, Australia is one of the top performing cruise markets in the world, with an eye-popping average annual passenger growth rate of 20% over the past decade,” says Carnival Corporation CEO Arnold Donald.

North America still tops While the rapid growth in Australasia is impressive, North America continues to account for the lion’s share of cruise passengers—more than 55% of the estimated 21.7 million cruise passengers this year, according to CLIA. The 21.7 million passengers ref lects a growth of 400,000 passengers over 2013. Europe has about a 30% share of the global cruise market.

Newbuildings At the keel laying ceremony for its third Oasis Class cruise ship, Royal Caribbean Cruises 38 MARINE LOG June 2014

CRUISE SHIPPING Ltd., Miami, FL, announced it had agreed to build a fourth 5,400-passenger vessel in the series at STX France in Saint Nazaire, France. The announcement was made jointly by Royal Caribbean Cruises Ltd.’s Chairman and CEO Richard D. Fain and President and COO Adam Goldstein, along with STX France CEO Laurent Castaing. The order for the fourth Oasis Class cruise ship—with a projected delivery in 2018— is subject to documentation and satisfaction of financing and other customary conditions. Projected capital expenditures for 2014, 2015, 2016, 2017 and 2018 are $1.4 billion, $1.4 billion, $2.2 billion, $0.3 billion and $1.5 billion, respectively, taking into account this order and existing ship orders. Besides the third and fourth Oasis Class ships, Royal Caribbean also has orders for three 167,800-gt, 4,100-passenger ships at Meyer Werft in Papenburg, Germany.

SACE, which is owned by CDP, the same Italian state enterprise that currently owns Fincantieri—although a Fincantieri IPO is in the works. With a length of 323 m, a width of 41 m and a height of 70 m, the 154,000 gt ships will each accommodate up to 5,300 passengers plus 1,413 crew members. They will have 2,070 guest cabins, 759 crew cabins, and will have 43,500 m2 of public areas available. “Today, MSC Cruises adds the last piece

to its new industrial plan that will allow us to double the capacity of our f leet by 2022. With the arrival of the new ships we will reach a capacity of about 80,000 passengers a day,” said Gianni Onorato, CEO of MSC Cruises. “As of today we have launched an investment pla n of over EU R 5 bi l l ion t hat includes newbuilds, ordered in Italy and France, and the conversion of four ships already in the fleet.” ■

Pushing the boundaries Focusing on continuing improvement, Royal Caribbean says the Oasis III will be 20 percent more energy efficient than the two previous vessels in the class— Oasis of the Seas and Allure of the Seas, which are among the most energy efficient cruise ships. During the keel laying ceremony for the still-to-be-named third ship, a 1,000-ton block measuring 32 ft by 154 ft (10 x 47 meters) was lifted by crane into the building dock. The Oasis Class ship will be delivered in the spring of 2016. At 225,282 gross tons, 16 decks and 2,700 staterooms, the Oasis Class ships are the largest cruise ships in the world. The ships also introduced extraordinary “firsts” at sea such as an 82 foot-long zip line, a handcrafted carousel, the Rising Tide elevating bar, the AquaTheater high-diving performance venue, and the Central Park with more than 12,000 live trees and plants. The Oasis Class also offers amenities that can only be found on Royal Caribbean, such as twin FlowRider surf simulators, cantilevered whirlpools, an ice-skating rink, the H2O Zone kids aquapark, and the Royal Promenade—an interior boulevard that stretches nearly the length of the ship.

MSC orders two MSC Cruises has signed a contract with Fincantieri for the construction of two 5,300-passenger cruise ships, w it h an option for a third. The ships carry a price tag of EUR 700 million each and will be the largest cruise ships ever built by the Italian shipbuilding giant. They are being funded with support from insurance and financing institution June 2014 MARINE LOG 39

FERRIES

CalMac’s Lochinvar is one of two hybrid ferries built by CMAL

SEARCH FOR GREEN OPERATIONS Batteries give new power to European ferry market

NG may be winning the attention of ferry operators here in North America but over in Europe another form of green energy is gaining attention: hybrid diesel electric propulsion systems. An integral aspect of the hybrid propulsion package is the use of lithium-ion batteries. With their small on-board footprint and powers of reduction on both the fuel consumption and emissions front; as well as their long-life, battery systems are a ideal alternative for ferry operators looking to save. One ferry operator taking on the hybridization of its fleet is Scandlines. By the end of this year, the operator, which provides ferry service between Sweden, Denmark, and Germany, will have the largest hybrid ferry fleet in operation. That’s because Scandlines is the first to use an on-board hybrid propulsion system on a large scale—equipping four of its ferries with the system. The hybridization of its fleet is just one part of the company’s environmental initiative program. Back in 2013, Scandlines announced that over the course of two years—concluding in 2015—it would invest more that EURO 40 million in sustainable technologies on its Puttgarden–Rødby and Rostock-Gedser routes. The first phase of its environmental investment program includes the use of EURO 14 million to refit four of its ferries with a hybrid propulsion system. “The hybrid propulsion system,” says Scandlines CEO, Søren Poulsgaard Jensen, “is a key element of our strategy for more sustainable ferry traffic.”

40 MARINE LOG June 2014

By Shirley Del Valle, Associate Editor

The EU via the TEN-T Program is providing financial aid to Scandlines’ environmental program. The hybrid system incorporates the world’s largest hybrid propulsion marine battery pack—the result of a collaboration between Canada-based Corvus Energy and Siemens. According to Corvus, each of the four Scandlines ferries will be equipped with a 2.7 Mwh Energy Storage System (ESS). The ESS is comprised of Corvus Energy AT6500 advanced lithium polymer batteries integrated with Siemens’ drive systems. “The 2.7 Mwh of modules are the most reliable and safe battery in the world, designed to operate both house and driveline systems,” says Brent Perry, CEO of Corvus Energy. “Scandlines is making a significant investment in new green technology that will benefit the people in the areas adjacent to the harbor and beyond in terms of reduced pollution,” says Fini Hansen, Technical Superintendent, Fleet Management, Scandlines. The first ferry to be fitted with the system was the 142 m RoPax MF Prinsesse Benedikte. The hybrid system helps reduce the 1,140-passenger ferry’s CO2 emissions by up to 15%. Optimizing the ship’s engine output, the system allows the ferry to operate on one diesel generator on each crossing, slashing energy usage and operating costs. Specifically, the batteries are used for two reasons: 1. Spinning reserve—Here the batteries provide immediate emergency power for steering and propulsion should the main engines fail;

FERRIES 2. Load leveling—The batteries essentially fill in the gap, as they’re used to provide transition power between generators to help meet the higher demand load. The use of the battery in load leveling also reduces emissions significantly, since diesel generators running at low load produce more NOx, SOx and particulate matter emissions when compared to one running at optimal load. As a whole, according to Corvus, the ESS will have a lifespan of more than 10 years. Corvus says the ESS also allows for flexibility, since it gives system integrators and designers “an alternative source of high energy that creates the opportunity to redesign systems to reduce system complexity and costs throughout the vessel.” Beyond the hybrid propulsion system, each ferry will also be fitted with a scrubber system that will rid the engine exhaust of SOx, NOx and particulate matter, helping reduce emissions by at least 90 percent. The scrubber will be installed on just one of the engines. This will allow the remaining three engines to run on gas oil. The gas oil contains only 0.1 percent sulfur. The refit of all ferries will be completed by the end of the year.

Scottish ferry operator goes hybrid Up in Scotland the world’s first pair of seagoing passenger hybrid ferries, the MV Hallaig and MV Lochinvar are operating on innovative green propulsion. Glasgow-based Caledonian Maritime Assets Ltd (CMAL) delivered the second ferry, the 142 ft MV Lochinvar, to CalMac Ferries Ltd this spring. Both ferries were fitted with a hybrid system provided by Imtech Marine. Imtech supplied each vessel with the propulsion motors, convertors and batteries. Made up of 375 kW variable speed drives, two 375 kW permanent magnet motors, and two 350 kWh lithium-ion battery banks, the Imtech system will use the convertors to transform direct current (DC) to alternating current (AC). Volvo Penta provided three 330 kW diesel generator sets and Voith Schneider equipped each ferry with two 375 kW propellers. The small diesel generator sets provide power to a 400 volt switchboard, which then supplies power to electric propulsion motors that turn the propellers. Using the system, the ferries are expected to achieve fuel savings and reduce CO2 emissions by more than 20%.

And, if need-be, the batteries can be use to operate the vessel on its own, without using fuel. Recently, Imtech Marine announced that following extensive trials on the Hallaig, actual savings were up to 38%. Beyond fuel savings and emission reductions, the system also reduces vessel noise and lowers maintenance requirements. The Hybrid Ferry Project was made possible after a £20 million investment from the Scottish Government. The Lochinvar can carry 150 passengers and 23 cars along the Tarbert to Portavadie route at a service speed of nine knots.

Electric Car ferry marks six-month milestone Scandinavia’s KF Hisarøy, an electric cable ferry owned by Wergeland AS and operated by Gulen Skyssbåtservice, marked a milestone this past April when it completed six months of “flawless” winter operations on Norway’s Fjords using its new propulsion system comprised of a rechargeable lithium-ion battery system. Ontario-based Electrovaya fitted the 49-passenger ferry with a 100 kWh prototype battery system based on its new SuperPolymer 2.0 system. The technology allows the vessel to save up to 180,750 liters in fuel consumption over the ferry’s lifetime. Additionally, Electrovaya says the battery system can potentially save about 500 tonnes on emissions, including 480 tonnes of CO2. The ferry’s success could potentially lead to the battery electrification of ferries in Norway. According to a study titled “Mapping of the potential for battery operation of ferries in Norway,” 47 out of 125 ferry connections are relevant for battery operation now, with an additional 34 relevant for battery operation in the future.

TESO orders hybrid ferry from Spain As we were going to press, Spain’s LaNaval Shipyard (Construcciones Navales del Norte, S.L.) announced that it signed a EURO 55.8 million contract to design and build a new 1,750 passenger, 350 vehicle ferry for the Royal N.V. Texels Eigen Stoomboot Onderneming (TESO), the Netherlands. To be named Texelstroom, the 135m vessel will be a dual fuel (diesel/CNG) hybrid vessel, with the batteries being supplemented by solar panels.

NTSB DETERMINES HUMAN ERROR CAUSE SEASTREAK ACCIDENT THE NATIONAL TRANSPORTATION SAFETY BOARD (NTSB) has released its findings on the SeaStreak Wall Street’s allision with Pier 11 in lower Manhattan, New York City. The accident—which occurred on January 9, 2013 seriously injuring four passengers and causing minor injuries among 75 passengers and one deckhand—was the result of human error according to the report. At the time of the accident 331 persons were on board. The NTSB determined the Captain lost control of the vessel while trying to dock. The loss of control was due to his being unaware that the propulsion system was in backup mode. Additionally, the procedure used by the captain to reduce speed and transfer control from one bridge station to another while approaching the pier did not allow enough time to adequately respond to the loss of propulsion control. The report states that earlier in the trip, the captain had taken the vessel from the normal Combinator mode to the seldom-used Backup mode; as he approached the dock, he was not aware he had not transferred the propulsion system back to Combinator mode. In Backup Mode, the propellers remained in the forward pitch position, causing the vessel to increase forward speed rather than slow down. Contributing to the severity of injuries was the lack of procedures to limit passenger access to stairwells on the ferry during potentially

high-risk situations such as docking and undocking. Immediately prior to the accident, no audible alarm was sounded nor did the captain make an announcement to inform passengers of the emergency. “Seastreak LLC had no safety management system (SMS) in place to identify risks and take corrective actions. Although the NTSB recommended that SMS be required in 2005 and the Coast Guard was provided the authority to require them by Congress in 2010, SMSs are still not required for domestic passenger vessels. It is time to require that every passenger vessel implement an SMS,” said NTSB Chairman Deborah A.P. Hersman. An SMS would have required the company to maintain current documents, to train employees to integrate safe practices into both routine operations and emergency preparations and to clearly define the roles of the crew members, ensuring the captain had assistance during the emergency. Among the NTSB’s recommendations to the U.S. Coast Guard is the carriage of marine voyage data recorders; the improvement of specific control system displays and alerts, complete development and implementation of a SMS; a revision of vessel operations and training manuals; and the manufacturer of the Seastreak Wall Street propulsion control system to improve its design and alert its customers to the changes.

June 2014 MARINE LOG 41

TUGS & BARGES

The Patriot is the newest harbor tug to join Marine Towing’s fleet in the Port of Tampa

CRUDE OIL REENERGIZES DEMAND FOR TANK BARGES By John R. Snyder, Publisher & Editor-in-Chief

otal crude oil production in the U.S. averaged more than 8.3 million barrels per day in April—the highest monthly average in 26 years. The U.S. Energy Information Agency, which keeps close tabs on the energy picture, says crude oil production will continue to grow this year—to 8.5 million bbl/day and next year to 9.2 million bbl/ day. That’s a level of production that hasn’t occurred in the U.S. since 1972—when Nixon was in the White House, bell-bottoms were all the rage, and the ground had just been broken for Hyundai Heavy Industries’ shipyard in Ulsan, Korea. This sharp increase in crude oil production has sketched a much different U.S. energy picture than back in 2011, when U.S. crude oil production averaged 5.7 million bbl/day, according to the EIA. The prospects of building any additional Jones Act product tankers or Articulated Tug Barge (ATB) units seemed like a pipe dream. But the recent rise in crude oil production has done just that— creating a strong demand for new product and crude oil carriers and tank barges for the coastal and inland markets. Back in March, shipbroker Marcon International, Inc., Coupeville, WA, called the market for double-hull tank barges “red hot.” Marcon pointed out that owners and operators were “realizing their highest utilization rates, and are earning levels not seen in anyone’s memory. Newbuilding continues for inland, coastal and ocean D/H tonnage to meet this continuing, and growing demand, which is a direct result of the incredible boost in the production of oil from tight resources in the U.S. shale plays which have become extremely active in their production levels over the past five years.” This has led to recent orders for new ATB units from Harley Marine Services, Seabulk Tankers, Kirby Offshore and Moran Towing. Harley Marine Services, Seattle, WA, is building two 83,000 coastal

42 MARINE LOG June 2014

tank barges, while Moran has opted for two 150,000 bbl tank barges, one 115,000 bbl tank barge, one 6,000 hp tug and a second 5,300 hp tug—all from Fincantieri’s Bay Shipbuilding facility in Sturgeon Bay, WI. Back in February, Seabulk Tankers signed a contract with Donjon Shipbuilding & Repair, Erie, PA, to build an 185,000 bbl coastal petroleum and chemical tank barge. The barge will become the barge component of an ATB Unit. Donjon expects to deliver the barge in the first half of 2016. The order for Donjon follows the delivery of a 225 ft x 42 ft hopper barge to Sterling Equipment, Quincy, MA, last September. Kirby, meanwhile, has committed to building two ATBs. The 185,000 bbl tank barges are being constructed in Portland, OR, by Gunderson Marine. One of the 10,000 hp tugs has been contracted to be built by Nichols Brothers Boat Builders in Whidbey Island, WA. A contract for the second tug is said to be close to signing. Back in late April, recently elected Kirby President and CEO David Grzebinski said, “consistently strong coastal tank barge demand, utilization and increasing pricing” led to the company exercising its option for the construction of a second 185,000 barrel ATB unit at $75 million, with expected delivery in the first half of 2016. And Kirby is not done. The company’s board of directors approved the construction of two more ATBs, bringing the total to four. Market fundamentals both in the inland and coastal tank market, say investment bankers Cowen & Company, make shares of publicly traded Kirby Inc. a good buy. Cowen & Company notes in its latest analysis of Kirby that “high single digit price increases for contract renewals in the coastal fleet, and spot prices higher than one year rates. Contract renewals for the inland fleet are increasing by low to mid single digits.”

TUGS & BARGES

Coastal tugs & barges on order at U.S. shipyards SHIPYARD/LOCATION

VESSEL TYPE

BAE Systems, Jacksonville, FL Bay Shipbuilding, Sturgeon Bay, WI Bay Shipbuilding, Sturgeon Bay, WI Bay Shipbuilding, Sturgeon Bay, WI Bay Shipbuilding, Sturgeon Bay, WI Bay Shipbuilding, Sturgeon Bay, WI Eastern Shipbuilding, Panama City, FL Foss Shipyard, Rainier, OR Gunderson Marine, Portland, OR Gunderson Marine, Portland, OR Main Iron Works, Houma, LA Moran Iron Works Nichols Bros. , Whidbey Isl., WA Nichols Bros., Whidbey Isl., WA Rodriquez Boatbuilders, Bayou LaBatre, AL SENESCO Marine, N. Kingston, RI SENESCO Marine, N.Kingston, RI Signet Shipbuilding, Pascagoula, MS Vigor Fab, Portland, OR VT Halter Marine, Pascagoula, MS VT Halter Marine, Pascagoula, MS VT Halter Marine, Pascagoula, MS VT Halter Marine, Pascagoula, MS VT Halter Marine, Pascagoula, MS Washburn & Doughty, E. Boothbay, ME Washburn & Doughty, E. Boothbay, ME Washburn & Doughty, E. Boothbay, ME Washburn & Doughty, E. Boothbay, ME

ATB tug Tank barge Tank barge Tank barge ATB tug ATB tug ATB tug Tug Tank barge Deck barge Harbor tug Onaway, MI ATB tug Tractor tug Tug ATB tug Container barge ASD tug Tank barge ATB tug Tank barge ATB tug Tank barge ATB tug Z-drive tug Z-drive tug Z-drive tug Z-drive tug

QTY

PARTICULARS

OWNER

EST. DEL.

1 1 1 1 1 1 1 3 2 1 1 2 1 1 1 3 6 1 2 1 1 1 1 1 1 1 2 1

12,000 hp 150,000 bbls 150,000 bbls 115,000 bbls 6,000 hp 5,300 hp 15,600 hp 132 ft 185,000 bbl 360 ft x 120 ft 4,480 hp 180 ft x 54 ft 10,000 hp 6,800 hp 2,000 hp

Seabulk Moran Towing Moran Towing Moran Towing Moran Towing Moran Towing Great Lakes Dredge Foss Maritime Kirby Offshore Foss Maritime Bisso Towboat Durocher Marine Kirby Offshore Baydelta Maritime Garber Bros. Reinauer Transportation Covanta Energy Signet Maritime Harley Marine Services Bouchard Transportation Bouchard Transportation Bouchard Transportation Bouchard Transportation Bouchard Transportation Moran Towing Moran Towing Moran Towing Marine Towing

1stH16 2016 2016 2016 2016 2016 2016 2014-16 2015-16 2014 1Q2015 OCT14 2ndH15 2014 2014

150 ft 2,400 hp 83,000 bbl 4,000 hp 250,000 bbl 10,000 hp 250,000 bbl 10,000 hp 93 ft x 38 ft 93 ft x 38 ft 93 ft x 38 ft 93 ft x 38 ft

2014 JUL14 2015 MAY14 2Q2014 2Q2015 4Q2015 4Q2015 2014 2014 2014 MAY14

Source: Colton Company/Marine Log

When it’s grim, you need Great

At Great American, we can make grim like it never happened. Contact us for hull coverage and a complete line of insurance products for the marine industry. Cap’t Ed Wimot / ewilmot@gaic.com Ocean Marine Division I GreatAmericanOcean.com ©2014 Great American Insurance Company, an authorized insurer in all 50 states and D.C Great American Insurance Group Tower I 301 E Fourth Street I Cincinnati, OH 45202

June 2014 MARINE LOG 43

TUGS & BARGES Cowen says, “With fundamentals continuing to point in the right direction, we are increasing our price target to $130, based on 10x 2015 EV/EBITDA.” As of press time, Kirby’s stock, trading under the symbol KEX was trading at $111.93 per share. Kirby has two 185,000 bbl ATBs valued at $75 million apiece on order and another 66 inland tanker barges on order, putting 2014 CAPEX in the $330 million range. Speaking at the Marine Log Tugs & Barges

2014 Conference & Expo last month, Charlie Papavizas, Esq., Chair of the Maritime Practice Group at Winston Strawn LLP, pointed out that freight rates for U.S. product tankers are at an all-time high—$100,000 to $110,000 per day. The strength of the Jones Act market has attracted the attention of private equity. Papavizas cited the recent investment by private equity firm Avista Capital Partners in a newly formed joint venture with

N R DE TIO UN RUC T NS

NEW TUGS ENTER FLEET

TIDEWATER BARGE LINES

THREE TUGS

WE’RE BUILDING

QUALITY VESSELS LY NT D CE ERE E R LIV DE

136’ FACTORY LONGLINER 1.855.VIGOR99 VIGORINDUSTRIAL.COM SALES@VIGORINDUSTRIAL.COM

SEVEN EXTENSIVE FACILITIES OREGON

•

SEACOR Tankers Inc., a subsidiary of SEACOR Holdings Inc. Under the terms of the joint venture, ACP III Tankers LLC, a wholly owned entity of Avista, will fund a portion of the equity for the design and construction of three 50,000 dwt product carriers, each with 330,000 barrel cargo capacity, which SEACOR has contracted to build at General Dynamic’s NASSCO, San Diego, CA, for dleivery in mid 2016, late 2016 and early 2017. The glut of oil in the U.S., also has some thinking about the possibility of exporting crude oil—something that would need action by Congress, since it is currently prohibited, with the exception of Alaska.

WASHINGTON

44 MARINE LOG June 2014

•

ALASKA

ALASKA LONGLINE CO.

Last month, Bouchard Transportation Co., Inc., NY, took delivery of the ATB tug Denise A. Bouchard from VT Halter Marine. The 112 ft x 35 ft, 4,000 hp tug is classed by ABS as +A1 Towing Vessel, Dual Mode, and is equipped with an Intercon Coupler System. It was built at VT Halter Marine’s Moss Point Marine shipyard in Escatawpa, MS. The Denise A. Bouchard is the sister vessel to the Evening Star which was delivered in October 2012, and is part of a major Bouchard fleet expansion currently underway at VT Halter Marine. The ATB tug will be paired with an existing Bouchard ATB 80,000 bbl barge and enter into Bouchard’s fleet service. Operators are also selectively adding harbor tugs to Marine Towing of Tampa, LLC Tampa, FL, recently took delivery of the 60-ton bollard pull ASD harbor tug Patriot. Built by Washburn & Doughty in East Boothbay, ME, the 93 ft long, 5,000 horsepower tugboat is equipped with two EPA Tier 3-compliant 16-cylinder Caterpillar 3516B HD engines that drive two Rolls-Royce 205 Aquamaster Z-drives. With the ability to spray nearly 12,000 gallons of water per minute at a distance of 400 feet, the Patriot will provide additional firefighting capabilities in the port and on open water. “We are thrilled to debut the first new tug to the Marine Towing fleet in over six years,” says Stephen Swindal, partner in Marine Towing of Tampa, “The Patriot, and all of its state-of-the-art capabilities will help Marine Towing of Tampa better serve Port Tampa Bay, Port Manatee and all of Tampa Bay.” You might remember Swindal as onetime heir apparent to the late George Steinbrenner to take over the reins of the New York Yankees. Swindal is now majority shareholder in Marine Towing, and the Chairman of the Tampa Port Authority Board of Commissioners. ■

OFFSHORE

There are some 52 Platform Supply Vessel on order or under construction at U.S. shipyards

ENERGIZED

Global offshore activity to continue to drive demand for new equipment

By John R. Snyder, Publisher & Editor-in-Chief

ffshore oil and gas activity in shallow water and deepwater will continue to drive demand for Platform Supply Vessels this year and 2015, according to a report by leading shipbroker RS Platou. In its Platou Report 2014, RS Platou says the rig owners have made “significant investments” in Mobile Offshore Drilling Units (MODUs) based on the increasing number of global deepwater discoveries (those in excess of 3,000 feet of water) in regions such as the U.S. Gulf of Mexico, Brazil, Australia and Africa. And these rigs don’t come cheaply; the average newbuild prices for a semi-submersible is about $575 million, a drill ship, $555 million, and a jack-up, $210 million. According to the Platou report, over the last five years, 100 MODUs have been delivered and, based on the orderbooks at rig building yards in South Korea, China, and Singapore—with one semisubmersible on order at BRASFELS in Brazil—35 units will be delivered this year and another 27 in 2015. The influx of the 35 MODUs—29 new drill ships and six semisubmersible drill rigs—this year into the world fleet will make it one of the highest years in terms of new f loaters delivered to the offshore oil and gas market, according to a recent report by classification society DNV GL. While f loater rates have softened, Platou says a large contract backlog should keep utilization at high levels. “Despite softer markets, we have observed a relatively strong beginning of the year in terms of contracting for both MOU’s and OSV’s,” says DNV GL’s Trend Report for the first quarter of 2014. “Drilling jack-ups continue their strong trend, but it is also expected that contracting will remain robust for the advanced construction and subsea support vessels. A slowdown in the speculative contracting for PSV and AHTS is possible.” DNV GL says the MODU f leet has been growing steadily in

terms of units by an average of 5 to 6% per year, however, this year it will jump by a “whopping” 8%. The current f leet consists of nearly 1,350 units. The classification society says during 2013 and 2014, close to 90 new, modern and large jack-up rigs entered the market. “The question remains whether the drilling market can actually absorb all of those new units. It is the re-development of the old fields that is expected to be the main driver rather than exploring the new ones.”

Demand for Offshore support vessels There will be a relatively high level of deliveries to the Offshore Support Vessel (OSV) fleet as well. The DNV GL report says Platform Supply Vessels will represent the largest share, with Offshore Service Vessels seeing “the strongest growth (up by 30%)” and the AHTS vessels remaining weak. The DNV GL report says that annual growth for the OSV fleet has been about 7% and the fleet should be more than 10,000 vessels by the end of 2014. The average price for a 4,000 dwt PSV is about $42 million, while a 240-tonne bollard pull AHTS vessel can cost about $91.5 million. “The rapidly expanding MOU f leet is expected to propel the demand for offshore vessels. The OSV fleet performed better than expected in 2013 due to an increased rig count as the main driver especially in the North Sea and GoM (Gulf of Mexico), where the utilization rates were close to 96% for large PSVs with rates growing by 18%.” DNV GL also points out that the Brazil region underperformed, “falling in the rig counts, which naturally affected the OSV fleet utilization.” Platou expects 170 to 180 PSVs to be delivered and another 60 to 70 smaller AHT vessels (<10,000 bhp) to be launched in 2014 and 2015. June 2014 MARINE LOG 45

OFFSHORE Strong GoM market In the Platou Report 2014, shipbroker RS Platou says term rates in the U.S. Gulf of Mexico across the PSV category grew by close to 18%. Demand was driven by a rising UDW rig count. The number of floating rigs on contract in the GoM rose from 31 in 2012 to 37 in 2013. “At the same time,” says Platou, “the Jones Act effectively blocked international vessels from entering U.S. waters, limiting supply growth.”

The order book for of fshore ser v ice vessels remains strong at U.S. shipyards, although the focus seems to have shifted to more specialized vessels. According to statistics compiled by Marine Log, there are currently 52 Platform Supply Vessels, including six dual fuel vessels, under construction at U.S. shipyards. Additionally, there are another 13 specialized vessels for deepwater support (Subsea Construction Vessels, Well Stimulation, and

UNCOMPROMISED

CONTROL

HT Series

Low Submergence Requirement Small Hull Penetrations Auxiliary Propulsion/ “Take Home” Capability Effective Thrust in Currents JT Series

Waterjet Bow/Stern Thrusters Up to 2,200HP

46 MARINE LOG June 2014

Proudly Made in the USA!

Multipurpose Service Vessels), as well as two ice class Anchor Handling Towing Supply vessels. Hornbeck Offshore Services, Edison Chouest, Harvey Gulf International Marine, Jackson Offshore, Gulfmark Offshore, Bordelon Marine, Candy, Boldini, Aries Marine, and Tidewater all have PSVs on order or under construction. Cowen & Company believes that shares of Tidewater will outperform other stocks in the offshore sector. “The OSV market is inexorably linked to the offshore rig market, as the largest source of vessel demand comes from offshore rigs. The rig market is in the early stages of a multi-year soft patch, given tempered demand growth and a surge in capacity additions, and as such we expect the group to remain under pressure in the near-term as negative data points continue to filter in. However, barring a commodity price collapse, we expect the growth in the working global rig count to outpace the growth in the OSV global fleet count over the next two years, further tightening an already solid OSV market. Given our bullish outlook on the OSV space, we contend that the 15.4% YTD decline in TDW shares (compared with just a 14.4% decline among the offshore drilling companies) has presented an attractive entry point.” Cowen & Company also believes that “cold water environments represent one of the biggest opportunities in the OSV space over the next decade, as operators push exploration into harsher and colder areas. Tidewater significantly expanded its Arctic service offering with the acquisition of Troms in 2013, which had the added benefit of a local management team that gives TDW a foothold into the Norwegian market. The company also just announced a further $137 million investment into three new Arctic class vessels that will target cold water markets. We think the cold water strategy is a smart one, as harsh environment operations offer a higher barrier to entry and often command higher margins.”

Brazil’s labor challenges One real problem for the offshore oil and gas market as a whole—including the shipyards that support the sector—is skilled labor. This is particularly challenging for Brazil, which has tried to leverage its natural resources—namely offshore oil and gas—into creating an entire industry and supplier infrastructure from scratch. Last month at an event called Invest in Brazil, which was held at the same time as the Offshore Technology Conference (OTC) 2014 in Houston, TX, Paulo Sergio Rodrigues Alonso, the Petrobras CEO’s

OFFSHORE Special Advisor on Local Content and Executive Coordinator of Prominp, said that as many as 17,000 people will need to be trained to work in the oil and gas sector between now and 2016. According to Alonso, the figure was estimated based on the requirements of the 45 most important projects at Petrobras and the leading Brazilian shipyards. “Prominp was established in 2003, with the goal of increasing the share of Brazilian suppliers of goods and services in oil and gas projects, both in Brazil and abroad. Between 2006 and 2013, we trained 97,000 people—technicians, engineers and other professionals, to work for the sector in Brazil.” He spoke about the company’s local content policy and stressed the importance of the Brazilian industry being able to offer its products on a competitive and sustainable basis and keep its focus on continual innovation. He emphasized that, “We must work together with suppliers and universities in Brazil and abroad. Innovation is a key aspect of our policy.”

Subsea work At the same event, Petrobras engineer Ronaldo Martins, the company’s Materials Market Development manager, addressed the issue of supplying critical items and the registration requirements for Petrobras suppliers. To give an idea of the scale the company’s demand over the next few years, especially in view of the pre-salt layer, the engineer pointed out that 24 new production units will be needed by 2020 for the Santos Basin and Campos pre-salt fields alone. Of those, eight will be allocated to the Lula and Iracema fields and five to the Buzios field. Martins added that, “These projects and their respective requirements do not even include the Libra field.” According to its 2014-2018 Business and Management Plan, state oil company Petrobras will need 873,000 tons of pipeline for Brazilian offshore development. The number of pumps and subsea Christmas trees (set of valves installed on an offshore well) were also mentioned, among other company requirements over the coming years, which are all included in the plan. “These are very significant numbers,” said Martins. Martins also talked about the importance of working with suppliers to develop cutting-edge technology. “We now have the f lexible riser technolog y for up to 2,200 meters and we want to go deeper. We always work closely with the f lexible riser manufacturers; there are just three worldwide and they are all in Brazil.”

Subsea specialist Deep Sea Mooring (DSM), a leading supplier of mooring solutions and services, is back ing t he launch of a new subsea installation solution specialist. Deep Sea Installation (DSI), Singapore, will initially focus on the FPSO segment, with the idea to quickly establish itself in the key regional markets of Asia, West Africa and Europe. “The FPSO market is growing fast, with $99 billion forecast to be spent on floating

production systems between 2014 and 2018,” says Åge Straume, CEO of Deep Sea Mooring. “This is creating real demand for installation expertise and DSM recognizes the potential for a business focused on this niche.” DSI’s team will use its expertise to offer services that include the hook up of FPSO vessels, calm buoys and submerged buoys, alongside vessel positioning, towing, and mooring line pull-in and tensioning. ■

• 10 Gulf Coast Locations • 28 Drydocks • New Construction, Conversion, Repair • Engineering/Program Management & Fabrication • Mobile Crews – Blasting/Painting, Machining Services • Armature, Machine and Propeller Services • ISO9001 Certified

Team Bollinger includes some of the brightest naval architecture and marine engineering minds in the business. We employ state-of-the-art ship design software to provide cost-effective solutions to complex ship repair and construction challenges. Backed by the industry’s finest master craftsmen and a management philosophy sharply focused on customer satisfaction, we provide our customers the most diversified services in the industry. Solutions. That’s the Bollinger Advantage.

www.bollingershipyards.com roberts@bollingershipyards.com

June 2014 MARINE LOG 47

COMMUNICATIONS

Maritime Broadband’s C-Bird antenna can be commissioned and assembled in under six hours

STAYING CONNECTED Access to communications on board is vital to a seafarer’s mental state

or seafarers, who toil at sea for months on end away from their families and friends, access to communications is just as vital to their spirit as oxygen, water and food is to their body. The Maritime Labor Convention 2006—the mariner’s bill of rights—promotes seafarer’s health and well-being. Vital to attaining that well-being is “reasonable access to ship-to-shore telephone communications, and email and internet facilities where available with any charges for the use of these services being reasonable in amount.” To that end, owners and operators have provided several communication options for crew—such as calling cards and access to email—but are those options enough? And how often are they available to crew?

Futurenautic study A crew communications research survey conducted between December 2013 and March 2014 by Futurenautics Research provides some insight into how crucial the role of communications is in crew retention and keeping up morale. Retaining crew is crucial to a company’s bottom line as the cost to train and maintain the crew makes up 10% of all non-fuel costs. The survey included nearly 3,000 participants, across 20 nationalities. Sixty one percent of those surveyed worked as officers and 48 MARINE LOG June 2014

By Shirley Del Valle, Associate Editor 39% worked as crew. The respondents worked across eight maritime sectors: tankers, gas carriers, bulk, car carriers, containers, offshore, general cargo and passenger vessels. Of those surveyed, 56% said they have access to communications on board always or most of the time, while 6% said they never have access to crew communications. While the 6% may seem like a small number, it is up from the 2% in 2012’s survey. The survey also reports that expenditures are up when it comes to certain types of communications compared to the 2012 survey. Futurenautics says “Monthly expenditure when ashore on video chat has increased five-fold from only $5 in 2012 to $25 in 2014, and internet access is now costing the average seafarer $30 per month, as opposed to only $2 in 2012.” Meanwhile, 69% of respondents said that access to communications played a major factor in the decision on where to work. The study also noted that crews were “less stressed, happier, more relaxed and more motivated” when having improved access to the outside world.

Giving crew access North American Maritime Ministry Association’s (NAMMA) Ken Hawkins has seen first-hand the vital role communications can play in the lives of seafarers. Hawkins, along with several chaplains and

COMMUNICATIONS

organization volunteers, visit ships at port where he meets seafarers and provides them with a helping hand and link to home. Hawkins believes it is of paramount importance to give seafarers access to communications since it is not only beneficial to the seafarer, but is also in the operator’s best interest. In telling Marine Log about his encounters with seafarers throughout his many years with the organization, Hawkins reminds us that a connection we take for granted every day is a luxury for so many seafarers. “Seafarers are largely from developing nations and support not just their own families but extended families as well. Email, Skype and the occasional phone call are often the only tenuous hold on important events in the lives of loved ones,” he says. Hawkins recounts the story of a young seafarer from the Philippines. The very “excited and animated young man,” explains Hawkins, “had just skyped home to see his newborn son for the first time.” While the young man’s tears of joy brought tears to everyone around him, his story is not an unfamiliar one. As Hawkins states, “Every day we meet a young man who is away [at sea] when his son or daughter was born.” It’s those moments, the ones we land lubbers get to experience freely, that seafarers readily miss out on. That’s why having access to communications is integral to a good mindset. Organizations like NAMMA and the Seaman’s Church Institute do their best to help seafarer’s connect to those back home—providing seafarers with Wi-Fi hot spots, calling cards, phones, and even money transfer forms. Hawkins, for instance, brings multiple hotspots on board, which “are used every minute they’re on board,” exclaims Hawkins. “That phone call or email may be the only real connection for days or even weeks, he adds. “We’re all human, and we’re all connected. So much of what they need is basic. Its our job to reach out and help them.”

Providing affordable options with C-Bird Aside from access to communications, cost is also a factor. Prompted by the Maritime Labor Convention, Brooklyn-based Maritime Broadband developed the C-Bird antenna. The goal in creating the C-Bird was to provide crews working on merchant ships with global connectivity at affordable rates. Maritime Broadband’s CEO, Mary Ellen Kramer, says that C-Bird guarantees its users bandwidth on the highest C-Band satellite network available. The C-Bird effectively offers continuous connectivity and coverage around the world from 70 N to 70 S.

Keeping crews linked: Maritime Broadband’s C-Bird provides global coverage from 70 degrees North to 70 degrees South

Unlike conventional antennas (like the ones you see on cruise ships), Maritime Broadband’s C-Bird is flat, has a small footprint of one meter squared and doesn’t feature a dome. In fact, the lack of dome is advantageous on a number of levels. As Kramer explains, while the use of a radome is perfect for commercial shipping, the C-Bird is targeted for merchant ships where aesthetics aren’t a factor. Using a dome is also costly and diminishes the signal, therefore leaving the dome out enables Maritime Broadband to provide affordable plans to operators and their crew. At a cost of just $28,700, the C-Bird antenna, explains Kramer, “performs as well as an antenna priced at $100,000. This is a big factor as part of the total monthly cost of ownership is the equipment lease.” Kramer adds, “An antenna with a radome requires more power—thus higher cost—from the satellite to deliver the same signal than an antenna without a radome.” The C-bird antenna is of a modular build, so it’s easily assembled and commissioned in under six hours by the ship’s crew. No cranes or ship drydocking is needed in order to assemble. Beam switching is also automatic so the connection to the C-Band network is always solid and continuous. And while the antenna is exposed to the elements, weather has no impact on its performance.

Crowley and Future Care join forces The Maritime Labor Convention also requires that seafarers are covered by adequate measures for the protection of their health—this includes access to prompt medical care while on board the ship and at sea. Showing its commitment to its mariners, Crowley Maritime Corporation, Jacksonville, FL, has teamed up with Future Care Inc. to provide Crowley’s active crew with the best possible health care at sea. The addition of Future Care’s services will complement the care mariners already receive from the active medical providers on board Crowley’s fleet of 156 vessels. Crowley says the additional wellness program is expected to keep crewmembers working, all-the-while reducing Lot Time and OSHA reportable incidents. The partnership, says Crowley, will give the crew around-the-clock emergency access to on-call physicians and nurses 365 days a year through Future Care’s “Caring for the Crew” program. Future Care will also provide routine consultations and coordinate shoreside appointments anywhere in the world. ■ June 2014 MARINE LOG 49

NEWSMAKERS

VADM Neffenger named Vice Commandant of U.S. Coast Guard VICE ADMIRAL PETER NEFFENGER has relieved Vice Admiral John Currier as Vice Commandant of the U.S. Coast Guard. VADM Neffenger recently served as the Deputy Commandant for Operations. R AY SHELDON has joined CDI Corp’s Global Eng ine er ing and Te chnolog y Solutions Unit as Vice President of Naval Architecture and Systems Engineering. Sheldon will provide advanced technology consulting and solutions to the U.S. Navy, U.S. Coast Guard, and other defense and commercial clients. HMS Ferries, Inc., part of the HMS Global Maritime Group, has named C APTAIN M AT THE W MILLER , Vice President of HMS Ferries, Inc. Captain Miller brings with him 29 years of leadership experience—which includes serving as the Chief of Staff for the 13th Coast Guard District in Seattle, Washington.

GED O’CONNELL has joined Kentucky-based Inland Marine Service group as Direc tor of Business Development. O’Connell, a four-decade veteran of America’s waterways, will be responsible for expanding IMS’s capabilities and presence in the waterway transport industry. Marine Procurement Solutions (MPS) has named ED WARYAS III as its Marketing Manager. In his new role, Waryas will be responsible for the marketing and sales of the company’s expanding product line. Foss Maritime has appointed C A RL SMITH Director of Sales and Marketing for its Fleet Services Division. Prior to joining Foss, Smith was part of the management team at Alaska Ship and Dry Dock. CHARLES PACKSHAW has joined BMT Group Ltd’s Board of Directors as a NonExecutive Director. Packshaw has 30 years

 



      











 50 MARINE LOG June 2014

of experience working with financial institutions and is currently the Head of UK Advisory at HSBC Bank. W&O subsidiar y Valve Automation & Controls ( VAC ) ha s promote d NANC Y GONZALES to Branch Manager at the company’s Chula Vista, CA, location. Gonzales has been with VAC for 20 years, and currently serves one of VAC’s largest accounts, NASSCO, as Project Manager. JORGE V ILCHE S has been named President and Chief Executive Officer of Pullmantur Cruises, par t of the Royal Caribbean Cruises Ltd group of brands. T home Ship Management ha s ap pointed STEEN NYGA ARD MADSEN as Chief Operating Officer for Thome Ship Management Tanker Fleet. Prior to joining Thome Ship, Madsen was Technical Director for Nordic Tankers/Herning-Shipping.

TECHNEWS The Island Navigator, based on a Rolls Royce UT 777 design, will be delivered in 2017

ABB TO POWER UP

next generation OSVs POWER AND AUTOMATION technology group, ABB, was awarded contacts worth more than $20 million to supply two next generation offshore vessels with electrical power and propulsion systems. ABB will supply both vessels with a complete power and diesel-electric system package made up of medium voltage generators, switchboards, transformers, frequency converters and motors. ABB will monitor the systems via its remote diagnostic system, reducing repair time and improving operational safety.

NAVIGATION APP launched by NavPlay ITALY-BASED APP MANUFACTURER, NavPlay, has launched an easy-to-use navigation app for iPad. The NavPlay app provides access to WiFi-networked vessel information, instrument readings, weather forecasts, alarms and enables autopilot operation. Additionally it provides AIS details for collision avoidance. With the app, boaters can plan routes and navigate on C-Map by Jeppesen charts and satellite imagery—Jeppesen’s weather forecast data is automatically downloaded helping to aid in route planning. One of the innovative offerings featured in NavPlay is its Draw Route feature that allows the user to quickly, and easily, modify one’s route with the simple swipe of a finger. The app is also one of the few on the market that enables full autopilot control. Additionally, it features a virtual pilot knob that lets boaters change direction and path manually. The app also allows boaters to quickly create customized bridges, displaying the data they need in the format they want. Furthering onboard safety, the app features an interactive Alarm Manager, Instrument Diagnostics and Safety Life features.The introductory version of NavPlay is priced at $4.99; a 15-day subscription is $14.99; and a year subscription is $49.99. www.navplay.com

The first package will go to the next generation vessel being built for Island Ventures II, LLC. Based on the Ulstein SX165 design, the 145 m vessel is being constructed at Ulstein Verft in Norway. The second vessel, being built for Island Offshore by Japan’s Kawasaki Heavy Industries, is based on Rolls-Royce’s UT 777 design. ABB has also been tapped to power Finnish Transport Agency’s new generation LNG icebreaker. ABB will supply an electric power plan and Azipod propulsion units. www.abb.com

CUMMINS TARGETS offshore market with new genset WITH ITS STEADFAST COMMITMENT to the offshore market in mind, Cummins Inc., Charleston, SC, has launched the latest addition to its C Power product line, the QSK60 C Power (CP) emergency generator set. The launch of the genset is part of the company’s initiative to develop power packages designed specifically for the offshore market. The gensets feature a Cummins marine auxiliary engine fit with radiator cooling and two independent starting systems to assure the generator operates independently from all other ship’s systems. The new genset also features an optional air shut-off valve to meet the emergency shutdown requirements. The gensets will feature two power options: 1,440 kWe and 1,800 kWe. C u mmin s w ill provide the 1,800 kWe gensets to 1 4 dr ill ships currently being built for Petrobras.

Cummins.com

FINALLY, THE SECRET OF THE HMB-1 CAN BE TOLD.

Yes, it’s true that the HMB-1 has a cloakand-dagger history. First, as part of a topsecret effort mounted by the CIA to salvage the remains of the Soviet submarine K-129 from the ocean floor. Then, as a floating drydock for the construction and sea trials of the Sea Shadow, an experimental stealth ship being tested by the Navy. But the real secret is now out in the open. The HMB-1 has been converted by Bay Ship & Yacht into a 6,000 ton commercial drydock, with a 76 feet vessel beam capacity. Which means that we can now provide service to wider vessels. In fact, the HMB-1 is

18 feet wider than our current capacity, and we can now offer lifting capacity in the 28 ton per lineal foot range. It’s no secret that customers come to Bay Ship & Yacht for price, quality and service. The HMB-1 delivers all of that, and more. Its 90foot high retractable roof means that weather is no longer a factor in scheduling services of mid-size vessels. We have also achieved QP-1 certification for the HMB-1, which is what you’d expect from Bay Ship & Yacht. So come take a look at the HMB-1 in our Alameda yard. Freshly painted inside and out, she’s ready for your next scheduled service. 2900 Main Steet, #2100 • Alameda, CA 94501 • www.bay-ship.com Ask about our new Treasure Island facility

June 2014 MARINE LOG 51

CONTRACTS SHIPYARD CONTRACTS While every care has been taken to present the most accurate information, our survey gathering system is far from perfect. We welcome your input. Please e-mail any changes to: marinelog@sbpub.com. Some contract values and contract completion dates are estimated. Information based on data as of about May 1, 2014. (*) Asterisk indicates first in series delivered. A “C” after a vessel type indicates a major conversion, overhaul or refit. Additional commercial and government contracts are listed on our website, www.marinelog.com. SHIPYARD

LOCATION

QTY

TYPE

PARTICULARS

OWNER/OPERATOR

EST. $ MIL

EST. DEL.

RECENT CONTRACTS Gunderson Marine

Portland, OR

tank barge

578 ft, 185,000 bbl

Kirby Offshore

1st Half 2016

Conrad Shipyard Eastern Shipbuilding

Morgan City, LA Panama City, FL

1 1

tug PSV

75 ft x 29 ft 9 in 284 ft x 60

Harley Marine Services Boldini

APR14 MAY14

Metal Trades Raymond & Associates

Yonges Island, SC Bayou LaBatre, AL

1 1

crane barge pushboat

200 ft x 72 ft 76 ft, 1,700 hp

Stevens Towing Blessey Marine Services

APR14 MAY14

Viking Welding Viking Welding

Kensington, NH Kensington, NH

1 1

fireboat fireboat

28 ft x 9 ft 6 in 31 ft x 10 ft

Mt. Pleasant Fire Dept. St. Paul Fire Dept.

APR14 APR14

Aker Philadelphia BAE Systems Southeast

Philadelphia, PA Mobile, AL

4 2

Options dump scows

50,000 dwt 7,700 ft3

Crowley Great Lakes Dredge

BAE Systems Southeast Candies Shipbuilders

Jacksonville, FL Houma, LA

1 1

tug subsea vessel

141 ft x 46 ft, 12,000 bhp 108m x 22m, MT6022

Seabulk Tankers Inc. Otto Candies LLC

Four shipyards on list Gulf Coast Shipyard

Gulfport, MS

3 4

vehicle ferries PSVs

LNG fueled, 600 PAX dual fuel, 302 ft x 64 ft

BC Ferries Harvey Gulf Intl. Marine

Jennings, LA

PSVs OPCs

300 ft x 62 ft Offshore Patrol Cutters

Tidewater U.S. Coast Guard

TBD TBD

2 1

LASH carriers double-end ferry

convert steam to LNG 70-car

Horizon Lines VDOT

$27

RFP RFP

TBD TBD

6 3

car ferries 1,200 PAX (convert to LNG) double-end ferries 4,500 PAX

Washington State Ferries NYCDOT

$309

RFP issued Proposed

Roll-On/Roll-Off

Pasha Hawaii Transport

$137

Option

DELIVERIES

PENDING CONTRACTS

Leevac Shipyards TBD

VT Halter Marine

NOTES

Pascagoula, MS

692 ft, 26,600 dwt

$500

2017 Options Option Option

$200-$300

Spr14 Options Options RFP/Phase I

Hire the Best Maritime Talent VISIT http://bit.ly/marinejobs

THE MARINE LOG JOB BOARD Recruit and hire the best maritime talent with Marine Log’s online job portal. To place a job posting, contact: Jeanine Acquart • 212 620-7211 • jacquart@sbpub.com 52 MARINE LOG June 2014

MARKETPLACE PRODUCTS & SERVICES

BOATBUILDING WORKBOATS UTILITY SKIFFS TOW BOATS CUSTOM FABRICATIONS BOOMS, MASTS, & RIGGING DECK EQUIPMENT HATCH COVERS

VESSEL UPGRADES AND REPAIRS CONVERSIONS TOP HOUSES REPOWERS SEATTLE, WA BULWARKS PLUMBING INTERIORS 206.953.7676 FIBERGLASS WWW.SNOWBOATBUILDING.COM

Specializing In Barges • •

Single or Double Hull, Inland or Ocean-Going Design, Construction & Modification • Chartering & Sales 503-228-8691 1-800-547-9259 3121 SW Moody Avenue, Portland, Oregon 97239

ENGINEERS & ARCHITECTS

Marine Yellow Pages

Get instant brand visibility with a free or enhanced listing. MarineYellowPages.com

Marine

Industry

M.A.C.E. Inc.

FT. LAUDERDALE - USA - WORLDWIDE PHONE: (954) 563-7071 FAX (954) 493-9559

Thickness - hardness crack determination Ultrasonic flaw detection Vibration - noise structural/modal analysis Field balancing Torque - torsional vibration analysis Predictive Maintenance IR - thermography measurements

June 2014 MARINE LOG 53

MARKETPLACE ENGINEERS & ARCHITECTS GILBERT ASSOCIATES, INC. Naval Architects and Marine Engineers

350 Lincoln St. Suite 2501 Hingham, MA 02043

Website www.jwgainc.com

Telephone: 781 740-8193 Facsimile: 781 740-8197 E-mail address: inbox@jwgainc.com

ABS Approved Ambient Environmental Testing Climate, Lighting, Noise & Vibration 1 Galleria Blvd. Ste 109 Metairie, LA 70001 Phone (504) 818-0377 x 33 Fax (504) 818-0447 www.hab-cert.com

BOKSA

Marine Design

Naval Architecture Conceptual Designs Marine Engineering Production Engineering Lofting & Nesting Tooling Design

BoksaMarineDesign.com

abitabilaty Certification Testing MR Dec13 3 by 1.indd 1

813.654.9800

11/14/2013 3:58:18 PM

KEEL DESIGN CORPORATION

The Proven Formula for Brand Success The Right Audience + High-quality Editorial

NAVAL ARCHITECTS & MARINE ENGINEERS QUALITY TECHNICAL SERVICES 2021 Dauphine Street â&#x20AC;˘ New Orleans, LA 70116 (800) 823-1324 (504) 945-8917

SOFTWARE Take your brand to the next level Contact your sales rep at marinelog@sbpub.com or call 212.620.7200

MARINELOG.COM 31,000+ subscribers worldwide 73% make purchasing decisions 48% are involved in vessel operations *2012 Verified Audit Report and 2013 Readership Survey

54 MARINE LOG June 2014

MARKETPLACE EMPLOYMENT

HARLEY MARINE SERVICES Open Positions: General Manager – Brooklyn, NY Port Captain – Seattle, WA Port Engineer – Seattle, WA and Brooklyn, NY Port Mechanic – Alameda, CA; Long Beach Harbor, CA and Brooklyn, NY ATB Captain – West Coast ATB Mate – West Coast Pilot – U.S. Gulf Coast Tankerman – U.S. Gulf Coast and Seattle, WA For a list of all open positions or to apply online, please visit our Careers page at www.harleymarine.com

MARKETPLACE SALES Contact: Jeanine Acquart Ph: 212/620-7211 Fax: 212/633-1165 Email: jacquart@sbpub.com

ALL MAJOR CREDIT CARDS ACCEPTED

INDEX OF ADVERTISERS COMPANY

PAGE #

ABS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 All About Marine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Baker Marine Solutions . . . . . . . . . . . . . . . . . . . . . . . 16 Bay Ship & Yacht Co . . . . . . . . . . . . . . . . . . . . . . . . . . 51 BMT Fleet Technology Limited . . . . . . . . . . . . . . . . . . . 4 Bollinger Shipyards . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Burger Boats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Centa Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 ClassNK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Coastal Marine Equipment. . . . . . . . . . . . . . . . . . . . . . 4 Continental Underwriters Ltd. . . . . . . . . . . . . . . . . . . 12 Eastern Shipbuilding Group . . . . . . . . . . . . . . . . . . . C4 ExxonMobil Global Fuels & Lubes . . . . . . . . . . . . . . . C2 Ferries Conference . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Great American Insurance Co . . . . . . . . . . . . . . . . . . 43 Hornbeck Offshore . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Interferry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3 JMS Naval Architects & Salvage . . . . . . . . . . . . . . . . . 10 Jotun Paints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Kvichak Marine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

COMPANY

PAGE #

Lufkin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Marine Art of J Clary. . . . . . . . . . . . . . . . . . . . . . . . . . 50 Marine Group Boat Works . . . . . . . . . . . . . . . . . . . . . 33 Marine Yellow Pages . . . . . . . . . . . . . . . . . . . . . . . . . 22 Metal Shark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 MMC International . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Omnithruster, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Petrotrin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Rapp Hydema/Rapp Hydra Pro LLC . . . . . . . . . . . . . . 37 Scania USA, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Schuyler Rubber Companies . . . . . . . . . . . . . . . . . . . 27 Sea Tow Services International . . . . . . . . . . . . . . . . .20 Seakeeper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Silverships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Smith Berger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Verrill Dana LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Vigor Industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 VT Halter Marine Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 W&O . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 WQIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 June 2014 MARINE LOG 55

SHIPBUILDING HISTORY

THE SUB CHASERS

MARINELOG ISSN 08970491

USPS 576-910

A Simmons-Boardman Publication 55 Broad Street, 26th Floor New York, N.Y. 10004 Tel: (212) 620-7200 Fax: (212) 633-1165 www.marinelog.com

the WWI version: it was powered by two 880– bhp diesels giving a speed of 16 knots; armed with a 40mm gun, two .50-cal machine guns and two depth charge projectors; and with a crew of 28. A total of 480 of these boats were ordered from 43 boatbuilders and 443 were delivered, the other 37 being cancelled. In addition to the SC, the Navy developed a 174-foot steel patrol craft, or PC, to be used for coastal duties: this was powered by two 1,440–bhp diesels giving a speed of 20 knots; armed with a 3” gun, two .50-cal and two .30-cal machine guns and two depth charge projectors; and with a crew of 65. A total of 418 of these boats were ordered from 15 small shipbuilders and 358 were delivered, the other 60 being cancelled. There were also two variants of the PC. The 180-foot PCE was designed for escort duty: it was broader and slower than the PC, had a service speed of 15 knots and a crew of 100. A total of 150 PCEs were ordered from four small shipbuilders and 75 were delivered, the other 75 being cancelled. Some of these PCEs were later designated PCERs, being configured for rescue work as well as

Advertising Sales UNITED STATES New York Sales Office 55 Broad Street, 26th Fl New York, NY 10004 U.S. Gulf Coast, West Coast and Mexico Jeff Sutley National Sales Director Tel (212) 620-7233 Fax (212) 633-1165 E-mail: jsutley@sbpub.com U.S. East Coast, Midwest and Canada Ian Littauer Regional Sales Manager Tel (212) 620-7225 Fax (212) 633-1165 E-mail: ilittauer@sbpub.com

56 MARINE LOG June 2014

escort duty. The 136-foot PCS was designed for minesweeping: it was smaller and slower than the PC, had a service speed of 14 knots and a crew of 57. A total of 90 PCSs were ordered from 18 small shipbuilders and all 90 were delivered. Including the five prototype boats, the total program numbered 1,143 boats ordered, of which 971 were built, involving 74 small shipbuilders and boatbuilders. More than 400 of these boats were transferred to allied navies, the major recipients being the USSR (91 boats) and the Free French (88). Another 70 were converted to Air-Sea-Rescue boats (WAVR) for the Coast Guard and 31 were converted to Yard Minesweepers (YMS). Only about 40 were reported as lost in action, but this does not include all the boats that were damaged beyond repair, abandoned in the war zone, scuttled or otherwise destroyed. Almost all the survivors were turned over for disposal either to the U.S. Maritime Commission or to the Department of State’s Foreign Liquidation Commission (FLC) and little is known of what happened to them.

Navsource.org

ONE OF THE MORE INTERESTING FEATURES of naval procurement in the 20th century was the degree to which we prepared for war before we actually committed ourselves to participating in it. In 1917, the U.S. Navy was busy developing its submarine fleet. Anticipating that other world powers were doing likewise, the Navy also set about procuring a fleet of sub chasers, later designated SCs. These were 110-foot wooden boats; powered by three 220–hp gas engines giving a speed of 18 knots, armed with a 3” gun, two .30-cal machine guns and a depth charge projector; and with a crew of 18. A total of 448 of these boats were ordered from 38 yards and 441 were delivered, the other seven being cancelled. All but 28 of these boats were delivered in 1917 and 1918, with 100 of them being transferred to the French Navy and 50 to other users. Most of the remainder were sold after the war and there is no sign of any surviving today. Armed with this experience, the Navy repeated the exercise in the years leading up to the U.S. entry into World War II. This time around, however, there were two basic types and several variants, all using a single series of pennant numbers that started where the WWI series left off. The program got going in 1940, with five prototypes: three for a new SC, from Luders Marine, American Car & Foundry and Fisher Boat Works; and two for a larger, steel boat, both built by Defoe Shipbuilding. The resulting SC—the Fisher design—was the same length, but broader and deeper than

By Tim Colton

WORLDWIDE Marine Log (UK) Suite K5 & K6, The Priory Syresham Gardens Haywards Heath RH16 3LB UNITED KINGDOM International Louise Cooper International Sales Manager Tel: +44 1444 416368 Fax: +44 1444 458185 E-mail: lcooper@sbpub.com

China and Korea Young-Seoh Chinn JES Media International 2nd Fl. ANA Bldg. 257-1, Myungil Dong, Kangdong-Gu Seoul 134-070, Korea Tel: +822-481-3411 Fax: +822-481-3414 e-mail: jesmedia@unitel.co.kr CLASSIFIED SALES Jeanine Acquart Classified Advertising Sales 55 Broad Street, 26th Fl New York, NY 10004 Tel: (212) 620-7211 Fax: (212) 633-1165 E-mail: jacquart@sbpub.com

39th ANNUAL INTERFERRY CONFERENCE OCTOBER 4 - 8, 2014 VANCOUVER

CONFERENCE SESSIONS

SPECIAL GUEST SPEAKERS

Panel: Subsidies, Governance and State-Owned Ferries

Overview of IMO Issues Size, Scope and Diversity of the World Ferry Fleet

Panel: RoPax Concept Viability and the Future of Passenger Shipping

Short Sea Shipping

CONFERENCE ACTIVITIES

Developments in Latin America and the Caribbean

Pre-Tours • Golf Tournament Welcome Reception • Evening Reception Networking Opportunities • Happy Hours Farewell Dinner • Spouses Program Technical Tour • Post-Tour to Victoria

Retail and Customer Service The Human Side of Safety LNG