Every company wants to attain and retain its share of the business associated with the approximately 60,000 ship calls at U.S. ports in a typical year. Those companies that have the means are working hard to capture a share of the lucrative LNG business being developed in a handful of American ports. Dredging and construction projects take place in nearly every port, and local companies find these to be steady work for conventionally powered tugs. Tug operators on the Eastern Seaboard, and to a lesser extent in the Pacific Northwest, are ever mindful of the fact that some seven million American homeowners still use No. 2 fuel oil to heat their dwellings, and almost all of that oil travels to final distribution points by ship and barge.
Global trade has been increasing steadily in recent years and, despite strong growth in Asian nations like China, the United States is still a major destination for ships from all over the globe. As it is, America’s 300 sea and river ports handle about 2.3 billion tons of domestic and foreign cargo in a typical year, the vast majority of that arriving and departing by ship, according to the American Association of Port Authorities. Coupled with this, approximately 13 million people are employed in some aspect of the U.S. marine transportation industry, according to the U.S. Army Corps of Engineers.
|New barge construction, always an important adjunct activity to the tugboat industry, has been going strong and should continue doing so in the near future. Shown here is a new 30,000-barrel oil barge built at Orange Shipyard for Harbor Bunkering Corp.|
More than 17 million marine containers enter U.S. ports each year, according to Congressional Research Service Reports. Since the U.S. economy is expected to grow at a rate of about 2.5 to 3 percent in the next year, and since Americans as a whole seem unlikely to change their consuming habits any time soon, this impressive level of importation of foreign goods is likely to continue, if not increase.
According to Congressional Research Service Reports, the volume of cargo that American ports currently handle — about two billion tons annually — is expected to double over the next 15 years.
The global economy, according to the international consulting firm Global Insight Inc., grew at a rate of about 4 percent in gross domestic product in 2006 and is expected to grow at a rate of about 3.5 percent in the current year. At the same time, reports Global Insight, world container trade grew at a rate of 9.6 percent last year and is expected to continue growth at a 9.0-percent rate during the current year.
Of course China, with almost five times as many ports, generates far more impressive shipping statistics than those coming out of America. The port of Shanghai, for example, handled more than 18 million standardized container units in 2005. That is more than was reported in all the ports of America. It’s no wonder that Shanghai, with more than 500 million tons of cargo handled in 2006 (about 25 percent of that handled in American ports), is considered the world’s busiest port by cargo tonnage.
And just to further ensure that port officials in booming American ports like Los Angeles and Houston do not go home with swelled heads, it is also reported that more than a third of the world’s container trade is now intra-Asian, according to Global Insight. Further, the Chinese government reported this spring that it sees European nations, as well as those of Asia, Africa and South America, becoming more significant destinations for its exported goods than the United States in coming decades.
Still, U.S. ports on all coasts (and tugboat companies that work in those ports) are gearing up for continued growth in container volume. Both Miami and Tampa in Florida, for instance, have new container terminals that can handle some of the world’s largest box ships.
The Port of Miami, already a sizable containership destination, recently completed the first phase of a long-delayed dredging project increasing depth on crucial waterways to 42 feet. A second phase, increasing depths to 50 feet, is slated to begin soon. The port also recently installed a pair of new gantry cranes suitable for loading and unloading the largest post-panamax containerships afloat — those with dimensions too large for transiting the Panama Canal.
More than 3,500 ships call annually at the port of Miami, including cruise ships. That means more than 7,000 ship movements, approximately 70 percent of which require the services of tugboats and pilots from the Biscayne Bay Pilots Association. The port plays host to cargoships from about 35 shipping lines with cargo volume exceeding nine million tons annually, according to the Port of Miami. As for tugboats, the port is well served by both Coastal Tug & Barge and Moran Towing Corp., each company offering the services of one z-drive tractor tug and several conventional tugs.
On Florida’s west coast, the Port of Tampa has been working hard to attract box-ship business to its new container facility, which includes three new gantry cranes. In fiscal year 2006 the container port handled 24,273 TEUs, down slightly from the previous year, according to the local port authority. About 3,600 ships call at Tampa in a typical year. As of this summer Tampa is also home to half a dozen tractor tugs, plus conventional tugs, all operated by competitors Marine Towing of Tampa and Seabulk Towing. Tampa handles close to 50 million tons of cargo in a year, twice that of any other Florida port, and nearly as much tonnage as Miami, Port Everglades and Jacksonville combined, according to the local port authority.
Aside from the lure of growth through containerization, another growth area for the U.S. tugboat industry is involvement with the handful of LNG importation terminals that are established, expanding or under construction at various ports. Because of the sensitive nature of liquefied natural gas as a cargo, coupled with security and port safety concerns, terminal operators demand high-horsepower tugs with extensive equipment, training and availability for dedicated LNG work. That translates into better than average billing rates for tug operators.
|A newly constructed articulated tug-barge operated by Crowley Maritime makes its way through the Port of New York.|
Although LNG contracts are highly desirable, only large tug companies with deep pockets are generally capable of winning and fulfilling those contracts. With some exceptions, winning an LNG contract today means having to build at least one new LNG-capable tug (at a cost of $7 to $10 million) to fulfill the contract.
Seabulk Towing, for example, recently completed construction of several new 75-ton bollard pull tractor tugs for LNG work, while more than half a dozen other tugs presently under construction by other companies can also be attributed directly to current or anticipated LNG contracts.
So far the major players in the LNG game include companies like Boston Towing, McAllister, Moran, Crescent Towing, Seabulk Towing, Bay-Houston Towing, Suderman & Young and Edison Chouest. Others will presumably be getting involved in the near future.
As of this spring there were still only a handful of operating LNG importation facilities in the United States — Cove Point, Maryland; Elba Island in Georgia, and Lake Charles, Louisiana. In addition, there is an importation facility on the south coast of Puerto Rico, an offshore operating terminal in the Gulf of Mexico, and an exportation facility has been operating at Kenai, Alaska, for many years. Three new importation facilities are under construction in Texas, however, plus a totally new facility in Lake Charles. Numerous other LNG proposals have been approved, including plans for two LNG receiving stations off the coast of Massachusetts. At least one has been approved for construction on Mexico’s Baja Peninsula. Others are expected to be approved in the near future, although investors could become cautious as they sense temporary saturation points for these expensive and sometimes controversial facilities. Applicants have five years to construct an LNG facility after approval by the Federal Energy Regulatory Commission (FERC).
For the tugboat industry, development of an LNG terminal can also represent an opportunity for expansion into a new territory. Except through acquisition or by contracting for LNG service or similar long-term commitments, it can be difficult for a tug company to set up shop in a new port where there are other established tug companies already operating.
“We are actually going after this contract type of business as a growth vehicle for our company,” said Kenny Rogers, president of Seabulk Towing, which holds a contract for LNG service at the British Gas importation terminal at Lake Charles. “In the future, unless there is an acquisition of another company, we don’t see ourselves entering ports without this type of contract business. Credible companies usually don’t do that. It just doesn’t make sense. As far as growth into other ports, it would most likely be through terminal contract or through some sort of acquisition.”
The trend toward use of “articulated” tug-barge (ATB) design is another significant driving force in the tugboat industry today. While there are still plenty of traditional wire boats being built to handle oil barges (see stories in this issue on Vane Bros. and Sause Bros.) many companies are going for the ATB design for oil barges of more than about 100,000-barrel capacity — and some for even smaller barges. At any given time, it seems, there are at least half a dozen large barges under construction with an articulated coupler system, often with a new or retrofitted tugboat to go with them.
Many new oil barges are being built today for long-term compliance with the requirements of OPA ’90, but the dictates of the barge industry are such that many tug companies would still be building ATB barges without OPA ’90 as a means of gaining and attaining new business, although perhaps at a slower rate.
|The cost of new construction has become so high that every vessel that can be refurbished and retrofitted with new technology automatically gets a new life. Here, an older tug operated by Crescent Towing in New Orleans gets a refit at Bollinger Shipyard.|
ATB tugs are being designed and built today ranging from the most common power range of about 4,000 hp up to 12,000 hp. At the lower end, Reinauer Transportation is a good example. This New York-based tug and barge company is working with Bob Hill of Ocean Tug & Barge Engineering on the design of a new series of 4,000-hp tug barges to be built at Senesco Shipyard in Rhode Island — acquired by Reinauer in 2006. At the upper end of the power range, Overseas Shipholding Group, which acquired tug-barge operator Maritrans in 2006, has a handful of large ATB units under construction at Bender Shipbuilding & Repair Co., Mobile, Ala., and at Tampa Bay Shipbuilding & Repair Co. in Florida. These are a mixture of 12,000-hp and 8,000-hp tugboats all with Intercon articulated coupler systems.
Bob Hill of Ocean Tug & Barge Engineering reports that he is currently introducing a new ATB design that could ultimately translate into greater use of tugboats in the offshore supply field (not that there aren’t plenty of tugs already out there). Hill is introducing design plans for articulated platform supply vessels involving 12,000-hp tugs and barges, presumably also with Intercon’s coupler system for large vessels.
“These will be able to carry more cargo than any self-propelled vessel and we will have far less regulation to deal with,” said Hill. He added that the ATB units can easily be set up to facilitate the dynamic positioning needs of platform operators. Most likely, he said, the tugs would be designed for a form of diesel-electric drive, employing battery-oriented “hybrid” technology as appropriate for each application.