Entering a new age of shipping


Four contracts signed by General Dynamics Nassco over the last 10 months have changed the future of shipbuilding in the United States by bringing liquefied natural gas propulsion into the mainstream.

First, TOTE Inc. ordered two 3,100-TEU containerships for the Puerto Rico trade that when completed are expected to be the largest ships in the world powered primarily by LNG. TOTE followed that with a design contract to convert its two Orca-class diesel-electric trailerships to LNG.

American Petroleum Tankers then ordered four 50,000-dwt Jones Act product carriers from Nassco to be delivered ready for LNG conversion. In September, Seabulk Tankers contracted for two more vessels of the same design.

Brian Gauvin photos

A ferry superstructure at Nichols Brothers in Washington.

A ConRo from VT Halter Marine in Pascagoula, Miss.

LNG is plentiful in North America and has cost and environmental advantages over diesel, particularly with a 2020 deadline for vessel emission controls imposed by the International Maritime Organization. The fuel is attractive to many vessel operators, especially ferry services, whose fixed routes make bunkering easy.

Nassco’s aren’t the first U.S. orders for LNG vessels; two years ago, Harvey Gulf International Marine asked TY Offshore in Gulfport, Miss., to build two 302-foot, dual-fuel offshore supply vessels. Nor is this the first interest from Jones Act tanker operators; American Phoenix, a tanker we profiled last year, was surveyed during construction for possible LNG conversion.

But Anthony Chiarello, TOTE’s president and CEO, was in no doubt about the significance of the containerships contract. “These vessels mark a new age of shipping,” he said.

There has been a flurry of other announcements about LNG. Harvey Gulf has extended its TY Offshore order from two vessels to six. Interlake Steamship announced an agreement with Shell that would allow it to convert its lakers to LNG as their main propulsion fuel. In Canada, Société des traversiers du Québec now has three dual-fuel ferries under construction, one in Italy and two in its home province.

The rise of LNG has coincided with strong markets in two other segments of the shipbuilding industry: tankers and vessels for the offshore oil and gas market. “I think it’s a very positive moment for commercial shipbuilding in the United States,” said Matt Paxton, president of the Shipbuilders Council of America, which now represents 85 shipyard facilities and 95 partner companies.


Tanker revival
Aker Philadelphia Shipyard, as well as Nassco, is building product carriers. Aker expects to deliver two Aframax tankers to SeaRiver, ExxonMobil’s U.S. marine affiliate, next year. In August, the yard signed a $500 million contract to build four 330,000-barrel product tankers for Crowley Maritime, with options for four more.

Aker traces the resurgence of tanker building for the Jones Act trade to the increase in production of crude oil from shale in North Dakota and Texas. “The shale revolution is creating industrial opportunities throughout the United States and specifically here in Philadelphia,” said Kristian Rokke, the yard’s CEO.

Photos courtesy Seacor Marine

Two recent additions to the Seacor fleet: Seacor Strong (above), a 201-foot OSV from Master Boat Builders in Coden, Ala. , and Keith Cowan, a 265-foot anchor handler completed at Eastern Shipbuilding in Panama City, Fla.

In September, Bloomberg quoted Bob Flynn of shipbroker MJLF & Associates as saying that day rates for Jones Act tankers for a one-year charter had hit a record at $100,000. “We need another shipyard or two,” Flynn said.

This year has seen renewed orders for crew and supply vessels, especially for deepwater. Edison Chouest, for example, which builds many of its own boats in the Gulf and overseas, announced in July that it has ordered 17 platform supply vessels as part of a fleet expansion, including a new fuel-efficient 312-foot class.

At the same time, the emphasis in new orders is shifting to more complex and more specialized boats, particularly multipurpose supply vessels (MPSVs) and inspection, maintenance and repair vessels (IMR). As an example, Eastern Shipbuilding of Panama City, Fla., recently delivered Harvey Deep-Sea, its second multipurpose light construction vessel for Harvey Gulf, and Harvey Gulf’s next three vessels from Eastern will be 327-foot IMRs.

In keeping with this trend, our Ship of the Year is a 257-foot MPSV, Connor Bordelon, from Bordelon Marine’s new shipyard in Houma, La.

One indication that the spate of orders for traditional supply vessels may be slowing came from Todd M. Hornbeck, chairman, president and CEO of Hornbeck Offshore Services, who told analysts in August that his company would build 20 new OSVs and four MPSVs as part of its current fleet expansion but added that it had let all 44 of its remaining options for new OSVs expire.

The CEO said the timing of the company’s newbuilds was excellent: “We are delivering our vessels early into this cycle in advance of the accelerated demand forecast for the next several years,” he said.

As for the future, however, “there is not a current imperative to announce additional vessel orders for speculative uncontracted vessels that deliver beyond 2015.”


A case for diversification
Many shipyards that build for the oil and gas industry are mindful of past downturns in the sector and don’t want to be too exposed if history repeats itself. Eastern is a case in point; its yards are full of platform supply vessels under construction, and it hopes for more, but it’s looking beyond them.

Courtesy Crowley Maritime Corporation

Aker Philadelphia Shipyard completed its six-year run of 14 46,000-dwt product carriers this year and has two 115,000-dwt tankers on deck.

“We’re building ourselves out of a job and the operators know that,” said Kenneth Munroe, executive vice president and chief operating officer, in an interview at Eastern’s Allanton Shipyard in Florida. “What’s it going to be like two or three years from now? We’re not ones to put all of our eggs in one basket.”

Eastern’s answer is to sign the Harvey Gulf IMRs, bid on ferries, go after the U.S. Coast Guard contract for the Offshore Patrol Cutter, and keep its existing customers happy, delivering towboat after towboat to Florida Marine Transporters and returning to its roots as a builder of fishing vessels — its order book includes a 194-foot freezer trawler for O’Hara Corp., based in Rockland, Maine, a client from long ago.

Bollinger Shipyards in Lockport, La., is also spreading a wide net. It, too, is building four PSVs between 270 and 300 feet, but it delivered a fourth oceangoing tug to Crowley in June and has three sludge ships for New York City in the works. Ben Bordelon, recently promoted to chief operating officer, is one of many shipyard executives who sees a need for MPSVs (“It’s a tribute to the need for Jones Act vessels in that space,” he commented). And Bollinger has one of the steadiest contracts in the industry, a standing order from the U.S. Coast Guard for Fast Response Cutters that currently extends to 18 boats and occupies the entire Lockport yard.

Courtesy J.M. Martinac Shipbuilding

Northern Leader, a longliner from J.M. Martinac Shipbuilding in Tacoma, Wash., the largest commercial fishing boat built in the Northwest in the last two decades.

“One nice thing about having a program like this: The men and women working on it can say, ‘We have a job for the next eight to 10 years,’” said Bordelon.

At yards in Larose and Morgan City, Bollinger is stretching three boats for Harvey Gulf from 210 feet to 250 feet and three boats for Hornbeck from 210 feet to 240 feet. Bollinger built the original boats itself. “It’s the gift that keeps on giving — cutting your own boats apart,” Bordelon joked.

The U.S. shipbuilding industry now accounts for $22 billion in revenue and employs 99,363 workers, according to a July report from IBISWorld, an industry research firm based in Los Angeles. That gibes with a Maritime Administration report issued in June that said the nation’s shipyards support $36 billion in gross domestic product, with a geographic reach far wider than the five states — Virginia, Louisiana, Mississippi, Connecticut and California — that account for 62 percent of all private employment in shipbuilding and ship repair.

In a world of sequestration and continuing budget resolutions, it’s worth remembering how much of U.S. shipbuilding is tied up in military rather than commercial work, especially since our focus in this issue is on the latter. According to IBISWorld, military shipbuilding accounts for 60.3 percent of all industry revenues, with repair work at 18 percent and commercial shipbuilding at just 21.7 percent.

Brian Gauvin photo

A welder at Breaux Brothers Enterprises in Loreauville, La., works on a 194-foot fast supply vessel for Edison Chouest.

From time to time a delivery comes along that stands out from the rest: this year’s is Northern Leader, a 184-foot diesel-electric longliner from J.M. Martinac Shipbuilding of Tacoma, Wash. The largest commercial fishing boat built in the Pacific Northwest in the last two decades, it was designed by Jensen Maritime Consultants of Seattle for fuel efficiency, to reduce waste and to maximize the value of the catch.

Alaska Ship & Drydock in Ketchikan, part of Vigor Industrial, is building a longliner too. “People forget, but the combined fisheries in the North Pacific are right about $6 billion,” said Paxton of the Shipbuilders Council.

Like the freezer trawler that Eastern is building, the boats are a reminder that America’s shipyards will go where the market takes them.

By Professional Mariner Staff