The following is a news release from Philly Shipyard ASA:
(PHILADELPHIA) — TOTE on Friday announced that its plans to enter the U.S. mainland-to-Hawaii containership service are on hold as a result of its Phase 1 technical review of Piers 1 and 2 in Honolulu Harbor. As a result of this delay, TOTE and Philly Shipyard Inc. will not extend their letter of intent (LOI), which is set to expire on Jan. 31.
In September, Piers 1 and 2, along with 40-plus acres of adjacent land, were allocated to TOTE by the Hawaii Department of Transportation (HDOT) for its access and use commencing in 2020, to coincide with the planned start of TOTE’s new operations in Hawaii. According to TOTE’s release, its preliminary study of the site’s infrastructure indicated that this terminal space will require upgrades and improvements to accommodate TOTE’s new Hawaii service.
The LOI, which was signed by TOTE and PSI in July, contemplates the construction and sale of up to four state-of-the-art, cost-effective and eco-friendly vessels, with planned deliveries for the first pair (hulls 031-032) in 2020 and the second pair (hulls 033-034) in 2021. Due to the scope and timing of the required upgrades and improvements to Piers 1 and 2, the LOI will not be renewed.
TOTE, however, noted in Friday’s release that it continues to be open to working with HDOT to update plans and a timeline for access to a deepwater terminal in Honolulu Harbor that would allow TOTE to launch its new Hawaii service.
Based on these developments, the project to build hulls 031-034 as containerships is being put on hold. PSI is suspending substantially all construction-related activities on these vessels, including design, planning and procurement work. As previously disclosed, PSI has placed orders for all major long-lead items for the first pair. If these orders were to be canceled, then the cancellation costs would be substantially lower than the value of the orders placed.
PSI intends to resume this project when there is more clarity regarding the new order situation and related capital requirements. Accordingly, PSI is exploring alternatives in order to secure contracts and financing for these vessels. In addition, PSI is continuing to pursue potential new construction projects for other types of Jones Act vessels.
PSI has delivered 28 vessels in its 20-year history, including four vessels for use in the Hawaii containership trade which were delivered in 2003-2006. Currently, PSI is building two 3,600-TEU containerships for use in the Hawaii trade for Matson (hulls 029-030).