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Sunday, October 25, 2015
Jones Act Ship: Only the Price is American
By Michael Hansen @ 2:35 PM :: 4889 Views :: Jones Act

by Michael Hansen, Hawaii Shippers Council, October 22, 2015

The publication Business Korea published on October 21st a news article entitled “DSME completes delivery of world’s first LNG-powered containership,” describing how the South Korea shipbuilding firm Daewoo Shipbuilding & Marine Engineering (DSME) designed, built and delivered the 3100 TEU Jones Act containership ISA BELLA to TOTE Maritime for employment in the Puerto Rico trade.

The foreign publication free from the constraints of the Jones Act maritime industry more or less accurately described the South Korean role in the construction of the ISA BELLA. Though to be fair, the ship was actually assembled at the General Dynamics NASSCO shipbuilding yard in San Diego to meet the Jones Act requirement that the ship be “built” domestically.

DMSE provided the design, patented technologies, the material package supply (DMSE with its much larger production base supplies most of the materials and equipment to construction the ship at lower cost than NASSCO could), and was onboard at sea trials to prove the ship before delivery to the new owners.

TOTE Inc. d.b.a. TOTE Maritime is part of the privately-held holding company Saltchuk Resources Inc. of Seattle, Washington. TOTE Maritime operates common carrier services in the Alaska and Puerto Rico trades. Saltchuk owns the major U.S. West Coast tug and barge operator, Foss Maritime Company, and its subsidiary Young Bros. Ltd., which provides interisland ocean freight service in Hawaii. Saltchuk also owns Alaska-based Northern Aviation Services, and its subsidiary Aloha Air Cargo, which provides interisland air freight service in Hawaii.

Key excerpts:

The world’s first container ship powered by liquefied natural gas (LNG), which has been built by Daewoo Shipbuilding & Marine Engineering (DSME) with proprietary technology, has successfully completed a sea trial and will be put on an actual route.

According to an official at the DSME on Oct. 20, NASSCO, a subsidiary of leading U.S. defense company General Dynamics, recently delivered the Isla Bella, a 3,100 TEU container ship, to Totem Ocean Trailer Express (TOTE) Maritime after the completion of the sea trial. The ship is the world’s first LNG-powered container ship that includes patented technologies from the DSME and its subsidiaries.

The DSME generalized the basic design and supply of its own patented high-pressure LNG fuel gas supply system, while its subsidiary Shinhan Machinery was in charge of manufacturing equipment. Also, its design subsidiary DSEC took charge of the overall design and material package supply.

In the process of the sea trial, the DSME proved its LNG gas supply system technology by successfully securing a stable supply of fuel. The system supplies high-pressure natural gas to the engine from the fuel tank, and it is considered a core technology in natural gas-powered ships.

  *   *   *   *   *

Will pigs fly before the Jones Act changes?

by Michael Hansen, Hawaii Shippers Council, October 22, 2015 

The Singapore-based online maritime publication Splash 24/7 published on October 22nd an op-ed entitled “Will pigs fly before the Jones Act changes?” discussing the prospects for Jones Act cabotage reform in the U.S.

The op-ed author, Clay Maitland, is a U.S. citizen, well known in U.S. shipping circles, and has been involved with flag of convenience (FOC) ship registries virtually all of his working life. His official short bio is: Clay Maitland has worked in the shipping industry since graduation from law school in 1968. Clay has been employed by International Registries, Inc. for 39 years and is now a managing partner of the company, which administers the Marshall Islands Ship Registry – the third largest registry in the world. He is President of the Trust Company of the Marshall Islands (TCMI), the statutory Maritime Administrator of the Republic of the Marshall Islands. Prior to the year 2000, Clay held similar positions with regard to the maritime administration of the Republic of Liberia.

Maitland is a strong supporter of the Jones Act and subsidies for the both the Jones Act industry and what is known as the U.S. flag international trade fleet (which is comprised of 87 foreign built U.S. flag ships). Maitland freely admits that the cost of constructing a large oceangoing ship in the U.S. is at least four times what it would be in Asia for a comparable ship, and his solution is that the domestic construction of Jones Act ships should be subsidized by the federal government. Not only would this become a boondoggle, but it would not increase competition as the subsidies are likely to go to the incumbent operators.

Maitland supports the Jones Act and the U.S. maritime establishment to defend his FOC Marshall Islands ship registry business from the U.S. establishing a U.S. international registry as several European countries have done.

Key excerpts:

It’s also true that it would cost about four (or more) times as much to build a containership, like El Faro, in one of the few remaining US yards, as it costs to build the same ship in China.

So maybe, with a hurricane approaching, the ship should not have sailed from Jacksonville. And maybe the ship might have fared better if it had not been 40 years old; and if it hadn’t lost propulsion at a critical time.

Can we make the cost of construction, and the capital expenditure, feasible for the building of a modern Jones Act fleet? I think we can, if we embrace a return to a construction subsidy.

Could our representatives change the law, to let in foreign-built ships? Given the fact that American shipyards have strong support on Capitol Hill, I’d say: don’t wager the family farm on it.

In the fever swamps of American maritime policy, where is a vision for the future? Clearly it is time to replace the elderly Jones Act fleet with new ships, built at a rational price.


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