Mystery ship operator identified for Philly Shipyard’s newbuild containerships

by Michael Hansen, Hawaii Shippers Council, August 17, 2017

Saltchuk Resources Inc. (the parent of TOTE Maritime and Young Brothers, Ltd.) and Philly Shipyard Inc. each issued complementary press releases late Thursday,. August 17, 2017, announcing that TOTE is the mystery ship operator who will take delivery from Philly shipyard of the four previously announced newbuild containerships for the U.S. West Coast / Hawaii trade .

This announcement would appear to bypass Pasha Hawaii Transport Line LLC, which was once thought to be a prime candidate for the Philly Shipyard newbuild containerships and seemingly puts Pasha at competitive disadvantage.

One consideration that lead to the thinking Pasha was Philly Shipyard’s likely customer for the containerships was the non-availability of a suitable container terminal in Honolulu Harbor for a purely new entrant ocean carrier. The Hawaii Department of Transportation (HDOT) though its Harbors Division has been planning for the past twenty years and began construction in 2016 of a new facility with the intention that Pasha would relocate there and leaving a new entrant without a place to handle their cargo.

The Saltchuk announcement directly addressed this issue, “This week [TOTE] began conversations to secure the new deep water Kapalama Container Terminal (KCT) in Honolulu for TOTE, a critical step in making the new service a reality.”Presumably Pasha has been unable to conclude an agreement with Harbors to accept the new KCT when it’s scheduled to be completed in the 2021 time frame, and TOTE is stepping in with the resources to conclude an agreement.

The Saltchuk announcement also makes reference to Pasha’s four ageing steam-powered containerships acquired from the dissolution of Horizon Lines Inc. in 2015. Those steamships will not be able to operate after January 1, 2020 when new international emissions regulations under the MARPOL convention come into effect.

Saltchuk states, “Timing is critical for construction of new ships for Hawai’i and a commitment for terminal space in Honolulu is needed to move the new venture forward. New environmental regulations taking effect in 2020 necessitate replacement of aged ships currently operating in the trade.”These statement are aimed directly at Pasha’s operation.

In what can only be described as a full measure of their confidence, Saltchuk concludes, “As planned, the new vessels from Philly Shipyard will enter service in early 2020 and 2021, just in time to meet the deadline and maintain trade capacity.” Not so subtly implying that they will succeed Pasha and be the surviving carrier in the domestic Hawaii trade along with Matson. 

Although Saltchuk’s statement appears determinative, it’s important to bear in mind they have several significant hurdles to clear before their subsidiary TOTE can proceed with firm plans to inaugurate a Hawaii service in the 2021 time frame.

Saltchuk’s current arrangement with Philly Shipyard is a letter of intent (LOI), which would have to become a firm ship construction contract. Prior to committing to the construction of up to four newbuild containerships, however, TOTE would need an exclusive use agreement with HDOT Harbors for KCT.  As Saltchuk stated an agreement with HDOT for KCT is a sine qua non condition for TOTE’s proposed Hawaii service.   

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