Federal Water Resources Act Signed Into Law

By Mark Edward Nero

President Obama on June 10 signed into law the Water Resources Reform and Development Act of 2014, the first major US waterways legislation in seven years.

The legislation authorizes 34 projects across the country, including dredging at the ports of Long Beach and Los Angeles. It identifies more than $12 billion worth of new water infrastructure projects, particularly on the East Coast and in the South, and authorizes funding for them, including flood protection, ecosystem restoration and maintenance of ports and navigation routes for commerce and the movement of goods.

The US Senate on May 22 voted 91-7 to approve $12.3 billion legislation that authorizes spending on infrastructure projects to boost US ports and waterways. The House of Representatives approved the same bill on a 412-4 vote earlier that week.

In addition to authorizing crucial port projects, the legislation reforms the Harbor Maintenance Trust Fund to increase port investment. Despite substantial maintenance needs at some US ports, only roughly half of the taxes collected in the Harbor Maintenance Trust Fund each year are actually used for port maintenance activities.

The legislation also calls for full expenditure of all revenues collected in the Trust Fund by 2025.

In his remarks, the President said the legislation would put Americans to work modernizing the country’s water infrastructure, plus restore vital ecosystems.

“As more of the world’s cargo is transported on these massive ships, we’ve got to make sure that we’ve got bridges high enough and ports that are big enough to hold them and accommodate them so that our businesses can keep selling goods made in America to the rest of the world,” Obama said. “Meanwhile, many of America’s businesses ship their goods across the country by river and by canal, so we’ve got to make sure that those waterways are in tip-top shape.”

Eagle Marine Services Files Layoff Notice

By Mark Edward Nero

Eagle Marine Services plans to lay off 94 of its employees within Washington State by the end of July, according to a notice the company has filed with the state Employment Security Department.

Eagle Marine, a subsidiary of American President Lines (APL) operates two West Coast terminals, one at the Port of Los Angeles and another at Port of Seattle. The Seattle terminal, which handles about 350,000 lifts annually, has the capacity for nearly 600,000 TEUs, according to Eagle Marine. It also contains a 190-acre container yard and 30 acres of on-dock rail.

Thus far, neither Eagle Marine nor APL has publicly commented on the reason for the layoffs, but on May 16, the port and Eagle Marine announced a plan to relocate Eagle Marine’s cargo and break bulk activities to another terminal so that the company’s current home at Terminal 5 can be modernized in order to handle larger vessels.

Under the agreement’s terms, which haven’t yet been approved by the Port Commission but may be considered at its June 24 meeting, Eagle Marine would shift operations this summer to Terminal 18, which already houses SSA Terminals. The port, however, has said that the proposal would allow Eagle Marine to preserve both container volume and ship calls.

Port of Port Angeles to Settle Stormwater Lawsuit

By Mark Edward Nero

The three-member Port of Port Angeles Commission voted unanimously on June 10 to use $26,500 to settle a lawsuit alleging the port violated a state stormwater permit issued under the federal Clean Water Act.

The settlement amount consists of $16,500 to cover the legal fees of the lawsuit’s plaintiff, environmental group Waste Action Project, plus $10,000 that will be paid to the Feiro Marine Life Center to help restore Peabody Creek.

King County-based Waste Action Project filed suit in US District Court in September 2013, alleging violations of the Clean Water Act relating to stormwater discharges from the port’s boatyard. The group had claimed that when it rained, the port was exceeding benchmark zinc and copper levels in stormwater that the port discharges into the Boat Haven marina inside Port Angeles Harbor.

The group’s lawsuit quoted discharge monitoring reports that the port files with the state Department of Ecology in stating that the seasonal average for copper concentration from 2011-12 was eight times the allowable average of 50 micrograms per liter and that the seasonal average for zinc concentration over the same timeframe was 267.5 micrograms per liter, three times the allowable seasonal average of 85 micrograms per liter.

Under the terms of the settlement, the port admits no wrongdoing, agrees to comply with the terms of its national pollutant discharge permit going forward and is also required to implement a new discharge system wherein stormwater will circulate through plants and soil in a rain garden, rather than flow into marina waters.

LA City Council Confirms Port Director

By Mark Edward Nero

The Los Angeles City Council unanimously confirmed veteran shipping industry leader Gene Seroka as the new executive director of the Port of Los Angeles on June 11. He replaces former Executive Director Geraldine Knatz, who retired in late 2013.

Seroka’s nomination was unanimously approved by the port’s Harbor Commission on June 5.

“The Los Angeles trade gateway is a vital force in our nation’s economy,” Seroka said. “I am honored to lead the team dedicated to making this powerful engine the most competitive, efficient and sustainable source of prosperity for the benefit of both our region and U.S. international trade.”

Seroka has more than 25 years of experience in shipping, global logistics and executive management. Most recently, he was Head of Commercial in the Americas Region for American President Lines (APL) Limited. Seroka joined APL, a wholly owned subsidiary of Singapore-based Neptune Orient Lines (NOL), in 1988 as a sales support representative.

Among those testifying on Seroka’s behalf before the City Council was Michele Grubbs, vice president of the Pacific Merchant Shipping Association.

“In a hyper competitive business environment, choosing Gene is a clear affirmation that the port of Los Angeles is customer-focused and committed to retaining its standing as the No. 1 container port in the United States,” Grubbs, told the Council.

“Gene Seroka is a dynamic, seasoned executive with all the right knowledge and skills to seize the opportunities and navigate the challenges of a fiercely competitive industry and ensure the Port of Los Angeles continues to thrive as a global leader in international trade,” said Los Angeles Mayor Eric Garcetti, who nominated Seroka for the position on May 27, after a global search to fill the position.

Russia's New Crimean Shipbuilding Sector

By Eugene Gerden

Russia is considering a massive shipbuilding program, utilizing the facilities of Crimean enterprises and plants, according to an official representative of the country’s Ministry of Industry and Trade.

As part of these plans, a special commission headed by Vladimir Shmakov, President of the United Shipbuilding Corporation, Russia’s state monopoly in the field of shipbuilding, has recently visited the Crimea to evaluate the shipbuilding potential of local enterprises.

According to state plans, the Russian Military-Industrial Commission, (which is a permanently functioning body with vast responsibilities for supervising the distribution and implementation of the “State defense order”) will soon provide the Crimean shipbuilding enterprises with state orders on the building and servicing of both military and commercial ships.

According to earlier statements by Dmitry Rogozin, Russia’s Deputy Prime Minister, who is responsible for the development of the military and industrial complex in the Russian government, Crimea has big shipbuilding potential.

“Crimea currently has several large ship repair and shipbuilding plants, located in Feodosia, Kerch and Sevastopol, which were among the largest during the Soviet times,” said Rogozin. “We have already evaluated their potential and have already decided to start production of some of vessels and marine equipment at their facilities this year”.

At present Crimea has about a dozen large-scale shipbuilding enterprises. In Sevastopol such plants include the Sevastopol Marine Plant named Ordzhonikidze, which was founded as far back as in 1783, the South Sevastopol plant and the Maritime Industrial complex.

In Kerch, shipbuilding is expected to be established at the local Zaliv plant and the Kerch Shipyard. Finally, in Feodosia, production may take place at the facilities of the existing More factory, which was founded in 1938 and which specializes in the production of hovercrafts and hydrofoils.

An official representative of United Shipbuilding Corporation (USC) has already confirmed the company’s interest in Crimean enterprises, but declined to provide details. He added that if the Crimean enterprises receive orders, it will help to save their production, scientific and technical potential, as well as ensure their integration into the Russian shipbuilding industry.

The USC believes that the transfer of some orders to Crimean enterprises will not affect the rate of utilization of the corporation itself and enterprises, which are part of it.

In the meantime, Russian experts in the field of shipbuilding have already welcomed the new state initiative, believing that it will have a positive effect on the economy of Crimea and the whole of Russia.

According to Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies, one of Russia’s leading analyst agencies in the field of maritime and shipbuilding, the annexation of Crimea by Russia is also beneficial because the Russian Black Sea Fleet will return to its historic base in Sevastopol from Novorossiysk and will no longer have to pay to rent naval bases in Sevastopol.

It is planned that at the initial stage the Crimean plants will focus first on the implementation of state orders, and later on commercial contracts. This will take place after the completion of a modernization of the facilities.

Among the planned production range are oil tankers, LNG carriers and vessels for the development of the Russian continental shelf and in particular the Arctic.

Sevmorzavod, which is the largest shipbuilding plant in Sevastopol, is expected to be one of the Crimean enterprises, which will receive funds from the Russian government.

According to Dmitry Belik, Acting Mayor of Sevastopol, Sevmorzavod is a former shipbuilding and shiprepair base for the Russian Black Sea Fleet, which had employed more than 15,000 workers in the past.

In addition to shipbuilding itself, there are plans for the development of diesel engine manufacturing, as well as casting and galvanizing production. Finally, a significant amount of funds are expected to be invested to establish the production of marine screws and other marine equipment.

Belik also added that all the Crimean shipbuilding plants will be repurchased from their current owners without any expropriation, while all the current workers will keep their jobs.

The utilization of Crimean enterprises will also help USC to implement one of the most ambitious goals for the current year and to double its revenue up to 350 billion rubles (USD$11 billion) this year, according to Alexander Neugebauer, the company’s vice president for economics and finance. In contrast to previous years, when the majority of revenue was generated by State defense orders, this year the share of revenue attracted by commercial orders will be significantly increased, which is expected to help to achieve such ambitious figures.

According to USC, its military and commercial order book is full. The largest commercial orders to be implemented in 2014 will be the production of icebreakers and offshore drilling platforms, which will be supplied both to domestic and foreign customers. In the case of domestic customers, OSC already has preliminary agreements on the supply of its new vessels and equipment to the country’s leading oil and gas producers, such as Rosneft and Gazprom. The names of foreign customers are currently not available, but according to analysts of the Russian Ministry of Industry and Trade, the new ships may be of interest to Rosneft and Gazprom foreign partners who participate in the development of oil and gas fields, including on the country’s sea shelf. Among such companies could be ExxonMobil, BP, Total and others.

In recent years, the development of shipbuilding has become one of the priority targets of the Russian government. In addition to Crimea, the government plans to continue its active development in the Far East. As part of this, the government plans to speed implementation of a project to build the Zvezda super shipyard, which will be located in Primorye (Far East) and will be the largest shipyard in the country.

According to the latest decision of the Russian government, the shipyard should be built no later than by 2018, instead of originally planned 2021, due to pressure of the country’s leading oil and gas producers. Upon completion of construction, Zvezda will become the largest shipyard in Russia, which will augment the existing state shipbuilding program by about 30 percent.

The building of the shipyard is expected to attract some leading design bureaus from St. Petersburg, Moscow, Europe and the US as well as leading shipbuilding corporations from Southeast Asia, and in particular from Korea.

Already during the first stage the shipyard will have the capacity to build ships with a length of 250 meters and launching weight of up to 30,000 tons.

The shipyard will specialize in the construction of tankers with a deadweight of up to 350,000 tons, gas, ice-class vessels, special vessels, offshore platform elements and other marine equipment.

Analysts of Russian Ministry of Industry and Trade believe that the segment of offshore vessels is expected to be the most profitable for USC and the whole Russian shipbuilding industry in the near future. According to earlier estimates of Russia’s President Vladimir Putin, the USC’s portfolio in this segment may reach 512 vessels by 2030, with a total value of 6.5 trillion rubles (USD$180 billion).

However implementation of these ambitious plans may never take place, due to current financial difficulties being experienced by the Russian government, associated with the recent Crimean crisis and devaluation of the ruble. According to Alexey Rachmanov, Russia’s Minister of Industry and Trade, the funding of the existing state program to help develop the national shipbuilding industry through 2030, initially estimated at RUB 1.3 trillion (USD$37 billion) could be cut by up to 40 percent.

Eugene Gerden is a free-lance writer based in Moscow, Russia who has covered the European maritime industry for 10 years. He can be reached at gerden.eug@gmail.com.

Westport Shipyard Sold

By Mark Edward Nero

Westport Shipyard, the largest yacht builder in North America, said June 6 that the company’s assets have been acquired by Westport, LLC, an ownership group that includes members of the Louisiana-based Chouest family.

Westport Shipyard, which was founded in 1964 and is now celebrating 50 years in business, maintains three locations in Washington state, as well as a marina and sales office in Ft. Lauderdale, FL. The company, which employs more than 400 workers, has completed more than 120 yachts since 2000. And one of those customers was Gary Chouest, a member of the new ownership group.

“Gary has always been passionate about our industry, and we are honored to count him as a customer, and now our majority owner, as well,” Daryl Wakefield, Westport’s president, said. Wakefield is expected to remain in his current role with the company, along with General Manager Dave Hagiwara, and the rest of Westport’s management team and employees.

The Chouest family of companies includes substantial holdings in its primary business in the oil and gas marine transportation industry globally, but also includes the Stuart, Florida-based American Custom Yachts (ACY).

“The Westport family is excited about joining forces with the Chouest family,” Wakefield said.

Since 1994, ACY has maintained a 63-acre facility accommodating the design and construction of custom sportsfishermen, as well as other affiliated companies.

Similar to the history of the Chouest family business, Westport began five decades ago with a fishing fleet, and has diversified into many other core businesses. Also similar to the Chouest business model, Westport maintains its own in-house vessel design and development team.

“We are pleased to join the Westport family, and look forward to pursuing the synergies that exist between the Chouest companies, ACY, and Westport,” Gary Chouset said. “We will continue to pursue the employment of skilled local workers, and will remain an active participant in the communities Westport serves.”

Vigor Delivers 144-Car Ferry

By Mark Edward Nero

Builder/contractor Vigor Fab delivered the Tokitae, the state’s newest ferry, to Washington State Ferry officials in early June.

The $144 million Tokitae is the first of three 144-car ferries currently planned, and is expected to enter service this summer on the Clinton-Mukilteo route. The second vessel, the Samish, is currently under construction at Vigor with delivery planned for early 2015. State lawmakers have provided funding for a third ferry, and construction is expected to begin in late 2014.

“Vigor Fab built a top-notch, first-in-class vessel on budget and on time to serve WSF’s peak summer season,” Vigor Fab Senior Vice President Joe Corvelli said. Vigor Fab is Vigor Industrial’s ship building unit. “The Tokitae is the result of all the skill, hard work and dedication our shipbuilding teams bring to the job. These workers have built a vessel ready to serve the people of Washington for the next 60 years.”

The vessel’s name, Tokitae,  comes from a Coast Salish dialect, and means ‘nice day, pretty colors.’

“We have a longstanding, productive partnership in new vessel construction with Vigor,” Capt. George A. Capacci, interim assistant secretary in charge of WSF, said. “Vigor and their subcontractors have delivered a good product that will serve our customers for decades to come.”

With three new 64-car ferries operating, and the first of three new 144-car ferries joining the fleet, the average age of WSF’s vessels is expected to drop from 38 years to about 31, according to Transportation Secretary Lynn Peterson.

“This new vessel brings us closer to increased service reliability, while meeting the needs of taxpayers and our customers,” Peterson said.

Crowley, Foss Receive Safety Awards

By Mark Edward Nero

The Chamber of Shipping of America (CSA) recently recognized hundreds of vessels for their outstanding safety records by naming them Jones F. Devlin award winners at the CSA Annual Safety Awards Luncheon May 29 in New Orleans.

Crowley Maritime saw 75 of its vessels recognized, while Foss Maritime had 73 vessels honored for outstanding safety records.

The Jones F. Devlin award is given to self-propelled merchant vessels that have operated for two full years or more without a crew member losing a full turn at watch because of an occupational injury. The award publicly recognizes the skills and dedication of the men and women who are responsible for those safe vessel operations.

Crowley’s Devlin Award-winning vessels together have achieved a total of 510 years of service without a lost time injury. Of the 75 awarded, 19 have gone without incident for 10 or more consecutive years.

“Safety is at the top of Crowley’s core values and strategic goals,” Mike Golonka, vice president, ship management, said. “The vessels receiving Devlin Awards exemplify this Crowley core value, because they live it every day – for themselves, their families and Crowley.”

The Foss vessels achieved the equivalent of 483 years without a lost-time injury. Of Foss’ 73 awarded vessels, 57 achieved five or more years of incident-free operation, with 10 of those vessels attaining ten or more years.

“We’re very proud of our program, training, resources and operations,” Foss President and CEO Paul Stevens said. “. The men and women of Foss, who work hard to earn us this recognition, are our greatest asset and their safety and well-being are our highest priority.”

POLA Adopts $938 Million Budget

By Mark Edward Nero

The Los Angeles Board of Harbor Commissioners on June 5 approved a $938.8 million fiscal year annual budget for the Port of Los Angeles, down from the current fiscal year’s $1.1 billion budget.

About $350 million, or 37 percent, of the new budget is earmarked for capital expenditures, down from $400 million in FY 2013-14.

In the FY-2014-15 budget, $281 million is dedicated to specific capital improvement program (CIP) projects. Terminal development and transportation projects comprise 87 percent of the CIP budget.

Roughly $136 million, or 48.5 percent, of the budget is dedicated to terminal development projects, with $100 million helping fund the ongoing TraPac Terminal expansion, which includes backland improvements, stacking crane and automation infrastructure, an intermodal facility to provide on-dock rail capabilities and other terminal-related construction.

Another estimated $19.2 million goes toward upgrades and improvements at the Yang Ming, APL, Evergreen, YTI and China Shipping terminals.

An estimated 38 percent of the proposed budget, or $109 million, is designated for transportation improvement projects, including $35.5 million for the Berth 200 Rail Yard with its accompanying track connections and $27.9 million for the South Wilmington Grade Separation project.

About $40 million has been allocated to improve vehicular traffic flow to and from the Interstate 110 Harbor Freeway.

The approved budget is based on a projected 3.8 percent increase in cargo growth over the current budget.

“In the face of fierce and increasing competition from around the world, we must do whatever we can to maintain our position as the nation’s premier trade gateway,” Harbor Commission President Vilma Martinez said. “This budget will allow us to continue to modernize infrastructure, upgrade terminals and build a transportation network that can continue to successfully compete globally.”

The port says it anticipates spending about $1.1 billion on capital improvement program over the next five years.