Friday, November 14, 2014

POLA Approves Yusen Terminal Upgrades

By Mark Edward Nero

A project that would overhaul and upgrade a Port of Los Angeles marine terminal moved a step closer to reality on Nov. 7 when it was unanimously approved by the port’s Board of Harbor Commissioners.

The approval means the port now has the authority to direct its real estate division to open negotiations with terminal operator Yusen Terminals Inc., or YTI. Yusen wants to improve and expand its existing 185-acre terminal, located at port berths 212-224.

The terminal proposal entails improving the wharves at berths 214-216 by increasing the berths’ depth from minus-45 to minus-53 feet. Also included in the plan is a modification of the wharves at berths 217-220 to make way for 100-foot gauge gantry cranes, and deepening the berths to a minus-47 foot depth.

The nearly $60 million project would also add an additional track to the terminal’s current on-dock rail yard capacity, plus create improvements and repairs to surface backland areas.

The idea is to ready the terminal to handle the larger class of vessels that have begun calling at ports around the world. The ships, known as Ultra-Large Container Vessels, or ULCVs, have the capacity to haul 14,500 or more 20-foot equivalent units, the cargo containers commonly known in the shipping industry as TEUs.

“The ILWU is in full support of the container terminal improvements project,” Mondo Porras, vice president of International Longshore & Warehouse Union Local 13 said. “This endeavor ensures that the new 13,000 TEU-sized ships can successfully call upon the Port of Los Angeles.”

The project is planned to increase the YTI terminal’s capacity from about 1.6 million TEUs annually to over 1.9 million. In addition to 750 direct and secondary construction jobs the project’s estimated to create, the port says the project would generate a total of 2,241 other jobs related to terminal operations.

Environmentalists attending the meeting voiced their concerns about the project’s EIR, including that it doesn’t address all feasible mitigations, that nitrogen oxide emissions would be too high and that the resultant greenhouse gas emissions would be eight times what’s considered significant.

The arguments did not deter the harbor board from voting for the project, however, with many stating that they were comfortable enough with the findings of the Final EIR to go ahead and approve the terminal overhaul and expansion. The document was prepared by the Port of LA in conjunction with the US Army Corps of Engineers.

Award of the capital construction contract is expected to be brought before the harbor board in a separate future action. The estimated cost of the project is $58.3 million, with construction expected to begin next year and last until at least 2018.

Horizon Selling Assets to Matson, Pasha

By Mark Edward Nero

Matson Inc. and Horizon Lines announced Nov. 11 that they’ve entered into a merger agreement under which Matson will acquire the stock of Horizon, including its Alaska operations and the assumption of all non-Hawaii business liabilities. Horizon also announced separately Nov. 11 that it has agreed to sell its Hawaii operations to the Pasha Group for $141.5 million and intends to shut down its Puerto Rico liner operations by the end of 2014.

Under the terms of the merger agreement, Matson is to acquire Horizon for 72 cents per share, or $69.2 million, plus the repayment of debt outstanding at closing. The total value for the transaction is $456.1 million before transaction costs, based on Horizon’s outstanding debt as of Sept. 21, 2014, minus the anticipated proceeds from the Hawaii business sale. Horizon has a long operating history in Alaska. The company deploys three diesel-powered Jones Act qualified containerships and operates port terminals in Anchorage, Kodiak and Dutch Harbor. Its Alaska service consists of two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor. Horizon also has a reserve steam-powered Jones Act containership for drydock relief.

“The acquisition of Horizon’s Alaska operations is a rare opportunity to substantially grow our Jones Act business,” Matson President & CEO Matt Cox said. “Horizon’s Alaska business represents a natural geographic extension of our platform as a leader serving our customers in the Pacific. We are also encouraged by the long-term prospects of the Alaska market, which mirrors Hawaii in many operational ways.”

The Boards of Directors of both companies have already approved the transaction and it is expected to close in 2015. “We wish the Matson team continued success in their new Alaska trade, and we look forward to working with them to close this transaction and provide a seamless transition for our customers,” Horizon's decision to terminate its Puerto Rico service is independent of the Matson deal and that it intends to cease operations between the U.S. and Puerto Rico whether or not the Matson deal is consummated.

Under the terms of the Pasha Group agreement, Pasha will acquire certain subsidiaries of Horizon constituting substantially all of Horizon’s Hawaii trade-lane business, including four Jones Act container ships.

“Since Pasha entered the Hawaii transportation circuit nearly 10 years ago, we have elevated the quality of customer service,” the company’s president and CEO, George Pasha IV, said. “With this acquisition, we will supplement that service and provide an improved, more competitive offering on the Hawaii trade lane.”

Crowley Vessels Receive Environmental Awards

By Mark Edward Nero

Eighty-nine Crowley Maritime Corp.-owned and operated vessels were honored with certificates of environmental achievement for years of safe operations by the Chamber of Shipping of America in Washington DC on Nov. 12.

The certificates were presented during the CSA’s 11th annual environmental awards ceremony. Crowley received an award for each vessel that worked at least two consecutive years without an environmental incident.

The 89 vessels have logged a combined 968 years of service without incident.

Each year, CSA invites all owners and operators of vessels that work on oceans or inland waterways to nominate their vessels for Environmental Achievement awards. About 1,386 vessels from 58 companies, including Crowley, were recognized at this year’s ceremony. The honored vessels accumulated a total of 10,749 years of safe operations.

Forty-seven of Crowley’s vessels have gone without incident for 10 or more consecutive years, including the Saturn, which hasn’t had an incident in 45 years; the Kuparuk River and Kavik River, each with 44 years; and Sag River, 39 years. Crowley has been honored with Environmental Achievement Awards each year since at least 2005.

Accepting the awards on behalf of Crowley were operations integrity manager Andy Legge; captains Steve Sears and Mike Lamb; port engineer Mark Richards; chief engineer Tim Weber; engineer Tara Weber; and port captain Kevin Cameron.

“These awards recognize the rigorous work of our crews, who ensure that our vessels operate safely and in an environmentally responsible manner,” Mike Golonka, Crowley’s vice president of ship management, said.

POSD Sees Significant Air Emission Reductions

By Mark Edward Nero

The Port of San Diego says it has seen significant reductions in greenhouse gas emissions and other air pollutants produced by its maritime operations, due in part to the efforts of its Green Port program, which aims to reduce environmental impacts of business operations and improve the health of the San Diego Bay.

The progress in reducing air emissions is described in a report released in early November. According to the report, greenhouse gas emissions from non-military ocean-going vessels, harbor craft, locomotives, on-road vehicles and cargo handling equipment were reduced by 42 percent in 2012 compared to the baseline year of 2006.

Additionally, other harmful air pollutants were also significantly reduced, including: nitrogen oxides by 50 percent; diesel particulate matter by 75 percent; and sulfur dioxide by 94 percent, according to the document.

After the baseline measurements were taken in 2006, the port put into place emissions control strategies to reduce the largest sources of emissions from its maritime operations. In 2009, a vessel speed reduction program was developed and in 2010, a clean truck program was implemented. Additionally, shore power was installed at the port’s cruise ship terminal in 2010 to reduce emissions from berthed cruise ships.

“By reducing greenhouse gas emissions and air pollutants, we have a positive impact on climate change while also improving air quality for local communities,” Port Commission Chair Bob Nelson said. “This environmental monitoring shows that our strategies have been effective as we strive for ‘green’ maritime operations.”

Overall, maritime activities are cleaner than they used to be, according to data in the report. For example, the report states, ocean-going vessels in the San Diego Bay produced fewer emissions on a per-vessel basis in 2012 than in 2006. The port continues to implement emission reduction strategies: in early 2014, a shore power system began operating at the port’s cargo facility, the Tenth Avenue Marine Terminal, thereby reducing emissions from berthed cargo ships.

Also, in 2013, the port adopted a Climate Action Plan that provides a long-term strategic vision for the Green Port Program, and calls for 10 percent reductions of all greenhouse gas emissions by 2020 and 25 percent by 2035 compared to 2006 numbers.

The port’s next maritime emissions inventory is scheduled to be conducted in 2018.

Tuesday, November 11, 2014

Fidley Watch: How it's Done

By Chris Philips, Managing Editor

Late last month a container ship in transit from Everett, Washington to the far eastern Russian port of Provideniya lost power due to a broken oil heater and went adrift off the coast of Haida Gwaii, or the Queen Charlotte Islands in British Columbia.

A Canadian Coast Guard mid-shore patrol vessel, the 162-foot, 4,800-HP Gordon Reid arrived at the scene to tow the ship, but could not keep a towline attached in strong winds and 15- to 20-foot waves and the ship again went adrift. The Barbara Foss was eventually contracted to tow the stricken vessel to the Port of Prince Rupert, about 90 nautical miles.

Two other vessels, the Canadian Coast Guard vessel Sir Wilfrid Laurier and US Coast Guard cutter Spar, were on-hand to render assistance," says Lieutenant Paul Pendergast, with the Canadian Navy's Joint Rescue Coordination Center at Navy Base Esquimalt, "but neither was equipped to tow the ship."

As in the US, Canada uses a vessel of opportunity system, and the Canadian Coast Guard describes a vessel of opportunity as any vessel, "...close enough to provide assistance to a vessel in distress." Under the Canada Shipping Act, as well as international law, every vessel at sea is required to assist in a distress situation.

Executive Director of the Puget Sound Marine Exchange, Captain John Ventjeer says any other country's maritime response agencies also have a tug of opportunity system, whether documented or not. "If they have AIS capability they can quickly identify where tugs are; it is just a matter then of how they are called out."

In the case of the Simushir, the vessel owners, Sakhalin Shipping Company, worked directly with Foss. As luck would have it theBarbara Foss is currently on a regular schedule between Whittier, Alaska and Prince Rupert, British Columbia, and happened to have been arriving about the same time as they received the call for assistance. The Barbara Foss delivered her cargo and went to assist at the Simushir's request.

"The guys did a good job," says Ron Burchett, an experienced tugboat captain and industry consultant based in British Columbia. "They exhibited first class seamanship." Burchett notes that the crew took the Barbara from Prince Rupert down the sheltered Hecate Strait and approached the stricken ship from the south, sheltered from the wind and waves by Haida Gwai.

"They did what they needed to do to get there on time," he says. Burchett says the Foss crew got a line on the Simushir on the second try, in 25- to 30-foot waves.

The 126-foot, 4,300-HP Barbara Foss was able to secure the Simushir, and keep her from breaking up against the pristine coastline of Haida Gwaii while the newer, larger and more powerful Gordon Reid could not. This isn't a reflection on the crew of the Canadian vessel, but rather a case of the right tool for the job. The crew of the Barbara Foss responded the way we expect West Coast tug crews to respond – quickly and professionally. As evidenced by the poorly-equipped anchor-handling tug Aiviq that lost a drill rig off Alaska in 2013, the vessels equipped to respond to emergencies such as this one are the vessels that perform these duties, day-in and day-out, 365 days a year.

Seaspan Completes Shipyard Modernization

By Mark Edward Nero

Seaspan-owned Vancouver Shipyards on Nov. 6 officially celebrated the completion of a two-year, $170 million shipyard modernization project.

The project, funded entirely by coastal transport company Seaspan Marine Corp., transformed Vancouver Shipyards into one of the most modern facilities in North America, and is expected to allow for the effective and efficient delivery of vessels for the Canadian Coast Guard and Royal Canadian Navy.

The new facilities include Canada’s largest permanent gantry crane, four new fabrication buildings and a new load-out pier.

“We have built a state-of-the-art shipyard right here in North Vancouver, tailor-made to support Seaspan’s role as the non-combat capability provider to the Government of Canada’s National Shipbuilding Procurement Strategy,” Seaspan CEO Jonathan Whitworth said.

The completion of the modernization project coincides with the commencement of construction on two initial blocks for the first ship, the Canadian Coast Guard’s Offshore Fisheries Science Vessel, slated for completion by the summer of 2016.

“We have begun our work for the Canadian Coast Guard on the initial blocks of the first Offshore Fisheries Science Vessel,” Seaspan Shipyards President Brian Carter said. “We estimate the new vessel construction work we will do for the Canadian Coast Guard and Royal Canadian Navy will result in the creation of 5,000 direct, indirect and induced jobs over the next 20 years, produce almost $500 million per year in gross domestic product for B.C.’s economy, and mean thousands of people will get the opportunity for an exciting career in shipbuilding.”

Once full production on the new vessels commences in the spring of 2015, Seaspan says, it will also create stable work over the next decade for suppliers throughout British Columbia and across Canada.
In addition to the Vancouver Shipyards project, Seaspan has invested an additional $15 million to upgrade facilities at Victoria Shipyards. Work, which includes a new operations center to support testing, trials and commissioning of the new federal vessels, is expected to be complete by the end of 2014.

USCG Detains Bulk Carrier in Longview

By Mark Edward Nero

The US Coast Guard on Nov. 7 detained 600-foot motor vessel Ikan Sudip in Longview, Washington and is requiring the ship to remain moored until significant safety violations are corrected by the crew.

The safety violations were related to extensive disrepair of various piping systems in the machinery spaces. Coast Guard vessel inspectors also discovered that half of the vessel’s fire hoses were deteriorated and inoperable, greatly reducing the crew’s ability to fight shipboard fires.

The discrepancies were discovered by vessel inspectors from the Coast Guard Marine Safety Unit in Portland last week during a routine safety and regulatory compliance inspection of the Panama-flagged vessel.

The purpose of the Coast Guard’s Port State Control program is to eliminate safety hazards and environmental risks posed by foreign vessels operating in US waters. The program is, for foreign vessels calling on US ports, the primary means of enforcing internationally recognized standards for safety of life at sea.

The Ikan Sudip, owned by Grace Hawk Shipping S.A., is a 31,000-gross ton bulk carrier built in 2008 that loaded grain in Longview and is scheduled to depart for Manila, Philippines, after the safety violations have been corrected.

“The risks posed by the safety discrepancies rendered the vessel substandard with respect to US and international law,” Capt. Pat Ropp, Sector Columbia River officer in charge of marine inspection and commanding officer of Marine Safety Unit Portland, explained. “The deficiencies were determined to pose significant risk to the safety of the vessel, crew and port. They collectively indicate that the vessel is unfit to proceed to sea.”

The Coast Guard says it’s working with the vessel’s crew, owner and managing company to mitigate the safety violations and make repairs to the vessel.

Maersk Line Settles Federal Fraud Allegations

By Mark Edward Nero

Maersk Line Ltd., a US-based subsidiary of A.P. Moller – Maersk Group, has paid the United States government $8.7 million to settle a civil settlement regarding Maersk’s failure to fully comply with terms of a contract with the United States Transportation Command, the US Attorney for the Southern District of Illinois, said Nov. 5.

Under the contract, the Department of Defense used Maersk services to ship cargo from the United States to military outposts in Afghanistan. Maersk moved cargo by sea to a designated port, then by trucks over land, often travelling in remote areas where enemy combatants and criminal entities were active in delivering shipments.

However, the Transportation Command found that some claims submitted by Maersk contained suspicious signatures. Further investigation revealed that signatures purporting to verify receipt of shipments in Afghanistan were forged. A review uncovered 277 instances in which such claims were falsely made.

The transport command is based in St. Clair County, Illinois, which is why the case was prosecuted by the United States Attorney for the Southern District of Illinois.

“I would note that to its credit, Maersk was cooperative in the investigation,” Stephen R. Wigginton, the US Attorney for the Southern District of Illinois, said. “Aside from these containers, Maersk has successfully delivered thousands of shipments during the war effort.”

The matter was investigated by the United States Army Criminal Investigation Command, Defense Criminal Investigative Service, Naval Criminal Investigative Service, Air Force Office of Special Investigations and the Office of the Special Inspector General for Afghanistan Reconstruction.

“Maersk’s overall conduct reflects a stronger performance and greater diligence than the relatively small amount of non-compliant warzone shipments would suggest, but ... even a small amount of overall fraud becomes a huge waste of tax dollars,” Wigginton said.

NASSCO President Receives Service Award

By Mark Edward Nero

Frederick J. Harris, president of San Diego-based General Dynamics NASSCO was one of three men recently recognized with the United Seamen’s Service 2014 Admiral of the Ocean Sea Awards in New York City on Nov. 7.

Harris became president of General Dynamics NASSCO and a vice president of General Dynamics Corp. in January 2006. He began his shipbuilding career in 1973 as a senior engineer for Electric Boat’s Trident ballistic missile submarine program.

He is also president of Bath Iron Works, which has operations in Everett, Washington, San Diego, Honolulu and elsewhere in the United States.

In addition to Harris, awards were also presented to Stephen Cotton, General Secretary of the International Transport Workers’ Federation; and Joseph J. Cox, President/CEO of Chamber of Shipping of America.

“This year’s recipients represent greatly diverse sectors of the maritime industry,” awards committee chair General Kenneth Wykle, USA (Ret.) said. “Stephen Cotton oversees a significant labor group whose mission is the well-being and fair treatment of the world's seafarers. Joe Cox is well regarded in international transportation circles and is greatly involved in safety issues. Fred Harris’ company has designed and built innovative tonnage for America’s sea-going fleet.”

The awards were presented at an industry dinner and dance held at the Sheraton New York Times Square Hotel. Recognition was also given to American Seafarers for specific acts of bravery and heroism while at sea.

Gen. Wykle, who’s the immediate past president of the National Defense Transportation Association, was presented with an AOTOS Recognition award at the event.