Thursday, August 6, 2015

Totem Ocean Signs LNG Conversion Deal

By Mark Edward Nero

Tacoma-based Totem Ocean Trailer Express has signed a contract with Singapore-based Keppel Shipyard for the conversion of one of its ORCA Class ro/ro ships, the Midnight Sun, to dual fuel liquefied natural gas propulsion.

The deal, which was announced Aug. 4, is one of the world’s first major conversions of a large ro/ro vessel to LNG, according to Totem Ocean. The work is expected to begin in December and be completed within 90 days.

“The removal and replacement of the four engines, adding 2,200 cubic meters of LNG capacity along with the addition of 47 kilometers of new cabling is a complex undertaking,” John Parrott, President of Totem Ocean, said in a statement. “We are confident that Keppel will provide safe, timely, high-quality work.”

Once the conversion is complete, the Midnight Sun would emit fewer air and greenhouse gas emissions, reducing emissions of particulate matter by 91 percent, NOx by 100 percent, SOx by 90 percent and carbon dioxide by 35 percent.

Her sister ship, the North Star, is expected to be converted in the 2016/2017 time frame, according to TOTE.

Michael Chia, managing director of Keppel Offshore & Marine Leveraging, said that due to natural gas’ cleaner burning properties, more and more vessel owners are choosing to have their ships powered by LNG.

“Keppel is well positioned to capture this growing market to meet the industry’s needs for environmentally friendly solutions,” he said.

Puget Sound Energy, in partnership with Totem Ocean and the Port of Tacoma, has plans to construct an LNG liquefaction terminal at the port that will serve Totem Ocean, residents of Puget Sound and the broader transportation industry in the Pacific Northwest. This facility is scheduled to be complete by late 2018.

In the short term, TOTE and its partner WesPac are building North America’s first LNG bunker barge to deliver fuel to the ships once converted.

Maritime Commission Fines NVOCCs

By Mark Edward Nero

The Federal Maritime Commission on Aug. 4 completed compromise agreements with six shipping companies, including one on the West Coast, for violations of the Shipping Act mostly involving rates violations.

The Maritime Commission said it’s recovering a total of $1.2 million in civil penalties from six non-vessel-operating common carriers (NVOCCs) and one vessel-operating common carrier (VOCC).

The penalties, according to the FMC, are a result of investigations conducted by the commission’s area representatives in Seattle and New York, as well as headquarters staff in Washington, DC. The parties settled and agreed to penalties, but did not admit to violations of the Shipping Act or the commission’s regulations.

The sole West Coast shipper involved in the settlements was Hyundai Logistics USA, an NVOCC and freight forwarder based in the Los Angeles County city of La Mirada, California. The FMC alleged that Hyundai Logistics violated the Shipping Act by knowingly and willfully obtaining transportation at less than applicable rates by improperly allowing third parties to access service contracts to which Hyundai Logistics (USA) was the contract signatory.

Under the terms of the compromise, respondent made a payment of $100,000.

The other companies that the FMC reached settlements with were: United Arab Shipping Co. of Dubai; China-based City Ocean Logistics; Oriental Logistics Group (Taiwan); Falcon Maritime & Aviation (New York); and Sea Gate Logistics (New York).

Each was fined from $80,000 to over $537,000 for shipping rates violations.

“The compromise agreements demonstrate how serious we are about protecting the international shipping marketplace from fraud and threats to cargo security, and in our commitment to shield the many lawful participants in international trade from commercial deception and other unlawful trading practices,” FMC Chair Mario Cordero said.

Matson Investing $30 Million in Alaska Operations

By Mark Edward Nero

Honolulu-based Pacific shipping company Matson Inc. said this week that it is moving to fund improvements in the Alaska operations that it took over following its May 29 acquisition of Horizon Lines’ Alaska services.

Matson expects to invest more than $30 million in new equipment, with planned upgrades over the next three months, including 2,000 new standard 40-foot dry containers for general cargo; a new 65-ton gantry crane for its Kodiak Terminal; 430 new insulated containers for winter operations; and two new Kenworth tractors for Anchorage Terminal container positioning.

In addition, Matson says, it has scheduled work to install new exhaust scrubber systems on the three former Horizon D7-class vessels it now operates in Alaska, with each vessel going into dry dock for three months beginning in September.

The new equipment is expected to help the vessels comply with the latest federal emissions regulations and virtually eliminate all sulfur dioxide and particulate emissions. Matson says it will deploy a reserve container ship during the installation period to prevent any disruption to its twice-weekly service from Tacoma to Anchorage and Kodiak and weekly service to Dutch Harbor.

The modifications to all three ships are expected to be complete by December 2016.

The new gantry crane is due to arrive in Kodiak in early August and the new insulated containers are expected to be delivered in Anchorage in late October.

“These infrastructure investments will bring Alaska assets in line with our standards,” Matson President and CEO Matt Cox said.

Matson acquired Horizon Lines, including Horizon’s Alaska operations and the assumption of all non-Hawaii business, for about $469 million on May 29. Around the same time, Horizon sold its Hawaii trade lane assets and liabilities to The Pasha Group for $141.5 million.

Canada to Map Arctic Sea Floor

By Mark Edward Nero

The Canadian government announced July 30 that it is setting aside more than $22 million for a series of projects that it says will “lay the foundation” for “safe and secure” shipping in the Arctic via improvements in northern shipping.

The Government of Canada, as part of its Economic Action Plan 2015, is investing $22.7 million over five years on a cash basis to provide a foundation to begin addressing the evolving needs of mariners in the North.

This suite of targeted investments, the government has said, will support the development of a long-term strategy for the Arctic and be aligned with current efforts to promote safe shipping and strengthen Canada’s ability to respond to marine pollution incidents.

Some of the money is earmarked for the purchase and installation of four multi-beam sonar systems aboard Canadian Coast Guard icebreakers for sea-floor surveying.

“Our enhanced ability to map Canada’s Arctic waters will result in better charts and navigational information, leading to improved safety for mariners in the North,” Canadian Transport Minister Lisa Raitt said in a news release.

The investments include:
$12.1 million over five years on a cash basis for the Canadian Hydrographic Service, and $900,000 ongoing to procure hydrographic equipment and increase the surveying capacity for key Arctic routes.

$5.6 million over four years for the Canadian Coast Guard to complete four reviews of marine navigation services and infrastructure, including aids to navigation.

$3.9 million over five years, also to the Canadian Coast Guard, and $500,000 ongoing to enhance the search and rescue capacity in Arctic coastal communities.

$1 million over five years Transport Canada to engage local and Aboriginal communities on the marine transportation system in the North.

Tuesday, August 4, 2015

Judge Upholds Foss’ Terminal 5 Lease

By Mark Edward Nero

On July 31, a King County judge upheld a land lease between Foss Maritime and the Port of Seattle, saying that the Terminal 5 deal is valid, despite claims to the contrary by environmental groups.

In his decision, Judge Douglass North ruled that the port, which bypassed an environmental review when awarding the lease, was within its right to do so.

The port signed the two-year lease with Foss Maritime on Feb. 9, giving Foss the right to short-term moorage and vessel operations along 50 acres at the port’s 156-acre Terminal 5, which is currently undergoing renovation.

On March 2 however, a coalition of five environmental groups – Puget Soundkeeper Alliance, the Sierra Club, Washington Environmental Council, Seattle Audubon Society and Earthjustice – filed a challenge against the port’s lease on the grounds that the lease would change the use of Terminal 5 by converting it into a homeport for Shell Oil’s Arctic drilling fleet.

They argued that such usage would not comply with the mandate that the terminal be used strictly as a transport facility where quantities of goods or container cargo are stored and transferred to other carriers and/or locations.

After Judge North’s ruling, attorney Patti Goldman, who’s representing the various environmental groups, said she would have to talk to the plaintiffs before deciding whether to appeal.

Despite the victory for the port and Foss, the status of the lease is still in question, however.
In early May, the Seattle Department of Planning and Development (DPD) ruled that an additional use permit is required for the moorage of a drilling rig and accompanying tugboats by Shell Oil at Terminal 5. The port and Foss have challenged the ruling, and a hearing on the matter is scheduled for Aug. 13.

“The judge’s ruling … confirms what we’ve known all along: Terminal 5 is properly permitted to tie up these vessels, sometimes for extended periods,” Foss spokesman Paul Queary said in a statement. “We look forward to the hearing examiner reaching the same conclusion.”

USCG Charges Portland Protestors

By Mark Edward Nero

Officers with Coast Guard Sector Columbia River have initiated civil penalties against 13 environmental activists who last month invaded an established safety zone around a Shell-contracted vessel in Portland, the US Coast Guard said Aug. 3.

The 13 cited were part of a blockade off the St. John’s Bridge in Portland on July 29 set up to delay Shell’s Arctic icebreaking vessel, the MSV Fennica, as it attempted to leave the Port of Portland.
The activists, who are with Greenpeace, were cited under the Code of Federal Regulations for being in a federally-regulated safety zone established between July 22 and July 30.

On July 22, the Coast Guard established 100-yard safety zones around Arctic drilling and support vessels, and 500-yard safety zones while transiting.

“While the Coast Guard supports peaceful protest activity upon domestic waters, the actions of these individuals violated federal law,” said Capt. Daniel Travers, captain of the port and commander of Coast Guard Sector Columbia River. “We are holding these individuals accountable because their safety zone violations created an extremely dangerous situation and unnecessarily put protesters and law enforcement personnel at risk.”

The climbers secured themselves in place suspended from the bridge and displayed banners with slogans including “#ShellNo” and “Save the Arctic.”

Although Coast Guard officials could have sought a maximum civil penalty of $40,000 for each entry into the zone or day the individuals violated the zone, the recommended penalty for each citation was $500. The Coast Guard Hearing Office in Arlington, Virginia will determine the final penalty.

Vancouver USA Slashes Current Budget by 18%

By Mark Edward Nero

The Port of Vancouver USA Commission on July 28 voted unanimously to slash the port’s current-year budget by 18 percent, bringing the amount down from $98.7 million to about $80 million.
The new budget also includes a 15.3 million reduction in operating revenue and a $13.5 million reduction in operating expenditures.

The changes are in response to the failure of a new freight-hauling venture, dubbed the Dedicated Rail Service, to generate as much revenue as predicted. The service moves North Dakota agricultural products west in railcars that would have otherwise been empty when returning from dropping off eastbound shipments.

Bulk agricultural products are one of the port’s key service areas, so when the service began last fall, the port was hopeful that it could fill the gap between Washington farmers’ growing needs for product movement and the railroads’ current capabilities.

However, the service hasn’t come close to generating the revenue the port projected it would.
The port’s original 2015 budget, which commissioners approved last November, pegged rail service revenue at $18.5 million, but the revised budget figures such revenue at $3.28 million, 82 percent less than originally projected.

Additionally, the revised budget drops the rail service’s expenses to $3.16 million, down 80 percent from an initial estimate of $16.64 million. If the numbers hold up, then the program would bring the port a profit of just over $120,100 in 2015, substantially less than the just under $2 million originally projected.

APA President Dies, Successor Named

By Mark Edward Nero

American Pilots Association President Capt. Michael R. Watson died unexpectedly at his home in Annapolis, Maryland on July 23 at the age of 72. He is being replaced by Capt. Peter McIsaac, the APA’s vice president for the Pacific states, who will serve out the remainder of Watson’s term of office, which expires Dec. 31, 2016.

Watson had been a maritime pilot and a national and international leader of the piloting profession for more than 45 years. He graduated from the US Merchant Marine Academy at Kings Point in 1965 and was commissioned as an ensign in the US Naval Reserve.

He began his maritime career by serving on US Military Sealift Command ships supplying US troops in South Vietnam. He was first elected APA president in 2000 and was re-elected in 2004, 2008 and 2012.

McIsaac, who began his maritime career in the tugboat industry in 1977, later advanced to tug captain and senior port captain while working on vessels throughout southwest Alaska and the San Francisco Bay area.

He joined the San Francisco Bar Pilots Association in 1992 and was later elected its president, serving terms from 2000-2004, 2006-2010, and 2012 to present.

A Michigan native, McIsaac was educated at the University of Alaska. He and his family currently reside in San Mateo, Calif.