Friday, December 11, 2015

Nichols Bros. Wins Expedition Ships Contract

By Mark Edward Nero

Nichols Brothers Boat Builders has signed agreements to build two US-flagged coastal vessels for expedition cruises and adventure travel company Lindblad Expeditions Holdings, Lindblad said Dec. 8.

The new 100-guest vessels are to be built at the Nichols Bros. shipyard on Whidbey Island in Washington State. The first ship is scheduled to be delivered in the second quarter of 2017, while the second is scheduled to for delivery in the second quarter of 2018.

The agreements are for Nichols Brothers to construct the two newbuild vessels at a purchase price of $48 million and $46.8 million, respectively, payable monthly based on the value of the work performed.

Jensen Maritime is serving as the naval architect on the project, with interior design work provided by Tillberg Design International. Construction of the vessels is expected to begin this month.

“We are pleased to be working with Nichols Brothers in Washington state on this project given their long history in shipbuilding, including having built our current US-flagged ships, the National Geographic Sea Lion and National Geographic Sea Bird,” Lindblad President and CEO Sven Lindblad said.

“This is an important milestone in the company's history as we enter the 50th anniversary of the birth of expedition travel begun by my father, Lars-Eric Lindblad, with the first laymen expedition to Antarctica in 1966,” Lindblad added.

Some key features of the new vessels include:
• Fifty cabins, 22 with balconies and eight that can be configured into four adjoining cabins for families.
• A fleet of sea kayaks, paddle boards, and specially designed landing craft, all geared to get guests out and into the places being explored.
• A fully equipped fitness room and a wellness spa.
• State-of-the-art expedition technology, including a remotely operated vehicle, video microscope, and a hydrophone and bow-cam designed for immediate bow deployment to hear and film, for instance, humpback whale vocalizations and see bow-riding dolphins.
• Full warm and cold water diving gear and underwater cameras for the undersea specialist to bring back rare imagery of the undersea world.

Lindblad had previously signed a non-binding letter of intent with Nichols Brothers for the newbuilds and paid a $4 million non-refundable slot fee during the third quarter of 2015 to reserve the shipyard’s capacity, which will be charged against the second vessel’s cost.

DOE: 100 New US LNG Ships Needed

By Mark Edward Nero

The United States is expected to change from a net importer of natural gas to a net exporter in the next five years, and transport of the full output capacity of under construction US liquefaction facilities will require about 100 or more American-built liquefied natural gas carriers, according to the US Government Accountability Office.

“Based on the current capacity of US shipyards we spoke with, building 100 carriers would likely take more than 30 years, with employment in US shipyards increasing somewhat or becoming more stable,” the GAO stated in its report, which was released Dec. 3.

Five large-scale US liquefaction facilities necessary for conversion of natural gas to LNG are under construction with a projected capacity to export more than 12 percent of US natural gas production in 2020.

The proposed requirement to transport exports of LNG via US-built and US-flagged carriers could expand employment for US mariners and shipbuilders if it doesn’t reduce the expected demand for US LNG.

According to representatives of US mariner groups, between 4,000 and 5,200 mariners would be needed to operate the estimated 100 LNG carriers needed to transport the five US facilities’ full capacity of LNG once the five are fully operational.

However, the GAO said it was told by several stakeholders that implementing the proposed requirement could prompt customers to attempt to modify, renegotiate, or terminate their existing contracts for liquefaction.

Maritime industry representatives told the government that US carriers would cost about two to three times as much as similar carriers built in Korean shipyards and would be more expensive to operate.

Based on GAO analysis, these costs would increase the cost of transporting LNG from the United States, decrease the competitiveness of US LNG in the world market, and may, in turn, reduce demand for US LNG.

Additionally, limited availability of US carriers in the early years of construction could decrease the amount of LNG that could be exported from the United States for a period of time, leading customers to seek alternate sources.

Currently operating LNG carriers are nearly all foreign built and operated. LNG carriers have not been built in the United States since before 1980, and no LNG carriers are currently registered under the US flag.

The full GAO report, titled “Implications of Using US Liquefied-Natural-Gas Carriers for Exports,” can be read or downloaded at the Accountability Office website:

5th Straight Month of Cargo Gains at POLB

By Mark Edward Nero

Strong cargo volume continued at the Port of Long Beach in November with 6.6 percent growth in container trade over the same month last year, according to newly released data.

It was the fifth straight month of increases and enough cargo to rack up the second-busiest November in its 104-year history, the port said.

A total of 619,699 TEUs moved through port terminals last month. Imports were up 4.3 percent to 306,654 containers, while exports fell four percent to 124,717 containers. The number of empty TEUs shipped was 188,328, a 19.5 percent increase over November 2015.

“Thanks to our industry partners, we have had consistent gains throughout 2015 and are on track to move more than seven million TEUs this year,” Port of Long Beach CEO Jon Slangerup said. “Retailers have reported a modest but healthy holiday season, which keeps us busy and the economy growing.”

The port said it believes that upcoming post-holiday sales planned by retailers across the country drove the port’s strong cargo numbers, as retailers heavily stocked their shelves a few months ago and are now shipping the empty containers back overseas to manufacturers to be refilled.

The National Retail Federation reported October sales were the highest in three months. The Toy Industry Association reported healthy sales figures up by 6.2 percent, an increase of $1 billion. Toy sales were driven by the “Star Wars” and “Minions” movies, whose toys came through the POLB.

Based on current projections for December, Long Beach expects to surpass seven million TEUs in 2015, which would be only the third time in its 104-year history. The other two times were in 2006 and 2007, when the Port of Long Beach reached 7.29 million and 7.31 million containers, respectively. Through 11 months of 2015, the Port was 5.5 percent ahead of the same period last year, and that’s despite the first quarter of the calendar year being negatively affected by congestion that hindered container movement on the docks.

More details on the cargo numbers are available at

Moody's: US Ports Stable in 2016

By Mark Edward Nero

The outlook for the US ports industry is stable for 2016 on the expectation of continued economic growth and a steady rise in US container volume, Moody’s Investors Service says in its annual ports outlook.

“Ports – US: 2016 Outlook – Container Volume Growth Supports Stable Outlook,” was released by the investment service Dec. 10. The outlook reflects Moody’s expectations for the fundamental business conditions in the industry over the next 12 to 18 months.

“We expect US container volume to grow three percent to four percent in 2016,” Moody’s analyst Moses Kopmar said. “Although weaker global demand and a strong U.S. dollar have weakened export activity, the US is a net importer with an improving economy, which we believe will support US consumption and drive cargo demand at US ports.”

Moody’s macroeconomic board predicts the US economy will grow two-to-three percent in 2015 and 2016; US container volume typically tracks closely with economic growth.

Additionally, shipping costs are near their lowest levels in recent years, a result of both overcapacity in the container market and low fuel costs.

“Overcapacity in the container market continues to depress freight rates, as supply growth outpaces demand growth,” Kopmar said. “While capacity is tighter for landside freight transport, such as truck and rail, competition and excess capacity have pushed down spot rates in these markets as well.”

Despite expectations of container volume growth, several factors temper Moody’s outlook. Among them is a significant build-up of business inventories than began in late 2014 and increased in 2015, which boosted container volume growth this year. As a result, Moody’s anticipates container volume growth will moderate in 2016.

The report’s part of a series of outlooks on a wide variety of sectors globally published by Moody’s. It’s available to Moody’s subscribers at

Other reports in the series can be found at

Tuesday, December 8, 2015

Obama Signs FAST Act Into Law

By Mark Edward Nero

On Dec. 4, 2015, President Obama signed into law H.R. 22, also known as the “Fixing America’s Surface Transportation Act (FAST Act),” $305 billion legislation that authorizes budgetary resources for surface transportation programs for fiscal years 2016-2020.

The US Senate and House of Representatives approved the bill just hours before President Obama signed it.

The FAST Act provides $6.3 billion for the new National Highway Freight Program, which will now provide dedicated formula funding to states for freight projects, including 1,400 miles of connections with ports and other intermodal facilities.

The legislation also funds $4.5 billion for the Nationally and Significant Freight and Highway Projects program, including $500 million for multi-modal freight projects and a $450 million ‘carve-out’ for projects ranging from $5 million to $100 million.

In a statement, Kurt Nagle, president and CEO of the American Association of Port Authorities (AAPA) applauded the government’s actions.

“The FAST Act is a major achievement, and not just for seaports and the freight community,” he said. “Passenger mobility will also be improved through congestion relief with the FAST Act provisions that fund and promote more efficient goods movement mobility. These provisions will enhance our international competitiveness in the global economy.”

The legislation also converts the Surface Transportation Program (STP) to a block grant program, maximizing the flexibility of STP for state and local governments, and increases the amount of STP funding distributed to local governments from 50 percent to 55 percent over the life of the bill.

Additionally, the Act expands eligibility for the Transportation Infrastructure Finance and Innovation Act (TIFIA) program by allowing states to use National Highway Performance Program, STP block grant and NSFHP funds to pay the subsidy and administrative costs associated with providing TIFIA credit assistance.

NASSCO Delivers American Petroleum Tanker

By Mark Edward Nero

On Dec. 4, San Diego-based General Dynamics NASSCO delivered the company’s first “ECO Class” tanker, the Lone Star State, to American Petroleum Tankers.

The vessel is the first of a five-tanker contract between NASSCO and American Petroleum, which calls for the design and construction of five 50,000 deadweight-ton, LNG-conversion-ready product tankers with a 330,000 barrel cargo capacity.

The ships were designed by DSEC, a subsidiary of Daewoo Shipbuilding & Marine Engineering of South Korea. The design incorporates fuel efficiency concepts through several features, including a G-series MAN Diesel & Turbo ME slow-speed main engine and an optimized hull form.

The tankers will also have the ability to accommodate future installation of an LNG fuel-gas system.
The 610-foot-long tankers are a new design offering improved fuel efficiency and the latest environmental protection features including a ballast water treatment system.

“The delivery of this new vessel symbolizes the future of American shipping: innovative, cost-effective, and green, General Dynamics NASSCO President Fred Harris said. “The Lone Star State, along with the four others we are currently building for APT, will be among the most fuel-efficient and environmentally-friendly tankers – anywhere in the world.”

The tankers, Harris said, are 33 percent more fuel-efficient than five previous tankers built by NASSCO for American Petroleum between 2007-2010.

Since the cut of the first piece of steel, local dignitaries have been involved in the build process of the tanker.

In September 2014, San Diego Mayor Kevin Faulconer signaled the start of construction, citing it as “a great example of innovative technology” and a “symbol of jobs and opportunity.” In March 2015, Faulconer’s wife Katherine laid the keel. Two months ago, NASSCO shipbuilders christened the vessel.

The construction and operation of the five new tankers are aligned with the Jones Act, which requires that ships carrying cargo between US ports be built in US shipyards.

Vigor Awarded $8.9 Million Dry Dock Contract

By Mark Edward Nero

Portland-based Vigor Marine has been awarded an $8.93 million contract for 56-calendar-day shipyard availability for the overhaul and dry docking of the USNS Yukon, the US Dept. of Defense revealed Dec. 3.

The USNS Yukon is an underway replenishment oiler launched in February 1993 that supports other US Navy vessels. It has a listed length of 677 feet, a beam of 97 feet, five inches and a draft of 35 feet. The vessel is listed at 31,200 deadweight tons.

The vessel entered non-commissioned US Navy service in 1994 under the control of the Military Sealift Command and serves in the United States Pacific Fleet.

Work is expected to include: general services for ship, clean and gas free tanks void and cofferdams and spaces; port and starboard cargo tanks preservation; center cargo tank preservation; close survey inspection; main deck overhead preservation; main house preservation; main engine exhaust insulation replacement; lifeboat repair and maintenance; reefer container installation; and underwater hull preservation.

The contract includes options, which, if exercised, would bring the total contract value to $9.78 million. Work will be performed in Portland, and is expected to be complete by March 2, 2016. If options are exercised, work could continue through March 12, according to the US Defense Dept.

CLIA: 24 Million Cruise Passengers in 2016

By Mark Edward Nero

Nearly 24 million cruise passengers are expected to sail in 2016, an increase from the estimated 23 million people who took a cruise in 2015 and the 22.1 million passengers of 2014, according to a report released Dec. 1 by the Cruise Lines International Association.

The number of projected passengers is a significant jump from the 15 million passengers 10 years prior, according to CLIA’s 2016 State of the Cruise Industry Outlook.

According to the outlook, CLIA member cruise lines are scheduled to debut 27 new ocean, river and specialty ships in 2016, for a total investment of more than $6.5 billion in new ocean vessels alone. Travel agents are also experiencing a higher demand for cruise travel, according to the outlook. Eight out of ten CLIA member travel agents said they’re expecting a sales increase in 2016 over this year.

“In an effort to make cruising the best overall vacation experience available, the industry is continuing to evolve,” Acting CLIA CEO Cindy D’Aoust said in a prepared statement. “By creating unique ships, new experiences and access to destinations around the world, the evolution, appeal and value of cruise travel continues to drive the overall growth of the industry.”

Cruise industry expenditures generated nearly $120 billion in total output worldwide last year, supporting 939,232 full-time equivalent employees who earned $39.3 billion in income in 2014, according to CLIA.

Among the current trends cited in the outlook are the growing popularity of river cruises; a 34 percent annual passenger volume growth rate in Asia; and an increase in overnight stays at ports of call.
More information on the outlook can be found at