Philly Shipyard to Build Cargo Ships for New Shipping Line Serving Hawaii, West Coast

Philly Shipyard Inc

Philly Shipyard announced June 8 that it will build up to four new containerships and is in “advanced discussions” to create a new cargo shipping line to provide transpacific service between the West Coast and Hawaii.

The former Aker Philadelphia Shipyard, renamed in December 2015, said the vessels will provide work for 1,200 employees at the South Philadelphia facility through 2021.

The shipyard has ordered parts to begin construction and “is actively promoting the formation” of a new freight carrier to compete across the Pacific between Hawaii and the U.S. mainland.

Currently, the route is served by only two carriers, Matson Inc. and the Pasha Group. Some U.S.-flag containerships now transporting a mix of cargoes to Hawaii are old steamships that by 2020 will not meet tighter emissions standards.

The new fuel-efficient and “environment-friendly” vessels will be built on spec, without a buyer. A maritime leasing company has offered preliminary terms for a bareboat charter, or leasing, structure, officials said.

Philly Shipyard said it is “in advanced discussions” with a major U.S. shipping operator to create the cargo line with a fleet of ships that will be built at the shipyard here. “Several prominent investors and lenders in the U.S. shipping market have expressed interest,” the announcement said.

Currently, Philly Shipyard is constructing two 850-foot-long containerships for Matson Navigation Co. of Honolulu. The ships are capable of moving 3,600 20-foot containers at speeds greater than 23 knots.

The ships announced June 8 will be “a continuation of the series” being built for Matson that will be completed in 2018 and 2019.

“We are excited to get started on building a new fleet of containerships for a new carrier in the Hawaii trade,” said Philly Shipyard president and CEO Steinar Nerbovik. “And we are pleased to have received such positive feedback from well-known U.S. marine players and financing sources.”

Philly Shipyard, the nation’s second-largest commercial shipyard after General Dynamics Nassco of San Diego, constructs oceangoing vessels in accordance with the U.S. Jones Act, which requires U.S.-made and U.S.-operated vessels to transport goods among U.S. ports.

In 2020, when stricter emissions regulations take effect, several older steam-powered vessels serving the Hawaii trade route will not comply “without substantial and costly modifications,” the shipyard said. “Even if these aging steamships are modified, they would be less reliable and carry significantly higher operating costs” in fuel consumption, personnel and maintenance requirements than a modern fleet.

“Philly Shipyard believes these circumstances create a unique opportunity for a new Jones Act carrier to enter the Hawaii containership trade,” the company said in the statement. Unless new ships enter the market, starting in 2020, local commerce “may be adversely impacted by the new emissions standards,” the yard said.

Philly Shipyard said former senior U.S. shipping executives with experience in the Hawaii containership trade are assisting, including John Keenan, former president and chief operating officer of Horizon Lines Inc. In 2015, Horizon Lines sold its Hawaii trade-lane business to the Pasha Group.

The first two ships, announced June 8, will be completed in 2020, and the second two in 2021. They are being designed to meet current and future market trends for larger-sized containers and faster transit times, and will be capable of running on LNG fuel, officials said.

Philly Shipyard has built and delivered 26 ships in its nearly 20-year history, including four for use in the Hawaii containership trade between 2003 and 2006.  The shipyard is constructing two 50,000-dwt tankers for a subsidiary of Kinder Morgan Inc.