Philly Shipyard Begins Construction of Modern Containership Fleet to Support Development of New Cargo Liner Service for the Hawaii Trade

  • June 8, 2017

Highlights

  • Philly Shipyard is in advanced talks with a leading Jones Act operator to establish a new shipping service in the Hawaii containership trade with up to four new, state-of-the-art, cost-effective and environment-friendly vessels
  • Philly Shipyard is building on its tradition of promoting new vessel owners in the Jones Act market
  • Indicative terms have been issued by a maritime leasing company for a bareboat charter structure to finance the purchase of these vessels
  • Former senior executives familiar with the Hawaii containership trade have been engaged to support this project
  • These vessels are a continuation of the series of similar containerships currently under construction at Philly Shipyard for the Hawaii trade-lane
  • Long-lead items have been ordered to support optimum delivery dates

Philly Shipyard, Inc. (PSI), a wholly-owned subsidiary of Philly Shipyard ASA (Oslo: PHLY), is pleased to announce that it has initiated construction of up to four new, cost-effective and environmentally friendly containerships with deliveries in 2020 and 2021, and is actively promoting the formation of a new entrant into the containership trade between the U.S. mainland and Hawaii to operate these vessels.  Presently, this trade route is serviced by only two carriers and is reliant in part on a group of near end-of-life steamships.

In line with its business strategy, PSI has a successful track record of promoting the formation of new vessel owners in the Jones Act market, such as American Shipping Company and Philly Tankers.

PSI is presently engaged in advanced discussions with a major U.S. shipping operator about establishing a new, financially strong carrier with a fleet of modern vessels to be built by PSI to support commerce between the U.S. West Coast and Hawaii.  Several prominent investors and lenders in the U.S. shipping market have expressed interest in taking part in this opportunity. In addition, a highly regarded maritime leasing company has issued an indicative offer with preliminary terms for a bareboat charter structure.

“We are excited to get started on building a new fleet of containerships for a new carrier in the Hawaii trade and are pleased to have received such positive feedback from well-known U.S. marine players and financing sources,” remarked Steinar Nerbovik, Philly Shipyard’s President & CEO. “Philly Shipyard has a strong track-record of building quality vessels for this trade, and we believe local communities can benefit greatly from the safe and reliable service provided by our modern, efficient and ‘green’ ships.”

PSI has retained former senior U.S. shipping executives with significant experience in the Hawaii containership trade to assist with the initiative.  These executives include John Keenan, who served in various key leadership roles at Horizon Lines, including as President and Chief Operating Officer from 2007-2011.

When strict MARPOL/ECA emissions regulations take effect in 2020, several of the older steam powered vessels serving the Hawaii trade route today will be out of compliance without substantial, costly modifications.  Even if these aging steamships are modified, they would be less reliable and carry significantly higher operating costs than modern vessels in areas such as fuel consumption and manning and maintenance requirements.

PSI believes these circumstances create a unique opportunity for a new Jones Act carrier to enter the Hawaii containership trade with a fleet of cost-efficient and eco-friendly container vessels built by PSI. Furthermore, unless these new ships enter the Hawaii trade route starting in 2020, local commerce may be adversely impacted by the new emissions standards.

For these reasons, PSI has begun construction of a new fleet of containerships, with planned delivery dates for the first pair in 2020 and the second pair in 2021.  In order to support this timetable, PSI has commenced design work and procurement activities.  The vessels are being designed to address the present market trends for larger sized containers, faster transit times and LNG fuel.  PSI has initiated placing orders and making financial commitments on long-lead items.

These modern containerships will be the direct continuation of the series of two similar 3,600 TEU Aloha class containerships with expected deliveries in 2018 and 2019 that PSI is presently constructing for the Hawaii containership trade.  PSI believes that the operational benefits offered by series production with familiar ships, coupled with its historical access to vessel financing, places PSI in an advantageous position to build vessels for a new cargo liner service between the U.S. mainland and Hawaii.

 

About Philly Shipyard:

Philly Shipyard is a leading U.S. commercial shipyard constructing vessels for operation in the Jones Act market.  It possesses a state-of-the-art shipbuilding facility and has earned a reputation as the preferred provider of oceangoing merchant vessels with a track record of delivering quality ships. Philly Shipyard is listed on the Oslo Stock Exchange and is majority-owned by Aker Capital AS, which in turn is wholly-owned by Aker ASA. Aker is a Norwegian industrial investment company that creates value through active ownership. Aker's investment portfolio is concentrated on key Norwegian industries that are international in scope: oil and gas, fisheries and biotechnology, and marine assets. Aker's industrial holdings comprise ownership interests in Aker Solutions, Kvaerner, Aker BP, Aker BioMarine, Ocean Yield and Akastor.

Philly Shipyard has delivered 26 vessels in its nearly 20 year history, including four vessels for use in the Hawaii containership trade which were delivered in 2003-2006. Currently, Philly Shipyard is building two 50,000 dwt tankers for a subsidiary of Kinder Morgan, Inc. (Hulls 027 and 028) and two 3,600 TEU containerships for use in the Hawaii trade for Matson Navigation Company, Inc. (Hulls 029 and 030).  For more information on Philly Shipyard transactions and projects, please visit www.phillyshipyard.com.

 

Disclaimer:

This press release includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Philly Shipyard ASA and its subsidiaries and affiliates (the "Philly Shipyard Group") lines of business. These expectations, estimates, and projections are generally identifiable by statements containing words such as "expects”, "believes”, "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the Philly Shipyard Group’s businesses, oil prices, market acceptance of new products and services, changes in existing laws and governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time. Although Philly Shipyard ASA believes that its expectations and the information in this press release were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this press release. Neither Philly Shipyard ASA nor any other company within the Philly Shipyard Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the press release, and neither Philly Shipyard ASA, any other company within the Philly Shipyard Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the press release.  Philly Shipyard ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in the press release, other than what is required by law.