New shipping service said to be headed to isles

Another company said it is making a run at starting a Hawaii cargo shipping service that would break up a market duopoly and could benefit consumers.

However, there is some doubt surrounding the motive of the initiative and whether it will result in a third ocean cargo carrier with regular service to the state from the West Coast.

The effort is being led by a Philadelphia shipyard owned by Norwegian-based Aker ASA.

Philly Shipyard Inc. announced Thursday that it has started to build the first of up to four new ships for the service, which is expected to be run by a “major U.S. shipping operator” that the shipyard would not name because negotiations are active.

Two ships could be ready for delivery in 2020, and another two in 2021, Philly Shipyard said.

If launched, a new shipping line would establish competition for Matson Inc. and Pasha Hawaii with regularly scheduled service on the route, which is restricted to ships built in the United States, owned by a U.S. entity and crewed by U.S. citizens under a federal regulation called the Jones Act.

Shane Peters, president of Honolulu-based Peters Communications, representing Philly Shipyard, said the shipbuilder identified Hawaii as a market with room for competition and a 2020 deadline to meet higher pollution emissions restrictions that could create openings for a company with new ships.

It’s possible that Philly Shipyard would be part owner of the new line, according to Peters. The shipyard said “several prominent investors and lenders” in the U.S. shipping market have expressed interest in taking part. The company also said it has retained former senior executives in the industry with Hawaii experience, including former Horizon Lines President John Keenan.

Peters said the shipbuilder is starting construction now so that the first two ships can be ready when the stricter environmental restrictions become effective.

“They’re pretty confident that they have the components of an agreement in place,” he said.

Steinar Nerbovik, Philly Shipyard president and CEO, said in a statement that the company is pleased to have received positive feedback from widely known players in the industry and from financing sources. “We are excited to get started on building a new fleet of containerships for a new carrier in the Hawaii trade,” he said.

Matson said in a written response that it has been the primary ocean cargo carrier serving Hawaii for 135 years and that it has four new ships being built to maintain its position.

“Matson’s mission — to move freight better than anyone — will not change,” the company said. “Our focus will always be on providing our customers the best service in the market.”

Two of Matson’s new ships are being built by Philly Shipyard, which was previously known as Aker Philadelphia Shipyard. Those two ships are scheduled for delivery in 2018 and 2019. The other two are being built by General Dynamics NASSCO and are scheduled for delivery in 2019 and 2020. Matson has 11 ships in its Hawaii service, including three ships that are near the end of their useful life and will not comply with the new environmental regulations.

Pasha announced last month that it was finalizing an order for two new ships to be built by Texas shipyard Keppel AmFELS and delivered in 2020. Pasha operates six ships, including two relatively new ships and four that are 36 years old.

In response to Philly Shipyard’s announcement, Pasha spokeswoman Laurie LaGrange issued a short statement: “Our number one focus is on our customers and continuing to do our best to serve them and ensure their ocean transportation needs are met.”

Mike Hansen, a local shipping industry observer who heads a group that has tried to relax Jones Act regulations, said Philly Shipyard’s announcement appears largely aimed at Pasha and could be leverage to get the company, or even Matson, to buy or lease the ships it is building so there is no new competition.

Hansen said there isn’t room for terminal operations of a third major carrier at Honolulu Harbor, and said Philly Shipyard’s announcement reminded him of a situation about a decade ago with the same shipyard and a potential new competitor in the Hawaii market.

In late 2004 a retired Matson CEO, Brad Mulholland, formed a company called OceanBlue Express and held discussions about buying two ships that were already being built by Kvaerner Philadelphia Shipyard, another predecessor of Philly Shipyard. But then in early 2005 Matson ended up buying the two ships for use in Guam and China.

Kvaerner’s then-President Dave Meehan said at the time that OceanBlue, which had expressed intent to serve Hawaii from California, had run into difficulties.

“We started building these ships on speculation and worked for some time with startup company OceanBlue Express,” he said in a statement in 2005. “As it became apparent that OceanBlue Express was experiencing difficulties in removing contingencies relative to our preliminary agreement, we escalated our sales efforts. We are very happy that we have now concluded a contract with our old customer Matson.”

Hansen said he doubts there will be a third carrier serving Hawaii from the West Coast due to Philly Shipyard’s effort. “My best guess is that they are seeking a buyer for four containerships with this ploy,” he said in an email. “This current Philly Shipyard move may be to either get Matson and/or Pasha to purchase the containerships.”