Shea’s talk covered issues of US “citizenship” and cargo preference, both timely topics as both industry and law-makers grapple with issues ranging from outside equity investments in US companies and possible employment for US flag vessels.
In looking at the rationale for US flag, Mr. Shea conceded that military needs may have over-taken commercial necessity. In a first at these type of speeches, he invoked Adam Smith who talked about movable assets being akin to utilities that are needed by society. He said that answers always come down to an evaluation of the benefits, in the face of the costs. In discussing opportunities for MARAD (part of the US Department of Transportation) to shape policy, he suggested that: “If MARAD has their wits about them, they will try to reinforce cargo preference.”
As an example, he suggested that other U.S. Federal agencies finance projects where cargo is moved; legally, such cargo may be required to move in U.S. flag ships. For U.S. flag carriers, there may be some short term opportunities in fully exploiting the existing legalities surrounding preferential cargoes.
Commercial shipbuilding in the U.S. was the focus of a luncheon meeting, hosted by the Society of Maritime Arbitrators at its new uptown venue, The Yale Club, drew a large crowd. Speaker Scott Clapham, senior vice president at the Aker Philadelphia, talked in great detail about the yard’s place at the center of U.S. deepsea tanker and containership construction. He stressed the importance of working using designs (and procurement infrastructures) of established South Korean yards, and that the cost advantage of Asian yards over US yards is due to massive economies of scale, and not to the labor component, as commonly thought.
In response to a question, he explained the slow speed diesel engines are built under license, from MAN-Diesel, or Wartsila, in S Korea, for use in vessels built in the States. On the subject of conversion to LNG propulsion, Clapham, who trained as a Naval Architect, said that fuel injectors could easily be switched out on tankers and containerships with modern diesel engines, leaving the cryogenic room location for the LNG tank as challenges. For tankers, fuel tanks could readily be placed on flat decks, not the case on container ships where reducing deck space impinges on revenue.
He said that vessel owners had not yet stepped up to LNG fuelled propulsion, but that it’s a subject of great discussion with customers and prospects. Clapham noted that “…many ships in the Jones Act container trades are due to be replaced…” but cautiously said that it was unclear what the impact would be on US yards’ ability to construct container vessels.
In other New York events, the Propeller Club made a concession to the Polar Vortex, this year’s guest weather personality, cancelling an event coinciding with this week’s storm, until next week. In contrast, the Young Shipping Professionals (YSPNY) are soldiering on, billing their upcoming social event as practice for a Vermont ski trip set for end February.
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