Monday, March 30, 2015

Update: Do Philly-made Aker ships cost >5X Asia ships? Industry responds

Repeal the Jones Act, urges UK shipper Drewry

Update: Do Philly-made Aker ships cost >5X Asia ships? Industry responds

The Aker Shipbuilding complex. (CLEM MURRAY/Staff Photographer)
The Aker Shipbuilding complex. (CLEM MURRAY/Staff Photographer)

UPDATE: American shipbuilders challenge British firm's cost claims about American ships (see earlier item below.) Matt Paxton, president of the Shipbuilders' Council of America, called Drewry's analysis incomplete:

"It is misleading to simply compare shipbuilding costs in the U.S. to costs abroad because most major shipbuilding nations heavily subsidize their operations. Many of the vessels being constructed in the U.S., and at Aker in particular, are being built with state-of-the art specifications to improve safety and fuel efficiency. These include double hull fuel tanks and engines that can run on both natural gas [LNG} as well as traditional fuels... Most importantly, the shipbuilding industry and the Jones Act significantly contribute to our economy, national security, and a skilled workforce."

Adds the American Maritime Partnership: "The Drewry report is a weak attempt to use cost data taken out of the national strategic context of the Jones Act to construct a false narrative that fulfills private commercial objectives. The Jones Act serves a critical economic, homeland, and national security purpose and the utility of the law is best left to those who understand its importance, the U.S. Congress, not those who stand to gain economically from its repeal."

EARLIER: The Jones Act, the U.S. law that requires barges used to carry cargo to Puerto Rico and other U.S. territories be built in the U.S. and staffed at least partly by U.S. sailors, is multiplying costs for shippers here, the Journal of Commerce reports here. Citing the cost, JoC says UK-based Drewry Shipping Consultants' maritime-research arm, in its newsletter Container Insight Weekly, urged repeal of the Jones Act, designed to preserve both U.S. jobs and wages and the U.S. merchant fleet and shipyards like Aker's state-subsidized South Philly yard, in case war blocks foreign ships and seamen from U.S. ports.

"What prompted Drewry’s opinion was the recent order by Matson for two container ships with capacities of 3,600 20-foot-equivalent units from Aker Philadelphia Shipyard in Philadelphia for approximately $209 million each... Vessels of a comparable size could be built in Asia today for less than one-fifth of that price," reported the JoC, citing Drewry.

"The last time Matson ordered four 2,890-TEU ships at a U.S. shipyard, which were delivered between 2003 and 2006, they cost around $125 million each, which was around four times higher than the market price in Asia at the time. So the cost differential is getting larger."

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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