TOTE, Inc., parent company of Sea Star Line and Totem Ocean Trailer Express, said last month it will build two 3,100-TEU containerships for the Puerto Rico trade that will be fueled with liquefied natural gas (LNG). It also has options to build three more similar ships for “additional domestic service.”
TOTE emphasized the environmental benefits of the new design: carbon dioxide emissions-per-container will be 71 percent less than the vessels now in the Puerto Rican trade. Emissions of particulate matter will be slashed by 99 percent; sulfur oxides by 98 percent; and nitrogen oxides by 91 percent.
In addition to being eco-friendly, classification society Germanischer Lloyd said current prices in Europe and the United States suggest LNG could be offered at a price comparable to heavy fuel oil, taking into account its energy content and the costs of small-scale LNG distribution.
It said LNG will be commercially attractive compared to low-sulfur marine gas oil, which will be required in the Emission Control Area (ECA) that went into effect in coastal waters in the United States and Canada last year.
Also, the IMO has designated waters around Puerto Rico and the U.S. Virgin Islands as an area in which stringent international emission standards will phase in between 2014 and 2016.
In August, TOTE also said it will modify two roll-on/roll-off trailer ships in its Tacoma-Anchorage service so they can carry LNG or diesel fuel.
Like the repowered Alaska ships, TOTE said the Sea Star ships will also have the ability to switch to marine diesel fuel, but “our expectation is that unless there is a supply issue, we will be sailing all the time with LNG,” said Anthony Chiarello, president and chief executive officer of TOTE, Inc.
The ships Sea Star currently operates were built in 1974 and 1976, so it is understandable that the company might want new ships that will be efficient and less polluting.
Equally interesting, however, are the size of the ships and the option for three more of the same size.
|Artist’s rendering of TOTE, Inc.’s new LNG-fueled ship. The yellow tanks at the stern will hold the natural gas. Under the deck are tanks that could hold bunkers as an optional fuel.
Puerto Rico is a trade that has been unhealthy for years because of excess capacity, and the day after TOTE’s announcement, Horizon Lines, the other operator of self-propelled containerships ships in the Puerto Rico trade, said it was ending one of its two weekly strings between Jacksonville, Fla., and San Juan, but would maintain three other sailings — one out of Jacksonville the others from Elizabeth, N.J. and Houston.
Sea Star’s current ships have a capacity of 1,300 TEUs, so the decision to more than double the size of its ships is notable.
The Puerto Rico ships will be built at the General Dynamics NASSCO shipyard in San Diego. Total investment will be $350 million—not only for the ships, but additional containers, and terminal improvements in Jacksonville and San Juan.
One observer of the Jones Act shipping industry said the deal could be significant, because it will “break the dam” and encourage ordering of new containerships for domestic use. Matson also announced last year it is planning to order two new containerships.
Timing of the announcement is also interesting because early this year the Government Accountability Office is expected to release a report on the economic impact of the Jones Act on Puerto Rico’s economy. Pedro Pierluisi, Puerto Rico’s resident commissioner in the U.S. House of Representatives, requested the study.
The two new ships TOTE is building for the Puerto Rico trade will be completed in 2015 or 2016 and enter service between Jacksonville and Puerto Rico.
Chiarello said the enlarged size of the ships reflects the fact that the company is “building for the future.”
What about the three ships that TOTE has an option on?
“We just felt it was important to have that added flexibility because we are looking so many years out,” Chiarello said. “We just believe there will be future opportunities, whether it is in existing trades or new trades in which the ships can be deployed. But we don’t have to make that decision relative to exercising the option for some time.”