Multiple River Bars Closed in Oregon and Washington

Coast Guard says Columbia River is among the closures 
(11/25/2011)


The following is the text of a press release issued by the U.S. Coast Guard:

(SEATTLE) -- The Coast Guard Captain of the Port (COTP) Sector Columbia River, in Astoria, Ore., and the COTP Sector Puget Sound in Seattle issued the closure of multiple river bars within Oregon and Washington due to hazardous conditions Thursday. The bars at Quillayute River, Wash., Grays Harbor, Wash., and the Columbia River are closed.

The bar closure applies to all vessels and any request to transit the bars prior to reopening must be approved by the COTP, Sector Columbia River. Mariners may contact the Coast Guard on VHF-FM Channel 16 or Sector Columbia River by telephone at (503) 861-6211 or Coast Guard Sector Puget Sound at 206-217-6001 for further information or to request crossing.

The Coast Guard will re-evaluate the bar closure on an ongoing basis and will re-open the waterway as soon as the offshore weather improves.

The Coast Guard understands the effects these closures have on commerce and will make every effort to re-open these waterways as soon as they are considered safe for navigation.

LNG Freight Gains on Trinidad Cargoes

From Bloomberg Business News:
14 November 2011

Demand for tankers that haul liquefied natural gas is set to climb as much as 3 percent as Trinidad and Tobago ships more cargoes to Europe and Asia amid rising U.S. shale-gas production, Lorentzen & Stemoco AS said.
About 7 million metric tons of Trinidadian LNG will travel three or four times farther as imports into the U.S. decline, creating demand for up to 12 more ships a year, Knut Stangebye Olsen, a gas analyst at the Oslo-based shipping consultant, said by phone today. A fleet of about 350 tankers carries 217 million tons of the fuel a year, he said.
The longer distances will support single-voyage charter rates for LNG carriers, which now exceed $100,000 a day, according to Stangebye Olsen, a former manager at tanker owner BW Gas Ltd. The percentage of ships at work, or fleet utilization, is at least 95 percent, he said.
“When you go past 90 percent utilization and you have some extra demand generated, the impact on the spot market rate is very substantial,” Stangebye Olsen said. “That’s why you get so much effect out of this.”
Trinidad and Tobago, the largest exporter of LNG to the U.S., is now sending 25 percent of its shipments to the country, down from 75 percent three years ago, Energy Minister Kevin Ramnarine said yesterday. Cargoes previously shipped to the U.S. are going to South America and Asia, Ramnarine said. The Caribbean nation exports 15 million tons of the fuel a year.
Japanese utilities imported 20 percent more LNG in October than a year earlier as operating rates at nuclear plants fell to the lowest levels in at least 34 years.
LNG is natural gas that’s been chilled to minus 260 degrees Fahrenheit (minus 162 degrees Celsius) to put it in a liquid state for shipping by tanker.
To contact the reporter on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net
To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

Unions Condemn Maritime Administration Report

From Seafarers International Union Website:
11/7/2011

Statement by American Maritime Officers; International Organization of Masters, Mates and Pilots; Marine Engineers’ Beneficial Association; and Seafarers International Union

On Maritime Administration Report Comparing U.S. and Foreign-Flag Operating Costs

November 7, 2011

Maritime Administration Disregards Shipboard Labor, Releases Flawed Report

The U.S. Maritime Administration recently released a highly contentious study of American-flag shipping without any input whatsoever from maritime labor. This inexplicable decision guaranteed that the report would not contain the information that Congress and the Administration would need to develop and implement meaningful maritime policy that strengthens, not weakens, the U.S.-flag merchant marine, provides jobs for American, not foreign, maritime workers, and bolsters, not diminishes, the economic, military and homeland security of the United States. The administrator who approved the report, David Matsuda, should be held accountable.

The Maritime Administration, more than a year ago, was tasked by Congress with identifying ways to boost American-flag shipping. Instead, the agency accepted a report based on incomplete information whose main conclusion – that in the deep-sea commercial sector, it often costs more to use U.S.-flag ships – isn’t news to anyone. The fact that MarAd chose to exclude a significant segment of the maritime industry from this process, and accepted a report that includes possible cost-cutting suggestions that are completely contrary to the overall best interests of the United States, represents a gigantic failure in Matsuda’s leadership and a missed opportunity on the part of the Maritime Administration.

How could the Maritime Administration sign off on a report that suggests consideration of weakening or eliminating the Jones Act, one of the bedrocks of our national and economic security? How could the agency not refuse the mere notion of turning America into a second register? (It should be noted that the carriers interviewed for the study soundly rejected lowering U.S.-citizen crewing requirements as well as the second-register idea.)

We make no apologies whatsoever for the fact that our members make a living wage and receive health care and pension benefits. American mariners are second-to-none worldwide when it comes to being properly trained for their profession. Yet MarAd’s report points to these factors as some of the reasons why it costs more, on average, to ship American. MarAd should be ashamed of itself for entertaining a study that suggests that beating down American mariners to the level of Third-World labor and lowering their standard of living are good for our industry and good for our country. The findings of this report are an insult to the brave men and women who comprise the U.S. Merchant Marine, including those who sail in harm’s way to deliver vital materiel to our armed forces.

We stand ready to work with Congress and the Administration to make our industry stronger, larger and more competitive. The Maritime Administration had the opportunity to start this process in an all-inclusive, productive way. It is not only unfortunate but a clear dereliction of duty that they chose not to and instead spent time, energy and resources on a report that serves no useful, constructive purpose.

Horizon Lines hit by third quarter losses.

Here's a follow up to an article from IFW talking about Horizon.

Source: IFW

Kizzi Nkwocha | Tue, 8 Nov 2011

Company hopes refinancing and exit from the trans-Pacific market will 

bring stability

 

Horizon Lines, the US’s busiest domestic ocean shipping company, sustained considerable losses of $126.5 million from continuing operations in the third quarter, the company has revealed.









The huge losses compared with a $8.2 million net profit a year earlier. In a defiant statement issued yesterday Horizon said it expects its recent refinancing and exit from the trans-Pacific market to stabilize future results despite “challenging” economic conditions.

Last month , as the US’s largest shipping line announced its decision to discontinue its Five Star Express (FSX) transpacific container shipping service between the US west coast, Guam and China, President and CEO Stephen Fraser said: “Our decision to exit this highly volatile market will allow Horizon to focus on our core domestic ocean shipping services, and provide the opportunity to produce a more profitable and stable financial performance over time.”

The results, announced yesterday included a $117.5 million goodwill impairment charge stemming mainly from the shutdown of the trans-Pacific service and deteriorating earnings.
Horizon said the amount of the goodwill impairment is an estimate that may be adjusted during the fourth quarter.

The company said it expects the shutdown of the trans-Pacific service to produce a pretax restructuring charge of $105 million to $110 million in the fourth quarter, following negative adjusted earnings before interest, taxes, depreciation and amortization of approximately $43.7 million for the year’s first nine months.

Horizon launched the trans-Pacific service last December after Maersk Line did not renew a take-or-pay agreement for eastbound capacity on the backhaul of Horizon’s service from the U.S. mainland to Guam. Horizon is laying up the service’s five chartered ships, each with capacities of 2,824 20-foot-equivalent units, and seeking to subcharter them.

Earlier this year Horizon Lines completed a complicated $650 million financial restructure that saved the shipping line from bankruptcy and will left bondholders with most of the company’s stock.

The carrier had struggled to straighten its finances since pleading guilty last March to price-fixing in the Puerto Rico trade.

Horizon operates between the US mainland and Puerto Rico, Alaska, Hawaii and Guam, and between China and the US west coast.

Bad News for the US Shipping Industry.

Source: IFW

Pete Goldin | Wed, 2 Nov 2011

Average US vessel operating costs last year were almost three times higher than their international counterparts, according to a report from MARAD, the US maritime administration body.

The report, Comparison of US and Foreign-Flag Operating Costs, says: “US flag-carriers are at a distinct disadvantage in their ability to compete in international transport markets.”

The comparison used aggregate average total operating costs.

MARAD also found that average operating costs for US-flagged containerships and ro-ro vessels in particular were generally three times higher than foreign-registered ships.

Difference in crew costs were even more noticeable – roughly 5.3 times higher for US-flagged vessels in 2010, even though their average crew size is slightly smaller. Crewing costs on US bulk carriers were 5.7 times higher.

The report attributes the higher operating costs to regulatory requirements on vessel labour, insurance and liability, maintenance and repairs, taxes and expenses associated with environmental compliance, higher wage rates and social benefits.

The report also notes that approximately 110 ships fly the US flag, while more than 540 US-owned vessels are registered in 31 other countries, presumably to reduce costs.

The report also suggests several options MARAD may pursue to encourage participation in the US fleet.

These include promotions and missions to secure additional streams of commercial cargo for US-flagged vessels, encouraging US companies to support domestic industry by using US vessels and providing information on annual cargo preference volumes to assist carriers with business planning.

Shipping Company Pleads Guilty to Pollution Charges

(11/7/2011)

The following is the text of a press release issued by the U.S. Attorney for the District of Oregon: (PORTLAND, Ore.)– U.S. Attorney S. Amanda Marshall and Oregon Attorney General John Kroger jointly announced that the owner and operator of a Cyprus-based ship pleaded guilty today to felony oil pollution charges. A.E. Nomikos Shipping Inv. Ltd. and Lounia Shipping Co. Ltd. pleaded guilty to one count each of violating the Act to Prevent Pollution from Ships, and knowingly making false statements to the U.S. Coast Guard. As part of the plea agreement, the companies agreed to pay a $750,000 fine. Half of the fine – $375,000 – will go to the Oregon Governor’s Fund for the Environment, which is dedicated to local environmental cleanup and restoration efforts focused on preserving and protecting Oregon’s rivers, watersheds, and fish and wildlife. Nomikos was the operator and technical manager of the Arion SB, a bulk carrier that operated under the flag of Cyprus. Nomikos provided management services pursuant to a contract with Lounia, the registered owner of the Arion SB. Nomikos is headquartered in Piraeus, Greece. Lounia is headquartered in Cyprus. Representatives of the companies entered guilty pleas before U.S. District Judge Michael H. Simon today, after which Judge Simon imposed sentence. In addition to the $750,000 fine, Judge Simon sentenced both defendants to three years probation, during which both defendants will be required to fund and implement an Environmental Compliance Plan. An investigation revealed that between at least June 2011 and October 16, 2011, Nomikos and Lounia, acting through their agents and employees, directed subordinate engine room crew to run the Arion SB’s Oil Water Separator improperly. Specifically, the Chief Engineer instructed the Second Engineer to pipe fresh, clean water directly into the Oil Content Meter for the purpose of blinding the Arion SB’s Oil Content Meter, so that it would not function properly to prevent the overboard discharge of oil-contaminated waste in excess of 15 ppm. The Chief Engineer failed to include any entries in the Arion SB’s Oil Record Book relating to the crew’s improper use of fresh water to manipulate the vessel’s Oil Content Meter, and also included inaccurate entries in the Oil Record Book regarding the crew’s use of the vessel’s Waste Oil Incinerator. “The sentences imposed today should send a clear message that the United States will hold vessels responsible for dumping oil in our oceans and for lying to the United States Coast Guard. We are pleased that the court allocated $375,000 of the fine to be used here in Oregon to benefit our environment,” said U.S. Attorney S. Amanda Marshall. “The Oregon Department of Justice is deeply committed to holding polluters accountable when they break the law,” said Attorney General John Kroger. This case came to light after the United States Coast Guard boarded the Arion SB, on or about October 16, 2011, to conduct a Port State Control Safety Exam for the vessel. “This case demonstrates our commitment to ensuring that vessels calling on U.S. ports fully comply with U.S. laws and international treaties,” stated Rear Admiral Keith A. Taylor, Commander, Thirteenth Coast Guard District. The case was jointly investigated and prosecuted by federal and state authorities. The case was investigated by the U.S. Coast Guard, U.S. Coast Guard Investigative Service, and Environmental Protection Agency Criminal Investigation Division. Assistant U.S. Attorney Stacie F. Beckerman and Special Assistant U.S. Attorney Patrick Flanagan of the Oregon Department of Justice’s Environmental Crimes Unit prosecuted the case.

The Changing Face of Piracy

From Maritime Reporter & Engineering News, October 2011

 

David Rider

As the NATO and EU NAVFOR operations Ocean Shield and Atalanta continue their work in the Gulf of Aden, Indian Ocean and Red Sea areas, one could easily be forgiven for thinking, well, that’s that. Tough luck, pirates, the world is on to you. Sadly, as anyone involved in international shipping knows, that is very far from the truth.
The fact is that the areas patrolled by the world’s navies are vast and the chance of early interdiction of a pirate skiff or mothership by a naval vessel is small. In the risk versus reward world of the pirate, it’s a virtual no-brainer.
Given that around seven percent1 of the world’s oil supplies and an estimated 22,000 vessels transit the Gulf of Aden (GoA) annually, it would be reasonable to expect that same transit route to be safe and free of incident, but the reality is far from it.
In early August 2011, the International Chamber of Commerce’s Commercial Crime Service reported that there had already been 22 successful hijackings by Somali pirates, while countless others have been approached, attacked and pursued by pirates in high speed skiffs, launched from nearby motherships.
As the methods employed by the world’s navies to combat them have become more sophisticated and organized, so the pirates have changed their tactics to suit, with the first six months of 2011 showing a dramatic rise in attacks over the same period for 2010; some 266 attacks on vessels in the period, compared with 196 for last year2.
This year’s monsoon season has been a stark reminder that pirates are highly motivated to capture their quarry. While normally shipping could breath a sigh of relief at the arrival of the summer monsoon, this year the IMB issued a statement warning seafarers of the continuing danger of pirate attack. The organization said that the movement of pirates to the GoA and Southern Red Sea (SRS) areas, due to monsoon conditions in the Indian Ocean were a, “cause for concern.” IMB Director, Captain Pottengal Mukundan, said: “It may be that these recent Indian Ocean incidents are a sign of desperation by pirates, or that there are many more pirate groups operating now than there were in 2010, particularly outside the Gulf of Aden.”
As a leading supplier of armed security personnel to the maritime community, Neptune Maritime Security continually has Vessel Protection Teams (VPTs) transiting both the IRTC and High Risk Area, and identified a potential trend in pirate tactics during the monsoons.
While July was a quiet month in the SRS region, with only a handful of minor reports, a string of what can only be termed ‘swarm’ attacks took place in August off the coast of Eritrea, possibly due to pirates moving up through Bab el-Mandeb, the ‘Gate of Tears,’ the strait that connects the Red Sea to the Gulf of Aden and Indian Ocean. When the monsoons bring dangerous conditions to the open sea, pirates will retreat here to calmer waters.
It was here that large numbers of pirates were reported to be operating in ‘packs’ and attempting to swarm vessels in large numbers.
The first incident, on August 7, according to the report filed with the IMB’s Live Piracy Reporting Center3, saw 12 skiffs containing between five to eight pirates per skiff pursue and attack a bulk carrier approximately 20nm off the coast of Eritrea. As the skiffs approached to within 300m of the carrier, the Master ordered the armed security guards onboard to fire warning shots at the pirates’ skiffs. While this show of force saw the majority of pirate vessels break off their attack, two skiffs continued in their pursuit for some 30 minutes, returning fire at the armed guards until they, too, aborted their attack. If one believes the report – and there is no reason to doubt the legitimacy of reports filed with the IMB – then even underestimating the number of pirates to just 60 still leaves us with evidence of a worrying trend in pirate tactics.
Following an advisory notice issued by Neptune Maritime Security to both the media and other companies in the industry, we received news of a second ‘swarm’ attack4 on August 10. On this occasion, a Panama-flagged tanker, Golden Topstar, was pursued while underway at 13:08N-043:07E by pirates in 12 skiffs. The vessel evaded the attack by employing evasive maneuvers and firing flares. The site of the incident is just 6.5nm away from the attempted attack three days previously.
A third ‘swarm’ attack occurred5 on August 17. A bulk carrier underway, approximately 22nm off Assab, Eritrea, at 13:16N-043:01E, was approached by seven high speed boats, each containing three to five men, armed with automatic weapons. Again, the attack was repelled thanks to the employment of evasive maneuvers and an increase in speed by the vessel. This attempt occurred just 10.2nm away from the incident on August 10th.
Reports then emerged from the Iranian Navy, concerning a wave of attempted attacks on the bulk carrier ‘SAEI’ at the mouth of the SRS at Bab-el-Mandeb, although exact location information was not provided. According to the Iranian Navy report, the first attack saw four skiffs containing 20 pirates engage the vessel, the second wave featured eight skiffs with a force of 40 pirates and a third and final attempt was said to feature just two skiffs with just 12 pirates on board.
While some sources have questioned the credibility of these reports, the bulk of available data should at least raise concerns in the industry as to the changing and malleable nature of the tactics employed by pirates in the area. The IMB reports6 that (at the time of writing), since May 20, 14 vessels have been attacked in the Southern Red Sea.
Further east, pirates were also changing their MO, choosing to avoid the rough Arabian Seas in favour of daring raids near major shipping hubs.
The successful hijacking of the chemical tanker, Fairchem Bogey7, on August 20, illustrates how pirates have altered tactics in response to pressure from EU NAVFOR, the monsoon and better practice by vessels transiting the HRA. According to reports, the Fairchem Bogey, carrying a cargo of methanol, anchored 4-5 miles off the Omani port of Salalah. Ironically, the armed guards employed by the shipping company to watch over the vessel in transit had disembarked once the ship reached what was thought to be safe anchorage. Then, at approximately 0630 UTC, a group of pirates stealthily boarded the vessel and took its crew of 21 hostage. Did the pirates have someone on shore, advising them of the protection team’s departure, or was this just dumb luck? We may never know.
The attack caused concern not only due to its brazen nature, but also because Oman has a well resourced Coast Guard, who were on the scene within an hour. Unfortunately, by then it was too late, and they were warned off by the hijackers, who later sailed the vessel to Garacad and demanded a $10m dollar ransom for its release8.
The attack shows parallels to the hijacking of the cargo ship, Leopard, which was boarded off the Omani coast on January 12. The freighter had discharged its armed guards and was boarded shortly afterwards. Six crew members are still being held hostage by the pirates involved9. Since the hijacking of the Fairchem Bogey, there have been several other attempts made to attack vessels, which the Omani Coast Guard have rebuffed.
While attacks on vessels off Oman are hardly news, recent weeks have seen an increase in attempted hijackings in the region, which perhaps illustrates the increasing pressure pirate gangs have felt due to local weather conditions, the presence of naval vessels and more recently, the presence of armed security guards onboard vessels. According to EU NAVFOR, 90% of ships surviving a pirate attack in the Gulf of Aden this year have credited a security team for aiding their escape10.
As we reach the end of the monsoon season, international shipping can once again expect Somali pirates to strike out further into the Arabian Sea and Indian Ocean in an attempt to make up for time lost due to the monsoon, utilising hijacked fishing boats and merchant vessels as mother ships. As Captain Keith Blount, Chief of Staff with EU NAVFOR told Reuters: “I think we are going to see a surge in piracy because we always have done at this time when the southwest monsoon abates and the seas become flatter.”
 “Typically the pirates have a really good go in the autumn and winter,” he said on the sidelines of a shipping conference11.
The international battle against piracy continues its cat and mouse game, with no immediate end in sight for either the beleaguered shipping companies who have paid an estimated $95 million in ransoms this year alone, or the estimated 343 seafarers still being held hostage in Somalia12.

Neptune Maritime Security
www.neptunemaritimesecurity.com
Email: info@neptune-ms.com

(As published in the October 2011 edition of Maritime Reporter & Engineering News - www.marinelink.com)

DryShips and OceanFreight Complete Merger

Friday, November 04, 2011

 

DryShips Inc. (NASDAQ: DRYS) and OceanFreight Inc. (NASDAQ: OCNF) announced today that following approval by OceanFreight's shareholders at a special meeting, the companies have completed the merger and OceanFreight has become a wholly-owned subsidiary of DryShips. Under the terms of the merger agreement, OceanFreight shareholders will be entitled to receive $11.25 in cash and 0.52326 of a share of common stock of Ocean Rig UDW Inc., a global provider of offshore ultra deepwater drilling services, for each share of OceanFreight common stock owned by them.

As a result of the merger, OceanFreight's common shares will cease trading on the NASDAQ Global Market today, and OceanFreight expects to deregister and suspend its reporting obligations under the Securities and Exchange Act of 1934, as amended.

American Stock Transfer & Trust Company has been appointed to serve as the agent for payment of the merger consideration to OceanFreight shareholders, and will promptly mail to shareholders instructions on how to surrender their stock certificates and receive payment for their shares. Banks, brokerage firms or other nominees will provide those shareholders who hold their shares in "street name" with their proceeds from the transaction. For more information, shareholders who hold their shares in "street name" should contact their bank, broker or other holder of record, and shareholders of record may contact American Stock Transfer & Trust Company at (877) 248-6417 (toll free). Shareholders of record should wait to receive the letter of transmittal before surrendering their shares.

Coast Guard Reccomends Changing Shipping Lanes For Blue Whales.

From the Los Angeles Times, November 1, 2011:

The U.S. Coast Guard has recommended shifting the shipping lanes in the Santa Barbara Channel to move cargo ships out of the way of whales feeding in the Channel Islands National Marine Sanctuary.

A proposal published Tuesday would narrow the lanes and move one of them north of a steep, underwater drop-off near Santa Cruz and Santa Rosa islands where endangered blue, fin and humpback whales have been congregating to feed on krill, saying it would “help in preserving the marine environment.”

Federal wildlife officials and environmental groups have been alarmed by the presence of whales in shipping lanes, which they worry puts the giant marine mammals at greater risk of being struck and killed by the hulking vessels that ferry goods in and out of the Los Angeles-Long Beach port complex.

Four blue whales were struck and killed by vessels near the Channel Islands sanctuary in 2007, prompting authorities to start issuing notices asking large vessels to slow down when whales are in the area.

The threat of collisions also has been of growing concern outside Los Angeles Harbor, where blue whales have been gathering to feed in dense concentrations in the path of a major shipping lane.

The Coast Guard proposal also calls for establishing new shipping lanes south of the Channel Islands, where some freighters have been navigating to avoid the state's strict air pollution curbs, prompting complaints from the Navy that they were getting too close to military testing ranges.

Unbounded ship traffic, the Coast Guard says, is a safety concern and a defined route would ensure more predictability.

Environmental groups, who have petitioned the Obama administration to establish a ship speed limit through California's four national marine sanctuaries to protect whales, praised the idea to move the lanes away from feeding areas. But they expressed disappointment that the Coast Guard’s proposal did not include speed restrictions.

 --Tony Barboza

Photo: A blue whale feeding on krill outside Los Angeles Harbor in October surfaces near a shipping lane. Allen J. Schaben/Los Angeles Times