U.S. Shipping reports loss for quarter

U.S. Shipping reports loss for quarter Tanker company U.S. Shipping Partners L.P., reported a second quarter net loss of $2.7 million compared to a profit of $2.4 million in the same 2007 period.
   Voyage revenue was $49.8 million for the quarter compared to $45.6 million in the second quarter of 2007.
   “Market conditions for Jones Act petroleum product tankers remained very challenging in the second quarter of 2008. Although our chemical business recovered somewhat in May and June following a weak April, the effects of record high oil prices on both refining activity and consumption of refined products caused a sharp drop in spot market demand for tanker transportation in our core market,” said Paul Gridley, the company’s chairman.
   Monday the Edison, N.J.-based company announced that Gridley would remain chairman, but had stepped down as chief executive officer of the company and would be replaced by Ronald L. O’Kelley.
   “Persistent record prices for fuel consumed to power our vessels also contributed to pressure on operating margins for those units primarily trading in the spot market. In response to the drop in spot market demand, the partnership has redeployed three of its six ITBs into carrying grain for humanitarian organizations under a U.S. government financed program where demand has been reasonably strong. However, given continued microeconomic stresses on the U.S. economy and unprecedented crude oil prices, our outlook for 2008 remains very guarded,” Gridley said.
   The company said a tug for second articulated tug barge is traveling up the East Coast to pick up the barge portion in Sturgeon Bay, Wis. The partnership expects that the completed ATB will be placed in service during the second half of August.
   The company said the total cost of the ship will be about $66.6 million, about $1.1 million more than originally estimated, principally due to contractually provided cost increases for steel and owner furnished equipment.
   U.S. shipping noted that spot tanker rates have deteriorated since late March due to the overall softening of U.S. economic activity and decreased demand for the domestic coastwise transportation of petroleum products. Refinery utilization is down, the supply of Jones Act tankers is up and the price of bunkers is up.
   The company noted that its “cash flows and liquidity have come under increasing pressure due to the current difficult market conditions” and that its new building programs have created a need for additional working capital.
   As a result it said it has hired Greenhill & Co. LLC and Jefferies & Co. Inc. to assist it in exploring strategic alternatives, including either the possible sale of the business or the sale of new equity, and other ways to increase liquidity and strengthen the financial resources.