Matson orders two new containerships

   Matson said Wednesday it has signed a contract to have Aker Philadelphia Shipyard build two new 3,600-TEU containerships for an aggregate price of $418 million.
   The new ships will  be equipped with dual fuel engines that have the ability to burn liquefied natural gas (LNG); the vessels are expected to be delivered in the third and fourth quarters of 2018.
   Matson said the first of the two so-called “Aloha Class” ships will be named after the late Senator Daniel K. Inouye because he was a longstanding supporter of the U.S. maritime industry and its role in supporting Hawaii’s economy.
   The ships will “meet Hawaii’s future freight demands with increased cargo capacity,” said Matt Cox, president and CEO, Matson. “The new ships are designed to accommodate the diversified mix of cargo needed to support the state’s economy and will boost our capacity for moving 45-foot containers and refrigerated cargo. The ships will also carry construction materials more effectively. Most importantly, this considerable investment underscores Matson’s long-term commitment to providing Hawaii with a strong, reliable lifeline to and from the U.S. mainland.”
   Matson said the 850-foot-long vessels will be the largest Jones Act containerships ever constructed and are designed to operate at speeds in excess of 23 knots, ensuring timely delivery of goods in Hawaii.
   The company said the ships will be used to replace two existing ships in its nine vessel fleet. Matson also said the ships will also be able to navigate safely into some of Hawaii’s smaller ports. The new vessels will incorporate a number of “green ship technology” features such as a fuel-efficient hull design; dual-fuel engines; environmentally safe, double-hull fuel tanks; and fresh-water ballast systems.
   “These state-of-the-art advancements are important to Hawaii as a means to reduce fuel consumption, resulting in significant emission reductions over time in our home trade,” Cox said.
   Matson has done business with the Aker Philadelphia Shipyard before, with the shipyard building it four Jones Act containerships between 2003 and 2006.
   Aker Philadelphia Shipyard President and CEO Kristian Rokke said, “The winning of this order provides the shipyard significant backlog and valuable visibility out to 2018.”
   Meanwhile, Matson also announced it had a profit of $17.2 million in the third quarter, compared to $19.1 million in the same 2012 period. Revenue was $415 million in the third quarter, compared to $401.4  million in the same 2012 period.
   Cox said, “Matson’s third quarter results were mixed, resulting in a modest decrease in consolidated earnings. After strong volume growth in the first half of the year, we saw a lull in container volume in our core Hawaii market. Further, several unfavorable items impacted earnings in the third quarter, including higher than expected transition costs at SSAT’s new Oakland terminal; an adverse arbitration decision related to previously co-owned Guam terminal assets; and response costs, legal expenses and third-party claims related to the molasses incident in Honolulu Harbor.
   “Despite these third quarter challenges, overall our ongoing ocean transportation and logistics operations performed well. We are encouraged by the continuing strong demand for our premium service out of China, and we believe performance in Guam will remain steady. Investments made by SSAT at the Oakland terminal position the joint venture well for the long term, while Logistics continues to rebound with stronger warehousing performance expected ahead.
   “The company expects its fourth quarter Hawaii volume to be modestly lower than levels achieved in the fourth quarter of 2012. In the China trade, the company continues to realize a premium in its rates for its expedited service. However, modest rate erosion is expected on a year-over-year basis for the balance of 2013 due to continued carrier over capacity in that trade. Guam trade volume decreased slightly in the quarter due to the timing of select shipments. Little, if any, fourth quarter growth in Guam is expected.”
   Because of the Oakland terminal expansion, SSAT, Matson’s joint-venture terminal operator, saw higher transition costs that it anticipated. The operator expects a loss in the fourth quarter.
   “With respect to the molasses incident in Honolulu Harbor, no legal claims have been initiated at this time, and government agencies have not yet presented the company with an accounting of claims for reimbursement,” Matson said. Company officials added that it is too early to estimate the exact cost of the incident.
   The company said, “Volume in logistics’ intermodal and highway businesses grew at a healthy pace in the third quarter and, combined with continued cost cutting measures, results improved and operating income margin reached 1.6 percent of revenues. Driven by continued volume growth, expense control and improvements in warehouse operations, operating income margin is expected to be 1 percent to 2 percent of revenues for the fourth quarter of the year.”