Marine-highway developments provide boost for Aker Philadelphia Shipyard

Aker Philadelphia Shipyard has gotten an indirect boost with the selection by the U.S. Department of Transportation of a coastal freight service that wants Aker to build five container ships to be part of a marine-highway system.

The selection of American Feeder Lines Holdings L.P. of New York and its partners, the South Carolina State Ports Authority and the Port of Galveston, Texas, does not directly help Aker solve its current crisis - no new ship orders or financing - and stay in business.

The South Philadelphia shipyard is completing three product tankers, which have buyers, with the last to be delivered in May. Aker recently began layoffs among its workforce of more than 1,000.

American Feeder has signed a "letter of intent" with Aker to build five container vessels. But first, the New York firm needs to raise $750 million in debt and equity financing from hedge and investment firms to start the ship construction, likely in 2012.

Eight marine-highway initiatives, endorsed Aug. 11 from among 35 applicants by the U.S. Maritime Administration, are eligible to compete for an initial $7 million grant and future aid aimed at getting cargo off congested roads and rails and onto waterways on the East, West, and Gulf Coasts, the Great Lakes, and some inland waterways.

"We have the moral support right now," said Tobias Koenig, chief executive and cofounder of American Feeder Lines. "For getting investors, this has put us in a better position because the DOT now says, 'We want this done.' "

American Feeder wants to operate a "short sea" container service between ports from Maine to Texas, based on a business model used in Europe, Asia, and South America.


Cargoes are expected to increase in 2014, when the Panama Canal is expanded and mega-ships from Asia arrive directly at the East and Gulf Coasts. Ships on the marine highway would operate as a "hub and spoke" network, similar to that of the airline industry. International containers would arrive at "hub" ports and transfer cargo to smaller ships, which would take it to "spoke" ports.

"We're working hard to find a way to get going before the end of this year," Koenig said. "Once we're there, we are happy to put orders in to Aker."

Aker senior vice president Scott Clapham said, "We are encouraged that the DOT is supporting this important effort, and hopefully it will create future work. We think this demonstrates the long-term need for the shipyard."

In addition to the eight projects selected, six others were identified to apply for federal funds after "further development of concepts."



Those include a "New Jersey Marine Highway Initiative" sponsored by the state Department of Transportation and backed by the South Jersey Port Corp. to develop maritime-freight services in five locations: Upper New York Bay; Newark Bay; Raritan and Linden; Camden, Gloucester and Paulsboro; and Salem.