Sunday, October 13, 2024
Hawai'i Free Press

Current Articles | Archives

Tuesday, September 26, 2017
Problems ahead for Pasha Hawaii and TOTE despite Gov Ige’s terminal announcement
By Michael Hansen @ 12:11 AM :: 5627 Views :: Jones Act

Problems ahead for Pasha Hawaii and TOTE despite Gov Ige’s terminal announcement

by Michael Hansen, Hawaii Shippers Council Sept 25, 2017

The international maritime journal, Tradewinds Magazine, published on September 21, 2017, the news article, “TOTE affirms 2020 entry to Hawaiian market,” that reports on the September 21, 2017 press release by Hawaii State Governor David Ige announcing future container terminal assignments in Honolulu Harbor and related ocean carrier considerations.

I was quoted by the author Michael Angell in regards to the possible time frame for the sequence of movements of ocean carrier operations around Honolulu Harbor as a result of the construction by the Hawaii State Department of Transportation (HDOT) Harbors Division of the long planned new container terminal known as Kapalama Container Terminal (KCT) projected to be completed in 2022.

Angell notes Saltchuk Resources Inc. / TOTE Inc. (TOTE) original announcement they would take delivery of four newbuild containerships from Philly Shipyard Inc. in the 2020 / 2021 time frame commencing service sometime during 2020.

However, Angell reports that I estimate the Diamond Head Terminal at Piers 1 & 2 – where TOTE would operate -- won’t be available until the 2024/2025 time frame based upon an analysis of Governor Ige’s press release.

See attached charts: HSC-939 Pasha / HSI operations Honolulu; HSC-940 KCT sequence of events.

The article also quotes two analysts who follow Matson Inc. (NYSE: MATX) and other maritime companies with interesting points in response to my estimates for the sequence of events.

Angell reported, Stifel Financial Corp. (NYSE: SF) “Ben Nolan says the timing of terminal moves may ‘be untenable to TOTE.’ "

Angell further reported, Michael Webber, VP & Senior Equity Analyst, Wells Fargo Securities LLC / Wells Fargo & Co. (NYSE: WFC), “says TOTE's order at Philly Shipyard ‘will likely proceed regardless’ of its use of KCT. The move will eventually force ‘some consolidation in the market.’ “ Presumably, such a development would create renewed competition between Pasha Hawaii and TOTE for KCT.

Finally, Angell reports that Webber said, “Pasha, itself, may face a reckoning on its ability to fund ships it has on order at Keppel . . . . . The privately held company is out in the market to secure a term loan for $260m to fund the newbuildings.”

It would appear that Pasha Hawaii didn’t place a firm order for two containerships with Keppel AMfels Inc. shipbuilding yard in Brownsville, Texas, rather the shipbuilding contract was likely contingent on financing, for which they may be having some issues securing.

Key excerpts:

US shipowner TOTE Maritime reaffirmed its commitment to a new Pacific Basin container service after a series of reshuffles for terminal space in Hawaii.

New Jersey-based TOTE is working with the Philly Shipyard on its plans to build four LNG-powered containerships.

TOTE said the vessels would be used as part of a new Jones Act-eligible Hawaii container service, The vessels hit the water around 2020 and 2021.

At the time, TOTE also said it was working with Hawaii's transportation department to secure deepwater dock space at the Kapalama Container Terminal (KCT) in Honolulu, Oahu.

And Pasha gets to operate out of KCT, which is scheduled to be ready by 2022.

But Michael Hansen, president of the Hawaii Shippers Council, says the space TOTE was assigned requires "extensive upgrades . . . including dredging, rebuilding the wharf aprons and installation of new container gantry crane tracks.

"This may mean the terminal won’t be available to TOTE until the 2024, 2025 time frame," Hansen said. "This will give TOTE ample time to consider their next step in regards to launching a new entrant service between the US West Coast and Hawaii."

A delay may mean Philly Shipyard will have to hold off on building the ships. Hansen warned a "significant delay would presumably be detrimental."

The issue of whether TOTE would enter the Hawaii container trade has had the most implications for the New York-listed Matson, whose shares responded negatively to the August news that TOTE would enter the trade.

The shares since reversed course upon the news that Matson secured its dock space, only to yet again fall on Friday.

Stifel analyst Ben Nolan says the timing of terminal moves may "be untenable to TOTE." As such, the impact to Matson may be overblown.

"The TOTE vessels would be ready in 2020, so there is still a two to three year period of time during which they have no place to discharge," Nolan said.

But Wells Fargo analyst Michael Webber says TOTE's order at Philly Shipyard "will likely proceed regardless" of its use of KCT. The move will eventually force "some consolidation in the market."

"The absence of clarity ... should keep investors away for now," Webber says.

Pasha, itself, may face a reckoning on its ability to fund ships it has on order at Keppel, Webber notes. The privately held company is out in the market to secure a term loan for $260m to fund the newbuildings.

Webber says the loan marketing process may conclude next week.

Charts:

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

MentalIllnessPolicy.org

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii

Obookiah

OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

RailRipoff.com

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

SenatorFong.com

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii