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Wednesday, May 8, 2013
Foreign-Built Jones Act Ship Launches New Domestic Puerto Rico Service
By Michael Hansen @ 2:07 AM :: 8446 Views :: Jones Act

New domestic Puerto Rico shipping service starts May 29th

by Michael Hansen, President, Hawaii Shippers Council

A new fortnightly ocean shipping service between Houston, Texas, and San Juan, Puerto Rico, is scheduled to start on May 29, 2013.  The new service will compete with the four incumbent carriers already operating in the domestic trade with the Commonwealth – Sea Star Line LLC. (TOTE Inc.), Horizon Lines Inc., Crowley Maritime Corporation and Trailer Bridge Inc. (SEACOR Holdings)

The noncontiguous domestic Puerto Rico trade is a Jones Act trade requiring a U.S.-built, U.S.-flag, U.S.-owned and U.S.-crewed vessel to carry cargo. 

The new service will be operated by National Shipping of America, which is based in San Francisco, California, and will be called Isla Verde Service, or Green Island Service.  The service is named after Isla Verde, a district of the City of Carolina on Puerto Rico next to Luis Munoz Marin International Airport, with resort hotels and a large white sand beach on the Island’s Atlantic coast.

Shipping agents, Norton Lilly International, will represent National Shipping of America at both Houston and San Juan and handle both port and liner agencies duties.

At Houston, National Shipping of America will use the 65-acre Jacintoport International LLC terminal (“Jacintoport”) on the north side of the Houston Ship Channel near Channelview, Texas, for ship berth and cargo handling.

International Shipping Agency Inc. (INTERPORT) will handle National Shipping of America at their container terminal on Piers L-M-N-O, Puerto Nuevo, San Juan.  Despite their name suggesting it is a shipping agency, INTERPORT is stevedoring contractor and cargo terminal operator.

National Shipping of America will be operating a single gearless containership with a capacity of 575 TEU and 96 refer plugs known as the NATIONAL GLORY, which although foreign built and once operated foreign flag is now a Jones Act vessel.

The NATIONAL GLORY is owned by National Shipping of America and is under the technical management of Crowley Maritime for maintenance and crewing.

Built in Poland in 1988, the NATIONAL GLORY was seized and confiscated in a 2003 (corrected--see below) drug bust by the U.S. Government and later sold at auction to U.S. owners.

Seizure by the U.S. Government made the ship eligible for the Jones Act trade under 46 Sec. 12112 Coastwise endorsement (a) Requirement – A coastwise endorsement may be issued for a vessel that (2) (B) if not built in the United States (ii) was adjudged to be forfeited for breach of the laws of the United States.

The NATIONAL GLORY is coming off a five year time charter to APL.  During the charter, the ship was first deployed in the Eastern Mediterranean and later in the Baltic to provide feeder services for government impelled cargoes including U.S. military preference cargo.  Prior to that, National Shipping operated, for a short time, a domestic short sea service employing the NATIONAL GLORY on the U.S. East Coast between Chester, Pennsylvania and Port Everglades, Florida, as part of the U.S. Maritime Administration (MARAD)’s Marine Highway Program on the designated M-95 Corridor.

National Shipping advises that they will be scheduling the NATIONAL GLORY opposite the Horizon Line Ltd. service between Houston and San Juan, which was recently reduced to a fortnightly from a weekly service by withdrawal of a ship from that route.  The addition of the NATIONAL GLORY would restore weekly service between Houston and San Juan.

The chairman of National Shipping is Dr. C. C. Chen, who founded Wan Hai Lines Ltd. in 1965 as one of the first short sea carriers in Asia.  Wan Hai now provides global shipping services.

According to Mr. Torey Presti, President, National Shipping of America, the company will make a formal announcement of their new service later this week, probably on Thursday.

The saga of the NATIONAL GLORY indicates the lengths to which one must go to obtain a ship for domestic service in the United States and amply shows how important is Jones Act reform particularly in regards to the U.S. build requirement.  The Hawaii Shippers’ Council is advocating for its noncontiguous trades Jones Act reform proposal which in a nutshell would exempt domestic trade with Alaska, Guam, Hawaii and Puerto Rico from the U.S. build requirement.

  *   *   *   *   *

Update – January 14, 2021 – The NATIONAL GLORY was not seized by the U.S. Government in 2008 as reported in the original article published 2013 but rather in 2003.

The NATIONAL GLORY was built in Poland as a geared tween-decker and originally delivered on July 1, 1988 (current age 33 years) as the POLONIA to Polish Ocean Lines for the North Europe/West Africa trade. The ship, operating as the Panamanian YALTA, was arrested in June 2003 by British and U.S. officials onboard the British naval frigate HMS IRON DUKE in the Caribbean Sea with 3.7 tons of cocaine onboard and the 17 crew members arrested by the U.S. Coast Guard. The ship was seized by the U.S. government and subsequently acquired in in a public competitive auction in 2004 for U.S. $2.6 million by the interests that would form the National Shipping of America (NSA) in 2007. NSA converted the ship into a gearless cellular containership requiring “substantial refurbishing” at Chengxi Shipyard Co., Ltd., Jiangyin City, on the Southern bank of the Yangtze River, China, for a reported cost of U.S. $23.4 million. The refurbished ship was delivered by the shipyard on September 1, 2007, to NSA.  

In 2013, the NATIONAL GLORY’s current employment began operating an end-for-end liner service as a Jones Act ocean common carrier between Houston, Texas, and, San Juan, Puerto Rico, on a fortnightly frequency. At the time, it was estimated that the vessel had a remaining useful life of between 10 to 15 years. That would imply the need to replace the vessel in the 2025 time frame (basis 15 years). Without the highly unlikely windfall of acquiring at auction a second seized foreign containership of the appropriate capacity (which would become eligible for coastwise (or, Jones act) trading), that would mean domestic construction at an extraordinarily high cost (currently estimated to be 5 times South Korea build cost for containerships). It will be interesting to see what if anything NSA does with regards to replacement of the NATIONAL GLORY over the current decade as owners face the daunting domestic build cost to comply with the Jones Act.

As of January 13, 2021, NSA changed the routing of NATIONAL GLORY to a triangle trade by including a call at Port Everglades in Southern Florida after Houston and enroute to San Juan. NSA hopes to garner cargo traffic from Texas to Southern Florida on the Marine Highway designated by the U.S. Maritime Administration (MARAD) as M-10 away from motor and rail carriers and cargo from Southern Florida bound for Puerto Rico (away from the three regularly-scheduled ocean services operating from Jacksonville in Northern Florida to San Juan).

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The Hawaii Shippers Council (HSC) is a business league organization incorporated in 1997 to represent cargo interests – known as “shippers” – who tender goods for shipment with the ocean carriers operating the Hawaii trade.

Please contact the HSC at email pacmar@hawaiiantel.net if you wish to be placed on our email list.

 
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