An (Electric) Jolt for the Passenger Vessel Industry
The domestic passenger vessel answers the call for cleaner and more efficient platforms. It is truly an electric time to be a part of this niche industry.
In the shadow of a rapidly changing political landscape, the domestic passenger ferry sector is nevertheless seeing an increasing number of newbuild vessel orders. Older fleet vessels, some approaching financial and operational obsolescence – also environmentally undesirable on a waterfront that more than ever demands cleaner carbon signatures – are going the way of the dinosaur. Making this happen requires a creative, collaborative and determined approach.
A combination of innovative vessel designs and public-sector financing incentives is steering vessel operators towards fleets powered in part (and, in some cases, entirely) by electric power or alternative fuels now becoming available on a commercial scale. In urban areas, propelled by local pressure to pull commuters out of their cars and onto cleaner modes of transport has been a driving force. In many cases, private finance is leveraged with public finance, typically in the form of Federal and State monetary grants. Separately, river and coastal cruising, mainly supported by private money, is also seeing an uptick in activity. Both efforts have this important industry on a true course for future success.
An Electric Voyage: That Ship has Sailed
The Washington State Ferry System (WSF), the largest in the country (9.7 million passengers and 9 million vehicles in 2023), is in the midst of a major electrification program, hoping to electrify its fleet by 2050 at a considerable cost estimated (as of September 2024) to be around $4 billion. The state’s Department of Transportation (WSDOT) declared, “… as the biggest contributor of greenhouse gas emissions among Washington state agencies, WSF burns approximately nineteen million gallons of diesel fuel to support nearly twenty million passengers every year. This innovative electrification program will drastically reduce greenhouse gas emissions and save millions in fuel costs.” The ambitious plan involves the conversion of six existing diesel-powered vessels to hybrid-electric power and building 16 new hybrid-electric vessels, as well as deploying shore charging at 16 terminals. As many as 13 conventionally powered vessels will be retired.
In May, 2024, invitations went out to potential bidders on the first tranche (up to five vessels) of newbuilds with capacity for up to 160 automobiles. In September, 2024, pre-qualification bid packages were received from three yards: Nichols Brothers (on Whidbey Island), Eastern Shipbuilding Group (ESG), and Philly Shipyard. WSDOT expects two new hybrid-electric vessels to enter service in 2028 with an additional three vessels in service by 2030.
ABB, with vast experience in vessel propulsion systems, has been hired to work closely with WSDOT, who advised, “ABB will select and integrate the technology that will power the new vessels, from the engine and batteries to the propellers. They will design a complete propulsion system, oversee the timely delivery of equipment, and offer expertise in equipment installation and commissioning.” Additionally, ABB would be involved extensively in training crews on both vessel operation and system maintenance.
Retrofitting of one existing Jumbo Mark II diesel vessel, Wenatchee (212 vehicle capacity) to hybrid power, has been underway since September 2023 at Vigor Shipyard’s Harbor Island facility (in Seattle). WSDOT explained, a year into the job, “Major work completed to date on Wenatchee includes removal of two propulsion diesel generators, installation of electric power conversion and distribution equipment, upgrades to obsolete propulsion control equipment, reconfiguration of piping systems, and build-out of two new battery rooms. Ongoing work includes installation of thousands of feet of electric and fiber optic cable. From there, the battery modules will be installed.”
Two sister boats, Tacoma and Puyallup, are next in line for conversion to hybrid, with work beginning at the Vigor yard after Wenatchee’s anticipated return to service in Summer, 2025. Next in line for conversion to hybrid electric will be WSF’s Kwa-di-Tabil class vessels (748 passengers/64 vehicles), the CHETZEMOKA, SALISH, and KENNEWICK. Contracting will not begin until after the conversion work on the Jumbo Mark II boats is completed.
“We now operate three ferries that cross the Mississippi forty times a day- we’ve been doing this for three and a half years … in a contract with the Regional Transit Authority.” – Cliffe LaBorde
Image courtesy Marine Money
Follow the Money: Federal Funding
In September 2024, the Federal Transit Administration (FTA, part of the U.S. Department of Transportation) awarded $299.3 million in grants across three programs – the Electric or Low-Emitting Ferry Pilot Program ($49 million), the Passenger Ferry Grant Program ($56.3 million), and the Ferry Service for Rural Communities Program ($194 million). These follow on to the $384 million that had been awarded in the previous year.
The biggest winners in the 2024 FTA funding rounds were the Alaska Department of Transportation, which will be seeing $177 million of funds for enhancing service on the Alaska Marine Highway, and for the design and construction of a new diesel electric vessel, to replace the 60-year-old MATANUSKA (450 passengers, 83 vehicles), and to add wi-fi service to the fleet. The FTA explained, “The new ferry, which will feature a diesel-electric propulsion system, will serve rural southwest Alaska, improving service, reducing greenhouse gas emissions, and preserving a vital transit lifeline.”
Electric power also figured in other 2024 awards. Delaware River Bay Authority will be using $20 million to fund a new diesel-hybrid ferry, which will be replacing CAPE HENLOPEN (1981-built / 800 passengers / 100 cars). Separately, in Florida, the Jacksonville Transportation Authority will be getting $15.6 million to buy a new diesel hybrid-electric ferry to serve serving numerous communities on the St. Johns River. A host of terminals will be getting funds to support ‘modernization’, including the Maine Department of Transportation. In November 2024, Rhode Island-based Senesco Marine launched the CAPT. ALMER DINSMORE, a 154-foot vessel (250 passengers / 23 vehicles) powered by a hybrid diesel/electric system, built for Maine State Ferry Service (MSF) to serve the Rockland / Vinalhaven run.
Pull Quote: “We find the sweet spot, both financially and operationally, to be around 200 – 250 passengers.” – John Waggoner, the CEO of the re-invigorated Victory Cruise Lines
Image courtesy Marine Money / David Butler
Out on the left coast, in California, SWITCH Marine received U.S. Coast Guard approvals for its SEA CHANGE, a 75-passenger ferry with electric motor propulsion using 360 kW fuel cells powered by compressed hydrogen (supplemented by lithium-ion battery storage). That vessel will be operated by Blue & Gold Fleet, a contractor for San Francisco Bay Ferry (SFBF) in San Francisco Bay. The vessel, in a project six years in the making, is also the subject of high-level scrutiny in the Golden State. California Governor Gavin Newsom insists, “California is a global leader in the fight against the climate crisis, pioneering new technologies to ramp up clean energy and cut pollution — that’s why the zero-emission SEA CHANGE is so exciting.”Switch Maritime (which had been helped early on by a grant from the California Air Resources Board, or CARB, and by support from heavyweights such as oil giant Chevron) recently announced plans for a much larger RoPax vessel (300 passengers, 80 automobile) in conjunction with partners LH2 Shipping and LMG Marin (a Seatrium subsidiary). The vessel, if built, would utilize a DNV-classed liquid hydrogen fuel source design, for a RoPax currently operating in Norway.
Image courtesy Victory Cruise Lines
Green Marine: Many Routes to the Promised Land
Speaking at the November 2024 Marine Money event in New Orleans, Pace Ralli, CEO of Switch, told conference attendees: “About six years ago, we started looking at hydrogen as a way to get to zero emissions today in maritime.” He stresses that the fuel cell technology “has been around for a while,” and that Switch “… put together off the shelf equipment in a maritime application that had never been done before.” He emphasized the need to explain the technology to numerous regulatory stakeholders (including the U.S. Coast Guard – which ultimately issued the COI) “… so they could get comfortable with it.” He added that harbor craft and similar vessels would be a great fit for hydrogen technology.
The SFBF, meanwhile, says that it “…continues to make progress on its Rapid Electric Emission Free (REEF) Ferry Program, having secured more than $117 million to electrify its ferry service. The 2050 Service Vision commits the agency to focus on adding zero-emission vessels to its fleet through new construction and conversion of existing vessels, when feasible.”
The Bay area stands to benefit from ferry-related electrification efforts in the Clean Ports Program, mainly aimed at the handling sector, administered within the U.S. Environmental Protection Agency (EPA). For example, the Port of San Francisco was awarded a $55.4 million grant which will go towards these efforts, complemented by state agencies. In Alameda, the operator SFBF was awarded a $12.5 million grant from California State Transportation Agency (CalSTA) to assist in deployment of electric charging stations on its piers; part of a broader effort at ferry electrification. Also in the Bay area, operators Golden Gate Ferry and the Angel Island Tiburon Ferry were also developing designs for electrically powered boats. The financial details of those efforts are yet to be determined.
Across the country, in New York Harbor, a hybrid ferry designed by Elliott Bay Design Group (EBDG) is under construction at Conrad Shipyard for the Governor’s Island / downtown Manhattan run. The 1,200-passenger vessel, replacing a 1956-built SAMUEL S COURSEN currently serving the route, will bring students and professionals to the one-time Coast Guard base in New York Harbor. Charging infrastructure on the island (home to the New York Harbor School, the Billion Oyster Project, and many climate-related non-profits) will be funded by a $7.5 million grant from the Federal Transit Administration.
Also in New York Harbor, the Staten Island Ferry has been looking at retrofitting electric power capability to a trio of boats. In October 2024, the New York City Department of Transportation (NYC DOT, operator of the service linking Staten Island to downtown Manhattan) announced that it would be testing the use of renewable diesel on JOHN J MARCHI (built 2005), with NYC DOT planning to transition from ultra-low sulfur diesel (ULSD) fuel to renewable diesel (with significantly less CO2 emission than the ULSD) across its fleet in the coming years.
Governors Island Ferry rendering. Image courtesy EBDG
Old School: Getting the Job done, too …
In case you were wondering, conventional powered boats have not disappeared. Earlier this year, Steiner Shipyard from Bayou La Batre, Alabama, delivered CHARLES NORMAN SHAY, (149 passengers, 7 automobiles), powered by two 600-hp Caterpillar C18 engines to Maine State Ferries for its Rockland / Matinicus Island route. ESG is building LONG ISLAND, (1,000 passengers and 124 cars) with a pair of EPA Tier 4 Electro-Motive Diesel (EMD) 12 ME 23B engines for Bridgeport & Port Jefferson Steamboat Company (a subsidiary of McAllister Towing), with delivery anticipated in early 2025. Bucky McAllister, President of the ferry company, stressed its cross-sound routing as being vital in reducing pollution by enabling drivers to avoid congested stretches of I-95 and I-495.
Interplay with the commercial sector is also happening. In New Orleans, Gulf of Mexico crewboat operator LaBorde Marine Services subsidiary LabMar Ferry Service now operates small ferries linking Canal Steet with Algiers Point across the Mississippi River. At the Marine Money event, Co-owner Cliffe LaBorde told listeners, “We now operate three ferries that cross the Mississippi forty times a day- we’ve been doing this for three and a half years … in a contract with the Regional Transit Authority.” The service deploys aluminum catamarans built at Metal Shark Boats with twin 715-hp Caterpillar C18 Tier 3 diesels supplying power.
Launch of the ferry Long Island. Image courtey ESG
Traveling in Style: Private Money Buoys Luxury Sector
While much of U.S. passenger vessel orders are tied to public transportation, there is also a private side of the marketplace – complete with private finance. One such niche involves the transportation of affluent passengers to private communities. ESG’s Allenton yard has begun construction on FALCON, a 150 passenger/ 30 automobile ferry with yacht-style finishes from a design by EBDG, for the upper end Fisher Island community in Miami Beach, Florida. Access to this elite private community is only by boat.
The river and coastwise cruising sector (where battery power is not a viable option) has been a growing niche in recent years. For the North American river and coastwise leisure cruise market, smaller is better. But, the entry of new players in this market – particularly Viking – has pushed the previously bare bones river markets to up their customer service and amenities. That’s a good thing.
At the November 2024 Marine Money Forum in New York, John Waggoner, the CEO of the re-invigorated Victory Cruise Lines – a legacy brand, now revamped and beginning operations in early 2025 in the Great Lakes – said, “We find the sweet spot, both financially and operationally, to be around 200 – 250 passengers.”
Also on the Marine Money panel, Peter Shaerf, deal-maker from AMA Capital, pointed to the importance of smaller vessels being able to visit smaller ports. “A lot of itinerary opportunity is with smaller ships,” he said. Waggoner had previous involvement building up American Queen Voyages (“AQV”, later- a subsidiary of Hornblower). AQV was, in fact, the seller, at an April 2024 auction, of the two ~200 passenger vessels, VICTORY I and VICTORY II, to be operated by Waggoner’s new company – Victory Cruise Lines, redeploying a brand name that had been absorbed into AQV in late 2021. The two vessels, following their April 2024 acquisition, are being refitted and refurbished, and are set to debut on the Great Lakes in Spring 2025.
Guilford, CT-based American Cruise Lines (ACL), with six vessels already on order from its Chesapeake Shipbuilding yard, announced an order for an additional four ships. The rollout began in November, with the 100-passenger “Coastal Cat” AMERICAN LEGEND entering service, with as many as nine additional vessels to be delivered over the next three years. The first in the series (initially dubbed “Project Blue”), AMERICAN EAGLE and AMERICAN GLORY, were delivered in 2023.
The leisure passenger sector is gaining in importance, if the Marine Money agenda is any guide. The November 2024 event in New Orleans, normally devoted entirely to Jones Act commercial activity, included passenger cruise finance, for the first time in two decades of hosting this late-Autumn forum.
Full speed Ahead: the domestic passenger vessel business
It really doesn’t matter which niche sector of this important domestic vessel business you look at. All are busy, for different reasons, with different funding sources and in myriad locations. It could be argued that the considerable federal money being thrown around will, eventually, yield exponential dividends for society; in terms of reduced health problems through a greener footprint, and reduction of highway wear-and-tear – and traffic – as more vehicles are removed from the roads. A solid return for taxpayers.
On the private, luxury side of the equation, demand for leisure travel and transport services where public money isn’t forthcoming, shows little sign of abatement. No matter where you look – and how you look at it – the waterfront has electrified [!]
