Philly Shipyard Looks to End Order Drought

Philly Shipyard said it is in the early stages of potentially securing an order to build two Jones Act compliant medium range (MR) product tankers for an undisclosed buyer.

The U.S. shipbuilder revealed in its second quarter report that it has executed a nonbinding Term Sheet with a potential customer for the construction of two newbuild 50,000 DWT tankers for targeted deliveries in Q4 2020 and Q1 2021.

In order to support the delivery timetable, the Aker-backed shipyard has initiated preliminary design work for the tankers. If built, the vessels would be similar to the builder’s recently completed series of eight MT-50 class ships (four for Crowley and four for Kinder Morgan), except the main engines would be upgraded from Tier II to Tier III compliant.

The transaction is subject to agreement by the parties on definitive documentation and fulfillment of certain closing conditions, including, but not limited to, securing commitments for charters, the shipbuilder said.

The plans come as Philly Shipyard is expecting significant losses in 2018 and 2019 amid a lack of new orders following a loss-making containership build program in progress for Matson and stalled plans to build up to four containerships for TOTE. Since the beginning of 2018, the shipyard has idled certain operations and let go roughly a quarter of its employees through a series of layoffs.

Short term, the shipbuilder said it is widening its search for new opportunities throughout the marine industry, including various specialized vessels such as fishing trawlers, cable layers and vessels to support the offshore wind industry.

In the longer term, Philly Shipyard is also looking for opportunities outside of the commercial market, having teamed with Fincantieri Marine Group and Vard Marine to compete for the detail design and construction (DD&C) of the U.S. Coast Guard’s next generation heavy polar icebreaker.