Philly Shipyard Signs LOI to Build Up to Four New Containerships for Hawaii Trade

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July 21, 2017

Jones Act ships under construction at Philly Shipyard, fomerly Aker Philadelphia Shipyard. File Photo

Jones Act shipbuilder Philly Shipyard announced Friday that it has entered into a Letter of Intent (LOI) with a leading, blue chip Jones Act operating company for the construction and sale of up to four containerships with planned deliveries in 2020 and 2021.

The identity of the operating company has yet not been disclosed, but Philly Shipyard indicated that the vessels would be based on a similar design to the two Aloha-class containerships it is currently building for Matson, Inc.

Friday’s announcement follows news from last month that Philly Shipyard had initiated construction of up to for new containerships and was “actively promoting” a new entrant in the Jones Act containership trade to operate the vessels between U.S. mainland and Hawaii. In its announcement, Philly Shipyard said those vessels would also be based on a similar design as the Aloha-class and that they would be delivered in 2020 and 2021.

Philly Shipyard, a wholly-owned subsidiary of Oslo-listed Philly Shipyard ASA, said the LOI announced Friday marks the entry into the next phase in the transaction process and builds upon ongoing discussions between the parties.

Under the terms of the LOI, the shipping company will make an initial order for two 3,700 TEU environmentally friendly containerships and receive options to order two additional sister ships. It is intended that these vessels will service the liner trade between the U.S. West Coast and Hawaii.

PSI says it has already begun construction of the vessels in order to meet their target delivery dates of 2020 and 2021. PSI said the design of the newbuilds is based on a continuation of Matson’s two 3,600 TEU “Aloha Class” containerships, which are currently under construction at PSI for the Hawaii trade-lane.

The final transaction is subject to agreement by all parties on definitive documents and fulfillment of certain closing conditions. The LOI provides for a period of exclusivity to negotiate and complete this transaction.

In addition to Matson Inc., the only other carrier operating in the Jones Act U.S. to Hawaii trade is Pasha Hawaii. In May, Pasha announced that it had selected Keppel AmFELS in Brownsville, Texas to build two new LNG-fueled containerships, with the option to build two additional vessels. At the time, Pasha Hawaii said it was still in the process of finalizing the contract for the vessel.

In its 20-year history, Philly Shipyard has delivered 26 vessels, including four vessels for use in the Hawaii containership trade, which were delivered in 2003-2006.

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