U.S. shipping company TOTE is putting plans for a new Jones Act service between the U.S. mainland and Hawaii on hold due to complications in securing terminal space Honolulu.
As a result, TOTE says it will not move forward with its Letter of Intent with Philly Shipyard, which called for the construction of up to four containerships custom-built for the Hawaii trade.
In an emailed statement on Friday, TOTE said that its plans to enter the Hawaii service are on hold as a result of its Phase 1 technical review of Piers 1 and 2 in Honolulu Harbor.
“In September 2017, the Hawai’i Department of Transportation earmarked for TOTE access to Honolulu Piers 1 and 2 and exclusive use of the adjacent 45 acres beginning in 2020, to coincide with TOTE’s new service to Hawai’i. TOTE subsequently conducted a preliminary study of the site’s infrastructure which indicated that upgrades and improvements will be required to accommodate the new operations,” the statement said.
“Due to the scope and timing of the upgrades and improvements, TOTE will not renew the letter of intent (LOI) with Philly Shipyard that expires on January 31, 2018.”
In August 2017, TOTE revealed that it was behind a previously-disclosed Letter of Intent calling for the construction of up to four containerships at Philly Shipyard being built specifically for a new Jones Act shipping service between the U.S. mainland and Hawaii. For TOTE, the service would have marked its entry into the trade, pitting it against Matson and Pasha Hawaii.
The LOI called for the initial construction of two 3,700 TEU containerships, with options to build two additional vessels. The ships were given delivery dates of early 2020 (for the first two ships) and 2021 (for the second pair), and Philly Shipyard even began working on the vessels in order to ensure on-time delivery.
On Friday, TOTE said it is still open to working with the Hawaii Department of Transportation to update plans and a timeline for access to a Honolulu deep water terminal that would allow commencement of the new service, however, no specifics were provided.
Philly Shipyard said in its own statement that as a result of these new developments, the shipyard has suspended all construction activities on the vessels as it assesses its options.
“Based on these developments, the project to build Hulls 031-034 as containerships is being put on hold,” the shipbuilder said. “PSI is suspending substantially all construction-related activities on these vessels, including design, planning and procurement work. As previously disclosed, PSI has placed orders for all major long-lead items for the first pair. If these orders were to be cancelled, then the cancellation costs would be substantially lower than the value of the orders placed.”
“PSI intends to resume this project when there is more clarity regarding the new order situation and related capital requirements. Accordingly, PSI is exploring alternatives in order to secure contracts and financing for these vessels.”