High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
By Tony Capaccio
(Bloomberg) — The U.S. Navy is spending millions of dollars to repair new high-speed transport ships built by Austal Ltd. because their weak bows can’t stand buffeting from high seas, according to the Pentagon’s chief weapons tester.
“The entire ship class requires reinforcing structure” to bridge the twin hulls of the all-aluminum catamarans because of a design change that the Navy adopted at Austal’s recommendation for the $2.1 billion fleet of Expeditionary Fast Transports , Michael Gilmore, the Defense Department’s director of operational test and evaluation, said in a report to Congress.
“The Navy accepted compromises in the bow structure, presumably to save weight, during the building of these ships,” Gilmore wrote lawmakers, including Senate Armed Services Committee Chairman John McCain, in a September letter that wasn’t previously disclosed. “Multiple ships of the class have suffered damage to the bow structure.”
The speedy catamarans are designed to transport 600 short tons of military cargo and as many as 312 troops for 1,200 nautical miles at an average speed of 35 knots. They’ve been deployed to Africa and the Middle East as well as to Singapore as part of the U.S.’s Pacific rebalance and are being considered by military officials for expanded use there by the Marines. The vessels fill a transport gap between larger, slower vessels and cargo aircraft.
Michelle Bowden, a spokeswoman for Henderson, Australia- based Austal, deferred comment to the Navy. Captain Thurraya Kent, a Navy spokeswoman, said the service accepted Austal’s recommendation because the company’s analysis showed the lighter-weight bow met criteria of the American Bureau of Shipping and Pentagon requirements. She said in an e-mail that Gilmore’s report confirms that the vessel “meets and in certain area exceeds” key performance parameters.
The Navy bought 10 of the shallow-draft vessels, at about $217 million each. Five have been delivered and are in operation, while the other five are under construction at Austal’s Mobile, Alabama, shipyard. Senator Richard Shelby, Republican of Alabama, is a member of the Senate Appropriations Committee, which added $225 million for an 11th vessel to the fiscal 2016 defense spending bill last month.
So far, the Navy has spent almost $2.4 million strengthening the bow of the first four vessels delivered since late 2012.
Repair costs include $511,000 on the initial vessel, the USNS Spearhead, which was damaged during deployment by waves slamming into the superstructure, according to test data cited by Gilmore and the Military Sealift Command.
The second, third and fourth vessels cost as much as $1.2 million each to repair and a fifth vessel, the USNS Trenton, awaits its bow reinforcement during its next scheduled shipyard visit, Tom Van Leunen, a spokesman for the Military Sealift Command, which owns the vessels, said in an e-mail.
The retrofits have added 1,736 pounds to the ship’s weight, displacing 250 gallons of fuel but having a minimal impact on the vessel’s range when fully loaded, Gilmore said. His concern about the vessel is likely to be highlighted in his annual report on weapons testing that’s scheduled to be released by Feb. 1.
“Since the repairs are still in progress, there has been no heavy weather testing yet to verify if the fixes are sufficient,” Marine Corps Major Adrian Rankine-Galloway, a spokesman for Gilmore, said in an e-mail.
Even with reinforced structures, the fast transport ships operate under sailing restrictions because “encountering a rogue wave” can “result in sea-slam events that causes structural damage to the bow structure,” Gilmore wrote. The operating restrictions include requiring vessels to wait out the highest seas or travel at speeds much lower than their maximum, according to Gilmore’s report.
Van Leunen, the Military Sealift Command spokesman, said that “the Navy routinely diverts ships during transits to avoid heavy weather” and this ship is no exception. Its primary missions will often be in coastal waters that offer “some protection from weather and sea state when compared to open ocean transits,” he said.
The vessel’s latest sea tests also were marred by the poor reliability of generators made by Fincantieri SpA that supply electrical power, according to Gilmore. The generators failed “at a much greater rate than predicted.”
Required to operate 8,369 hours between major failures, the generators failed as soon as 208 hours at some points, improving to 1,563 hours in the most recent tests.
Fincantieri spokesman Antonio Autorino said in an e-mail that “the concerns described in the report have been resolved and this information was provided to the Navy, yet was not included in the report.”
©2016 Bloomberg News
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