MARITIME | US approves new Jones Act feeder line

American Feeder Lines’ planned coastal container service will include a series of 10 vessels of 1,300 teu ordered from two shipyards

IN WHAT could prove a major boost to short sea shipping, the US Transportation secretary Ray LaHood has approved American Feeder Lines’ planned US coastal container service.

AFL’s Atlantic and Gulf Coast Short Sea/Feeder Service was deemed “essential and inevitable for the United States” and was one of eight successful applications for American Marine Highway status.

The project intends to transfer containers moved by land transport to more environmentally friendly maritime transport.

The AFL application was sponsored by South Carolina State Ports Authority in Charleston and the Port of Galveston, which are among the ports on AFL’s proposed service network. The application was also supported by other US East Coast ports including Norfolk and New York/New Jersey. AFL plans to cater for both feeder and domestic container traffic.

As a domestic coastal service it is subject to the Jones Act and must use ships built and flagged in the US and crewed by US seafarers. This will add significantly to the cost of building and operating the ships compared with international vessels of the same size.

AFL plans initially to construct a series of 10 vessels of 1,300 teu at two shipyards, but longer-term plans involve as many as 30-40 ships. The vessels are designed to optimise environmental benefits including burning low sulphur fuel. According to AFL, one of its ships will produce 27% less CO2 per tonne/mile than if the same containers were moved by rail and 77% less than if they were trucked by road.

Its planned service network includes three sectors: from Boston and Portland, Maine in the north east to East Coast ports as far as Norfolk, Virginia, from there to Miami, Florida and a link into the US Gulf to New Orleans, Houston and Galveston.

SCSPA chief executive Jim Newsome said: “The Port of Charleston enjoys a strategic location in the southeast, so a feeder system out of Charleston to other seaports can provide significant benefits such as reduced congestion and enhanced environmental sustainability.”

It hopes to be up and running by the time expansion of the Panama Canal is completed in 2014, when larger mainhaul vessels are expected to serve the US East Coast and generate new demand for coastal services.

Co-founders of the AFL project are Percy Pyne and Tobias König of German KG house König & Cie. Mr Pyne’s background is in real estate and they are partners in New York-based König Pyne & Cie.

Mr König told Lloyd’s List that they the companies were working with US consultancy firm Seabury to raise finance for the project and are preparing a roadshow later this year. They are also in contact with “a few banks which have expressed interest”.

He revealed that AFL would own some ships directly, but it was also looking at long-term leasing structures. This would give options for raising finance both in the US and overseas. Foreign finance can be used for ships leased to Jones Act companies under bareboat charters under the Foreign Lessor Exemption scheme.

Mr König said that AFL is talking to major shipping lines and domestic shippers, forwarders, trucking companies and railroads. Although feeder and domestic traffic would be treated as separate businesses, he told Lloyd’s List that it anticipated there would be about a 9:1 ratio of domestic to international cargo.

The AFL move is is one of eight projects and six initiatives that received federal government approval from some 35 applications. They are eligible for funding assistance under the American Marine Highway Program to move more cargo by water. The US Maritime Administration will assist in developing services and identifying potential markets.

Designated projects are eligible to compete for Marine Highway federal funding, which includes a newly announced $7m for initial funding. Applications for this money must be submitted by August 27. So far the Transportation Department has given grants worth a total of $58m for projects supporting the start-up or expansion of Marine Highways services.

Other marine projects gaining approval include a number of container-on-barge services involving operations in New England, US Gulf, Tennessee-Tombigbee Waterway and James River.

Source: LLOYD’S LIST

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