TOTE Inc. will build two LNG-powered container ships for its Sea Star Line service between the U.S. mainland and Puerto Rico in what the company describes as “a major technological milestone” for shipping.
The vessels will be the first fueled by liquefied natural gas, and mark a major development in efforts to renew the aging U.S.-flag domestic liner fleet. With capacities of 3,100 20-foot-equivalent units, they will be the largest container ships in the Jones Act trade.
General Dynamics’ NAASCO shipyard in San Diego will build the ships, which will have a top speed of 22 knots. The contract includes options for three additional ships.
TOTE said it has committed more than $350 million to the project. That figure includes the cost of the ships and equipment and improvements at terminals, said Anthony Chiarello, TOTE’s president and CEO. No price was given for the ships themselves.
New ships are rare in the domestic seagoing trade, where the Jones Act requires ships to be U.S.-built and -flagged, and owned and crewed by U.S. citizens. Sea Star’s existing ships date to the late 1970s.
TOTE’s decision to invest in ships that can switch between diesel and LNG was driven by tightening rules on emissions. The Marpol Annex VI requires ships to burn low-sulfur fuel or LNG or use other measures within an emissions control area extending 200 nautical miles from the coast.
Last August, TOTE announced plans to convert two diesel-powered, roll-on, roll-off ships in the company’s Pacific Northwest-Alaska trade to also run on LNG. All of TOTE’s PNW-Alaska route and most of its 1,100-mile Jacksonville-San Juan run are within an emissions control area.
TOTE said its new ships will far surpass regulatory requirements and will be “the most environmentally friendly container ships in the world.” Compared to Sea Star’s existing ships, the new vessels will reduce emissions per container by 71 percent for carbon dioxide, 91 percent for nitrogen oxide, 98 percent for sulfur oxide and
99 percent for particulate matter.
Construction of the first ship is scheduled to begin in the first quarter of 2014, with delivery scheduled for the fourth quarter of 2015. The second ship is scheduled for delivery in the first quarter of 2016.
The ships are being ordered by TOTE Shipholding, a subsidiary that will charter the vessels to Sea Star, TOTE Inc.’s U.S. mainland-Puerto Rico carrier. TOTE said it hasn’t decided where to put the three additional ships if they are ordered.
Technology for LNG-powered ships is proven but hasn’t been used for container ships. Chiarello said LNG would be impractical for a larger ship operating on a long route, because fuel tanks would displace too much cargo space. But he said it’s ideal for a short shuttle trade such as Florida-Puerto Rico.
The ships’ fuel tanks will hold enough for slightly more than two round trips. The plan is to top off the tanks at the end of each round trip. TOTE is discussing the sourcing of fuel with potential suppliers. “We think we’ll have a number of options,” he said.
At current prices, LNG would be cheaper than low-sulfur diesel, Chiarello said. “There’s a fuel savings at current prices, but we really didn’t base this decision on that,” he said. “No one knows what LNG costs will be in three years when the ships come out of the yard. But we do believe that LNG is the fuel of the future, especially for the domestic trades.”
TOTE said the ships’ design accommodates five times more 53-foot containers than current ships in Puerto Rico and will include expanded volumes for refrigerated boxes. Chiarello said Sea Star would be the first carrier to load 53-foot-long, 102-inch-wide containers that will be carried above and below decks.
The vessel order raises the bar for other Jones Act liner operators, which are plotting how to replace their existing vessels.
Matson Inc. in November told analysts it plans to order two ships of an undetermined design within the next three to five years. Matson operates between the U.S. West Coast and Hawaii, and has a service linking the West Coast with Hawaii, Guam and China.
Horizon Lines said earlier this year it has several more years to decide what to do about fleet replacement. The company’s newest ships, used in the Alaska trade, were built in 1987. The rest of Horizon’s active fleet is an average of more than 36 years old.
The other main Jones Act liner carriers, Puerto Rico operators Crowley Maritime and Trailer Bridge, operate container and trailer barges towed by seagoing tugs.