Factiva

 

499 words
27 April 2007

Oakland and Jacksonville-based Crowley Maritime Corp is joining in the legal battle among US shipowners over the conversion of US-flag tankers in China.

A hand-delivered, 58-page appeal by Crowley to the US Coast Guard (USCG) could affect hundreds of millions of dollars in conversion contracts at Chinese yards like Cosco Nantong - or billions in newbuilding orders at more expensive US yards.

If successful, Crowley would persuade regulators to put a stop to 10 scheduled tanker conversions by Seacor, Keystone Shipping and US Shipping Partners and potentially at least another 12 similar jobs on double-bottom tankers, say company lawyers in legal filings.

Crowley's fight is among US tanker owners but has parallels to the feud on the dry-cargo side between Pasha Hawaii Transport and Matson Navigation over conversions of three boxships into conros - a dispute Crowley has been watching closely.

The company asks the USCG to reverse preliminary determinations that it has previously given to companies seeking to convert US Jones Act ships abroad.

Crowley's legal representative, Michael Roberts, confirms the appeal to TradeWinds and adds that low-key Crowley will go to court if the USCG does not reverse itself.

Work on the Keystone and US Shipping Partners jobs is understood not to have begun yet and Crowley is asking that approval be stayed in those cases.

US law requires domestic-trading ships to be built and, if necessary, rebuilt domestically. But Crowley says its investment in fleet renewal at US yards is in danger because the USCG has issued rulings permitting others to renew their fleets on the cheap through rebuilding abroad.

At issue are several thorny technical requirements about how to apply maximum limits of between a total of 7.5% and 10% of discounted steel weight in foreign rebuilds or of 1.5% of the steel weight for single major components in such jobs - such as the inner hull of a double-hull vessel, argues Roberts.

Roberts says Crowley has been watching the issue ever since preliminary determinations issued to Seabulk became public. However, similar go-aheads issued to Keystone and US Shipping Partners in January and February, along with recent moves in the lawsuit brought by Pasha and the Shipbuilders' Council of America (SCA) and administrative proceedings before the USCG and the US Maritime Administration (MarAd) by the same parties finally pushed Crowley to take a position.

"At that point, we realised the Seabulk determination was not an isolated incident but part of a trend and one that was not a healthy one for the US shipping industry," said Roberts.

Crowley itself has four tankers that could be converted in procedures similar to those Seabulk is using. However, Roberts says the company chose to pursue its current $1bn newbuilding programme at US yards in part because it relied upon a 1991 USCG Navigation Vessel Inspection Circular (NVIC) that ruled out foreign retrofits of Jones Act vessels.

 

Document TRADEW0020070426e34r0001r