Philly shows mettle in Jones Act market

Boxship and tanker production at Philly Shipyard (credit: Philly Shipyard)
Boxship and tanker production at Philly Shipyard (credit: Philly Shipyard)
'American Endurance' led Kinder Morgan’s series of Philadelphia-built 50,000dwt product carriers (credit: Philly Shipyard)
'American Endurance' led Kinder Morgan’s series of Philadelphia-built 50,000dwt product carriers (credit: Philly Shipyard)

In Philadelphia, high-grade tankers and containerships are being constructed on the site that produced the Iowa-class battleships ‘New Jersey’ and ‘Wisconsin’ for the US Navy. By David Tinsley.

November’s delivery of the 50,000dwt product carrier American Pride afforded further testament to the resurgence of the shipbuilding industry on the Delaware River. The handover of the latest addition to the US mercantile marine signalled an important juncture in the business development of Philly Shipyard, finalising a long production run of tankers while the company ramps up containership construction.

American Pride marked the full realisation of Philly Shipyard’s plan to invest in eight LNG-ready, Jones Act product tankers representing a total contract value of approximately US$1 billion. The first quartet was ordered through a joint venture with Crowley Maritime and the subsequent four vessels were booked to the shipbuilding group’s account via Philly Tankers. The latter had been established in June 2014 with the remit of investing in newbuild tonnage to serve oil majors and other end-users in the Jones Act coastwise trades.

Just one year later, it was decided to spin-off the tanker shipping assets. Consequently, in August 2015, Philly Tankers’ four newbuild contracts were sold to American Petroleum Tankers (APT), part of North America’s largest energy infrastructure company, Kinder Morgan, at an all-in price of US$568m. The next month, a subsidiary of Marathon Petroleum Corporation signed a deal to buy out the yard’s interests in the product tanker operating and chartering joint venture between Crowley and Philly Shipyard revolving around the other four 50,000dwt newbuilds.

The Crowley quartet entered service between October 2015 and August 2016. The series purchased by APT was opened by American Endurance in November 2016, followed by American Freedom and American Liberty in March and July 2017, respectively, culminating with the commissioning of American Pride in November.  Each vessel has capacity for some 14.5 million US gallons (about 345,000 US barrels) of refined products or crude oil in six pairs of cargo tanks.

Located on the site of the Philadelphia Naval Shipyard, which was closed in 1995, Philly came into being as a commercial shipbuilder in 1997 under the banner of Kvaerner Philadelphia Shipyard, subsequently named Aker Philadelphia Shipyard, and re-branded as Philly Shipyard in 2015. The company is the operating subsidiary of Norwegian-headquartered Philly Shipyard ASA, listed on the Oslo Stock Exchange and majority owned by Aker Capital.


The shipyard estate is leased from Philadelphia Shipyard Development Corporation (PSDC), a government-sponsored, not-for-profit undertaking. Under the terms of the 99-year lease, Philly must maintain an average of at least 200 full-time employees on site for 90 consecutive days or run the risk of PSDC taking back the yard.

Utilising European shipbuilding technology, the yard was reconstructed and re-equipped between 1998 and 2000, when work started on the first newbuild, a 2,600 TEU containership delivered in 2003. A total of 28 vessels have been completed to date, comprising tanker and boxship tonnage, representing around 50% of all large Jones Act commercial ships constructed in the USA over the past two decades. The output rate has gathered pace, with seven 50,000dwt product carriers having been handed over since December 2015.

The yard’s state-of-the-art facilities, performance record, and a policy of accessing Korean shipbuilding and design expertise through agreements with Hyundai Mipo Dockyard (HMD) and Korea Maritime Consultants (KOMAC), have strengthened its hand in the captive US Jones Act shipbuilding market. The 2016 Annual Report stated that more than US$650m had been invested in the shipyard, and the company has been paying quarterly dividends since early 2014.

American Pride and her three sisters plus the preceding quartet for Crowley each embody the MT50 class, based on a proven design from HMD, with American Bureau of Shipping’s LNG Ready Level 1 endorsement giving the owner the option to convert to LNG-fuelled propulsion.

Use of so-called ‘clean-burning’, readily available and competitively-priced LNG is a way of ensuring compliance with SOx, NOx and particulate matter (PM) exhaust emissions in the North American Emission Control Area (ECA), within which APT’s new tankers will operate.

The tanker’s propulsion engine is an MAN electronically-controlled, ME-series two-stroke diesel rated at 8,200kW. This would be modified to ME-GI (gas-injected) dual-fuel configuration, using a number of new components, if the decision is taken to adopt LNG fuel. Provision has been made for LNG fuel storage in Type C tanks on deck.


The nature and extent of tonnage being turned out at Philadelphia is helping to re-shape the US home trade fleet, imbuing much higher levels of operating efficiency and ensuring compliance with some of the world’s toughest environmental controls.

With the softening in the US product tanker market, Philly has switched focus to other lines of business, manifested in efforts to extend the containership programme.

Current production activity is concentrated on two 3,600 TEU Aloha-class boxships due for delivery to Matson Navigation in the third quarter of 2018 and opening quarter of 2019. Booked in 2013 at a combined value of US$418m, the pair will rank as the largest Jones Act cellular containerships, and will be deployed in the owner’s service between the US West Coast and Hawaii. The design features LNG-capable dual-fuel engines and the ability to make more than 23 knots. Matson’s fleet includes four container vessels in the 2,500/2,600 TEU category completed at Philadelphia between 2003 and 2006.

The Aloha class provided the template for up to four 3,700 TEU boxships figuring in the July 2017-signed letter of intent with TOTE Maritime, encompassing delivery slots through 2020 and 2021. All major, long lead items were quickly ordered for the first pair.

The series would mark TOTE’s entry into the Hawaii/mainland traffic, currently served by only two carriers and reliant in part on a number of near end-of-life steam turbine-powered ships. The design addresses the market’s requirements for larger-sized containers, faster transit times and powering arrangements that satisfy tightening emission regulations.


However, towards the end of January 2018, TOTE put the newbuild scheme on hold because of issues surrounding terminal upgrades and improvements at Honolulu, and said it would not extend the letter of intent at Philly beyond the January 31 expiry date. While uncertainties remain over TOTE’s plans for the new service, the shipyard is assessing its options, including possible alternatives in order to secure contracts and financing for the envisaged boxships.

Philly’s long-term strategy embraces other prospects besides large container vessels. Given its specific experience in the design and construction of tonnage in which provision has been made for operation on LNG fuel, the yard will be in contention for newbuilds intended to use LNG as their principal fuel.

It is also looking to add a new dimension to production by teaming with Fincantieri Marine Group (FMG), the US arm of Italy’s premier shipbuilding organisation, for the detail design and construction of the next-generation US heavy polar icebreaker. The US Coast Guard is planning to award a turnkey contract in the 2019 fiscal year, subject to appropriations.

Furthermore, if capacity is available, the yard will apply core competencies in steel fabrication, heavy lifting and project management to business opportunities outside the sphere of shipbuilding.

A new welding training facility was opened in 2016, to support not only the existing workforce but also the company’s apprentice programme. As skilled labour constitutes the yard’s most valuable resource, a positive trend is the improved retention rate for own personnel and subcontractors alike.

R&D endeavours are primarily related to advances in building methodology and working procedures, and to ship design development, while continuing to identify and obtain licences on existing best-in-class designs from the international market.


US coastwise shipping law, commonly referred to as the Jones Act, requires all commercial vessels transporting merchandise between ports in the US to be built and registered in the US, owned and controlled (to a minimum 75%) by US citizens, and manned by predominantly US crews. The Jones Act market encompasses all waterborne transportation between US ports, including between mainland US and the non-contiguous states and territories of Alaska, Hawaii and Puerto Rico, as well as shuttle tankers operating in the US Gulf of Mexico.



Founded by public-private partnership between US government agencies and Kvaerner Shipbuilding Division


Construction start on first newbuilds


Deliveries of four 2,600/2,700 TEU containerships to Matson (Hulls 001-004)


Deliveries of 12 product tankers of 46,000dwt to American Shipping Co and Overseas Shipholding Group (Hulls 005-016)


Delivery of two 46,000dwt product tankers to Crowley (Hulls 017/018)


Deliveries of two 115,000dwt aframax crude carriers to SeaRiver Maritime (Hulls 019/020) and two 50,000dwt product tankers to Crowley (Hulls 021/022)


Deliveries of two 50,000dwt product tankers to Crowley (Hulls 023/024) and one 50,000dwt product tanker to APT/Kinder Morgan (Hull 025)


Deliveries of three 50,000dwt product tankers to APT/Kinder Morgan (Hulls 026-028)


Deliveries of two 3,600TEU containerships to Matson (Hulls 029/030)


(provisional—project on hold)Deliveries of four 3,700 TEU containerships (Hulls 031-034)


Length overall


Length b.p.


Breadth, moulded


Depth, moulded


Draught, scantling


Draught, design




Cargo + slop tanks

12 + 2

Cargo capacity


Gross tonnage


Main engine, MCR



3 x 800kW




USA/Wilmington DE



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