Revitalizing the Maritime Industry: A Maritime Forum May 7, 2012 MITAGS - Linthicum Heights, MD.

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1 Revitalizing the Maritime Industry: A Maritime Forum May 7, 2012 MITAGS - Linthicum Heights, MD. Requirements & Realities: Do we have the resources to make America s Marine Highway a reality? What are the major challenges? Enduro Multi-modal design for America s Marine Highways & Mark Yonge, Managing Member US Navy Dual-Use Initiative

2 American Marine Highways No longer what we thought 10 years ago Major shift of International supply chain logistics Shipper Distribution centers extended to more diversified geographic locations lessening service interruptions risk Trans-loading of 20 & 40 international containerized cargo to domestic 53 containers now SOP Long Haul, Domestic Intermodal preferred - Trucking Sector now largest customer of R/R Intermodal increased domestic intermodal demand an integral part of logistics industry long term Strategic Plans Truck HOS; Driver Shortages; Driver Culture Changed 2

3 AMH Major Challenges Barriers to Marine Highways Start-up Danger in starting a Disruptive service in direct competition with existing services at a time when adequate capacity exists Just in Time shipper mandate - Speed, Reliability, Cost competitive Service must be Equal to or better than Reluctance of shippers to change existing supply chain or logistics provider contracts Proof of Service Build it and maybe we will come Significant capitalization, start up risk Harbor Maintenance Tax on domestic cargo a dis-incentive MARAD Title XI Loan Guarantee availability difficult "repeal of Treasury's 1986 CCF alternative minimum tax limitations (returning the CCF program to the form in which it was originally enacted)" 3

4 U.S. Natural Marine Highways - July 2010

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6 Navy Official Calls for a Fleet of Dual-Use Marine Highway Ships* *JOC July 13,2011 Mission: Develop a viable commercial vessel design as a Dual-Use Marine Highway vessel meeting USN RRF requirements for National Defense and Emergency needs Operational features compatible for U.S. Military Sea Lift needs and ready reserve capacity Adequate Deck heights Water tight stowage for CH-47 Chinooks, A deck load of M-I Abrams tanks at 68 Short Tons Quarters for force protection personnel, Portable ramp capabilities Long Range capability Ability to load/discharge in austere Ports 6

7 A potential market for AMH services does exist (2014 onward) Best routes with only two ports are more cost competitive than routes with multiple ports: 1. Pacific Northwest to/from Southern California 2. Delaware River or New York/New Jersey to/from Florida 3. Texas to/from the west coast of Florida Study designs are generic & based on off-the-shelf technology Cost competitiveness can be enhanced by using existing designs Incorporate cost reductions available via technical support from overseas shipyards Government policies and support can have a major impact on the viability of AMH services 7

8 America s Marine Highways Dual-Use Vessel Development Program Performance Requirements & Concept Designs Military Sealift Committee Meeting National Defense Transportation Association (NDTA) March 05, 2012

9 Portfolio of Eleven AMH Vessel Designs for MARAD Vessel type definitions RoRo all cargo is driven on or off Rocon combination RoRo & dedicated container (loaded by cranes) Small less than 500 TEU Medium 500 TEU to under 1,000 TEU Large 1,000 TEU or larger TEU sizes 53 Trailer/Container- 2.8 TEU, 40 Container- 2.0 TEU Speed Design speed (at normal engine rating with 15% sea margin) Covers wide range of possible AMH Vessels - Vessel concept datasheets available on MARAD website Designs selected for further development on basis of viability for multiple AMH Routes and Military Dual-Use Capability Design 03 RoRo Medium 23 knots Design 04 RoRo Medium 20 knots Design 13 Rocon Large 22 knots NDTA Sealift Com. - America s Marine Highways March 5,

10 01-RoRo Small 18 kt 550 x89 x 58.7 ( 168x27x17.9m) Draft 19.8 (6.0m) 71 Trailers, 80 Containers RoRo 74,400 ft 2 10,000 kw, Twin Screw w/ CPP 02-RoRo Trimaran 29 kt 673 x 133 x70.6 (205x41x21.5m) Draft 26.9 (8.2m) 115 Trailer, 138 Containers RoRo 106,023 ft 2 76,500 kw, CPP, Pod, 2xWater Jet Developed jointly with CSC 03-RoRo Medium 23 kt 682 x95 x77.4 (208x28.5x23.6m) Draft 23.3 (7.0m) 151 Trailers, 104 Containers RoRo 130,820 ft 2 28,000 kw, Twin Screw w/ CPP NDTA Sealift Com. - America s Marine Highways March 5,

11 04-RoRo Medium 20 kt 602 x95 x68.2 (184x29x20.8m) Draft 23.3 (7.1m) 154 Trailers, 160 Containers RoRo 144,500 ft 2 17,000 kw, Twin Screw w/ CPP 05-RoRo Large 21 kt 740 x97 x76.1 (226x29.5x23.2m) Draft 22.3 (6.8m) 203 Trailers, 140 Containers RoRo 166,116 ft 2 18,000 kw, Twin Screw w/ CPP 06-RoRo Fastship 30 kt 869 x131 x107 (265x40x32.7m) Draft 32.8 (10.0m) 60 Trailers, 440 Containers RoRo 192,550 ft 2 118,000 kw, 3 x Waterjets NDTA Sealift Com. - America s Marine Highways March 5,

12 Other Requirements Deck strengths - require 250 to 350 psf for dual-use Minimum RoRo area 96,000 ft 2 for dual-use Containers on RoRo vessels stowed two-high on Cassettes Special provisions needed for over size, reefer and hazardous cargo Detailed requirements developed for Ramp design LoLo Container stowage similar to Containerships Clear Height: min 14-9 RoRo (meets dual-use requirements), 23-9 for two high container Cassettes Range: minimum 10,000 nm for dual-use NDTA Sealift Com. - America s Marine Highways March 5,

13 Two High Container Cassette Container Cassette can sit without special fittings on ground or deck Cassette for multi-length containers (40 /45 ) on special trailer NDTA Sealift Com. - America s Marine Highways March 5,

14 US Construction Costs basis - large or mid-tier shipyards currently building commercial vessels using best available technology (technical support from overseas shipyards) Costs have Uncertainty so range given non standard designs have higher uncertainty on up side Indicated Costs ($ M) for 3 Ship Series - average cost per vessel with LNG capable engines for all vessels except 02, 11, 13. The costs are estimated final negotiated contract prices and not initial asking prices by shipyards, which are likely to be higher. 01-RoRo Small 18kt 02-RoRo Trimaran 29kt 03-RoRo Med 23kt 04-RoRo Med 20kt 05-RoRo Large 21 kt 06-RoRo Fastship 30kt Ship Price - Each $122 $301 $197 $163 $182 $357 Lower bound estimate $110 $271 $177 $147 $164 $321 Upper bound estimate $134 $347 $217 $180 $200 $410 Uncertainty -10%/+10% -10%/+15% -10%/+10% -10%/+10% -10%/+10% -10%/+15% 11-ATB Rocon 14kt 12-Rocon Large 18kt 13-Rocon Large 22kt 21-Container Feeder 18 kt 22-Ropax Med 22kt Ship Price - Each $114 $164 $160 $84 $211 Lower bound estimate $103 $148 $144 $77 $190 Upper bound estimate $126 $180 $176 $90 $242 Uncertainty -10%/+10% -10%/+10% -10%/+10% -8%/+8% -10%/+15% NDTA Sealift Com. - America s Marine Highways March 5,

15 CENTER FOR THE COMMERCIAL DEPLOYMENT OF TRANSPORTATION TECHNOLOGIES California State University, Long Beach Contributions to RFR Route B2B Vessel 03, 247 Units Contributions to RFR Lease, Own Labor, Door to Door (With Drayage) $ M NPV, 25 YEARS $M, Annuity Vessel Construction Costs Including Financing $116 $16.9 Vessel Fuel Costs $155 $22.6 Vessel Manning Costs $22 $3.2 Vessel Lubes and Stores $2 $0.3 Vessel Maintenance $9 $1.3 Vessel Insurance $4 $0.5 Vessel Administration $3 $0.4 Annual Pilots and Tugs $5 $0.7 Harbor Maintenance Tax (HMT) $28 $4.1 Terminal Infrastructure $12 $1.8 Terminal Maintenance $2 $0.3 Terminal Lease $27 $3.9 Terminal Labor and Cargo Handling Costs $13 $1.9 Drayage $84 $ % 24% 3% 6% 0% 6% 3% 5% 32% 1% 0% 1% 2% 0% Vessel Construction Costs Including Financing Vessel Fuel Costs Vessel Manning Costs Vessel Lubes and Stores Vessel Maintenance Vessel Insurance Vessel Administration Annual Pilots and Tugs Harbor Maintenance Tax (HMT) Terminal Infrastructure Terminal Maintenance Terminal Lease Terminal Labor and Cargo Handling Costs Drayage

16 AMH Likely Routes & Cargo Volumes East Coast Maine NY/NJ SE New England [B1] 556 loads/week - SB Delaware River Jacksonville [B2] 289 loads/week - SB Delaware River Florida (3 Ports) [B3] 417 loads/week - SB NY/NJ-Hampton Roads-Florida [B4] 417 loads/week - SB 1. Volumes are estimated 2014 head haul direction loads. 2. Volumes are based on about 5% to 10% diversion rate of potential cargo to the AMH Service NDTA Sealift Com. - America s Marine Highways March 5,

17 AMH Likely Routes & Cargo Volumes West Coast Portland LA [C1] 667 loads/week - NB Portland Richmond LA [C3] 746 loads/week - NB Richmond LA [C4] 258 loads/week NB/SB 1. Volumes are estimated 2014 head haul direction loads. 2. Volumes are based on about 10% to 15% diversion rate of potential cargo to the AMH Service NDTA Sealift Com. - America s Marine Highways March 5,

18 Conclusions AMH vessel designs cover a wide range of possible routes, pier facilities, ports, and cargo mixes Designs with greatest potential for economically viable operation RoRo Designs 03, 04 & to 350 Trailers & Containers - for AMH Services Rocon Designs 12 & to 125 Trailers, 300 to 400 Containers for high volume AMH Services and combined AMH/offshore Jones Act Services ATB Design to 100 Trailers, or 300 containers for shorter Services Military dual-use capability can be incorporated into the designs without major impact on cost or commercial operation Performance Requirements - Useful guidance for designers of AMH vessels Specific AMH Routes have been proposed - RFR Analyses made by Dr. Matt Tedesco that follow shows some Routes can be profitable America s Marine Highways concept can meet multiple national goals - reduced truck traffic, reduced pollution, new sealift support vessels NDTA Sealift Com. - America s Marine Highways March 5,

19 stx Canada Marine U.S./Canada/European Design Collaboration Collaborative design with STX Canada/US Marine & STX Europe developed a unique ship design utilizing STX European proven design and technology, P /02 Enduro (Enhanced, Dual-use, RoRo) High capacity, Dual-Use, Multi-Modal, RoRo vessel STX Canada Marine Inc. STX US Marine Inc. wholly owned subsidiary of STX Offshore and Shipbuilding in South Korea (one of the world s leading shipbuilding groups, (Shipyards Worldwide) 19

20 Candidate Vessels for IML from - STX - Finland M.V. Star built in 2008 for Tallink Lines M.V. Spirit of Tasmania (formerly Superfast III ) M.V. Color Superspeed built in 2009 for Color Line M.V. Contentin, built 2007 ***IML Hull L

21 European Technology Transfer STX Finland RoPax Design M/V COTENTIN built 2007 Modern State of the Art Hull form - Low resistance Proven in successful service Proven Build/Shipyard Technology transferable to U.S. Yards Enduro Series IML/STX #L Dual-Use Dual Fuel: LNG/MDO Hi-Capacity-Multi-modal RoRo Marine Highway Vessel 21

22 Dual-Use/Dual-Fuel (LNG/MDO) Marine Highway Multi-modal RoRo Vessel Enduro Series (Enhanced Dual-Use, Roll On/Roll off) 22

23 IML Hull L Enduro Multi-Modal Series LOA 191.8M Vessel Cargo Capacity: 3803 Lane Meters Trailers on wheels Double Stacked 53 Containers loaded on cassettes on the main deck. Total containers on cassettes & trailers on wheels or trailers on wheels Vessel Power: 28.5MW Dual Fuel IFO/LNG Wartsila: 2 x 9V 8,550 kw and 2x6V 5,700kw K at full power in calm water. Planned voyage speed 23 at sea is K.

24 Enduro Main Specifications Lightship Weight (Est.) 11,500 MT Deadweight (Est.) 9,500 MT Displacement (Est.) 21,000 MT 24

25 FO AND GAS CONSUMPTION - REV 3 STX Lead No. L January, 2011 Vessel Length = M LOA Estimated ME Fuel Total ME Cost/ton (MDO) LNG LNG Free Gas Power (kw) Consumption - Consumption $971/ton Consumption Consumption Consumption - $350/ m3 Speed g/kw/hr tonnes/hr - m3/hr - tonne/hr m3/hr ($.35/Liter) $ $ $ $ $ $ $ 1, $ $ 1, $ 1, $ 2, $ 1, $ 2, $ 1, $ 3, $ 2, $ 3, $ 2, $ 4, $ 2, $ 4, $ 3, Add approximately 0.29 tonnes/hr for auxiliary consumption Add approximately 0.58 m3/hr gas for auxiliary consumption Assume LNG at 0.425SG and rated at 50MJ/kg energy Assume expansion rate of LNG to Free Gas at 1:600 25

26 T U G T U G IML L January 25, 2012

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29 European Cargo Handling Technology RoRo Cassette cargo handling system Containerized and/or Unitized cargoes Cassette System Double Container Stacking Capability Summary Benefits of a Cassette System High load capacity Short turn-around times Reduced lashing Optimized use of space Faster loading and unloading Lower occurrence of handling damage No load-securing labor Low running costs Safer operation Pre-loading concept equalizes utilization of equipment and labor 29

30 RoRo Cassette Advantages *Terminal efficiency: Cassette systems offer high capacity based on a high payload of the cassette.. *reduced turnaround time in port allowing the terminal to handle more vessels per day. *Storage efficiency: Due to the interlocking design, empty cassettes can be stacked five high *Maintenance efficiency: Cassettes have no moving parts such as tires, bearings, hoses, electrical wiring and lighting, so their running and maintenance costs are practically non-existent. 30

31 RoRo Cassette Advantages Cassette Stowage 11-14% better utilization of deck space The cassette system has a higher loading capacity than any other handling method. Loading and unloading capacities for various methods: Cassette system 540 ton/h Roll trailer system 300 ton/h Semi trailer 180 ton/h Forklift truck handling 30 ton/h 31

32 RoRo Cassette Advantages Operating efficiency: Traditional trailer systems typically require brake lines and electrical wires be connected and disconnected with each move. Vessel Design efficiency: Loaded cassettes are typically lower in height than traditional trailer systems. In addition, double stacking increases the efficiency of the cargo hold. The result is vessels designed around the cassette system can be reduced in height, resulting in less steel costs and better stability. 32

33 Challenge Met USN, OPNAV N42 The ENDURO ship design has militarily useful attributes that can be enhanced with the installation of National Defense Features (NDFs) 33 January 25, 2012

34 Design Achievements Proprietary Dual Use/Dual Fuel high speed American Marine Highway s Ro/Ro ship design developed from existing proven and operating STX Europe vessel designs Commercially competitive and commercially viable Designated Military Useful Enduro Design Provides USN National Defense Feature Capability and U.S. Navy Ready Reserve Capacity and Capability Enduro Design "Validated as a Dual-Use Marine Highway Vessel 2011 MARAD and CCDOTT independent studies RoRo Cassette cargo handling system Provides High Capacity vessel utilization and low cost terminal operations Versatile Muti modal design for: Dry, Reefer, Tank containers, trailers; cars, & other rolling stock; Oversize, overweight & hazardous cargoes LNG-Dual Fuel to provide for future ECA/EPA/IMO regulations 34

35 1st Developed Route-Four (4) ships planned. Anticipated Shipbuilding Contract- mid-2013; 1 st ship Delivery 2016 MOU with South Jersey Port Corporation Ship Management/Technical services MOU in place with Crowley Marine. Additional M-95, M5, M10 Long haul routes under development with potential for additional 6-8 ship orders 35

36 Just In Time - Voyage Speed Analysis 36

37 Major Challenges Remaining No Un-met Consumer Demand today! Adequate truck and rail capacity No incentive today for shippers to commit to the unknown A disconnect between shippers needs today and the need to plan for the future Repeal of Treasury's 1986 CCF alternative minimum tax limitation Harbor Maintenance Tax on Domestic movements High Start up cost & risk Title XI Loan Guarantee Need AMH specific loan guarantee program Keep the Camel s Nose away from the tent (Protect the Jones Act)! 37

38 Thank you!! Mark Yonge, Managing Member Phone: (Direct) Direct 38