Philly Shipyard puts TOTE’s LNG-ready containerships build on hold

Philly Shipyard, the U.S. unit of Philly Shipyard ASA, said it will not extend its letter of intent signed with TOTE for the construction of four LNG-ready containerships.

The LOI was signed in July last year and is valid until January 31, 2018, Philly Shipyard said in its statement.

Previously, TOTE put on hold its plans to enter the U.S. mainland to Hawai’i containership service as a result of its Phase 1 technical review of Piers 1 and 2 in Honolulu Harbor.

In September 2017, Piers 1 and 2, along with 40+ acres of adjacent land, were allocated to TOTE by the Hawai’i Department of Transportation (HDOT) for its access and use commencing in 2020, to coincide with the planned start of TOTE’s new operations in Hawai’i, however, to accommodate the service, the preliminary study shows that the terminal space will require upgrades and improvements.

Under the LOI, Philly Shipyard agreed to deliver the first pair of LNG-ready vessels in 2020 to be followed by the second pair in 2021.

Based on these developments, the project to build Hulls 031-034 (the first pair) as containerships is being put on hold.  PSI is suspending substantially all construction-related activities on these vessels, including design, planning and procurement work.  As previously disclosed, PSI has placed orders for all major long-lead items for the first pair.  If these orders were to be canceled, then the cancellation costs would be substantially lower than the value of the orders placed, the shipyard said in a statement.

PSI intends to resume this project when there is more clarity regarding the new order situation and related capital requirements.  Accordingly, PSI is exploring alternatives in order to secure contracts and financing for these vessels.