2001 Maritime
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August 16, 2001

Matson has RFP out for containerships
Matson Navigation Company, Inc., the ocean transportation arm of Alexander & Baldwin, is looking to rejuvenate its fleet. It put out a Request For Proposals (RFP) to U.S. shipyards in the first part of July for the construction of two 2,500-TEU containerships with options for two additional ships.

"We expect to receive bids from the yards in early September," Peter Fisher, the director of vessel construction for Matson, told MARINE LOG. "Depending on the responses, we could place the order within the next six months."

The 235 m x 33 m vessels would be open-top with a service speed of 22.5 knots.

One of the financing options available to Matson is the Capital Construction Fund. At the end of last year, Matson Navigation had made $150.4 million in CCFdeposits. The majority of vessels in Matson's cargo fleet have been acquired with the assistance of CCF withdrawals.

The CCF was established under provisions of the Merchant Marine for the acquisition, construction or reconstruction of vessels and for repayment of existing vessel indebtedness.

Matson has a fleet of 11 containerships, four combination
container/trailerships, one roll-on/roll-off barge, three container barges.
These 19 vessels represent an investment of some $770.4 million expended over the past 30 years.

More on AMCV's Project America challenges

Here's what Phil Calian, CEO of American Classic Voyages, had to say about the status of its Project America ships at the company's investor/analyst conference call on August 14. (you can listen to a recording of the entire conference call at http://www.amcv.com.

"We are currently in discussions with Northrop Grumann’s Ingalls Shipbuilding to resolve issues affecting the construction of our new Project America ships. While we cannot disclose details of the discussions at this time, I will say that American Classic Voyages remains committed to this project.

"As you know, in March 1999 we entered into a contract with Northrop Ingalls for the construction of two ships at a fixed price of $440 million per ship with firm ship delivery dates of January 2003 and January 2004. Steel for the first ship was cut in June 2000, and through June 30 of this year, we had paid Northrop Ingalls approximately $236 million for the ships -- close to $200 million for the first ship and $39 million for Ship Two. By spring of this year, less than nine months into the production process, it was clear to us that the project was running behind schedule and was not meeting the progress milestones established at the time of the Northrop Ingalls’ contract. Also, as we have disclosed in our public filings, Northrop Ingalls in March claimed we were responsible for increased costs and delays on the project. We strongly denied, and continue to deny, responsibility for any increased costs or delays on this project. Given the uncertainty as to the shipyard cost and delivery dates of the ships, we believed the economic viability of the project needed reevaluation, and we consequently entered into discussions with Northrop Ingalls this summer with the goal of putting the project back on track. We are hopeful we can resolve the outstanding issues with Northrop Ingalls. It is important to point out that work in Pascagoula, Mississippi has continued on the ships while our discussions are taking place.

"Both Northrop Ingalls and American Classic Voyages are aware of the keen interest this project has generated both within the U.S. maritime industry and among members of Congress and officials at the Department of Defense. The challenges of performing commercial work with its tight schedule requirements and budget disciplines are proving very real to Northrop Grumman as compared to their typical military ship work. It is fair to say that all of us have a vested interest in the success of Project America. If we are unable to reach a negotiated agreement with Northrop Ingalls, we are prepared to submit the matter to binding commercial arbitration by a neutral third party. We will provide more information to you on Project America when appropriate. Let me reemphasize our commitment to building the new ships and achieving the economic and public interest goals we set for ourselves and our shareholders at the onset of Project America."

New CEO at Northrop Grumman Ship Systems
Northrop Grumman today announced the appointment of Philip A. Dur as corporate vice president and president of the company's Ship Systems sector, which includes Ingalls Shipbuilding in Pascagoula, Miss., and Avondale Industries in New Orleans.

Dur will assume his new position on October 1, succeeding Jerry St. Pe, who announced his decision to retire on October 31 after 40 years with the company.

Dur, a former rear admiral of the U.S. Navy, currently serves as vice president of program operations at Northrop Grumman's Electronic Sensors and Systems Sector, the company's largest sector with annual revenues of approximately $5 billion. He manages the sector's business operations, oversees program execution and acquisition and alliance activities.

"Phil brings to Ship Systems extensive experience in naval operations and a strategic insight into our industry and future business opportunities,'' said Kent Kresa, chairman, president and chief executive officer of Northrop Grumman. "During his distinguished Navy and corporate careers, Phil has served in several important posts that make him uniquely qualified for this important position.''

Dur, 57, served in the Navy as assistant deputy chief of naval operations; director, Navy strategy division; commander, battle force Sixth Fleet; and commander, cruiser-destroyer group eight, where he was responsible for the combat readiness of 35 cruisers and destroyers, a battleship and 11,000 personnel. He also served as commanding officer of two Ingalls-built surface combatants.

Dur joined the company in 1999 following five years with Tenneco, Inc., where he served most recently as vice president, worldwide business development and strategy.

He earned bachelor's and master's degrees from the University of Notre Dame. Dur earned a master's degree and a doctorate from Harvard University.

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