Since its founding 30 years ago Harley Marine has prospered through industry-leading investments in people, equipment and safety management systems.
By Paul Benecki
Harley Franco founded what would become Harley Marine in 1987 with a single leased tug and barge. Over the course of the next 30 years his company grew into what is today a national brand with over 100 vessels engaged in ship-assist, bunkering and liquid bulk transport. Along the way the firm built a reputation for quality with a strong safety management system and industry-leading investments in people and equipment. Even in today's challenging market, the Seattle-based company is still innovating, winning awards and creating new opportunities.
Harley Marine's rapid development was driven by organic growth, expansion into new regions and a series of acquisitions. The company added a Portland operation in 1994, and four years later it acquired tug companies in Los Angeles and southwest Alaska, extending its reach up and down the Pacific Coast. It entered the San Francisco market in 2003 under the name of Starlight Marine Services, using Z-drive tractor tugs to offer ship-assist in addition to bunkering.
In 2006 it opened a division in the New York area, and in 2011 it bought the Gulf Coast bunkering firm MGI, cementing its presence on all three U.S. coasts. The company added ten more vessels to its Gulf Coast fleet earlier this year with the purchase of Enterprise Products Partners' marine services division.
A History of Innovation
The bunkering and ship-assist markets are no longer the growth areas they once were, but Harley Marine is still finding new ways to develop its business. This time it is building up its coastwise product shipping operations with a new fleet of articulated tug-and-barge units (ATBs). “We're already the largest bunker operator on the West Coast and we're very competitive on the other coasts, so our natural source of growth is from customers asking us to do new things,” says Chief Operating Officer Matthew Godden.
Two of the new ATBs are operating along the Northeast corridor and two are trading on the West Coast. ATBs are common on the Atlantic seaboard but relatively rare out West, where tugboat operators have used a winch, a towline and surge gear to move barges for decades. Harley Marine's use of ATBs on certain Pacific routes is motivated in large part by the seaworthiness of the articulated designs.
“ATBs have a better safety profile and our customers are willing to pay for it, which is a good combination in our business,” says Godden. Long-distance hauls out to Hawaii and Alaska are already proving the new vessels' robust construction and efficiency, and when the weather turns cold and rough ATBs can keep running while traditional tugs have to wait for better conditions.
"The ATB pinning systems have come into their own,” says Captain Sven Christensen, General Manager of the firm's Pacific Northwest business unit, Olympic Tug and Barge, “and there's a high level of confidence in their reliability now. You'll be seeing more and more of them on the West Coast. In addition, our charterers like their higher speed, which lets them get in two or three more voyages per year.” Modern ATBs can achieve 10 to 12 knots, approaching the design speed of a comparably sized product tanker.
On the East and Gulf coasts, Harley Marine has many competitors who already operate this type of vessel for petroleum transportation. However, most operators order units with larger barges in the range of 120,000 barrels or more. Harley's ATBs are all built to carry 80,000 barrels or less, and Godden says this is a popular niche size, a “sweet spot” for transporting smaller volumes. The four existing units are so successful that the company already has four more on order, and Godden expects that all will be chartered prior to delivery.
The ATB program is just one part of a major fleet renewal initiative, and by the end of 2017 a surge of new deliveries will bring the firm's average vessel age down to just ten years. This is an important consideration as some bunker terminals won't even allow vintage tonnage to come alongside. As the fleet's average age falls, its size will rise, thanks to the large volume of newbuilds. The latest additions are top quality: The new tractor tugs Lela Franco and Michelle Sloan made the list of the WorkBoat Show's Significant Boats of 2015, and the line-haul tug Earl W. Redd will be the first boat of its type to feature Caterpillar’s new Tier IV 3516E engine.
The emphasis on high-spec tonnage isn't a new strategy for Harley Marine. Harley Franco likes to say that the firm “doesn't go cheap,” and he has made market-leading investments in equipment for decades. Back in the 1990s his firm was the first to introduce double-hull petroleum barges in Seattle and Portland, and it was one of the first tug operators to work with the California Air Resources Board's Carl Moyer Program, which provides assistance for buying cleaner-than-required engines. On Harley Franco's directive, the company is now in the process of replacing all pre-Tier IV diesels across the fleet, even when not required by regulation.
Godden says that the repower initiative started when a tractor tug in Dutch Harbor came due for a refit this year: “We put modern engines in, and we spent several million dollars extra to deliver an up-to-date, good-as-new vessel.” Godden thinks it's the right thing to do from an environmental standpoint, but it's also good business: “We believe the emissions requirements are only going to get tougher. All the West Coast states will eventually follow California's strict standards, and it's easier to invest now.”
Vice President of Engineering Steve Carlson adds that there’s also an operational case to be made for repowering: “It’s a challenge to take an existing boat and put new engines into it, and there's a cost to the business from the out-of-service time. But once you get through the process you have new, reliable propulsion with up-to-date technology and diagnostics.” He says younger crewmembers are more comfortable with modern engine electronics systems, making the process of training new hires easier.
“Boots on the Barge”
From the beginning Harley Franco set out to make his company the safest operator in the business. Over the years it invested heavily in safety certifications and vetting, and this year it celebrated its first decade as an ISO/ISM company. As part of its safety management system, the firm has adopted many innovative policies including what it calls “boots on the barge” – sending supervisors out with the fleet to keep them in close contact with operations.
“Having a management presence on board has been the single biggest factor in safety for us,” Godden says. “You'll see port captains and barge operations supervisors out on a high percentage of our jobs. These managers understand our standards because they're all drawn from the ranks of our own mariners.” In addition, Harley's tugs hold weekly safety meetings with results reported back to the head office, and the fleet has an active peer-mentoring program for safety and skill-building.
The company also takes pride in its environmental stewardship, earning ISO 14001 environmental quality certification in 2008. In the eight years since it has won over two dozen awards for its efforts including the Coast Guard's Rear Admiral William H. Benkert Award, the Workboat Environmental Initiative Award, the NAMEPA Marine Environment Protection Award and the Chamber of Shipping's Environmental Achievement Award.
Harley won all this recognition thanks to a sustained, company-wide focus on cleaner operations – from the office to the maintenance shops to the barges. As a petroleum transportation firm, it has a “zero spill” policy and comes very close to achieving that goal. Last year its crews spilled only one quart out of three billion gallons of product transported.
On shore, it has an innovative recycling system for everything from fender tires to waste oil. It has switched over to using shore power for vessels at berth, cutting daily fuel consumption for some of its harbor tugs by a third. Its new headquarters building in Seattle is LEED Gold-certified, packed with solar panels, a rainwater collection system and a swath of energy-saving features – so many that it won the state-level “Office Development of the Year” Award from the National Association of Industrial and Office Properties.
“Right Thing to Do”
The high standards for safety, quality and environmental responsibility come at a premium: The new headquarters costs thirty percent more than a standard commercial structure of the same size, and the fleet renewal initiative will add significantly to capital expenditures. Harley Franco believes the extra investment is the “right thing to do” but says it can be a challenge convincing customers that it’s worth the higher service rates. Given current market pressures in shipping, container lines in particular have been reluctant to hire anyone but the lowest bidder.
Still, Harley Marine retains a core constituency of clients who have been with the company for decades. With the company’s long history of safe transportation, leadership in environmental quality, growing portfolio of services and rapidly modernizing fleet, it's easy to see why customers have stayed – and why Harley Marine will be moving their cargoes for many years to come. – MarEx
West Coast-based Paul Benecki is a staff writer for the magazine.