Philly Shipyard Expects "Significant" Losses Through 2019

On Monday, American shipbuilder Philly Shipyard said that it posted a net loss of $36 million for the year to date, including a $17 million write-off for the cancellation of two container ships for TOTE Maritime. 

The yard has only one order in its backlog, the second of two container vessels for Matson. About $40 million in shipbuilding activity for that vessel remains, and it is scheduled for completion in the first quarter of 2019. At present, Philly expects that the vessels for Matson will be a loss-making project, with no margin to provide coverage for the yard's overhead costs. 

Philly says that it is searching for options to provide additional work after the second vessel in the series is delivered. Even if it secures orders for new vessels, the firm expects to suffer significant losses in 2018 and 2019.

Philly has several future projects that it hopes to secure. In the long term, the yard is pursuing the Coast Guard's replacement heavy icebreaker contract, with support from Fincantieri. In the near term, it has two main prospects. 

The first would be the construction of two new 50,000 dwt product tankers for operation in the Jones Act trade. The yard and the unnnamed buyer signed a term sheet for the order in July, but have not yet closed on the agreement, pending the successful conclusion of several details (including securing a commitment from a charterer). 

The second is the U.S. Maritime Administration's tender for the new National Security Multi-Mission Vessels, which will replace the maritime academies' current training ships. The RFP response for the NSMMV is due at the end of the month, and MARAD will make its decision by early January, with the contract award to follow shortly thereafter. MARAD has already secured funding for the first vessel in the series from Congress.