Philly Shipyard Wins Non-Binding Order for MR Pair

Philly ShipyardImage Courtesy: Philly Shipyard

U.S.-based shipbuilder Philly Shipyard seems to have broken the dry spell having secured a non-binding order for the construction of two 50,000 dwt tankers.

Specifically, announcing its second quarter results, the shipbuilder said that it had signed a non-binding term sheet for the construction and sale of two newbuild Jones Act Medium Range (MR) product tankers with an undisclosed customer.

The two ships, if confirmed, are scheduled for delivery in Q4 2020 and Q1 2021 respectively. Their design would be similar to the yard’s MT-50 class product tankers, with the main engines upgraded from Tier II to Tier III compliant. In order to support the delivery timetable, Philly Shipyard has initiated preliminary design work for the vessels.

The sealing of the contract is subject to, among other things, securing commitments for charters.

The contract breaks a protracted lack of orders which resulted in layoffs and idling of the company’s facilities as a means of adjusting its business operations.

Since the beginning of 2018, Philly Shipyard has laid off approximately 25 percent of its employees.

The company is currently building two containerships for Matson, which were 84 pct complete as of June 30. One of the boxships, Daniel K. Inouye, was christened at the end of June and, when delivered, it will be the largest containership ever built in the United States.

Philly Shipyard booked a net loss of  USD 2 million for the second quarter of 2018,  compared to net income of USD 2.2 million for Q2 2017. Net loss for the first six months of 2018 was USD 5.6 million compared to net income of USD 19.4 million in the same period of 2017.

“Securing contracts for new vessels is the key to Philly Shipyard’s long-term future and ultimate return to sustained profitability, but will not materially improve its near-term forecast. Due to the under-recovery of the costs mentioned above, Philly Shipyard expects it will suffer significant losses in 2018 and 2019, even if the shipyard receives orders for new vessels,” the company said.

The shipbuilder is seeking orders outside its conventional portfolio including in the fishing, offshore wind and cable laying sectors.

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