Auto-shipping plans stymied
By Andrew Gomes
Advertiser Staff Writer
A Mainland partnership that had planned to compete with Matson Navigation Co. and CSX Lines shipping automobiles between Hawai'i and California will be unable to initiate service as anticipated this year because of ship construction difficulties.
Pasha Hawaii Transport Lines LLC had planned to begin service in mid-2002 with the first of two new $70 million vessels each capable of carrying more than 4,000 vehicles.
But problems between the shipbuilder, a surety company and Pasha Hawaii halted construction of the first ship last July, and there is no clear indication when work on the half-built vessel may resume.
A Pasha Hawaii official said a resolution is in the works, but noted it would involve a sale of the shipbuilder as well as negotiating a new construction contract — a process that could take months and would push back the earliest date for launching service into next year.
The tie-up follows a move last April by Matson to lock up a major piece of automobile shipping business. Matson extended exclusive agreements with the country's Big Three automakers to deliver westbound DaimlerChrysler vehicles into 2004, eastbound and westbound Ford vehicles into 2004 and eastbound and westbound General Motors vehicles into 2005.
Pasha Hawaii's goal is to capture a "significant segment" of the market in which more than 150,000 vehicles a year are shipped to the state by auto manufacturers, car rental companies, the military and private parties.
The company, a joint venture between California-based automobile distributor/marine terminal operator Pasha Group and Connecticut-based ship operator Van Ommeren Shipping (USA) LLC, announced plans for weekly service two years ago.
The partnership ordered two ships designed with drive-on access to enclosed parking decks, compared to most Matson and CSX cargo ships onto which vehicles are loaded via crane inside containers or racks.
The first of the so-called floating garages was about half complete last April when Friede Goldman Halter Inc., parent company of the ship's Mississippi-based builder Halter Marine Inc., filed for Chapter 11 bankruptcy reorganization.
At the time, Pasha believed that its ship was not at risk, but Halter Marine said it would be unable to complete the project unless payments were advanced to ensure positive cash flow.
According to Friede Goldman Halter's most recent quarterly financial report, Halter Marine and Pasha amended the contract, but a surety company that had been providing the requested additional money quit making payments in July.
Halter Marine has since rejected the contract, and Pasha Hawaii has sued the surety company to compel payments, according to the Friede Goldman Halter filing.
Halter Marine spokesman Larry Walker earlier this month said the shipbuilder is "on the sidelines" waiting for Pasha and the surety company to resolve the financing issue. "We would love to complete the contract," he said.
Gary Kaliher, a Pasha Group senior vice president, said last week that he is hopeful construction can resume pending what Walker said are negotiations to sell Halter Marine as part of the bankruptcy restructuring.
"It is our hope that when the sale is completed we can negotiate a new deal with the new owner," Kaliher said. "We had envisioned that that might have happened by now, but it has not."
Walker said no decision has been made regarding a purchase, and that Halter Marine is considering offers. Kaliher said he did not have an idea as to when a sale might take place.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
