Matson proceeds with upgrade in China

U.S. container ship owner Matson Navigation will go ahead with its plan to upgrade at least one ship in China despite a pending lawsuit aimed at stopping that move, a Matson spokesman said.

The move comes amid allegations of unfair competition and offshoring work on U.S. ships to overseas shipyards. The cost of rebuilding ships in Asia is significantly lower than in the United States, and coastal shipping rates in the United States are sharply higher than the international market.

The Shipbuilders Council of America and Pasha Hawaii Transport Lines are suing the U.S. Coast Guard, Department of Homeland Security and National Vessel Documentation Centre at the Eastern District Court of Virginia at Alexandria to stop a three-ship conversion plan in China by Matson. SCA is the largest U.S. shipbuilding association representing 36 companies that own and operate over 100 shipyards, and Pasha is a competitor of Matson.

“Matson will honour its contract with the Chinese yard. The ship will be sail to China as planned,” said Jeff Hull, a spokesman for Matson. Matson received approval from the Coast Guard for the conversion plan for three ships a few months ago.

The container ship ?Mokihana? was to be converted to a car carrier-container ship, with the rebuilding work to be done in both Alabama and China. The ship was scheduled to sail to China for conversion work in December.

Matson has yet to decide on whether to exercise its option to convert two other ships in China after receiving approval from the Coast Guard for three ships, Hull said.

Matson is sending the Mokihana to COSCO’s Nantong Shipyard in China and Atlantic Marine in Alabama for rebuilding works.

Some industry sources pointed out that the three Matson ships converted could sail only in U.S. coastal routes. They are too old to serve the international market.

“If the court rules against the Coast Guard, it is not known if these ships will be allowed to sail in the United States,” a source said. John Love, a Pasha Hawaii spokesman, said Pasha filed the complaint because of “unfair competition.”

“There will be no objection from Pasha if Matson rebuilds these ships in a U.S. yard,” he said.