Hawaii Ocean Industry Magazine Archives

February - March 2001

Hawaiian Maritime Industry Day 2001

2001 Maritime Legislative Initiatives

Matson Launches $31.5 Million Facility Upgrade

New DrydockK is State's Largest

Publisher's Message

We're 5 years old!

Five years ago this January, we launched the first issue of Hawaii Ocean Industry & Shipping News, the product of months of planning and input from many of you in the industry. Along the way we received comments that ranged from "You're crazy" to "Great idea."

We put the skeptics' opinions aside and forged ahead in the belief that there was a need for a publication dedicated to news for and about Hawaii's multi-billion-dollar ocean industry. In 1997 we expanded our horizons with the publishing of our first annual Hawaii Port Directory and Hawaii Marina Directory.

Our Website, hawaiiocean.com went online in July, 1999, making our publications as well as weather information and other resource links available at the click of a mouse.

As we celebrate five years in business, I want to take this opportunity to thank the many individuals, companies and government agencies whose advertising support, story ideas and photos, editorial contributions and helpful feedback have made this magazine one heck of a fun voyage so far.

Mahalo,
Terry White, Publisher

Salutes

Hawaii maritime industry advocate Clint Taylor has formed his own company, Clint Taylor Consul-tants, specializing in public affairs and business development in both maritime and non-maritime industries. Taylor was public affairs manager at CSX Services for the past 4-1/2 years, and previously had his own consulting business.

Robin Cababa has joined the Oceanic Institute as director of research operations, responsible for the oversight of research operations, budget, facilities usage and coordination of research activities among all programs. Cababa was formerly with the U.S. Army Engineer Research and Development Center in Vicksburg, Miss. Also at the institute, Dr. Tomonari Kotani, a distinguished researcher from Nagasaki University's Faculty of Fisheries, will complete a one-year sabbatical at OI as a visiting researcher. While here, he will continue his research into marine invertebrate zoology.

News Briefs

American Classic to relocate headquarters

American Classic Voyages Co., parent company of American Hawaii Cruises and United States Lines, is relocating its present New Orleans operational offices and Chicago corporate headquarters to Sunrise, Florida, thanks to a $4.2 million economic incentive package from the state and county governments in Florida.

AMCV, the largest American cruise company, will be the lead tenant in a new six-story, 240,000-square-foot building that broke ground on Jan. 16. The company plans to move into its new headquarters in November of this year.

Upon occupancy of its new headquarters facility, AMCV will receive an annual tax refund of $543,750 for four years, beginning in fiscal 2002-2003, under Florida's Qualified Target Industry Tax Refund Program. The refunds are part of a total economic incentive package of more than $4.2 million, including state job training funds and cash grants approved earlier by Broward County and the City of Sunrise.

Snapper spawning success

The Oceanic Institute recently achieved natural spawns of red snapper in captivity, the first recorded for red snapper in almost 25 years. This also is the first record of spawning outside the species' natural reproductive season. While many organizations have been working towards this goal, OI is the first to bring captive red snapper to maturity and to create the conditions necessary for a natural spawning.

Red snapper populations have been steadily declining, and OI is leading the development of culture technology in an effort to restore wild populations in the Gulf coast region.

OI President and CEO Dr. Thomas Farewell said, "OI's history of success in closing the lifecycle for a variety of species makes it uniquely qualified to make the breakthroughs necessary to culture snappers, ornamentals and other important species. This program will be a high priority for OI as it races to address the problems of seafood shortages and environmental preservation."

Second Jones Act auto carrier planned

Pasha Hawaii Transport Lines LLC (PHTL), the joint venture of The Pasha Group and Van Ommeren Shipping (USA) LLC, has exercised its option with Halter Marine for the construction of a second U.S.-built Jones Act Pure Car and Truck Carrier. According to George W. Pasha, IV, president and CEO of PHTL, "The response we received when we announced our plans [last fall] for deployment of the first vessel in the Hawaii/Mainland trade was well beyond our expectations and the second vessel will only better serve this market."

The Hawaii/Mainland trade currently generates over 150,000 vehicles per year. A second vessel, which will be a sister ship to the 13,000-DWT vessel under construction at Halter Marine in Pascagoula, Miss., will enhance the service offering of PHTL by providing increased frequency and reliability.

This first vessel has a capacity for 4,300 vehicles and is scheduled for a spring 2002 delivery. Combined with the sister vessel, the two ships will provide weekly service between Hawaii and two California ports.

Hawaiian Maritime Industry Day 2001

The US Coast Guard Marine Safety Office Honolulu presents the 11th Annual Hawaiian Maritime Industry Day Ñ Hawaii's premier maritime community event Ñ on Thursday, March 1, at the Hawaii Convention Center in Waikiki. Hawaii Ocean Industry and Shipping News is one of the sponsors of the day-long conference, which will cover a variety of maritime-related topics in a convention-style program.

The $35 admission fee includes a continental breakfast, luncheon, conference and breakout sessions, industry exhibits, and reception. Parking is $5 for 8 hours.

Breakout sessions will cover safety, environmental, regulatory and operational issues affecting Hawaii's ports.

Register online at www.aloha.net/~msohono/iday by Feb. 14 or call USCG MSO-Honolulu for information, (808) 522-8256.

Exhibitor Booth Space Available

In addition to the conference sessions there will be an exhibitor's hall with vendors and organizations presenting their services, products and information. Booth space is limited and is available by calling Terry White at Hawaii Ocean Industry & Shipping News,
(808) 599-3788.

2001 Maritime Legislative Initiatives

by Clint Taylor

The Hawaii Maritime Conference IV (HMC IV), held last November, had a very broad and diverse group of 120 representatives of maritime businesses and unions, state legislators and administrators, federal officials, and a visiting delegation from the Northwest Cruise Line Association. Conference attendees focused upon issues of ensuring sufficient container yard space for continued economic growth, sufficient berthing and terminal facilities for both domestic and international cruise lines, and sufficient funding for small boat harbors that serve both ocean tourism and recreational boating sectors.

In the intervening seven weeks between the end of the conference and the opening of the 2001 legislative session in January, bills were drafted and various groups have gotten behind various recommendations of HMC IV.

First and foremost, the Maritime Committee of the Chamber of Commerce of Hawaii is unanimously supporting five of the conference's recommendations:

• Capital advancement - SB 755
• Maritime land for maritime use - SB 754
• Non-maritime use of DLNR DOBOR back-up lands - SB 752
• Expedite Kapalama container yard development
• Website bill status coordination and cooperation

Senator Cal Kawamoto and the Ocean Tourism Coalition support a sixth recommendation: Consolidate the Department of Land and Natural Resources Division of Boating and Ocean Recreation (DOBOR) with DOT-Harbors Division - SB 757.

The last two conference recommendations - continuation of the ferry system and general fund support for DLNR DOBOR - have various constituencies supporting them.

Bills to track:

The six maritime bills introduced by Sen. Kawamoto include:

SB 752 Expansion of non-maritime use of DOBOR backup lands

This bill expands the non-maritime use of DOBOR backup lands. It would allow ancillary and supportive uses of such backup lands in partnership with the private sector to increase the revenue stream to support public shoreside improvements.

SB 753 Hawaii Port Authority

This bill, establishing a port authority, received much attention during the 1998 session and was reintroduced this year, although there is not consensus in the maritime
community.

The bill would put maritime land in the port authority jurisdiction. A Port Authority Board, not DLNR's Land Board, would pass on final disposition of such land. The bill offers more complete control over maritime lands by the maritime sector but it presents other issues.

For a port authority bill to be successful, it has to address concerns raised in the past that the Port Authority Board would be another layer of bureaucracy, that interest groups other than maritime users could control one or more seats on the board, and that DLNR DOBOR does not drain DOT Harbors of funds or staff time.

SB 754 Maritime lands for maritime use.

This bill requires that DLNR's Land Board define lands for maritime use regardless of which state department they are in, and that it consider the requirements of water dependent maritime users prior to committing such land for non-maritime use.

Since the legislature passed a maritime lands definition bill last session, the maritime industry believes that this bill has a good chance to go through again this year without the additional caveat that was in last year's bill that restricted the Hawaii Community Development Authority (HCDA) to only maritime use of Piers 1 and 2.

Governor Cayetano vetoed last year's bill stating that it limited his flexibility with respect to land use. The new bill states that the requirements of maritime users for maritime land need to be considered before land is committed in perpetuity for non-maritime use. This is more flexible than "restricted to maritime use."

SB 755 Capital advancement

This bill is essentially the same as last year's "cost reimbursement" bill (SB 2300), allowing private development of maritime facilities on state land with reimbursement over time through fee and lease rent rebates.

The maritime industry will request a limit of total capital for this program of $2 million for each fiscal year to start to increase the chance of passage of this bill. However, the bill initially retains the original language from last year, allowing for an unlimited number of projects up to $2 million each, to be negotiated directly by DOT-Harbors, and up to $5 million per project to be accomplished with legislative approval. Discretion would be left up to DOT-Harbors to put an annual limit on the use of this tool.

SB 756 Public Service Company taxes for passenger cruise facilities

Senator Kawamoto chose to reintroduce this bill that passed, but was vetoed by Governor Cayetano last year on the grounds that it reduced his flexibility over funds destined for the general fund. The senator wants to see how the maritime and visitor industry communities view this initiative this year.

SB 757 Transfer DOBOR back to DOT Harbors

Senator Kawamoto and the Ocean Tourism Coalition support this bill to recombine these two state agencies, first separated in 1991, due to the increasing commercial activities of the small boat harbors today. The intent of this consolidation is to achieve economies of scale through the elimination of duplicative functions. Opponents are concerned that DOBOR will drain DOT-Harbors of dollar resources and critical planning and engineering staff time necessary to expedite priority commercial harbor projects.

Two bills introduced as part of the Governor's package are not supported by the maritime industry:

SB 1170/HB 695 Designating a portion of Kapalma Military Reservation as an industrial park

These companion bills go counter to the Oahu Commercial Harbors 2020 Master Plan which earmarks Kapalama as the principal container yard expansion area for Hawaii. The maritime industry requires all of this approximately 75-acre area to remain in the DOT-Harbors portfolio and to be developed as a container yard as soon as possible.

Hawaii cannot afford to have 12.6 acres re-designated as a DLNR industrial park relocation site for state lessees being displaced by HCDA development in the Kakaako waterfront area. While the industry sympathizes with the need to designate state land for relocation of displaced lessees, Kapalama is prime maritime land and is not the place for such relocation.

The maritime industry and the broader maritime community look forward to the 2001 legislative session and to the continued excellent legislative support of initiatives upon which we come to a consensus.

Clint Taylor, HMC IV coordinator and president of Taylor Consultants, is a management consultant specializing in public affairs and business development in both maritime and non-maritime sectors.

For Your Information

For online access to texts of bills and resolutions, hearing notices, legislative timetable and links to lawmakers, visit the State Capitol Web site at www.capitol.hawaii.gov/

Information also is available at the Public Access Room at the Capitol, Room 401.
Phone 587-0478.

Matson Launches $31.5 Million Facility Upgrade

by Mele Pochereva

Matson Navigation Company's recent addition of 500 new 45-foot chassis and 500 new 45-foot high-cube dry containers is the latest step in a multi-million- dollar capital investment program at the company's Sand Island terminal. Last year, Matson invested $22 million in new container equipment. The equipment acquisitions are part of a $31.5 million conversion from a straddle carrier operation to a partial-wheel operation.

With container storage space on Sand Island at capacity, and the state's planned container facilities at Kapalama Military Reservation still 10 years away, Matson has embarked upon its own plan to expand capacity and efficiency at its 110.5-acre facility.

The project, called Team 2000, is scheduled for completion in late 2001. Matson expects the upgrades to increase the terminal's capacity by 30 percent and result in a more efficient operation. The project also will help the company accommodate expected increases in container volume until additional terminal space is available at Sand Island.

Explains Brad Mulholland, Matson president and CEO, "Our goals are threefold: To provide world class service to our customers and the trucking community that uses the terminal, to have the most efficient terminal operation for any similar sized terminal in the United States, and to accommodate projected growth through the year 2020."

Matson's operations in Oakland, Seattle and Terminal Island are all partial wheeled facilities. Unlike a straddle carrier operation, which requires containers to be transported to and from vessels and trucks by straddle carriers, a partial wheeled operation allows truckers to pick up and drop off containers unassisted.

"Instead of making truckers wait to be serviced by a straddle carrier, a partial wheeled facility will allow truckers to merely connect or disconnect with the container/chassis combination at a designated location in the container yard, which should save a lot of time," says Gary North, president of Matson Terminals, Inc.

Project phasing

One of the challenges Matson faces is how to convert the terminal without any disruption to its operations. The first phase of the project will begin the partial wheeled operation by keeping all loaded containers on wheels and stacking autos and empty containers in block-stow areas to be handled by top or side picks.

Phase two will include reinforcing 30 acres or pavement to accommodate the use of top picks, which have heavier wheel loads for stacking loaded containers. This second phase should increase the terminal's capacity by 30 percent, allowing the company to accommodate container volume increases at least to the year 2010, when the state expects to have a new Kapalama facility available for CSX Lines. At that time, Matson would expand into the existing
CSX facility.

Saving Pago Pago

by Eric Hedaa

Dec. 10, 1991, was a very bad day for American Samoa. The U.S. territory lay directly in the path of Hurricane Val. Val attacked Tutuila Island with devastating force, killing four people, injuring 200 and leaving 4,000 people homeless.

Pago Pago Harbor, the island's only major port, was left in complete chaos. Val broke nine longliner fishing vessels from their moorings and tossed the 170-foot, 300-ton vessels along the northeastern reefs of the harbor like plastic toys.

Val's initial destruction of Pago Pago would have far reaching effects. After grounding, the nine vessels began leaking diesel fuel and oil into the sensitive coral reef ecosystem.

U.S. Coast Guard marine safety inspectors stationed in American Samoa found the vessels' owners unwilling to salvage their vessels or take responsibility for the damage they were causing, so they called for reinforcements.

Within 48 hours, Coast Guard pollution response teams from Marine Safety Office Honolulu and the Pacific Strike Team stepped out of a Coast Guard C-130 Hercules long-range rescue aircraft onto the runway of Pago Pago International Airport with orders to save Pago Pago Harbor.

An estimated 1,500 gallons of diesel oil were already awash in the surf. If nothing was done to contain the leakage, the vessels would spill another 100,000 gallons of oil onto the reef.

The Coast Guard, with the help of salvage crews from Honolulu-based Pacific Environmental Corp. (PENCO) and Harbor Refuse and Environmental Services of American Samoa, immediately went to work. They found six of the nine vessels were dangerously unstable. It was decided the best strategy was to contain the oil spills around these six vessels with booms and soak up the pollutants with absorbent pads.

Once the discharge of diesel oil from the six longliners was contained, the crews turned their efforts to removing the oil and other pollutants from the three remaining vessels, which were hard aground and stable enough to work on.

By Dec. 13th, three days after Val struck, 12,000 gallons of diesel, oil and hydraulic fluid had been transferred from three of the longliners, and the discharge of diesel oil from the other six had dissipated. With the immediate pollution threat diminished, the two Coast Guard teams focused their energies on helping reestablish Pago Pago Harbor as a navigable port.

"We fixed a lot of aids to navigation because almost all the aids were blown over," said Petty Officer 2nd Class Domenic Santoro, one of the five Coast Guardsmen flown in to respond to the hurricane's damage. "We also helped rebuild people's roofs."

Coast Guard pollution response teams left American Samoa knowing they'd kept more than 12,000 gallons of oil from Pago Pago's reef. However, an undetermined amount of oil and other pollutants remained aboard the six longliners awash in the surf. These vessels were too unstable for surveyors to inspect thoroughly, let alone remove. It was possible that these vessels would eventually spill oil and other pollutants onto the reef if they weren't salvaged.

The Coast Guard investigators who began hunting for the responsible parties faced a challenging and frustrating task. All of the vessels were registered in foreign countries to companies that had declared bankruptcy days before Val hit.

As the years passed and the investigators continued running into dead ends, the Coast Guard, the Environmental Protection Agency, and the government of American Samoa began looking for other means of removing the longliners and their pollutants.

Pollution threat resurfaces

In February of 1997, time ran out. An oily sheen appeared on the water surrounding one of the longliners. With the discovery of a new oil leak, the Coast Guard stepped in again. Coast Guard Marine Safety Detach-ment American Samoa responded to the report and found a small amount of oil seeping from one of the longliners, the Koram No. 3.

A May 27, 1998, report from the National Oceanic and Atmospheric Administration Damage Assessment Center and Coast Guard Marine Safety Office Honolulu stated that an imminent pollution threat existed. Two of the vessels were in danger of falling apart.

"The vessels were rusting; changing chemically," said Lt. Cmdr. John Sifling, the chief of port operations at MSO Honolulu. "They were falling apart, moving around and spreading debris all over the reef."

Each of the vessels also held an undetermined amount of ammonia in their refrigeration systems. Ammonia is highly soluble in water and even small amounts are highly toxic to a wide range of organisms. And there existed the potential for another storm to refloat the vessels and cause more damage to the reef or to other vessels.

A plan was developed to permanently resolve the problem. It was decided to remove all of the pollutants from the nine longliners, cut the vessels into pieces, load them onto a barge and dump them offshore in 10,000 feet of water.

The project was huge. Just reaching the vessels, which were hundreds of feet offshore, required a couple of major construction projects. Salvage workers built causeways from shore that were large enough to support the heavy machinery necessary to cut the vessels apart.

On Aug. 7, 1999, crews from PENCO began building a causeway to the first three longliners. Salvage workers used a hydraulic sheer — monstrous, industrial-strength tin snips — to cut into the three vessels and access their fuel tanks. Pumps and hoses were used to pump out the pollutants. A temporary dump was set up where pollution-containment bladders, tanker trucks and dump trucks off-loaded the pollutants and eventually, the cut-up pieces of seven vessels.

After the pollutants were removed, the cutting and removal of the hulls continued until nothing of the vessels remained above the water. Oil and other chemicals were cleaned off the huge piles of scrap metal before the scraps were trucked to a barge, towed offshore and dumped.

The work was labor intensive, dangerous and expensive; made more so by the lack of blueprints for any of the vessels to show where their fuel tanks and pressurized systems were.

With so much effort going into deconstructing the vessels, expenses were piling up faster than the scrap metal. The project was being paid for with money from the Oil Spill Liability Trust Fund and the Comprehensive Environmental Response Compensation and Liability Act, both established after the Exxon Valdez disaster, but everyone involved was looking to keep costs as low as possible.

During a discussion between Sifling, Capt. Gilbert Kanazawa, the commanding officer at MSO Honolulu, and Lt. Cmdr. Bob Spaulding, the assistant chief of port operations at MSO Honolulu, the idea came up to pull the last two vessels off the reef intact, tow them to the dump site, and sink them, Sifling said.

The vessels Yu Ti No. 1 and Amiga No. 5 had suffered significantly less damage than the other seven longliners because of the way they'd gone up on the reef. The idea was that refloating the vessels intact would save a significant amount of money and cause less damage to the reef.
"Two engineers from the Marine Safety Center in Washington, D.C. came down and ran some calculations to see if it was feasible," Sifling said. "They said the two vessels would float and estimated it would take 150 tons of pulling pressure to get them off the reef."

Final salvage

The American Salvor, a 195-foot, deep-draft salvage vessel homeported in Seattle and owned by Crowley Marine Services, was contracted for the complex job.

On March 15, 2000, after months of preparation, the Salvor took a position 300 yards from the rusty, 300-ton Amiga No. 5. A pair of 2-inch steel cables connected the two vessels. The cables extended from a hole cut in the Amiga's stern to the Salvor's two, 150,000-pound stern winches. Four steel anchor cables speared out from the bow of the Salvor to hold the ship in place when the monstrous winches began pulling the Amiga.

The pull would be the culmination of weeks of dirty, dangerous and difficult work to prepare the Amiga for floating and then sinking. It took a four-man crew and a helicopter a full week to strip the longliner of 30 tons of loose metals and other materials. Eight hundred gallons of diesel oil and an assortment of other deadly chemicals were removed. Next, the Amiga was cut, welded and reinforced to survive the forces the Salvor's pulling would exert upon the Amiga's rusty frame.
Besides heat exhaustion and dehydration, the salvage crew also faced dark, unfamiliar compartments with rusted-out floors, jagged, rusty bulkheads, broken glass, tangled lines, hidden fuel tanks and high-pressure blast freezers.

With both vessels prepared for their 150-ton tug of war, supervisors from each agency present, and crews manning their stations on both vessels, the winches were engaged. The two winches slowly increased their pull on the steel cables so that the maximum strain on the cables would be reached just as high tide hit Pago Pago Harbor.

Aboard the Amiga, a small salvage crew nervously awaited signs of movement. They would be needed to adjust the Amiga's ballast once it was refloated.

Finally, with the winches pulling a combined 154 tons of pressure and the tide almost at its full height, the Amiga began to move. The Salvor was winning, slowly at first, and then the Amiga slipped down the remaining 30 yards of reef with surprising speed and began floating.
After adjusting the ballast in the Amiga, the longliner was hooked up to a tugboat and towed 12 miles out to sea. There, in 10,000 feet of water, the salvage crews opened up the soft-seal plugs and, 15 minutes later, the Amiga disappeared into the sea.

The whole operation was repeated with the Yu Ti No. 1, and on March 19, the last victim of Hurricane Val slipped into the Pacific Ocean.

"Refloating and sinking the last two vessels worked out to be quicker and much cheaper than building trestles," Sifling said. "It also caused much less environmental damage because both vessels came out of the same scar, which the Yu Ti created when it first ran aground.
"None of this was possible with the other seven boats," Sifling said. "They were stacked up against each other way too far on shore."

After sinking the last two vessels, all that remained of the longliners were five hulls below the waterline and assorted debris scattered around the reef. Under NOAA supervision, a crane barge was used to remove the remaining hulls last June. The remaining debris in the outer harbor was cleaned up by early January of this year, and the final clean-up of the inner harbor should be completed by the end of March this year.

In total 1,900 gross tons of metal, 36,000 gallons of diesel and oil, 600 lbs. of poisonous anhydrous ammonia, and 10 pounds of freon were removed from the nine longliner fishing vessels and disposed of at a cost of over $12 million.

"The American Samoa Longliner Response pointed to a need for local governments in more remote Pacific Island nations to develop plans to respond immediately to hurricanes and other environmental disasters," said Lt. Cmdr. Lane Johnson, the assistant marine environmental response officer at the Coast Guard's Fourteenth District Marine Safety Division. "MSO Honolulu, MSO Guam and our office offer assistance to meet those demands through the multi-national South Pacific Region Environ-mental Program and the Oceanic Regional Response Team, which encourages local governments and port authorities to not only prepare for emergencies, but to prevent them."

Eric Hedaa is a public affairs specialist with the 14th Coast Guard District, ehedaa@d14.uscg.mil

New Drydock is State's Largest

Pacific Shipyards International LLC has brought to Honolulu what is now the largest commercial drydock in the state. With a lifting capacity of 10,000 tons, overall length of nearly 400 feet, and clear width between wing walls of 105 feet, the new dock will be capable of handling all locally based vessels except the ocean liners ms Patriot and SS Independence.

Pacific Shipyards International (PSI), a limited liability corporation formed in April, 2000, will own and operate the drydock. PSI member companies include three local maritime interests: Honolulu Shipyard Inc., Honolulu Marine and HSI Electric. Primary responsibility for marketing the drydock will be Honolulu Shipyard and Honolulu Marine.

After acquiring the dock from a Japanese shipyard, PSI conducted a complete refurbishment and extensive upgrade to the dock before towing it to Hawaii in January. The dock is equipped with its own large power generation equipment, three large cranes, and modern control and safety equipment. Says PSI spokesman John Ball: "The dock is essentially in new condition and should perform for decades before any major upkeep is required."

The company is currently completing final assembly of the dock at Pier 41, with a planned commissioning date in mid-February. The dock will provide local ship and barge operators the opportunity to drydock their vessels in Hawaii instead of sending them to the mainland. This will reduce the time vessels are out of service and producing no revenue.

"It's a service the Hawaii maritime industry has wanted and needed for a long time," says Ball. "It can save local vessel operators a lot of time and money. It will also help Hawaii's economy by keeping work in the state. It's a win-win for everyone."

PSI plans to eventually hire 20 to 30 employees, not including employees from its three partner companies.

Pacific Shipyards names CEO

William Clifford was named CEO of Pacific Shipyards International, effective March 1, 2001.
Prior to joining PSI, Clifford was vice president of new construction at Atlantic Marine, a major shipbuilder/ship repair company in Jacksonville, Fla. From 1996-1998 he was the director of new ship construction at Bath Iron Works, where he was responsible for building and delivering the new Arleigh Burke class destroyers.
Clifford also spent seven years with Pacific Marine in various capacities from 1989 to 1996, including president of Honolulu Shipyard.

Soundings

Sustaining the vitality of ocean tourism

by James E. Coon

I would like to take this opportunity to offer some thoughts both about the future of the state's small boating program and how it impacts ocean tourism and the need to look at sustainable growth and structure of the entire maritime industry. This seems to be particularly relevant in light of proposed legislation that offers a variety of different bills that try to address the economic and functional challenges we now see facing the Division of Boating and Ocean Recreation (DOBOR) and the maritime industry.

There have been several organizations, both public and private, over the past decade that have studied ways (quoting a working group mission statement) "to more efficiently and cost effectively consolidate, plan, finance, develop, market and manage statewide maritime lands, facilities and functions to maximize the benefit to commercial and recreational maritime users in the public interest while sustaining and improving the natural and public trust resources of Hawaii's harbors, waterfront and near ocean waters."

These studies offer very insightful suggestions on what is currently dysfunctional and what should be done to make it better: Lack of strategic planning, outdated management regimes for ocean and coastal management, inadequate management capabilities and lack of administrative efficiency, inadequate administrative flexibility for resource managers, a $140 million deferred maintenance shortfall, to name a few. Most of this valuable advice has yet to be implemented.
We have some very substantial economic challenges ahead of us. The private business sector has been forced to change or modify the way it does business this past decade. The pace of change will continue to increase as we integrate into the global economy. For the private sector this has meant adopting policies that cut waste and increase productivity. Government must do the same. Albert Einstein observed, "The significant problems we face cannot be solved at the same level of thinking we were at when we created them."

Senator Cal Kawamoto has introduced six very worthy maritime bills, SB 752-757, which if all passed, would provide a comprehensive long-term solution to our maritime infrastructure and management needs. Representative Joe Souki has also introduced some companion legislation (HB 138) and has a long history of supporting our industry. SB 757 and HB 138 would return the small boat harbors out of DLNR and back to DOT where the program was originally housed. SB 753 and HB 137 create the Hawaii Port Authority.

Serious consideration should be given to combining all designated state harbor management efforts into one department (or port authority) that has the long-term mandate and technical support--as well as the financial strength--to sustain and develop harbor support programs. There could be substantial cost savings to the state with this increased efficiency, especially if duplicate management functions, personnel, and associated infrastructure costs were eliminated.
Long-term planning for harbor infrastructure needs, alternative funding mechanisms, (SB 755, SB 752, SB 754, SB 756, SB 550), as well as a long-term management strategy must be implemented. For the recreational small boat harbors with little or no commercial activity, privatization, community-based management, or inclusion in the state park system with some general funds support, should be considered (SB 663, SB 664, SB 689, SB 801).

The ocean tourism industry has organized on a statewide level as the Ocean Tourism Coalition. (www.oceantourismcoalition.org). This is an industry in which sustainable growth should be encouraged and nurtured. A more accessible and business-friendly environment is hoped for by a majority of the ocean tourism industry.

A dynamic industry The industry is highly segmented and dynamic. The kinds of marine activities generating expenditures include tour boats and inter-island cruise ships, submarines, dive shops, ocean activity product manufacture and sales, charter boat fishing, recreational fishing, personal boating, major yacht races, wind, board, and body surfing events, jet skiing, parasailing and ocean kayaking. Total direct revenues were $560 million and total employment was about 5,850 in 1992. This had grown to an estimated $797 million in 1998 with total employment at about 7,000.

The OCEAN TOURISM INDUSTRY is one of the fastest growing economy. Overall, Hawaii's maritime industries generated an estimated $3.8 billion in 1998 and employed 20,000. By comparison, revenues for all agricultural production (farm-gate values) over this same period have varied little, ranging between about $500-600 million annually.

If this trend continues, which appears likely, ocean recreation and marine tourism revenues will continue to exceed agricultural production revenues in the future. This likelihood reflects a major restructuring of Hawaii's economy away from traditional mainstays such as agriculture to more service-oriented industries, especially related to tourism.

Hawaii's ocean tourism industry is a "clean non-consumptive" industry and is world famous for its conservation efforts and high quality ocean experience. It understands that a pristine environment is good business.

Ocean tourism is not only an important player in the overall tourist industry, but serves a vital role in attracting new visitors. It contributes very significantly to the high level of visitor satisfaction resulting in the large percentage of repeat visitors to our state.

Most ocean tourism businesses are small, capital and labor intensive, locally owned and operated. They depend almost entirely on other small business to support and supply virtually every aspect of their particular enterprise. They are also very vulnerable to government regulation and control.

As form follows function, the ocean tourism industry (small passenger vessels) would be better administrated by DOT-Harbors, or a port authority, with the rest of ocean commerce (large passenger vessels) and not be included with the recreational boating program. The current permit structure that relates to ocean access is multi-jurisdictional. The associated complexity makes it difficult for the commercial operators, who are required to obtain these permits, to comprehend and comply. This situation has resulted in confusion in the marketplace and has caused the public, the commercial ocean tourism business, and the regulatory agencies considerable concern.

The vitality of the ocean tourism industry depends on a state government that is responsive and sensitive to the needs of commercial boaters. What the state lacks in adequate rules and legislation must be made up with sensible leadership and a partnership with the ocean tourism industry.

There are small boat harbors in which a majority of the activity and revenues generated are coming from the commercial sector. These harbors function more like commercial harbors than recreational. The lines of distinction will continue to blur as the large cruise ship industry and inter-island ferries utilize these harbors and as the ocean tourism small passenger vessels are built to meet this increasing demand.

Search for sustainable growth

This comment is not intended to promote an increase in the number of commercial permits, which has already been fixed at a specific number for each harbor, but is an attempt to look at sustainable growth and recognize that some harbors are more commercial than recreational. The public might be better served to have these harbors re-classified as commercial harbors. This would allow the state to take advantage of more favorable bonds and lending sources for harbor facilities improvement, while simultaneously protecting the interests and improving the infrastructure needs of the recreational boater that may be berthed there.

In any event, commercial boating should be treated the same statewide regardless of which harbor the activity is generated from. The department regulating the harbors should be given much more flexibility in generating revenue from the lands surrounding the harbors while insuring that state lands near harbors are available to meet our vital shipping needs. Slip fees and boat ramp fees should be raised to levels equivalent to their West Coast counterparts. However, this increase should not single out specific harbors; the same percentage increase should apply for all harbors statewide.

It is time to look at the ocean tourism industry separately from the recreational boating program. It is not fair or feasible for the ocean tourism industry, operating out of the small boat harbors, to subsidize the state's recreational boating program.

Finally, it is time for the maritime industry to put aside its parochial bias and come together to support these changes. It is also time for the leadership of our great state to reject the dysfunctional status quo and make the proactive and innovative decisions necessary to serve the sustainable growth needs of our maritime industry into the foreseeable future.

James E. Coon is CEO of Coon Brothers Inc., which operates Trilogy Excursions, Maui's oldest sailboat company. He is also active in a variety of marine conservation efforts and serves on the Small Business Regulatory Review Board.

Hawaii Ocean Industry provides this space as a forum to express veiwpoints in Hawaii's ocean industry.