Galveston County PilotsGalveston County Pilots

2009-2010 Tariff Application2009-2010 Tariff Application

May 3, 2010May 3, 2010

IntroductionIntroduction

Captain Wallace R. Hogan, Jr.Captain Wallace R. Hogan, Jr.Presiding OfficerPresiding Officer

Galveston-Texas City PilotsGalveston-Texas City Pilots

PresentationPresentation

Captain Mark SaundersCaptain Mark Saunders

Vice PresidentVice President

Galveston-Texas City PilotsGalveston-Texas City Pilots

Texas Transportation CodeTexas Transportation Code67.06667.066

(1) characteristics of vessels to be piloted; (1) characteristics of vessels to be piloted; (2) the average number of hours spent by a pilot in (2) the average number of hours spent by a pilot in

performing pilot services; performing pilot services; (3) costs to pilots to provide the required pilot services; (3) costs to pilots to provide the required pilot services; (4) the effect, including economic factors affecting the (4) the effect, including economic factors affecting the

shipping industry in the area, that the granting, refusal, or shipping industry in the area, that the granting, refusal, or modification of the application would have on Galveston modification of the application would have on Galveston County ports and the persons residing in the board's County ports and the persons residing in the board's jurisdiction; jurisdiction;

(5) an adequate and reasonable compensation for the pilots (5) an adequate and reasonable compensation for the pilots and a fair return on the equipment and vessels that the and a fair return on the equipment and vessels that the pilots employ in connection with pilot duties; and pilots employ in connection with pilot duties; and

(6) the relationship between the pilotage rates in Galveston (6) the relationship between the pilotage rates in Galveston County ports and the rates applicable in other ports of this County ports and the rates applicable in other ports of this state and in competitive ports in other states state and in competitive ports in other states

The Proposed TariffThe Proposed Tariff

Explanation of the Tariff Structure Explanation of the Tariff Structure and Justification for Each Increaseand Justification for Each Increase

A Comparison of the Tariff on a Per A Comparison of the Tariff on a Per Ship Basis to other Regional PortsShip Basis to other Regional Ports

Financial FactorsFinancial Factors Economic Effect on IndustryEconomic Effect on Industry

Draft ChargesDraft ChargesNo IncreaseNo Increase

DRAFT CHARGE DRAFT CHARGE $45.80/ft.$45.80/ft.                                                                                                       To or From To or From Sea to Galveston, Texas City, or Sea to Galveston, Texas City, or Bolivar Roads; To or From Bolivar Bolivar Roads; To or From Bolivar Roads to Galveston or TexasRoads to Galveston or Texas City; orCity; or between Galveston and Texas City. between Galveston and Texas City. Minimum draft charge is 20 ft.Minimum draft charge is 20 ft.

Unit ChargesUnit ChargesNo IncreaseNo Increase

        Vessels shall also be charged a Unit Charge.  Vessels shall also be charged a Unit Charge.  Units are computed by multiplying the vessel’s length overall in feet Units are computed by multiplying the vessel’s length overall in feet by her extreme breadth in feet and dividing by 100.by her extreme breadth in feet and dividing by 100.

          Units         Cost/Unit          Units                Cost/Unit Units         Cost/Unit          Units                Cost/Unit 0- 50          $0.121              801- 850       $0.786 0- 50          $0.121              801- 850       $0.786 51-100       $0.146            851- 900       $0.818 51-100       $0.146            851- 900       $0.818 101-150     $0.187              901- 950       $0.866 101-150     $0.187              901- 950       $0.866 151-200     $0.214              951-1000       $0.898 151-200     $0.214              951-1000       $0.898 201-250     $0.253              1001-1050      $0.949 201-250     $0.253              1001-1050      $0.949 251-300     $0.282              1051-1100      $0.980 251-300     $0.282              1051-1100      $0.980 301-350     $0.321              1101-1150      $1.026 301-350     $0.321              1101-1150      $1.026 351-400     $0.349              1151-1200      $1.059 351-400     $0.349              1151-1200      $1.059 401-450     $0.388              1201-1250      $1.105 401-450     $0.388              1201-1250      $1.105 451-500     $0.416              1251-1300      $1.140 451-500     $0.416              1251-1300      $1.140 501-550     $0.454              1301-1350      $1.186 501-550     $0.454              1301-1350      $1.186 551-600     $0.482              1351-1400      $1.221 551-600     $0.482              1351-1400      $1.221 601-650     $0.626              1401-1450      $1.267 601-650     $0.626              1401-1450      $1.267 651-700     $0.660              1451-1500      $1.299 651-700     $0.660              1451-1500      $1.299 701-750     $0.705              1501-1550      $1.348 701-750     $0.705              1501-1550      $1.348 751-800     $0.738              1551- up        $1.376751-800     $0.738              1551- up        $1.376

Education and SafetyEducation and Safety

Per movement/cancellationPer movement/cancellation $41.00 $41.00

These charges are needed to accomplish These charges are needed to accomplish pilot training and continuing education. pilot training and continuing education. This fund is also used to provide pilots This fund is also used to provide pilots with portable GPS/AIS navigation with portable GPS/AIS navigation computers. With new pilots coming on computers. With new pilots coming on board, this fund needs to be replenished.board, this fund needs to be replenished.

Fuel ChargesFuel Charges

Per  movement/cancellationPer  movement/cancellation $120.21 $120.21

This charge is for the pilot boat to cross This charge is for the pilot boat to cross the bar, there are no charges for inter-the bar, there are no charges for inter-harbor shifts between Houston, Galveston, harbor shifts between Houston, Galveston, Texas City or to Bolivar Roads or for Texas City or to Bolivar Roads or for second pilots.second pilots.

Charges That are Within the Charges That are Within the Control of the CustomerControl of the Customer

Anchorage: Allows customers to conduct crew Anchorage: Allows customers to conduct crew changes, inspections, stores and other operations changes, inspections, stores and other operations in the protected waters of Bolivar Roads that are in the protected waters of Bolivar Roads that are not possible in the offshore fairway anchorage. not possible in the offshore fairway anchorage. By utilizing this anchorage, considerable port By utilizing this anchorage, considerable port expenses such as wharfage, tugs, and line expenses such as wharfage, tugs, and line handling can be avoided. handling can be avoided.

Cancellation and Detention: When pilot ordering Cancellation and Detention: When pilot ordering is done in a timely manner, port efficiency is is done in a timely manner, port efficiency is greatly enhanced. The Pilots, along with Tug, greatly enhanced. The Pilots, along with Tug, Line Handing companies, and port facilities can Line Handing companies, and port facilities can better control costs. better control costs.

Second Pilot SECOND PILOT

On vessels over 120,000 DWT, or on vessels 860 ft. LOA or more, there shall be two Pilots. If not turning, one pilot is required for those vessels with operational thrusters or less than 130 ft. of beam. The second pilot is charged at the same rate as the first. There is no fuel charge for the second pilot.

Cruise Vessels: Upon completion of dredging operations which widen the Galveston Ship Channel in any of those certain areas as specified in Attachment A where cruise ships turn, there shall no longer be any second pilot required aboard cruise ships equipped with bow thrusters, stern thrusters, azipods, and/or similar propulsion capabilities.

Galveston Channel Proposed Turning Radiuses

Bolivar Roads AnchoringBolivar Roads Anchoring

In addition to any other applicable In addition to any other applicable charge, any movement involving the charge, any movement involving the Bolivar Roads Anchorage will be Bolivar Roads Anchorage will be charged $654.15 charged $654.15

Anchoring a vessel in Bolivar Roads Anchoring a vessel in Bolivar Roads requires additional use of assets requires additional use of assets including Pilot time, Pilot Boat Time including Pilot time, Pilot Boat Time and takes a pilot boat away from the and takes a pilot boat away from the boarding area.boarding area.

Detention or HoldingDetention or Holding Detention is charged after the first half-hour (30 minutes Detention is charged after the first half-hour (30 minutes

free time), and not prorated. If, after 30 minutes, the vessel free time), and not prorated. If, after 30 minutes, the vessel does not sail, or does not arrive, then detention shall be does not sail, or does not arrive, then detention shall be charged from the original time of the order. Detention shall charged from the original time of the order. Detention shall be charged if the pilot is unable to disembark within 30 be charged if the pilot is unable to disembark within 30 minutes of first line. Detention shall be charged to vessels minutes of first line. Detention shall be charged to vessels over 80,000 DWT only if the pilot is unable to disembark over 80,000 DWT only if the pilot is unable to disembark within 45 minutes of first line.within 45 minutes of first line.

Holding is charged when a vessel requires a Pilot to hold Holding is charged when a vessel requires a Pilot to hold the vessel alongside a dock or bank, or hold in the stream, the vessel alongside a dock or bank, or hold in the stream, or to stand by while the compass is calibrated. Holding time or to stand by while the compass is calibrated. Holding time will also be charged when a vessel is under reduced speed will also be charged when a vessel is under reduced speed in order to await a clear berth, or adequate harbor tugs. in order to await a clear berth, or adequate harbor tugs.

Detention/Holding $392.47//hr. Detention/Holding $392.47//hr.

CancellationsCancellations

Sailings, shifts, or other movements Sailings, shifts, or other movements originating on inside waters $392.47 originating on inside waters $392.47

ArrivalsArrivals $654.15 $654.15

Notice Can Be Given to Avoid Notice Can Be Given to Avoid Cancellation and Detention Cancellation and Detention

ChargesCharges

Cancellation and Detention charges Cancellation and Detention charges can be avoided by giving the pilot can be avoided by giving the pilot office notice of changes.office notice of changes.

Sailings, shifts, or other movements Sailings, shifts, or other movements originating on inside waters:originating on inside waters: 1.5 1.5 hrs. hrs.

Arrivals:Arrivals: 2    hrs 2    hrs

Minimum ChargeMinimum Charge

The minimum charge for all vessels, The minimum charge for all vessels, whether arriving, sailing, or shifting, whether arriving, sailing, or shifting, is is $995.00$995.00

ShiftingShifting

Between docks within Galveston or within Between docks within Galveston or within Texas City, a flat rate charge shall be made. Texas City, a flat rate charge shall be made.

Shifting charge Shifting charge $886.00 $886.00

      

VesselsVessels shifting shall pay the unit charge in shifting shall pay the unit charge in addition to the shift charge.   addition to the shift charge.   Minimum shifting chargesMinimum shifting charges $995.00$995.00

Communication ChargeCommunication Charge

Per movement/cancellation$22.49 Per movement/cancellation$22.49

This charge is essentially to offset This charge is essentially to offset costs of operating dispatch services costs of operating dispatch services and Harborlights fees.and Harborlights fees.

Oil RigsOil Rigs Helicopter:Helicopter:

Pilots will embark or disembark by helicopter, unless the rig is stationary Pilots will embark or disembark by helicopter, unless the rig is stationary alongside a dock within Galveston Harbor.  Helicopter service fees will be alongside a dock within Galveston Harbor.  Helicopter service fees will be contracted and paid by the customer.  The Pilots will board by pilot ladder contracted and paid by the customer.  The Pilots will board by pilot ladder via pilot boat if it is safe and suitable to do so.  The Pilots will make the via pilot boat if it is safe and suitable to do so.  The Pilots will make the final determination on how to board the rig.final determination on how to board the rig.

Number of Pilots: Number of Pilots: Semi-Submersibles and similar sized vessels, while underway, will require Semi-Submersibles and similar sized vessels, while underway, will require two pilots on the rig, and one pilot on the towing vessel, for a total of three two pilots on the rig, and one pilot on the towing vessel, for a total of three pilots. Shifting from berth to berth within the harbor, under adequate local pilots. Shifting from berth to berth within the harbor, under adequate local harbor assist tugs, will require only two pilots on the rig.harbor assist tugs, will require only two pilots on the rig.

Jack-ups and similar sized vessels, while underway, will require one pilot on Jack-ups and similar sized vessels, while underway, will require one pilot on the rig, and one pilot on the towing vessel, for a total of two pilots. Shifting the rig, and one pilot on the towing vessel, for a total of two pilots. Shifting from berth to berth within the harbor, under adequate local harbor assist from berth to berth within the harbor, under adequate local harbor assist tugs, will require only one pilot on the rig.tugs, will require only one pilot on the rig.

For those rigs due to their size, purpose or construction where the number For those rigs due to their size, purpose or construction where the number of pilots cannot clearly be determined as required under this section, the of pilots cannot clearly be determined as required under this section, the Galveston-Texas City Pilots will make such final determination as to the Galveston-Texas City Pilots will make such final determination as to the number of pilots required.number of pilots required.

Oil Rigs ChargesOil Rigs Charges

Movements within Galveston Harbor-Shifting $750.00/hr.* Movements within Galveston Harbor-Shifting $750.00/hr.* Movements to or from Sea, as well as Bolivar Roads, with Movements to or from Sea, as well as Bolivar Roads, with 5 5 hr. hr. minimum applicableminimum applicable $750.00/hr.* $750.00/hr.* All hourly charges to commence upon time for order, and hours of All hourly charges to commence upon time for order, and hours of service are not prorated. *Plus the Communication Charge, the service are not prorated. *Plus the Communication Charge, the Fuel Charge, and the Education and Safety Charge.Fuel Charge, and the Education and Safety Charge.

Ordering/Movements: Ordering/Movements: Notice for pilot services for rig movements will be placed at least Notice for pilot services for rig movements will be placed at least four hours in advance of movement. Rigs will be moved at slack four hours in advance of movement. Rigs will be moved at slack water or on following tidal currents, during daylight hours. water or on following tidal currents, during daylight hours. Depending on draft, large rigs may require prior implementation Depending on draft, large rigs may require prior implementation of a U.S.C.G. safety zone or the like. All movements will be of a U.S.C.G. safety zone or the like. All movements will be predicated on sea, weather, and visibility conditions, as well as predicated on sea, weather, and visibility conditions, as well as adequate assist tugs, as determined by the Galveston-Texas City adequate assist tugs, as determined by the Galveston-Texas City Pilots. Pilots.

Special Services and Pilot Carried Special Services and Pilot Carried to Seato Sea

SPECIAL SERVICES SPECIAL SERVICES The rates for any Special or Extra service not The rates for any Special or Extra service not covered herein, including, but not limited to, trial covered herein, including, but not limited to, trial runs, movements of unusual types of floating runs, movements of unusual types of floating equipment such as special purpose barges, and equipment such as special purpose barges, and placing vessels on or off a drydock or barge, shall placing vessels on or off a drydock or barge, shall be by specific agreement made in advance of be by specific agreement made in advance of movement. movement.

PILOT CARRIED TO SEA PILOT CARRIED TO SEA If the Pilot is carried to sea for any reason, If the Pilot is carried to sea for any reason, including weather, the pilot shall be paid $950 including weather, the pilot shall be paid $950 per day plus all expenses back to Galveston.per day plus all expenses back to Galveston.

Galveston County Pilots Handle a Galveston County Pilots Handle a Broad Array of Vessels-Broad Array of Vessels-

Large and Small We Pilot them AllLarge and Small We Pilot them All

Aframax and Suezmax TankersAframax and Suezmax Tankers Ro-Ro VesselsRo-Ro Vessels Breakbulk Cargo VesselsBreakbulk Cargo Vessels Cruise ShipsCruise Ships Seismic Support VesselsSeismic Support Vessels Crew boatsCrew boats Semi-Submersible Drilling UnitsSemi-Submersible Drilling Units Mobile-Offshore Drilling UnitsMobile-Offshore Drilling Units Self Propelled Drilling UnitsSelf Propelled Drilling Units Deadship TowsDeadship Tows

The Pilots Commitment to Safety, Technology and Efficiency

New Pilot Boat on the way Harborlights System Website Access for Agents

The Pilots Commitment to Port Efficiency The Pilots are committed to port efficiency. The The Pilots are committed to port efficiency. The

implementation of Harbor Lights, along with the implementation of Harbor Lights, along with the concerted efforts of Industry and Pilots will greatly concerted efforts of Industry and Pilots will greatly mitigate these costs, thereby benefiting everyone. mitigate these costs, thereby benefiting everyone.

The Gal-Tex Pilot organization is comprised of highly The Gal-Tex Pilot organization is comprised of highly trained and experienced pilots. In addition, our trained and experienced pilots. In addition, our pilot boat captains average more than twenty years pilot boat captains average more than twenty years experience each. These highly skilled mariners not experience each. These highly skilled mariners not only ensure the safe and efficient boarding only ensure the safe and efficient boarding process, they are a key part of port efficiency. process, they are a key part of port efficiency.

Our Pilot Dispatchers are also highly trained and Our Pilot Dispatchers are also highly trained and experienced personnel who liaise with agents, the experienced personnel who liaise with agents, the USCG, VTS, Harbor Masters from both Ports, Tug USCG, VTS, Harbor Masters from both Ports, Tug Boat companies, line handlers and more. Boat companies, line handlers and more.

New Pilot Boat-The GalvestonNew Pilot Boat-The Galveston

The new Pilot boat Galveston, a sister to the Texas, is a 70 The new Pilot boat Galveston, a sister to the Texas, is a 70 foot, 30 knot state of the art pilot boarding craft nearing foot, 30 knot state of the art pilot boarding craft nearing completion and scheduled to be delivered first of July 2010.completion and scheduled to be delivered first of July 2010.

This new pilot boat will complete our fleet: two heavy This new pilot boat will complete our fleet: two heavy weather boats and one smaller boat, The Galveston Bay, to weather boats and one smaller boat, The Galveston Bay, to serve industry.serve industry.

When the Texas City dredging project is complete, Pilots When the Texas City dredging project is complete, Pilots will have to board approximately three miles further out.will have to board approximately three miles further out.

This new boarding area will require additional assets (pilot This new boarding area will require additional assets (pilot boats) and personnel (pilot boat captains) to be called into boats) and personnel (pilot boat captains) to be called into service.service.

The new pilot boat will enable the Pilots to serve both the The new pilot boat will enable the Pilots to serve both the inshore and offshore boarding areas concurrently, ensuring inshore and offshore boarding areas concurrently, ensuring continued timely service to ships ready to embark or continued timely service to ships ready to embark or disembark a pilot.disembark a pilot.

HarborlightsHarborlights The Pilots have recently implemented the The Pilots have recently implemented the

Harborlights systemHarborlights system This allows agents and other port users to This allows agents and other port users to

log into Harborlights to coordinate port log into Harborlights to coordinate port movementsmovements

This will also bring administrative This will also bring administrative efficiencies to the pilots and our customers efficiencies to the pilots and our customers as our business grows thereby keeping as our business grows thereby keeping costs down.costs down.

Same system currently used by Houston Same system currently used by Houston PilotsPilots

Harborlights ContinuedHarborlights Continued

Will facilitate better port planning by Will facilitate better port planning by customers and users to predict shifts customers and users to predict shifts from various berths in the from various berths in the Houston/Galveston Port Complex.Houston/Galveston Port Complex.

Will create a cost savings for users Will create a cost savings for users by avoiding some port costs, by avoiding some port costs, including wharfage, detention, and including wharfage, detention, and other costs related to shiftingother costs related to shifting

Can also facilitate layberth planningCan also facilitate layberth planning

Website Access for Agents and Website Access for Agents and UsersUsers

We are creating a website for users We are creating a website for users and agents which will grant them and agents which will grant them access to the Harborlights system.access to the Harborlights system.

This will allow for improvements in This will allow for improvements in scheduling.scheduling.

Average Number of Hours Spent Average Number of Hours Spent By a Pilot in Performing ServicesBy a Pilot in Performing Services

To perform their services, Galveston County To perform their services, Galveston County Pilots are required to travel to the Pilots are required to travel to the dispatched job, travel to the ship by pilot dispatched job, travel to the ship by pilot boat, conduct the transit or shift, and then boat, conduct the transit or shift, and then return home and standby for the next return home and standby for the next dispatched job.dispatched job.

Since December 09, the Pilots have Since December 09, the Pilots have averaged 2.25 jobs a day. The average averaged 2.25 jobs a day. The average pilot time per job is six hours from pilot time per job is six hours from dispatch time to arriving home including dispatch time to arriving home including travel time.travel time.

Costs to Pilots to Perform ServicesCosts to Pilots to Perform Services

Maintenance and Repair on pilot boatsMaintenance and Repair on pilot boats Operational costs of Pilot StationOperational costs of Pilot Station Personal Healthcare PlanPersonal Healthcare Plan Harborlights SystemHarborlights System Pilot Boat OperatorsPilot Boat Operators DispatchersDispatchers Business StaffBusiness Staff

Royal Caribbean and the FCCA

The following port users have agreed to the modified tariff:• Carnival• Port of Texas City• All of the members of WGMA• Stolt

What Royal Caribbean is Objecting To

Paying full price for the second pilot on turning vessels

Carnival has agreed to this in light of the proposed dredging

Royal Caribbean’s vessels will not return to Galveston until November

The Dredging could and should be finalized by then

Impact of the Proposed TariffImpact of the Proposed Tariff

H. Thomas KornegayH. Thomas Kornegay

Regional Pilotage Tariff Regional Pilotage Tariff ComparisonComparison

GALVESTON-TEXAS CITY HOUSTON ARANSAS-C.C. SABINE FREEPORT LAKE CHARLES

PROPOSED TARIFF 2010 2010 2010 2010 2010

GENMAR HORN (tanker) 14,076 40,913 15,174 21,518 14,617 19,193

PARTHENON (Aframax oil tanker) 5,768 27,645

LIBERTY STAR (PanMax grain ship) 6,255 10,671 6,321 13,605 5,335 8,387

SULPHUR ENTERPRISE (bulk carrier) 3,416 5,830 3,070 3,312 2,133 5,152

TRISTAN (ro-ro cargo carrier) 3,757 6,608

VALENCIA CARRIER (fruit cargo) 2,783 4,782

IKAN VERACRUZ (grain ship) 3,335 6,126 3,199 3,668 2,299 6,370

CARNIVAL CONQUEST (cruise ship) 7,662 13,492 25,909 effective 2011

CARNIVAL ECSTASY (cruise ship) 6,332 4,122 8,245 effective 2011

Pilot Financial DataPilot Financial Data

Audited Financial Report from 2009Audited Financial Report from 2009 Mr. Mark K. Johnson, CPAMr. Mark K. Johnson, CPA

Galveston County PilotsGalveston County Pilots

2010 Tariff Application2010 Tariff Application

May 3, 2010May 3, 2010