P & O Nedlloyd buys Farrell Lines

By Staff -- Logistics Management, 7/1/2000

Yet another U.S.-flag ocean carrier has been bought by foreign interests. Dutch/British carrier P & O Nedlloyd, one of the world's largest ocean carriers, announced last month that it had purchased Farrell Lines Inc. The deal is subject to approval by the U.S. Maritime Administration.

New York-based Farrell Lines was founded in 1925 by brothers John and James Farrell, and had been family-owned until now. After some tough times in the 1980s, the privately held line reportedly has been profitable for the last 10 years. The carrier is a shadow of its former self, however: It operates just five ships, and its only trade route is between the U.S. East Coast and Mediterranean and Middle Eastern ports. Farrell employs 130 people in the United States and Europe.

In January, Farrell replaced two small vessels with larger ships, increasing capacity by about 20 percent. All five ships will remain under the U.S. flag, keeping them eligible for the U.S. government cargoes that are a major revenue source for the carrier. Several of the vessels participate in a U.S. government program that provides subsidies for ships that are available for military duty in times of emergency.

For P & O Nedlloyd, the acquisition gives it more vessels and faster transit times in the U.S. East Coast-Mediterranean trade. The company plans to use the additional capacity to increase the number of direct vessel calls at eastern Mediterranean ports, says a spokeswoman for the carrier. Farrell's customers will benefit by gaining more frequent service and connections to P & O Nedlloyd's worldwide network.

The sale follows several high-profile acquisitions of U.S.-owned container operators, including Singapore-based Neptune Orient Line's purchase of APL Ltd., the sale of Sea-Land Service to Denmark's Maersk Line, and the purchase of Lykes Lines by U.K.-based CP Ships. The only major container operators that remain under U.S. ownership are Crowley Liner Services, which serves the Caribbean and Central America, and Matson Navigation, which serves Hawaii and Guam. Other, smaller U.S. ship operators, such as Totem Trailer Express, operate roll-on/roll-off and combination vessels in regional service.