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Matson pulls one vessel string out of Transpacific

“Persistently high fuel prices and overcapacity in the Transpacific trade had a significant negative impact on the performance of our two China-Long Beach services (CLX1 and CLX2), which overshadowed the company’s otherwise strong second quarter performance,” said Stanley M. Kuriyama, A&B president and chief executive officer.
By Patrick Burnson, Executive Editor
August 11, 2011

In its quarterly statement to investors, Alexander & Baldwin, Inc. announced that Matson would withdraw one of its two U.S.-China ocean carrier services. 

“Persistently high fuel prices and overcapacity in the Transpacific trade had a significant negative impact on the performance of our two China-Long Beach services (CLX1 and CLX2), which overshadowed the company’s otherwise strong second quarter performance,” said Stanley M. Kuriyama, A&B president and chief executive officer.

According to spokesmen, weak Transpacific fundamentals have had a pronounced impact on CLX2 due to the absence of CLX1’s advantage in carrying westbound cargo from the U.S. Mainland to Hawaii and Guam. As a result, and because of sustained high fuel costs, CLX2 incurred significant operating losses during the second quarter and first half of the year.

Spokesmen noted, however, that since the service’s inception in September 2010, the company was able to achieve a number of CLX2’s operating goals, including building a shipper base that allowed it to meet sales volume and vessel utilization expectations.

But spokesmen added that these accomplishments were not sufficient to overcome what is now forecast to be long-term levels of higher fuel prices and an increasingly uncertain Transpacific container rate environment. After evaluating the available alternatives for this service, the company has concluded that CLX2’s outlook does not merit continued investment and will discontinue the service.

“While the termination of the CLX2 service is a significant disappointment to us, our remaining services - Hawaii, Guam and CLX1 - will not be affected by the termination, and remain fundamentally sound with strong long-term prospects,” said Kuriyama.

The ongoing withdrawal of capacity by other carriers does not come as a surprise to many industry experts.

“Expect to see a shift from the West Coast ports of LA/LB towards all water services to the Gulf Coast ports,” said Don Pisano, ocean cargo chairman for the Industrial Transportation League.

“This trend will be especially true for lower valued products which are less sensitive to longer transit times.” 

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


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