Subscribe to our free, weekly email newsletter!


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).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Total POLB volumes dropped 9.1 percent in August at 573,083 TEU, and POLA volumes in August were up 6.7 percent compared to August 2013 at 757,702 TEU.

Following a week in which the average price per gallon was flat, diesel prices resumed their decline, falling 1.3 cents to $3.801 per gallon, according to the Department of Energy’s Energy Information Administration.

Read how others are using Business Process Modeling to implement Microsoft Dynamics AX with reduced risk.

While diesel prices have largely been out of the spotlight in 2014, freight transportation and logistics stakeholders always need to keep a close eye on what prices are doing, as it has a significant impact on transportation budgets and forecasting.

Railroad service issues and rates, which many rail shippers deem as unreasonable, are front and center in a piece of legislation to be introduced soon by Senators Jay Rockefeller (D-WV) and John Thune (R-SD), chairman and ranking member of the Senate Committee on Commerce Science and Transportation.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA