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 ·

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

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 [email protected]

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!

Latest Whitepaper
Maximizing Your Sales Team’s Effectiveness
Companies need to examine how to restructure their sales team to respond to different customers and subsequent buying behaviors and preferences.
Download Today!
From the November 2017 Logistics Management Magazine Issue
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships into true, collaborative partnerships—and greatly strengthened its logistics and supply chain operations in the process.
34th Annual Quest for Quality Awards: 2017 Awards Dinner
Trucking Regulations: Washington U-Turns; States put hammer down
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Make Your Products Smarter in the Supply Chain with the IoT
This webinar explores how temperature-sensing smart labels and inexpensive NFC tags are being used to extend product safety and efficiency beyond the shipping dock while also building a communication bridge to your customers.
Register Today!
EDITORS' PICKS
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...
2017 Alliance Awards: Recognizing outstanding supply chain partnerships
In an era where effective supply chain collaboration is both highly valued and elusive, Logistics...

26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...