Matson adds second transpacific string
Matson Navigation Co. said Thursday it will expand its involvement in China, adding a second transpacific string that will call South China ports.
The company will charter five foreign-flag ships with average capacity of about 3,500 TEUs, and operate them in a Hong Kong, Shenzen, Shanghai, Long Beach, Hong Kong rotation.
Matson has offered a service from North China to Long Beach since February 2006 using five U.S.-flag ships with capacity ranging from 2,200 TEUs to 2,600 TEUs That link also serves Hawaii and Guam on their western legs.
The new ships are not eligible to trade in the Jones Act between the mainland and Hawaii Guam because they were not U.S. built nor do they employ U.S. mariners.
Matson said it would bring ships into the service in August and the service will be fully deployed by October.
Matson’s announcement comes on the heels of word earlier this week that Hainan P.O. Shipping Co. is planning a mid-August launch of a transpacific container liner service. Matson’s rival in the Hawaii and Guam service, Horizon Lines, is beginning a eastbound service from Hawaii in December and two other companies, PIL and The Containership Co. both launched new services in April.
Matson said like its existing service, the new service will be high-speed, offering 10-day transit from Shanghai to Long Beach.
Matthew Cox, president of Matson, said in a call with stock analysts that the new service would allow the company to offer similar service to shippers moving cargo from the Pearl River Delta region in South China, and also offer shippers a second sailing from Shanghai on Saturdays. Matson’s current service departs from Shanghai on Thursdays.
Matson’s existing service from North China has a Los Angeles, Honolulu, Guam, Xiamen, Ningbo, Shanghia, Los Angeles rotation.
Cox said Matson has contracts with about 300 shippers on its existing service from North China and about 200 of those shippers also have transportation needs from South China.
Because the new service will not call Hawaii or Guam, he said a challenge in the new service will also be developing westbound traffic to China, but he noted many Matson executives have experience in the international market.
The company said it will cost about $50 million to start up the new service, but it expects it to make a profit by the second half of 2011.
Matson said it will provide next-day cargo availability and one-stop
intermodal connections through its Matson Integrated Logistics unit.
Matson’s parent company Alexander & Baldwin reported second quarter profit of $28.9 million compared to $12.6 million in the second quarter of 2009. Second quarter revenue was $398.9 million, up from $351 million.
Ocean transportation operating profit improved 71 percent to $37 million quarter, up 75 percent while ocean transportation revenue rose 18 percent to $257.2 million.
Containers shipments to and from Hawaii were off 2 percent and automobiles shipped fell 22 percent when compared to the same 2009 period, largely because of a change in ordering cycles by car rental companies. The company’s China container business was up 35 percent and Guam container business up 17 percent in the second quarter versus the comparable 2009 period. ' Chris Dupin