A little more than two years after Maersk Line Ltd. and Rickmers-Linie (America) Inc. formed a joint venture to provide breakbulk and project cargo shipping with two U.S.-flag, multi-purpose ships, one of those vessels will “flag out.”
The Maersk Texas will be transferred to the Marshall Islands, while the Maersk Illinois will continue to operate under the U.S. flag.
The Maersk Illinois is currently moving supplies under a military contract to McMurdo Station to support in National Science Foundation research in Antarctica.
By putting one of the ships under a foreign flag, “In essence, it is lowering our cost structure,” explained Dave Harriss, a Maersk Line Ltd. executive who is a managing director in the joint venture. He said the Maersk Texas will continue to compete in the international market for cargo.
The two 19,000-deadweight-ton ships are owned by Maersk and chartered to the joint venture. They have cranes capable of combined lifts of 480 metric tons.
While the joint venture was formed during a buoyant period for U.S. project cargo, the market has become more challenging for several reasons.
Harriss said there is increased competition for project cargo, not only from operators of breakbulk/heavylift ships such as Maersk-Rickmers and Intermarine, but also from what Harriss calls “asymmetric competitors” — operators of roll-on, roll-off ships and containerships that are looking to increasingly to move oversize cargo.
Many modern roll-on, roll-off ships have at least some decks capable of carrying heavy cargo and moveable decks that can be raised to accommodate oversize cargo. Similarly, many containerships can use flat racks to carry high and heavy cargo.
With the winding down of military operations in Iraq and Afghanistan, U.S. flag carriers are also looking for more civilian cargo.
Harriss also notes that shippers are finding ways increasingly to “modularize” cargo so that it will fit in standard container slots or on flat racks and take advantage of the economies of scale and lower rates that container carriers can provide.
Some shippers are also seeking greater service frequency — something difficult for a company like the Maersk-Rickmers joint venture with two ships to offer.
Cargo financed by the U.S. Export-Import Bank is an important source of cargo for the operators of U.S.-flag carriers. But financing by the Ex-Im Bank fell last year. Authorizations grew from $12.68 billion in the fiscal year ending Sept. 30, 2007, to a peak of $35.8 billion in FY 2012, but then fell to $27.3 billion in FY 2013. Last fall’s government shutdown prevented the Ex-Im bank from processing applications, delaying some project exports.
Harriss said competition has gotten so extreme that, at times, the freight rates for heavy lift shipments on U.S.-flag vessels have dipped below those for foreign-flag vessels.
Maersk-Rickmers to ‘flag out’ breakbulk ship
