Liner carriers set changes to their fleets as Iraq, Afghanistan wars end.
By Chris Dupin
The U.S. merchant marine is adjusting to the drawdown in military operations in Iraq and Afghanistan by reconfiguring their services.
In April APL announced plans to take four of its U.S.-flag ships out service — the President Adams, President Jackson, President Polk and President Truman — citing reduced need for transport by the U.S. military and the economic slowdown.
“The market place has been under extreme pressure with the wind down of both Iraq and Afghanistan. In addition the United States and world economies have been in various levels of recession and have been slow to recover. As a result cargo volumes and rates have been depressed,” said Eric Mensing, president and chief executive officer of APL Maritime Ltd., the U.S.-flag arm of liner carrier APL.
The four ships had been deployed in an APL service along with four other Singapore-flag ships between the U.S. East Coast, Middle East, Colombo and Singapore.
Mensing noted the ships, known as C10 ships, “are our oldest ships and have aged out as far as being efficient and cost effective to operate. This isn’t to say that the crews have not done everything that is expected from professionals in maintaining and operating the vessels. However, as we compete in a market place that is over saturated with new and old tonnage it is hard for the company to justify any capital expenditures for new vessels at the current time.
“All of these factors have created market place in which APL can no longer justify the continued operation of the C10-class vessels,” he said. The ships were to be phased out of U.S.-flag service as they arrive in Singapore between June 5 and July 24.
APL said it planned to scrap the four ships and there was no plan to replace the C10s. The carrier will continue to operate 10 U.S.-flag ships, including nine under the U.S. Maritime Security Program (MSP), which provides a subsidy for U.S.-flag vessels.
The C10 ships are historically important to the container shipping industry, because when they were built in 1988, they were the first “post-Panamax” containerships, too wide to transit the Panama Canal.
Now their 4,300-TEU capacity seems almost quaint in an era in which Maersk is building its “Triple E” ships with capacities of 18,000 TEUs apiece.
A company that had chartered a small U.S.-flag ship to APL for the past few years, National Shipping of America (NSA), is also redeploying its vessel.
NSA’s 570-TEU ship, National Glory, had been used by APL in several services to support the war effort, most recently to shuttle cargo from Hamburg and Bremerhaven to Tallinn, Estonia.
Torey Presti, president of NSA, said the ship was to be deployed at the end of May into a fortnightly service between Houston and Puerto Rico.
Presti said the company is hoping the sailing from Houston will be attractive to the many shipping services out of Jacksonville, Fla. that cater to Puerto Rico. Shippers moving cargo from west of the Mississippi, especially those with heavy freight, such as resins, chemicals, and rice, are being targeted as potential customers.
National Glory has an interesting history. It was one of 10 tweendeckers built in Poland by Polish Ocean Lines for trade between North Europe and West Africa. Normally ships operating in U.S. domestic trades, including the trade to and from Puerto Rico, must be built in the United States. But because the ship was seized in a drug bust and sold at auction in 2005, it was possible to use it for domestic, or so-called Jones Act, services.
Meanwhile Maersk Line Ltd. (MLL), the U.S.-flag arm of the A.P. Moller-Maersk Group, is upsizing the size of the ships in a service it operates between the U.S. East Coast and Mediterranean and Middle East.
MLL will replace eight existing ships with eight newer, larger containerships at a cost of about $500 million.
While that might sound anti-intuitive at a time when military cargo is becoming scarce, Maersk has also made the decision to use the weekly Middle East Container Line service (MECL1) as the backbone for its liner services to the Mediterranean where the company is eliminating two other non-U.S.-flag strings.
The company will increase the number of ships in the MECL-1 loop from seven to eight, all of which will be U.S. flag. In addition to moving military cargo, the service also transports commercial cargo and U.S. food aid.
Maersk said it will be the industry’s only direct U.S.-flag service to and from the U.S. East Coast and Pakistan, and includes a new stop in Algeciras, Spain, which will be used as a hub for cargo moving to and from ports in the Mediterranean.
The new ships are about 10 years younger than the outgoing ships, offering improved fuel efficiency and environmental performance. For example, the Maersk Chicago, formerly known as Maersk Kuantan, was built in 2007 and has a capacity of 6,200 TEUs, according to the Maersk Line Website.
BlueWater Reporting said ships previously used in the service had an average size of about 4,288 TEUs.
“These eight newer vessels, along with the global transportation network that connects them, demonstrate our commitment to our customers. We are proud to serve the U.S. military and to deliver U.S. food aid worldwide,” said John Reinhart, MLL’s president and chief executive officer.
Maersk’s move to increase the size of its vessels is a bold one given the fact that U.S.-flag shipping services are facing a possible loss of food aid cargo because of the Obama administration’s plan to source more food overseas, closer to the recipients rather than buying it from U.S. farmers and transporting it in U.S. flag vessels.
Reinhart said the new ships “will further increase reliability and shrink our environmental footprint.”
All eight vessels will join the U.S. government’s MSP and Voluntary Intermodal Sealift Agreement (VISA). The ships are reflagged to make sure they meet the stringent safety, environmental, operational and compliance standards required by the U.S. Coast Guard and other U.S. maritime authorities.
Maersk said the other seven ships will be named after Atlanta, Columbus, Denver, Detroit, Hartford, Memphis, and Pittsburgh — “American cities that have brought industrial vitality to the U.S. economy through manufacturing, finance, transportation, and exports.”
