Maersk operation tailored to balance U.S. import and export international container volumes.
By Francis Phillips
Beginning early March Maersk Line launched a premium transpacific eastbound service called Flagship.
It offers weekly day of availability connections between 15 ports in Asia and five inland destinations in the United States, including Chicago, Houston, Dallas/Fort Worth, Memphis, and Northwest Ohio. The inland rail service provider for Flagship is the BNSF Railway.
The transpacific portion of Flagship pivots around three highly reliable ocean services which time their U.S. West Coast arrivals around weekends in Los Angeles. One from Northern China and Shanghai arrives Friday; another from Southeast Asia, Vietnam and Southern China arrives Sunday; and the third, from Korea and Japan, arrives Monday.
Maersk’s terminal in Los Angeles at Pier 400 is operated by sister company APMT LA, part of the worldwide APM Terminals division of AP Moller-Maersk. The five-berth Pier 400 terminal is the largest of its kind in the world, handling 2.1 million TEUs last year. It has five miles of on-dock rail line, in 12 tracks set out in four sets of three, sufficient to hold four full-size double-stack trains at any one time. Last year they handled 400,000 import and export rail loads, equivalent to 740,000 TEUs.
The terminal railhead allows APMT to build up to eight solid single-destination Maersk Flagship trains each week as part of its much larger overall on-dock rail operation. The Flagship service has been designed to run three dedicated trains for Chicago, two for Houston, and one each for Dallas-Fort Worth, Memphis and Northwest Ohio. The Northwest Ohio train runs express to the CSX switchyard in North Baltimore, Ohio. Here the Northwest Ohio train divides, with sections joining CSX sprint trains for destinations like Detroit, Cleveland, Columbus or Cincinnati, allowing BNSF to bypass interchange delays in Chicago.
These are big trains, each up to 8,000 feet in length and hauling 560 TEUs, with up to three locomotives in front and one behind. They are pulled out of the Pier 400 terminal in three sections, hitching the second and third behind the first as BNSF draws them away. This is exactly the kind of business BNSF likes to handle, and for which it has made its own matching investments in non-stop long distance rail tracks and large inland intermodal facilities.
Maersk and BNSF have worked together for many years, but until now Maersk’s on-dock trains have been blocked into mixed inland destinations. This is the same for all the marine terminals around Long Beach and L.A., requiring BNSF to move railcars first to an inland point to sort them into longer, more efficient transcontinental trains. These trains may have to stop again to switch out sections for intermediate destinations.
The solid single-destination train concept associated with the Flagship project avoids all that. It allows faster transits and so significantly reduces transit variability that Maersk and BNSF can together underwrite a highly competitive array of “availability definite” services, with 95 percent reliability all the way from Asia. Meanwhile, the three logistics parties in the Flagship chain — Maersk Line, APMT LA and BNSF — are each doing what they like to do in the way that each knows best.
Maersk’s biggest ships are in the TP6 loop, which arrive in L.A. on Sundays. It is an all-Maersk standalone loop averaging 9,500 TEUs, over which the carrier has full control of the arrival times of its vessels. It can speed them up if they get delayed, and it takes all the ships’ cargo space. Although this 16-ship loop begins in North Europe, with a stop in Salalah in the Middle East, it maintains a consistent on-time reputation. It begins loading for Flagship in Tanjung Pelepas, Malaysia (21 before Los Angeles); then Ho Chi Minh, Vietnam (19 days); Nansha (15 days); Yantian (14 days); and Hong Kong (13 days).
Maersk similarly provides all the ships on the smaller five-ship average 4,000 TEUs TP5 loop arriving Mondays in L.A. from Japan and Korea. It also has an on-time reputation. However in this case Maersk shares its capacity with vessel-sharing arrangement partners Mediterranean Shipping Co. and CMA CGM, with Evergreen Line taking slots. For this reason Maersk itself ends up with a small share of a smaller overall Japan/Korea volume.
Nevertheless the TP5 Flagship product saves a day in final transit to Flagship destinations by arriving in California a day after the TP6. Adjusted for this, its equivalent transits from Asia are from Kobe (16 days), Guangyang (14 days), Busan (13 days), Hakata (12 days), Nagoya (10 days), and Yokohama (nine days). This gives cargo from Yokohama by far the best guaranteed Flagship availability transits of 16 days from vessel departure to each of Chicago, Memphis and Northern Ohio, (i.e. first Sunday after arrival LA) and 17 days (Monday) to Houston.
The third transpacific service is Maersk’s TP8, arriving L.A. on Fridays. Here all the ships are provided by VSA partners MSC and CMA CGM. Maersk charters slots. The earlier scheduled arrival of TP8 builds in a safety margin for delays, but it also extends ocean transit times from Asia. TP8 ships average 8,700 TEUs, but Maersk has to share this capacity with its partners. Adjusted for their two days’ earlier departure from Asia the TP8 gives Flagship customers the equivalent of a 20-day transit from Xingang (to a Sunday arrival in L.A.), then Dalian (19 days), Qingdao (17 days), and Shanghai (15 days).
Maersk’s all-important TP6 loop is completely turned around in Los Angeles. It leaves for Vostochniy in Russia on Wednesdays; a full-ship discharged and then reloaded with an exchange of 19,000 TEUs performed in three days. (Both TP8 and TP5 call other West Coast ports). After Vostochniy TP6 continues onwards to Ningbo and Shanghai, simultaneously beginning to load as Maersk’s AE6 schedule, calling at Xiamen, Yantian, and Tanjung Pelepas as part of the guaranteed Daily Maersk conveyor belt, bound for Algeciras, Bremerhaven, Hamburg and Felixstowe and then leaving Europe outbound again from Le Havre.
In the same way that solid trains leave L.A. each week with premium imports under the Flagship banner, solid trains return to L.A. each week by around Friday from the same five specific locations. They are loaded with export cargo for the next week’s ships. Even the sections for the North Baltimore, Ohio train are reassembled for the return journey.
As more details emerge, it becomes apparent that the Flagship operation has been carefully tailored to balance import and export international container volumes. Inbound trains deliver container equipment to where specific shippers can use them for exports.
| Mygatt |
Craig Mygatt, Maersk’s senior vice president of inland operations for North America, confirmed there was little or no domestic cargo being back-loaded on the trains. About 98 percent of the Flagship-related rail moves are international.
Mygatt said individual export shipments tend to be larger than import ones, requiring the availability of more containers. Asked if some of the Houston train’s volumes might continue onwards by sea to Caribbean destinations, he said any cargo from Asia on these trains would be destined for the Houston area. Maersk is not using Flagship as a bridge.
Twenty percent of all Maersk Line North America import cargo — all trades — moves to inland locations. Fifty percent of those moves are on Flagship services to the five inland destinations. The other half travels on standard rail to locations not currently in the scope of the Flagship service. Mygatt mentioned that no premium for Flagship is being charged right now, implying in due course it may.
Explaining how the concept arose, Mygatt said: “We went to BNSF and asked them: ‘What is the optimal way for you to run your network?’” And now that Flagship is up and running Maersk is researching other destinations to which it might run full weekly trains. “We are looking at Kansas City, New York and Atlanta, for instance — all based on customer demand,” he said.
Because Maersk is such a large global operator, it might be assumed that it has the advantage of a dominant transpacific West Coast market share. In fact, according to ComPair Data capacity figures, the multi-carrier Grand and New World Alliances (six total carriers, or three per alliance) each have double Maersk’s market share and the CKYH partners (four carriers) have three-times its volume.
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| Kinne |
Patrick Kinne, general director of international marketing for BNSF, is well aware of the difference in market shares but quickly pointed out it would be difficult to work in the same way with several lines at once, each with varying requirements, as happens with the alliances.
By contrast Maersk has focused on handing over solid formation trains and has invested in the on-dock railyard facilities needed to do so. For its part BNSF has also made substantial matching investments, like the new Logistics Park which the Flagship trains use in Chicago. It has another new one in Memphis and a big terminal in Dallas-Fort Worth.
Kinne said Maersk and BNSF have worked closely together for many years and the Flagship concept developed within a collaborative process.
Running solid intermodal trains is a mature and efficient operation for a railroad because it reduces variability. This is the key message underlying Flagship’s guaranteed weekly day of availability service. Kinne said he’s not worried, for instance, that COSCO and Hanjin have recently announced a direct all-water joint service between Yantian and Houston (via Panama), with a transit of 24 days. “Flagship guarantees availability in 22 days from Yantian,” he said, predicting that the all-water alternative will have much more variable on-time reliability.
APMT at Pier 400 faced the biggest challenge of all with the Flagship concept. For the terminal it meant switching from a piecemeal railhead operation, dispatching mixed destination trains as soon they could be made up, to organizing the solid single-destination trains needed under the Flagship regime.
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| Haymaker |
Dana Haymaker, APMT LA’s director of rail operations, said Flagship is not easier for the terminal to handle because targeting certain cargo coming off a ship makes it a bit more complex. However it is “not a huge negative,” he said, and BNSF quickly draws the Flagship trains away as soon as they are ready.
Haymaker explained how Maersk Line and BNSF came to APMT and asked: “Can we do it?” There is no specific premium service afforded to Maersk by the terminal, but it means placing boxes for each of the Flagship destinations in specific terminal areas once they are discharged from a ship.
Haymaker described how Maersk has gotten very good at loading the big ships so that they are stowed in blocks of containers available for priority discharge matched to Flagship destinations. “We always concentrate on Chicago first and they may have a ship’s hold full of Chicago boxes, allowing a gantry crane to work continuously on a shuttle to the Chicago stack,” he said.
It’s not necessarily all plain sailing, Haymaker said. Maersk is just one of several APMT LA customers and many other operational problems have to be dealt with day to day. Haymaker cited heavy winds slowing ship discharges and loadings. A rolling plan of discharging railcars is needed to make sure they are empty and ready for reloading so solid import trains are not held up. Trains are constantly pulling into and out of the terminal, Haymaker said, with four or five trains moved every day.
However, Haymaker also reported an extremely positive experience with the whole Flagship operation. Within the first four weeks BNSF managed to move the solid trains even faster than advertised, with instances of some arriving “two-dozen hours early”, he said. “There is nothing they have to stop for once they leave here, so they can run express all the way.”