Matson cancels one China-US west coast loop, citing high fuel, low rates

Time:2011-08-11 Browse:50 Author:RISINGSUN

AMERICAN Jones Act carrier has decided to cancel its only non-US domestic service, the CLX2 to China, attributing the withdrawal to high bunker costs and declining transpacific rates.

The CLX2 runs from Long Beach, Hong Kong, Shenzhen-Yantian, Shanghai and back to Long Beach. Its last eastbound sailing will be on August 21 followed by a final westbound sailing on September 3.


"The economics of the transpacific shifted dramatically in the short time we developed the model," said Matson president Matt Cox.


"Sustained high fuel prices, rate volatility and overcapacity in the Asia market have made this growth initiative unprofitable. Unlike Matson`s first China - Long Beach Express, which includes calls in Hawaii and Guam en route to China, resulting in revenue for both westbound and eastbound voyages, the second string sailed directly from Long Beach to China, making the economics of the service during this period exceptionally difficult," Mr Cox said.


Matson last year launched the CLX2 service as cargo volumes rates increased in what was a surprisingly good year, but as trade soured the company`s operating profit fell 75 per cent year on year to US$9.4 million in the second quarter.


Unlike Matson`s other China service, which includes calls between Long Beach and Hawaii and Guam, the CLX2 service does not participate in the US domestic trade and is therefore dependent on eastbound sales, noted Newark`s Journal of Commerce.


Matson said it will retain its 5-year-old Long Beach-China service, which includes calls in Xiamen, Ningbo and Shanghai.