Maersk cuts Chennai/U.S. East Coast link

Maersk cuts Chennai/U.S. East Coast link    Maersk Line will stop a direct connection between Chennai and the U.S. East Coast when its MECL2 service stops calling at southeast Indian port at the beginning of February, the Indian financial newspaper Mint reported Wednesday.
   The Danish line will serve Chennai, India’s second-busiest container port and the biggest on the country’s East Coast, through the Sri Lankan transshipment port of Colombo, which has more mainline services and serves as a major conduit for Indian container trade.
   Chennai has designs on becoming a major container hub and a counterweight to the Nhava Sheva-Jawaharlal Nehru port complex on India’s West Coast. In June, PSA International and a local joint venture partner opened a 1.5 million-TEU terminal, doubling the port’s current capacity. The terminal also crucially can handle ships up to 8,000 TEUs. The port could eventually handle 6 million to 10 million TEUs once a new terminal is built on reclaimed land.
   The MECL2, which was introduced in 2007, has U.S. calls at New York, Savannah, Norfolk and Houston.
   A Maersk representative told Mint that using Colombo allows Indian shippers increased frequencies to the U.S. East Coast because there are more feeder connections between Chennai and Colombo than MECL2 calls. However, the report pointed out that costs for shippers rise when containers have to be transshipped through the Sri Lankan port. India’s shipping ministry estimates that Indian shippers pay at least $225 million on transshipment costs annually because India largely doesn’t have deepwater berths able to accommodate mainline services. With U.S. demand for goods down, it appears that finding enough cargo to fill ships outside of Nhava Sheva could also be a problem, even if deeper berth exists.
   Interestingly, Maersk’s logistics and forwarding unit Damco announced last week it had opened a new container freight station near Chennai to handle increasing business. Evidently, that growth is not coming from the U.S. East Coast. Maersk's other service between the U.S. East Coast and the Indian Subcontinent, the MECL1, has a call between Nhava Sheva.