Matson has ended one of its two U.S./China services a year after it was launched, citing sustained high fuel prices, downward rate pressure and overcapacity in the transpacific trade.
Matson in late August discontinued its expanded China-Long Beach Express service (CLX2), which includes service between Hong Kong, Yantian, Shanghai and Long Beach.
The company emphasized that discontinuing the CLX2 would not affect Matson’s five-year-old CLX1 service, nor the company’s Hawaii and Guam services. It said the CLX1 service, which has a rotation of Long Beach, Honolulu, Guam, Xiamen, Ningbo, Shanghai, and Long Beach, continues to be profitable and benefits from round trip economics because of the outbound cargo moving to Hawaii and Guam.
The CLX2 service had an operating loss of $17.7 million in the second quarter ($11 million after taxes), and the service has had operating losses of $49.7 million since being launched last September. The company said it would incur another $20 million to $25 million in after-tax losses related by the decision to end the CLX2, mostly in the third quarter.
The company said with two China services in the second quarter of this year compared to just one in 2010, it moved 38,800 containers in the China trade, more than twice the 16,400 containers in the same 2010 period.
Matson’s announcement follows decisions by several other shipping companies to end services this year, including The Containership Co., CSAV, the New World Alliance, Hainan PO Shipping and TS Lines.