Second carrier unit for China Shipping in U.S. trades
China Shipping will run its U.S. container shipping services using two carrier units, effective Jan. 1, as part of a worldwide corporate restructuring.
The internal restructuring involves transferring some China Shipping services from China Shipping Container Lines Co. Ltd. (CSCL) to its wholly owned subsidiary, China Shipping Container Lines (Hong Kong) Co. Ltd.
Although the services will be provided by two units instead of one, the Chinese group insists the change will have no impact on its customers or vendors.
“To avoid any distinction between the China Shipping services operated by CSCL and those operated by CSCL (Hong Kong), the two companies have published common tariffs covering all China Shipping services in the U.S. trades,” the company said. “In addition, CSCL has asked all shipper parties to its service contracts to amend the contract to add CSCL (Hong Kong) as a carrier party to ensure that there is no disruption in the service provided under the contract.”
The restructuring began outside the U.S. trades over two years ago with the formation of CSCL (Hong Kong) as a wholly owned subsidiary of CSCL.
CSCL told investors in June it was transferring revenue from many of its international services to the Hong Kong affiliate to lower its tax payments.
“Over the past two years, certain services outside the U.S. trades have been transferred from CSCL to CSCL (Hong Kong),” the company said.
The company will continue to use China Shipping as a single brand name.
In the past few weeks, China Shipping has amended cooperative agreements with other shipping lines to add CSCL (Hong Kong) as a party to those agreements. The Chinese carrier’s lawyers have notified the U.S. Federal Maritime Commission that CSCL (Hong Kong) has become a member of the following joint services:
* “Pacific Gulf Express Slot Charter Agreement” with CMA CGM.
* “Pacific East Coast Express Agreement” with CMA CGM and P&O Nedlloyd.
* “CMA CGM/CSCL Cross Space Charter, Sailing and Cooperative Working Agreement.”
* “Zim/CSCL Space Charter Agreement.”
Within the carrier agreements, both CSCL and CSCL (Hong Kong) will be treated as a single party with joint and several liability.
The Chinese company said the restructuring will not affect its vendors and suppliers, nor the obligations of CSCL under their individual contracts.
In November, China Shipping Container Lines (Hong Kong), deemed a state controlled carrier under U.S. law, also filed a petition with the FMC requesting an exemption from pricing restrictions applicable to state carriers under the Shipping Act of 1984. In April, the FMC approved a similar exemption request made by CSCL, and CSCL (Hong Kong) now wants to enjoy the same treatment.
The many changes are expected to make CSCL (Hong Kong) a full-fledged container shipping line entity.