TCC stops liner operations
The Containership Co. a startup container line founded in 2009, has ceased operation of its single service, a transpacific loop connecting three ports in China with Los Angeles.
The carrier filed a note with the Norwegian stock exchange Friday saying its liner business unit will go into 'reconstruction.' TCC is split into two units — Denmark-based TCC A/S Denmark, which runs liner operations; and TCC ASA (Norway), which manages the company's assets.
'Following thorough analysis and legal advice we have today filed for a so-called 'reconstruction' of TCC A/S in Denmark,' TCC Chief Executive Officer Jakob Tolstrup-Moller told American Shipper in an e-mail. 'Whereas TCC A/S is now under 'reconstruction,' TCC ASA is still operating in a normal manner. TCC ASA will focus its business around chartering out vessels that TCC ASA either owns or has on long term charter.
'The 'reconstruction' is the best way forward to protect the assets in TCC A/S Denmark. We expect that the outcome of the 'reconstruction' will be that we pay all our creditors and protect all TCC's shareholders' interests; employees, investors, the ship owners, the owners of the equipment, etc.,' he said.
The maritime journal Tradewinds quoted Tolstrup-Moller on Friday as saying the line is considering folding: 'I don't know what we're going to do but it's looking very bad. It's not a profitable business. So we have to review the business case. We have to look at it in a different way.'
TCC operates a single service, the Great Dragon, from Taicang, Ningbo, and Qingdao to Los Angeles, using ships of about 3,000 TEUs. The carrier started as a no-frills operation, offering low port-to-port rates. But as freight rates on the transpacific have eroded, due in part to little capacity being pulled in the slack season, and operating costs have risen, due largely to escalating bunker prices, TCC has found its business threatened.
The line said it lost $7.4 million in its first eight months of operation, including $2 million in startup costs. The Great Dragon service initially was a straight run from Taicang, which lies inland from Shanghai, and Los Angeles, but the line found difficulty filling ships strictly from Taicang, and so added other stops later.
'The cargo volume shipped out of TCC’s main port Taicang in China has not been as anticipated, primarily due to the competitive situation between Chinese ports,' Tolstrup-Moller told American Shipper. 'In addition, shippers have not met their contractual cargo volumes committed to TCC under the 2010-11 season service contracts. All aggravated by the downturn in the transpacific market. As a result the basis for continuing ordinary operations has changed materially and recently the board of directors and the management have investigated alternative operating models for the continuation of TCC.'
In a statement, TCC said: 'Following the 'reconstruction,' TCC A/S in Denmark will cease to run liner operations and TCC ASA in Norway will remain focused on containership asset play in managing owned and chartered ship(s). Going forward TCC ASA in Norway will manage one owned 2,500-TEU geared vessel and five 3,000-TEU time-charter vessels. All vessel charter in rates are significantly below current market rates, and TCC ASA holds options to extend the charters until 2013 as well as options to purchase three of the 3,000 TEU vessels.'
The forwarding and logistics giant Kuehne + Nagel sounded an ominous note for smaller transpacific operators in its sea freight Twitter feed Friday: 'The Containership Company (TCC) is Discontinuing Transpacific Service. Watch out: with these low rates and high bunker cost, carriers with small vessels will discontinue certain services. More to come!' ' Eric Johnson
TCC stops liner operations
