Honolulu-based US domestic and transpacific premium carrier Matson has closed its seasonal China-California Express (CCX) loop ahead of the peak season, after spot rates on the tradelane collapsed.
Just last month, at the company’s Q2 earnings call, Matson CEO Matt Cox was bullish about support for the service, which it launched in the third quarter of 2021, saying demand “remained solid”.
He said the carrier expected to operate the CCX service “through the October peak season” and was optimistic that demand would be sufficient for the loop to “continue into 2023”.
“We continue to believe our China service freight rates will be above pre-pandemic rate levels and significantly higher that the SCFI [Shanghai Containerized Freight Index] due to our differentiated, expedited ocean services,” said Matson at the time.
Mr Cox told investors and analysts freight rates were declining in “an orderly manner”, “not falling off a cliff” and that the carrier anticipated “a moderate peak season”.
However, according to Alphaliner, the last CCX sailing, by the 2,890 teu Manukai, arrived at Long Beach on 20 September and the service has now been suspended.
The consultant said: “The closure of the CCX does not come as a surprise, since transpacific cargo demand has fallen notably during the past weeks.” It added that the number of ad-hoc sailings between Asia and the US west coast had also “dropped considerably”.
“In view of China’s upcoming Golden Week holiday in the first weeks of October, the main carriers active in the trade are expected to implement additional capacity cuts,” said Alphaliner.
In a double hit for carriers plying the route, vessel operators are also suffering from an acceleration in the coastal shift of cargo to the US east coast, accentuated by intermodal congestion issues at west coast ports and concerns over a lack of a new labour agreement, after the expiry of the old agreement on 1 July.
According to the SCFI, the average spot rate from Shanghai to Los Angeles/Long Beach stood at $3,050 per 40ft last week, having crashed some 60% since the beginning of July.
But many industry experts believe spot rates on the tradelane have further to fall as the market hits the traditional slack season after Golden Week.
Matson deployed three 2,900 teu to 4,250 teu vessels on the CCX and has so far not advised how the ships will be redeployed. It also operates the CLX and CLX+ loops between China and the US west coast and is confident it will continue to achieve a premium on current market rates, despite the weakening fundamentals.
Matson reported ocean transport revenue of $1.1bn for the three months to the end of June, up 54% on the same period the year before, for a net profit of $470m, which was 134% higher than the previous year.
It transported 242,000 teu during the quarter, of which 97,400 teu was ex/to China.
Source: The Loadstar