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  January 15th, 2016 | Written by

Matson Modifies Transpacific China Service

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  • Discontinuation of Matson’s CLX2 service has no impact on Matson’s original China-Long Beach Express service.
  • Matson is confident in the long term viability of its CLX1 service.
  • Cost model for Matson’s two China services are considerably different, with CLX1 benefiting from round trip economics.

The Matson Navigation Company’s recent decision to discontinue its expanded China – Long Beach Express service was motivated by sustained high fuel prices, downward rate pressure, and overcapacity in the transpacific trades.

Discontinuation of the CLX2 service, which added a call at Hong Kong to its weekly sailing between Xiamen, Ningbo and Shanghai and the Southern California mega-port, “has no impact” on Matson’s original China – Long Beach Express service (CLX1), which has served the Xiamen, Ningbo, and Shanghai to Long Beach route for the past five years, or its Hawaii – Guam service.

Oakland-headquartered Matson’s expanded service that was launched last year “succeeded in achieving our service goals and building on our customer base,” said Matt Cox, president.

“Unfortunately, the economics of the transpacific trade have shifted dramatically in the relatively short time since we developed the model,” he said. “Sustained high fuel prices, rate volatility, and overcapacity in the Asia market have made this growth initiative unprofitable.”

Since its inception, Cox added, the CLX1 service “has weathered comparable negative operating environments in the transpacific trade.”

The company, he said, is “confident in the long term viability of that service and remain committed to delivering a premium service for our customers, distinguished by fast transit times, industry leading on time arrivals and next day cargo availability.”

According to one industry analyst, the cost model for the two services “was considerably different, with the CLX1 service benefiting from round trip economics, generating revenue for both westbound and eastbound voyages.”

The CLX2 service “provided direct service from Long Beach to China, resulting in a cost model entirely dependent on the market conditions of the transpacific trade, which is currently challenging for most carriers as a result of chronic high fuel costs and aggressive rate actions in the trade.”