The biggest containerships ever to call the United States are headed this way.
French liner company CMA CGM said yesterday it will deploy six vessels, each carrying up to 18,000 twenty-foot equivalent units (TEUs), in the Asia-U.S. West Coast trade starting the end of May. The six ships include the CMA CGM Benjamin Franklin, which over the past three months has made pilot calls at the Ports of Los Angeles, Long Beach, and Oakland to test the ports' abilities to efficiently handle the giant vessel.
The six vessels will join CMA-CGM's "Pearl River Express" service, which connects five Chinese ports with Long Beach on eastbound sailings, and with Oakland heading west. The sailing rotations have not been set, and there was no formal announcement from the liner company on what U.S. ports the vessels will call at. Spokesmen at the Ports of Long Beach and Oakland effectively confirmed the vessels would call at their ports. A spokesman for the Port of Los Angeles, the nation's busiest port, said he did not know if Los Angeles was in the rotation.
In a statement that was surprisingly terse given the significance of the news, CMA CGM said the move "is in line with both the growth strategy set by the Group in the United States and around the world, and the optimization of its fleet." It called the trans-Pacific trade lane the "most active and dynamic market to date," without going into specifics.
The massive vessels are relatively commonplace in the Asia-Europe trade, the world's largest shipping lane. There have been concerns in the U.S. about the ability of gateway ports to handle the ships, especially given the productivity problems that West Coast ports have experienced in recent years handling smaller vessels.
Marseilles-based CMA CGM is the world's third-largest container shipping firm, trailing only Danish carrier A.P. Moeller-Maersk and Swiss firm Mediterranean Shipping Co. It operates over 170 routes linking 400 ports in 150 countries.
CMA CGM, whose traditional strengths lie on the Asia-Europe, Asia-Mediterranean, Africa, and Latin America routes, jumped into the trans-Pacific market in a big way last December when it proposed to buy Singapore-based Neptune Orient Lines (NOL) for $2.4 billion in cash. NOL operates under the familiar APL brand, which has long been a major player in the Asia-U.S. trade lane. The transaction, expected to close by midyear, would create a firm with 563 vessels, capacity of 2.4 million TEUs, and US$22 billion in revenue.
The announcement of megavessels hitting the trans-Pacific trade comes as liner companies continue to struggle with a combination of subpar demand and excess supply in many global markets. Noncontractual, or spot, rates from Shanghai to the U.S. West Coast stood at US$1,005 per 40-foot equivalent unit (FEU) containers as of the end of February, according to data from the Shanghai Containerized Freight Index. That isn't much higher than the $922 per FEU rate quoted at the time the CMA CGM-NOL deal was announced.
The U.S. is one of the few strong end markets for container shipping, due to a resilient U.S. economy and a strong U.S. dollar that makes Asian exports more price-competitive in world markets.
