Five months after placing in service the largest containership ever to call the U.S., French liner CMA CGM Group has pulled the plug.
Marseilles-based CMA CGM, the world's third-largest liner company, has terminated sailings of the "Ben Franklin" megavessel that had been operating between China and the West Coast ports of Oakland, Los Angeles, and Long Beach, according to two sources. Also tabled were CMA CGM's plans to operate five additional megaships, each capable of carrying 18,000 twenty-foot equivalent units (TEUs), eastbound into Long Beach and outbound from Oakland. That service was to start at the end of the month.
CMA CGM had not issued a statement, nor put up an announcement on its website. It is expected the vessels will be redeployed on the Asia-northern Europe lane, the world's largest shipping lane, where such large ships have sailed for years.
The "Benjamin Franklin" sailings commenced around Christmas with much fanfare, with company executives saying the commitment to such a large vessel underscored their confidence in the trans-Pacific seafaring market. When the company announced its expansion in early March, it called the trans-Pacific trade lane the "most active and dynamic market" in the maritime world.
Yet the eastbound trans-Pacific market has fallen victim to the same fierce downward rate momentum afflicting all the ocean trades, which are struggling in an environment of tepid demand and significant overcapacity. As recently as last week, "spot," or noncontract, rates were quoted at $760 per 40-foot equivalent unit (FEU) box from Shanghai to New York, a 40-percent drop just in the first 15 weeks of 2016, according to the Shanghai Containerized Freight Index, which tracks spot prices. At those despairing levels—at least for carriers—CMA CGM may have decided it couldn't justify the high costs of running such a huge containership.
Another factor may have been CMA CGM's pending $2.4 billion cash purchase of Neptune Orient Lines Ltd. (NOL), the Singapore firm that does business under the more familiar name of APL. NOL, through APL, already has a solid position in the trans-Pacific trade, and the capacity NOL brings to the Asia-U.S. market may have rendered the megaships' capacity unnecessary.
Sources at the ports of Oakland and Long Beach said the reliability of the service—for as long as it lasted—wasn't an issue for CMA CGM. Arrivals and departures were timely, and terminal operators at both ports excelled at turning the vessel, the sources said.
