Demand grows for faster shipping
Small is beautiful for an expanding band of niche-focused container shipping carriers which have forsaken larger ships and slower sailing speeds in favour of 'greyhound' services which can offer quicker transits across the Pacific.
The move by the four carriers - Horizon Lines, Matson Navigation, The Containership Company and TS Lines - to launch services on one of the world's biggest trade lanes runs counter to the approach adopted by larger container carriers.
These include Orient Overseas Container Lines, which saw transpacific routes generate 905,000 20-foot equivalent units (teu) in the first nine months of the year and Cosco Container Lines, which carried almost 1.2 million teu across the Pacific.
The Tung-family-controlled shipping line, together with European and Asian rivals, have favoured leviathans capable of carrying around 6,500 20-foot boxes to generate economies of scale.
Cutting the speed of vessels from around 24 knots to 17 or 14 knots has also cut fuel consumption and costs.
By comparison, the four smaller companies operate ships of about 3,000 teu at a full service speed of 24 knots.
Commenting on what made the transpacific attractive for smaller shipping lines, Brian Taylor, Horizon Lines senior vice-president for international services, said: 'Fortunately, we do not live in a one-size-fits-all transportation world.'
Shippers today need a variety of options in a rapidly changing logistics environment.
'Small to midsize shippers with smaller transportation departments still need a carrier that provides very reliable deliveries and high levels of customer service - a niche that can be nicely covered by a smaller, more focused carrier,' he said.
It is against this background that Horizon Lines is preparing to launch an 11-day direct service between Ningbo, Shanghai and Los Angeles next month using five ships sailing at around 24 knots.
Taylor said: 'As bigger carriers continue to slow-steam and super-slow-steam, we believe there is a natural fit for a high quality carrier to fill the void in transit time to the west coast along with rapid intermodal connections inland.' He said Ningbo and Shanghai were chosen because they had not only shown strong growth over the past five years, but generate volumes that are equivalent to all US container imports moving from the Pearl River Delta region.
Taylor thought demand for quick transit and additional capacity would grow in the Ningbo-Shanghai region as more customers continue moving factories further north and west.
Already, there had been an increase in the volume of high-end garments and electronics being manufactured in the Shanghai region, products that were a better fit for a high-speed service.
The Containership Company is also focusing on the Yangtze River region. It launched its transpacific operations from Taicang in Jiangsu province to Los Angeles and has since expanded to Ningbo. A new service from Qingdao starts on Monday.
Marketing director Lars Jensen said Taicang was chosen because a cargo owner in Jiangsu could save up to 1,000 yuan (HK$1,164) on trucking costs by using the port rather than Shanghai.
He said using Taicang and Ningbo allowed the carrier to keep its costs low while providing competitive transit times so that the five 3,000 teu ships operating its Great Dragon Service arrived at port an average of two hours ahead of schedule.
Matson Navigation spokesman Jeff Hull said the carrier initially launched transpacific services between Ningbo, Shanghai and Long Beach, California, in 2006, but recently expanded to Hong Kong and Yantian, allowing Matson to widen its geographic reach to the south. 'Being a smaller carrier allows us to provide higher levels of customer service. Our smaller vessels allow faster loading and unloading of cargo,' Hull said.
The final entrant, Taiwan's TS Lines, will launch its transpacific service linking Hong Kong, Yantian, Ningbo and Shanghai with Long Beach in about 10 days. Asked why the service was being launched, TS Lines planning director Jane Wu said it hoped to grasp the opportunity of faster transit times while utilising the carrier's extensive intra-Asian network. She said the company, which will use five 3,000 teu ships, would also benefit from lower costs in what would be the slack season.
Asked why these smaller carriers were launching or expanding services, Charles de Trenck, head of independent transport advisory outfit Transport Trackers, said: 'I would have to think they would only be making preparations at this stage, and would want to ramp up after Chinese New Year.'
He said that while maybe TS Lines was less similar to the others because it was more focused on intraAsian and other medium-haul services, Horizon Lines and Matson might share some similarities because they had experience in the US domestic market.