Ocean carrier Matson Navigation announced Monday that in August it will discontinue the expanded China–Long Beach Express service (CLX2) started last August, citing sustained high fuel prices, downward rate pressure and overcapacity in the transpacific trade.
Matson said that discontinuing the CLX2 service, which includes service to and from Hong Kong, Yantian, Shanghai and Long Beach, will have no impact on Matson’s original China–Long Beach Express service (CLX1), which will continue to operate. The CLX1 service was launched in 2006 and provides expedited service from Xiamen, Ningbo and Shanghai to Long Beach. The discontinuing of the CLX2 service will also not affect the carrier's Hawaii or Guam services.
According to Matson, a wholly owned subsidiary of Honolulu-based Alexander & Baldwin, Inc., the "cost model for the two services is 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, Matson said, 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.
“Matson’s expanded service that was launched last year succeeded in achieving our service goals and building on our customer base,” Matson President Matt Cox said.
“Unfortunately, the economics of the transpacific trade have shifted dramatically in the relatively short time since we developed the model. Sustained high fuel prices, rate volatility and overcapacity in the Asia market have made this growth initiative unprofitable. Unlike Matson’s first China–Long Beach Express, which includes calls in Hawaii and Guam en route to China, resulting in revenue for both westbound and eastbound voyages, the second string sailed directly from Long Beach to China, making the economics of the service during this period exceptionally difficult."
Cox reiterated that since its inception, Matson’s original CLX1 service has weathered comparable negative operating environments in the transpacific trade.
"We are 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," Cox said.
The last eastbound sailing on the CLX2 service will depart Shanghai on August 21. Westbound service from Long Beach to China will continue until September 3.
“Matson appreciates the support our customers gave to this expansion of our China service,” Cox added. “The decision to discontinue the service was difficult but necessary, and was due entirely to the financial component of the expansion.”
