U.S.-listed shipping company Matson has closed its China-California Express (CCX) service, an expedited service direct to the Port of Oakland, ahead of the peak season as spot freight rates on the trans-Pacific route plummeted.
As recently as last month's second-quarter earnings call, Matt Cox, Mason's chief executive, expressed optimism about the service, saying demand "remains solid." Matson launched the service in the third quarter of 2021.
Matson expects the CCX service to operate "through the peak season in October," he said, and is optimistic that demand will be sufficient to keep the service "until 2023."
"We still believe that our China shipping service rates will be higher than pre-pandemic rates and much higher than the Shanghai Containerized Freight Index (SCFI) because of our differentiated and fast shipping services," Matson said at the time. .
Matt Cox told investors and analysts that freight rates are falling in an "orderly" way, "without a cliff" and the company expects a "moderate peak season".
But according to Alphaliner, the last voyage of the CCX service, performed by the 2890TEU container "Manukai", arrived at the Port of Long Beach on September 20, and the service has now been suspended. The port order of the cancelled CCX service is: Ningbo-Shanghai-Oakland-Long Beach-Honolulu-Ningbo.
"The closure of CCX services is not surprising, as cargo demand on trans-Pacific routes has fallen significantly over the past few weeks," Alphaliner said, adding that the number of temporary sailings between Asia and the U.S. West Coast was also "substantially reduced."
"Given that China is about to usher in the Golden Week holiday in the first few weeks of October, major shipping companies active on this route are expected to further cut capacity," Alphaliner said.
In addition, shipping companies on the route are also suffering from accelerated cargo transfers to the east of the United States, multimodal congestion at ports in the west of the United States, and concerns about labor negotiations.
Spot freight rates from Shanghai to Los Angeles/Long Beach were $3,050/FEU last week, according to SCFI data, which has plunged about 60% since early July. The industry believes that after the Golden Week, the spot freight rate of the route will further decline.
Matson is understood to have deployed three vessels ranging from 2,900TEU to 4,250TEU on the CCX Express service and has not disclosed how these vessels will be redeployed. The company, which also operates two expedited services "CLX" and "CLX+" between China and the U.S. West Coast, expressed confidence in continuing to receive a premium to current market rates amid weak fundamentals.
According to Matson's performance report, as of June 30, 2022, the company's ocean shipping revenue in the second quarter was US$1.1 billion, a year-on-year increase of 54%; net profit was US$470 million, a year-on-year increase of 134%. Its cargo volume during the quarter was 242,000 TEU, of which 97,400 TEU was destined for China.