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BREAKING NEWS | CMA CGM to deploy six 18,000-TEU ships from Asia to West Coast
3/3/2016

CMA CGM to deploy six 18,000-TEU ships from Asia to West Coast

The mega-ship CMA CGM Benjamin Franklin arrives at the Port of Seattle. Credit: Don Wilson, Port of Seattle

CMA CGMplans to upgrade a trans-Pacific service to the West Coast by deploying six ships with capacities of 18,000 twenty-foot-equivalent units, starting late May, a bet that container terminals can handle the largest mega-ships to call the U.S. and that volume will steadily grow.

The deployment of the six vessels, which will be shifted from the Asia-Europe trade for the Pearl River Express service, comes after two successful pilot runs at the ports of Los Angeles and Long Beach in December and two weeks ago, respectively, Rodolphe Saade, vice chairman at the French carrier, told JOC.com Thursday. The 18,000-TEU Benjamin Franklin, which most recently called at the Port of Seattle, is the largest ship ever to call the U.S.

“While we believe 2016 will be a challenging year, we believe that the U.S market is growing faster than Asia-Europe and by deploying capacity on the trans-Pacific we will be able to take advantages of greater economies of scale,” Saade said. “We believe very much in the U.S. market.”

He said it’s likely the current service loop — Yantian, Long Beach, Oakland, Fuquing, Xiamen, Nansha and Hong Kong — will remain the same when the larger vessels are deployed, but the specifics have yet to be confirmed. The service calls at SSA Marine’s Pier J, in which CMA CGM bought a stake in 2013, and the terminal operator’s Berth 58 in Oakland. Aside from the Benjamin Franklin, the eight other vessels on the service are no larger than 11,400 TEUs.

The move could also allow CMA CGM to gain market share. CMA CGM and Maersk were tied as the third-largest carriers of laden containers from Asia to the U.S. between August and January, according to PIERS, a sister product of JOC.com within IHS. CMA CGM grew its market share of cargo 1 percentage point to 7 percent compared to the first half. Evergreen Line has the largest share of laden containers on that lane, with a 12 percent share in the second half and Hanjin Shipping ranked second with a 9 percent share.

CMA CGM’s shipping alliance partners, China Shipping Container Lines and United Arab Shipping Co., have slot space on the service and will continue to have slot capacity when the larger vessels are deployed. The Ocean Three Alliance has five trans-Pacific services to the West Coast.

Saade rejected criticism that U.S. West Coast ports can’t efficiently handle the mega-ships, saying Los Angeles and Long Beach handled the Benjamin Franklin “very well.” He said there was still work to be done by West Coast marine terminals to better handle mega-ships.

He acknowledged trans-Pacific rates are under pressure, but the economies of scale gained by the larger vessels and expectations that volume would grow 4 percent between Asia and the U.S. West Coast like last year warrant the decision to upgrade the service. U.S. imports will increase by 5.3 percent year-over-year in 2016 to 20.8 million TEUs, according to IHS Maritime & Trade Senior Economist Mario Moreno.

Saade said CMA CGM is considering deploying mega-ships from Asia to the Pacific Northwest ports as well. He added that CMA CGM is considering deploying larger vessels on its two all-water services via the Panama Canal to the East Coast but is waiting for a finalized opening date for the larger locks. The canal is expected to open sometime in the second quarter after years of delays, allowing ships up to 14,000 TEUs to traverse the waterway, nearly triple the 5,000-TEU limit now in place.

Contact Mark Szakonyi at mark.szakonyi@ihs.com and follow him on Twitter: @szakonyi_joc.

 

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