The Containership Company said weak volume and rates forced it to end niche trans-Pacific service it launched a year ago.
“The cargo volume shipped out of TCC’s main port, Taicang in China, has not been as anticipated, primarily due to the competitive situation between Chinese ports,” CEO Jakob Tolstrup-Moller said in an e-mail to The Journal of Commerce. “In addition, shippers have not met their contractual cargo volumes committed to TCC under the 2010/2011 season service contracts.”
Weak volumes have been “aggravated by the downturn in the trans-Pacific market,” Tolstrup-Moller said.
By The Numbers: SCFI - Shanghai Containerized Freight Index
Drewry Shipping Consultants’ container rate benchmark, which measures spot rates paid by non-vessel-operating common carriers from Shanghai to Los Angeles, hit a one-year low this week of $1,693 per 40-foot-equivalent unit, down 40 percent since August and 23 percent since the Lunar New Year in February.
Tolstrup-Moller said Norway-based TCC ASA’s Danish subsidiary, TCC A/S, will file for financial reorganization under Danish law and will cease liner operations. He said the Copenhagen law firm Bech-Bruun has been hired as an adviser on the reorganization.
TCC’s Norwegian unit will continue as a ship charterer-manager. The company owns one 2,500-TEU ship equipped with its own lifting gear and has time-charters on five 3,000-TEU ships that had been used in the trans-Pacific service.
The time-charter rates that TCC ASA is paying are “significantly below current market rates,” Tolstrup-Moller said. He said TCC ASA has options to extend the charters until 2013 and has options to purchase three of the 3,000-TEU vessels.
TCC was founded in 2009 by Tolstrup-Moller and Capt. Franck Kayser. It began liner operations in April 2010, offering a port-to-port service between Taicang, near Shanghai, and Los Angeles. The carrier added a second China call at Ningbo last September and later extended service to a third Chinese port, Qingdao.
The startup carrier marketed itself as a low-cost, no-frills carrier providing only port-to-port services, with no-transshipments.
TCC told customers it would not complete this month’s scheduled eastbound voyages of its ships California Dragon and Nanjing Dragon, or westbound voyages of the Jiangsu Dragon and Shenzhen Dragon.
TCC said customers that had stuffed TCC-operated containers with cargo by midnight April 8 Shanghai time for eastbound voyages or April 7 Los Angeles time for westbound voyages could divert the shipments to other carriers and redeliver the boxes later under terms of their agreements with TCC.