Matson Navigation saw third-quarter operating profit plunge 32.7 percent year-over-year to $28.6 million, largely because of the cost of shutting down its second China-Long Beach service.
Matson’s adjusted operating profit was $34.7 million, down 18.4 percent year-over-year, excluding the $6.1 million lost through the CLX2 shutdown.
The year-over-year decline in adjusted operating profit was primarily due to lower rates for the first China-Long Beach service, which it discontinued in August, and lower volumes. The latter was partially offset by a year-over-year increase in Hawaii container volumes and lower operating expenses.
“Trans-Pacific market conditions continued to be highly challenging during the third quarter,” Matson parent Alexander & Baldwin said.
“Overcapacity in the trade lane resulted in a weak peak season, which stands in stark contrast to last year's strong rate environment. The persistent weakness in the trade lane validates the company's earlier decision to discontinue the operation of CLX2, which was more exposed to volatile trans-Pacific trade lane rates than CLX1 because of CLX2's lack of a west-bound head haul,” A&B said.
Total losses, net of taxes, from the operation and shut down of CLX2 for the third quarter of 2011 were $17.7 million (of which $14.0 million was included in losses from discontinued operations), in line with previous expectations.