LONG BEACH—The Dec. 12 announcement that CMA CGM is taking an equity stake in the Pier J terminal at the Port of Long Beach is a significant development for the world’s third-largest container line as well as for the port.
CMA CGM, with headquarters in Marseille, France, finally has a home in the largest U.S. port complex. “This first new investment for our group on the U.S. West Coast will reinforce our position in North America,” said Farid Salem, CMA CGM group executive officer.
CMA has three China services spread out between the ports of Los Angeles and Long Beach. These are vessel-sharing alliances with other lines also contributing ships. As part of the agreement with the Port of Long Beach, CMA is now committed to sending all of its vessels operating in the Southern California services to Long Beach.
This will be a bonanza of cargo and revenue for Long Beach, which estimates that over the next five years CMA’s business will bring a volume of 2.6 million 20-foot container units and $70 million in revenue to the port.
In return, the Long Beach Board of Harbor Commissioners approved wharfage reductions for CMA that will total up to $9 million over five years, said Chris Lytle, the port’s executive director.
The new arrangement also works well for SSA Marine, which operates the 256-acre Pier J terminal in a joint venture with China Ocean Shipping Co. SSA has been serving CMA vessels for the past 10 years at Pier J, and now the French carrier is a partner with its equity stake in the facility, said Ed DeNike, SSA’s chief operating officer.
CMA at present is involved in three weekly services linking China and Southern California in alliances with either Mediterranean Shipping Co. or Maersk Line.
The Pearl River Express serves South China. The Bohai Express is from Central and North China and calls at the TTI terminal in Long Beach. CMA also has slots on MSC vessels in a weekly service from Shanghai and the Yangtse River region of China.
CMA’s agreement with the port commits all CMA vessels in the China services to call in Long Beach, although the ships do not all have to call at the same terminal, Lytle said.
One common thread running through all of the China-Southern California services is that the vessels are big, and they are getting bigger. At present, vessels contributed by the VSA partners on these services range in capacity from 8,000 TEUs to 13,000 TEUs. The VSA partners continue to upgrade the vessels as they expand their global fleets.
According to the Paris consulting firm Alphaliner, ports around the world must prepare themselves for an onslaught of mega-ships if they are going to remain load centers in the global container trades.
There are a total of 20 services today with vessels of 10,000-TEU capacity and larger, and carriers are scheduled to take delivery over the next three years of an additional 110 mega-ships ranging in size from 10,000 to 18,000 TEU-capacity.
The majority of the mega-ships are in the Asia-Europe trade. However, two of the services call in Long Beach, and the number of 10,000-plus-TEU vessels calling in Southern California is projected to increase steadily over the next three years. After the Panama Canal is enlarged in 2015, East Coast ports will also enter the competition for attracting such ships.
Lytle said it is therefore important to CMA that the carrier has a home in Southern California as it increases the sizes of the vessels and the number of mega-ships involved in the trans-Pacific trades. These vessels require large terminals with operators that are experienced in handling the big ships, he said.