EMPRESA NAVIERA SANTA CANCELS TWO SERVICES

EMPRESA NAVIERA SANTA CANCELS TWO SERVICES

The Peruvian ocean carrier Empresa Naviera Santa, stung by rates that have fallen by more than 30 percent on its routes and a severe slowdown in traffic, is undergoing a retrenchment that will take it out of certain markets and leave it a much smaller player in others, the carrier said Tuesday.

The carrier has suspended container trade between the United States and Central America, where it held an 11 percent-to-13 percent market share to Guatemala and El Salvador.That move, which was not announced to shippers when the service was dropped early this month, resulted in the withdrawal of one ship and layoffs of 18 to 20 people at the carrier's Miami headquarters. The company now has 34 employees in Miami.

Also canceled is the carrier's breakbulk service between the U.S. East Coast and Peru and Chile, the only such service on that route. The carrier's existing breakbulk-container trade between the U.S. Gulf and Peru and Chile will be extended to include Charleston and Miami, but East Coast service north of Charleston will be discontinued.

"We're trying to restructure, to become profitable, so we're concentrating on profitable runs by making these changes," an official with Empresa Naviera Santa (USA), the line's U.S. ship agent, said Tuesday.

What remains for the Lima, Peru, carrier is its Gulf and now South Atlantic breakbulk operation, which uses two ships, and a deal under which Empresa charters container slots aboard ships operated by Lykes Bros. Steamship Co. of New Orleans and the Chilean carrier Compania Chilena de Navegacion Interoceanica, or CCNI.

Empresa has an 11 percent share of the containerized market between the United States and Peru, and a 5 percent share to Chile, according to the Port Import/Export Reporting Service (PIERS), a unit of The Journal of Commerce. A third of Empresa's business is breakbulk, according to PIERS.

In explaining why the company is restructuring, the ship agent said that rates on the carrier's Central American routes, which had included direct calls to Guatemala and Honduras, had fallen 45 percent since 1990 and had never recovered.

On its East Coast breakbulk routes, he said, traffic volume fell more than 60 percent in the last year.

"We don't know if it is being sourced from another area or another continent, but (the volumes) are not there to continue" the service, the official said.

The carrier has been retrenching steadily all year.

This spring, it canceled a roll-on, roll-off service between South Florida and the west coast of South America after only one sailing. In June it stopped operating containerships by entering into the slot-charter deal with Lykes and CCNI. And in July, the carrier canceled direct service to Costa Rica and laid off seven people.

An atmosphere of uncertainty pervaded Empresa on Tuesday, with the remaining U.S. employees unaware of the company's status.

"We're waiting to find out where we are going from here," one New York sales representative said.

Shippers contacted Tuesday also were not aware of the company's plans, and some expressed reluctance to continue using the carrier for container shipments to South America.

"I would be reluctant to let them handle any shipments at the present time," said Carlos Onate, sales representative for Carisam International Corp. of Miami, which supplies liquor to U.S. embassies and to duty-free stores in Central and South America.

The carrier's container business to Chile and Peru may improve after the formation this summer of a new conference - the West Coast of South America Agreement - in which member lines including Empresa have committed themselves to ending a rate war that has driven down rates by 25 percent to 30 percent northbound and 20 percent southbound.

Shipping executives speaking on a condition of anonymity said the carrier's problems stemmed from depressed rates on its principal trade routes, an inability to compete with carriers using more modern equipment, and the fact that its owner, Roberto Leigh, is diverting resources to his airline, Faucett Peruvian Airlines.

The airline operates two Lockheed L10-11s and has 14 percent of the seats on routes between the United States and Peru, said Merge Global, a transportation consulting firm in Alexandria, Va.