MCC and CSCL to launch direct China-Myanmar services

MCC and CSCL to launch direct China-Myanmar services

HONG KONG — Maersk subsidiary MCC Transport and China Shipping Container Line (CSCL) will both launch direct services between China and Myanmar on Jan. 24 to capitalize on growing trade between the two Asian nations.

The China state-owned carrier and MCC will use smaller vessels on the service that will be able to call direct and avoid having to tranship in Singapore or Malaysia, according to a report in the South China Morning Post.

Eight 1,100 TEU vessels will be deployed by MCC on the Intra-Asia 5 (IA5) service, and four 1,000 TEU vessels from CSCL will operate its Burma Express. According to SeaIntel's Sunday Spotlight, the CSCL service will depart Shanghai then call at Ningbo, Ho Chi Minh City in Vietnam, Singapore, and Yangon, the capital of Myanmar and take 12 to 14 days

A spokesman for CSCL told the Hong Kong newspaper that cargo volume between China and Myanmar had grown by 30 percent in the past year to 350,000 TEUs. Containers loaded in China are dropped off in Singapore or Malaysia and transshipped to smaller vessels. The new direct link means containers will be able to remain on the vessels that are able to enter Yangon port.

MCC's port rotation will be longer than that of CSCL and call at Vladivostok (Fish Port), Vladivostok (Dalzavod), Shanghai, Ningbo, Singapore, Port Klang, Yangon, Port Klang, Singapore, Tanjung Pelepas, Kuantan, Sihanoukville, Ho Chi Minh, Hong Kong, Shanghai, Ningbo, Busan, Vladivostok (Fish Port).

However, MCC chief executive Tim Wickmann told the SCMP the direct service was expensive and would generate the highest unit cost per container from China to Singapore and Malaysia.

“Our hope is customers will appreciate the direct service, and be willing to pay a premium over the transshipment services,” he told the newspaper.

Scale economics mean the smaller the vessel, the more it costs to carry a container, and shipping lines have been aggressively ordering larger ships to reduce the unit costs of transporting a box. But with draught in Myanmar ports constrained to 7or 8 metres, larger vessels are unable to enter.

Trade between Myanmar and China grew by an average of 16 percent from 2009 to 2013, according to the World Trade Organisation. China is by far its largest trading partner and the economy has been growing rapidly as the former military dictatorship embraces consumerism.

Maersk Group has been rapidly expanding its involvement in the emerging Southeast Asian nation since sanctions were lifted in 2012, and its logistics unit, Damco, began operations at the first international container freight station in Myanmar in June last year.

The 4,000-square-meter, C-TPAT-compliant facility, located 15 kilometers (9.4 miles) from Yangon port and major industrial locations, is designed to handle imports and exports of consumer goods, electronics, apparels, machinery and project cargo.

Myanmar’s bilateral trade with the United States reached $115.9 million in 2013, up from $65.7 million in 2012, $48.9 million in 2011 and just $9.7 million in 2010, according to the Foreign Trade Division of the U.S. Census Bureau. Bilateral trade totaled $5.2 million in the first quarter of 2014.

Containerized trade between Myanmar and the United States totaled 2,614 20-foot-equivalent units according to PIERS, the data division of JOC Group Inc. In the first four months of 2014, bilateral volume reached 1,013 TEUs, and preliminary figures for May would add 238 TEUs more.

Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler.