Ocean Alliance launches Jakarta-US direct service

Ocean Alliance launches Jakarta-US direct service

APL continues to introduce niche services between Asia and the United States.

The Ocean Alliance on Monday launched the first direct Indonesia-US container shipping service, a pendulum loop that connects Jakarta to the US West and East coasts as well as hub ports in Asia.

Operated by CMA CGM with its APL subsidiary having the largest allocation, the Pendulum Loop 1 service sailed from Jakarta for Los Angeles, a 23-day transit that removes the need for Indonesia’s exporters and importers to use transshipment, according to Nicolas Sartini, APL chief executive. CMA CGM is deploying 17 vessels of between 8,469 and 9,365 TEU on the service.

“We are confident that the PE1 service will be a compelling alternative to transshipment, which Indonesia relies on for shipments to the US and vice versa,” Sartini said in a statement.

In 2016, Indonesia exported goods valued at more than $19 billion to the United States, its main trading partner. According to the IHS Markit Global Trade Atlas, in the first seven months of 2016, total Indonesia-US trade reached almost $80 billion, although that represented a year-over-year decline of 12 percent.

While Indonesian exports in February recorded their fourth month of double-digit growth, the country continues to struggle with poor port and road infrastructure that the ambitious government plans to continue improving in face of severe funding issues.

The PE1 service will directly link Jakarta with its top five trading partners, making weekly calls at Port Klang in Malaysia, Singapore, Jakarta, Laem Chabang in Thailand, Cai Mep in Vietnam, Los Angeles, Oakland, Hong Kong, Colombo in Sri Lanka, Halifax in Canada, New York, Norfolk, and Savannah.
 
Sartini described Indonesia as a stronghold market of APL that the carrier has served since 2001. In 2016, 16 percent of the outbound volumes from Indonesia to the United States were handled by APL, making it the market leader on the trade.

APL is the liner division of Singapore-based Neptune Orient Lines that CMA CGM acquired in 2016 and Sartini took over the post of CEO. Since its acquisition, APL has been aggressively expanding its coverage individually and within the Ocean Alliance, launching 24 new services since June 2016.

The carrier recently launched a premium date specific, money-back service called Eagle Guaranteed on the trans-Pacific that Sartini believes is what shippers are looking for as they try to further secure their supply chains.

APL intends to expand its customer base of US importers whose supply chains are built upon day-definite performance by launching its Eagle Guaranteed program in which customers pay a surcharge to participate in the program, and 100 percent of the surcharge will be refunded if the delivery date is not met.

The service involves intermodal shipments through APL’s terminal at the Port of Los Angeles, destined for rail yards at six destinations: Chicago; Columbus; Dallas; El Paso, Texas; Kansas City; and Memphis, Tennessee, on Union Pacific Railroad trains.

Vessels will be US-flagged with a capacity of 5,500 teus with the target of 1,000 feus carried per vessel every week.

On April 1, Ocean Alliance and THE Alliance were launched, along with a 2M Alliance that shares slots with Hyundai Merchant Marine. The alliance reshuffling was triggered by last year’s carrier consolidation, creating three east-west alliances out of the previous four.

However, an analysis of the new alliances by SeaIntel has found that they have brought a significant reduction in the number of direct port-to-port connections on Asia-Europe and the trans-Pacific.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.