Long Beach prepares for Pacific ultra-large boxship switch

The12,500 teu MSC Fabiola, which will arrive in Long Beach next week, could be the first of many giants to head into the Pacific trade

Long Beach is to receive the largest boxship yet seen on the US west coast with the arrival of the 12,500 teu MSC Fabiola next week.

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Overcapacity on Asia-Europe trades brings cascade of larger tonnage

SEVERAL of the world’s biggest containerships are being quietly shifted to the Pacific in a move that could place freight rates under further pressure just as ocean carriers and shippers start to negotiate annual service contracts.

Long Beach is preparing to receive the largest boxship yet seen on the US west coast with the arrival of the 12,500 teu MSC Fabiola next week.

Container lines have been trying to raise spot rates from Asia to the US, with a further increase scheduled to take effect mid-March, before they begin to talk about contract rates that would be valid for 12 months.The realisation that ultra-large containerships are being moved from the ravaged Asia-Europe trades could strengthen shippers’ bargaining position.

MSC Fabiola’s redeployment is part of a major cascade exercise as global carriers shuffle capacity around in order to bring supply more into line with demand on the most route worst-hit by over-supply.

The 2010-built MSC Fabiola will be followed by two ships of around 11,000 teu that Mediterranean Shipping Co plans to deploy in an upgraded service run in partnership with CMA CGM.

Lloyd’s List understands that there has even been talk in Copenhagen about moving the 15,500 teu Emma Maersk and its sister ships to the Pacific, with a single west coast call in Los Angeles, although any decision is not thought to be imminent.

Until now, the largest vessels operating on the Pacific have been around 9,500 teu, and MSC is said to be downplaying the introduction of much bigger tonnage for fear of destabilising the trade at such a critical time.

The introduction of so many ships of this size into the Asia-Europe trades over the past year or so has contributed to a devastating price war.

From peak to trough, Asia-Europe rates fell 68% over the course of the recent downturn, according to Drewry research manager Martin Dixon. In contrast, the Pacific trades were relatively more stable, he told the Trans-Pacific Maritime conference, with the rates dropping 48%.

Speaking at the same conference, SeaIntel Maritime chief executive Lars Jensen warned that the transfer of mega-size boxships from the Asia-Europe trades to other routes such as the Pacific, Atlantic or Asia-Middle East routes would perpetuate market instability and frequent boom-to-bust cycles.

MSC Fabiola, which sailed from Hong Kong last week after completing its last Europe-Asia leg, is so high that it will not be able to sail under the Gerald Desmond bridge to MSC’s Long Beach terminal. Instead, it will be berthing at Hanjin Shipping’s Total Terminals International on Terminal Island.

After leaving Long Beach, the ship will call at Oakland.

Although the deployment of this new generation of ships on the Pacific is causing some consternation in industry circles, it will nevertheless confirm how far US west coast ports have advanced over the past 15 years. In 1998, Maersk Line brought the 6,000 teu Regina Maersk to the Pacific seaboard as a wake-up call that terminals along the coast needed to be able to handle the latest class of ship. At that stage, a 6,000 teu vessel could not enter a US west coast port fully laden. Neither were cranes able to stretch across what was then the world’s biggest boxship.

Now, though, the adjacent ports of Long Beach and Los Angeles are assuring their customers that they are able to handle the largest ships on the high seas.

“We are big ship ready,” Long Beach executive director Christopher Lytle told Lloyd’s List.

The arrival of MSC Fabiola around March 14 or 15 will also be further proof that Long Beach is back on track after what appeared to be a poor year compared with Los Angeles in terms of cargo volumes. But that reflected the move from Long Beach to Pier 400 in Los Angeles of Hyundai Merchant Marine’s California United Terminals which dented annual container throughput figures.

Excluding that, Long Beach terminals did well in 2011, with net growth of around 8%, according to Mr Lytle, who took up his new job at the start of the year.

Long Beach is also about to finalise a lease with Hong Kong’s Orient Overseas Container Line that will signal the start of a massive redevelopment of its middle harbour and provide a revenue stream of $4.6bn over 40 years.

Long Beach will be investing $1.2bn in the scheme, the largest of its kind so far undertaken by any US port, and will need to borrow funds to help pay for the development that eventually will be able to handle 3.2m teu, double current capacity. Other investment projects include a new grain export container facility.

However, it is the new generation of containerships, soon be a feature of the Pacific trades, that is attracting the most attention.

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