A curious concoction is fermenting around the West Coast. The Containership Company (TCC), nominally based in Denmark, is pleased with results so far, a $3 million net loss on $21 million in revenue during the first half of its first year. Then we have Hainan PO Shipping, nominally a private-government partnership, which has made its first trip to Long Beach.
TCC says the loss is due to start-up costs, with working capital used less than expected. Money so far is small change -- $10 million on containers (a sale and leaseback is being arranged to get more working capital) --$21 million in investor equity and $9 million in available cash.
While the line's two bosses are in Copenhagen and are made out to be the main partners , the real force is said to be Norwegian in the form of tanker king John Fredriksen (but with Cypriot residence because Norway tightened tax residence concessions).
Very little else is available about the financial set up. Which also applies to PO Shipping, owned 55 percent by the Yangpu Economic Development Zone through its Office of State Assets Management Committee, and 45 percent owned by Hainan Province Yangpu Development and Construction Holding Co, a company entirely owned by Yangpu Economic Development Zone, which is a government organization directly under the Hainan Provincial and central government. In other words, the whole outfit is government owned.
China's service deploys four 2700TEU vessels with an average service speed of 20.5 knots. TCC operates five ships with capacities ranging from 2600-3500TEU and an average speed of 19 knots, up from an original 15 knots.
Meanwhile, Maersk is sticking to slow steaming, which is about 15 knots.
Added to the concoction is the latest traffic survey from the National Retail Federation, which says the peak period has already been and gone.
Conclusion: a dogfight is going to materialize at some point. Granted, Maersk's traffic dwarfs that of the TCC and PO Shipping, but those two will jump in with both feet if traffic for them continues to improve. Of course, China won't even wait for an increase – the government will add ships regardless of profits, solely to increase market share at the expense, mostly, of Maersk.
Some people would say that if this happens, Maersk will conveniently forget its noble mission of cutting down CO2 emissions and do "whatever it takes", to quote a phrase now much in favor, to protect its turf.
Expect the environmentalists to make snarky comments, which will signal a general kerfuffle over liner practices.