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TCC Ceases Trans-Pacific Operations

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Date:2011-04-18
Created by HButler on 4/8/2011 4:07:49 PM

The Containership Company said weak volume and rates forced it to end niche trans-Pacific service it launched a year ago.

¡°The cargo volume shipped out of TCC¡¯s main port, Taicang in China, has not been as anticipated, primarily due to the competitive situation between Chinese ports,¡± CEO Jakob Tolstrup-Moller said in an e-mail to The Journal of Commerce. ¡°In addition, shippers have not met their contractual cargo volumes committed to TCC under the 2010/2011 season service contracts.¡±

Weak volumes have been ¡°aggravated by the downturn in the trans-Pacific market,¡± Tolstrup-Moller said.

Drewry Shipping Consultants¡¯ container rate benchmark, which measures spot rates paid by non-vessel-operating common carriers from Shanghai to Los Angeles, hit a one-year low this week of $1,693 per 40-foot-equivalent unit, down 40 percent since August and 23 percent since the Lunar New Year in February.

Tolstrup-Moller said Norway-based TCC ASA¡¯s Danish subsidiary, TCC A/S, will file for financial reorganization under Danish law and will cease liner operations. He said the Copenhagen law firm Bech-Bruun has been hired as an adviser on the reorganization.

TCC¡¯s Norwegian unit will continue as a ship charterer-manager. The company owns one 2,500-TEU ship equipped with its own lifting gear and has time-charters on five 3,000-TEU ships that had been used in the trans-Pacific service.

The time-charter rates that TCC ASA is paying are ¡°significantly below current market rates,¡± Tolstrup-Moller said. He said TCC ASA has options to extend the charters until 2013 and has options to purchase three of the 3,000-TEU vessels.

TCC was founded in 2009 by Tolstrup-Moller and Capt. Franck Kayser. It began liner operations in April 2010, offering a port-to-port service between Taicang, near Shanghai, and Los Angeles. The carrier added a second China call at Ningbo last September and later extended service to a third Chinese port, Qingdao.

The startup carrier marketed itself as a low-cost, no-frills carrier providing only port-to-port services, with no-transshipments.

TCC told customers it would not complete this month¡¯s scheduled eastbound voyages of its ships California Dragon and Nanjing Dragon, or westbound voyages of the Jiangsu Dragon and Shenzhen Dragon.

TCC said customers that had stuffed TCC-operated containers with cargo by midnight April 8 Shanghai time for eastbound voyages or April 7 Los Angeles time for westbound voyages could divert the shipments to other carriers and redeliver the boxes later under terms of their agreements with TCC.


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