High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
Crowley Maritime Corporation says that it doing a good job of picking up the slack following Horizon Lines’ sudden departure from the Jones Act U.S. mainland to Puerto Rico trade route late last year.
Since mid December, Crowley has created additional weekly cargo carrying capacity for about 780 loads – or 78 percent the 1,000 loads previously transported by Horizon Lines in an average week. This week, Crowley’s Liner Services group is marking the maiden voyage of its new flat-deck barge 455-4 on the route, carrying a full load. The vessel is expected to reach San Juan on Monday.
“Before Horizon left the trade, we had, on average, about 230 empty container slots each week on Crowley vessels,” explained Jose “Pache” Ayala, Crowley vice president, Puerto Rico. “That space has been absorbed by customers. In mid-December, we structurally modified our barge layouts to optimize the stow factor, which generated enough new capacity for another 100 loads a week. Then on Jan. 15, we began running our vessels at an accelerated speed, which increased our frequency of service and weekly cargo capacity by another 250 loads. And most recently, we deployed the new flat-deck barge, which will arrive every other week in Puerto Rico – effectively increasing capacity by 200 loads per week. ”
In addition to increasing its weekly cargo carrying capacity, Crowley has ordered and begun placing into service more than 6,500 pieces of new cargo handling equipment, including 40-foot, 45-foot and 48-foot high cube containers, 20-foot ISO tanks and a variety of fixed and slider chassis.
“We completely understand that there has been some stress on the island’s supply chain given the abrupt departure of Horizon Lines from the market,” said John Hourihan, Crowley senior vice president and general manager. “We have responded aggressively to replace the void they left, and are confident that current concerns will be short lived and that the island’s overall supply chain will be back to normal very soon.”
Crowley says that as for the new barge 455-4 en route to San Juan, it went to great measures to ensure the vessel would accommodate the size and type of equipment most popular in the Puerto Rico trade.
Last November, Jones Act shipper Horizon Lines announced plans to terminate its Puerto Rico operations by the end of 2014 due to continuing losses and no hope for future profitability. At the same time, the company said it would be selling the remaining company, made up of its Hawaii and Alaska operations, to The pasha Group and Matson, Inc. respectively. Those sales were expected to close sometime in 2015.
Crowley has been serving the Puerto Rico market since 1954, longer than any other carrier in the trade. The company, with nearly 200 Puerto Rico employees, is also the leading ocean carrier between the island commonwealth and the U.S. mainland with more weekly sailings and more cargo carried annually than any other shipping line. In addition, Crowley is currently building two new LNG-powered container/Ro-Ro ships to be deployed in the trade in 2017.
Crowley was also recently approved for a 20-year expanded lease with JAXPORT which would see the consolidation of Crowley Liner Services’ operations at the port of Jacksonville. Under the agreement, Crowley will relocate its Puerto Rican service from its private terminal along Jacksonville’s harbor to JAXPORT’s Talleyrand Marine Terminal and expand its current leasehold in preparation for deployment of the two new LNG-powered ConRo ships.
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