Horizon Lines to Discontinue Trans-Pacific FSX Service

[traviskane]

[B]Company Will Conduct Orderly Transition to Minimize Supply Chain Disruptions

Last Voyage of FSX Service from China Expected on November 2; Final Sailings to Guam on November 8 and 10[/B]

Horizon Lines today said it plans on slashing its trans-Pacific container service, Five Star Express (FSX), between the U.S. West Coast, Guam and China starting in the fourth quarter. The last voyage of the FSX service from China is scheduled to depart Shanghai on November 2, 2011. Horizon Lines said it will also suspend ocean services to Guam and surrounding islands.

“This has been a very difficult decision in light of the tremendous contributions from our associates, and our organized labor and vendor partners, who have worked so hard to make the FSX service a success,” said Stephen H. Fraser, President and Chief Executive Officer. “Our decision to exit this highly volatile market will allow Horizon to focus on our core domestic ocean shipping services, and provide the opportunity to produce a more profitable and stable financial performance over time.”

The company expects to cease all operations related to the FSX service during the fourth quarter and does not expect to reinstate the service in the future.

Horizon Lines added that the five Hunter-Class D-8 vessels operating in the FSX service and leased from Ship Finance International Limited through 2018 to 2019 are planned to be laid up as of now.

Horizon Lines launched the FSX service in December 2010, following expiration of a long-term space charter agreement with Maersk Line. The service offers eastbound transit between Ningbo and Shanghai in China and Los Angeles and Oakland on the U.S. West Coast. The westbound leg of the FSX service provides transit between the U.S. West Coast, Guam, Micronesia and the Northern Mariana Islands.

While the FSX service met volume and vessel utilization expectations, freight rates from China to the United States have fallen more than 37% in the past 12 months to the lowest level since the worldwide recession of 2008-2009. At the same time, the average price of bunker fuel has climbed more than 40% since the launch of the service.

“Given current market conditions and foreseeable future expectations, discontinuing the FSX service is the appropriate decision for the company,” said Mr. Taylor. “It will allow us to focus all of our resources on serving customers in the very solid domestic ocean markets in Alaska, Hawaii and Puerto Rico.”

Copied and pasted from gCaptain

[Jeffrox]

Matson Assures Guam/CNMI/Micronesia Business Community of Shipping Stability Following Horizon Lines Exit from Trade

OAKLAND, Calif., Oct 25, 2011 (BUSINESS WIRE) –

In response to Horizon Lines’ announcement that it will be discontinuing its Guam service effective November 10, Matson assured customers that it has the vessel capacity and necessary equipment to handle the additional volume and maintain existing levels of service without requiring any new fleet deployments. Matson’s U.S.-flag ships currently provide weekly service to Guam and have available capacity to absorb the increased demand. In addition, the financial stability of Matson’s Guam service, which includes calls in Hawaii and China, has a solid track record that has weathered volatility in the Transpacific trade in recent years.

“Matson has been serving Guam continuously since 1996 and remains firmly committed to delivering reliable vessel schedules for the region’s business community,” said Dave Hoppes, senior vice president, ocean services. “Our service encompasses all major ports on the West Coast, with Honolulu serving as a transshipment hub for Guam-destined cargo. We will do what is necessary to ensure that all Guam cargo currently moved from the U.S. will be efficiently accommodated, without compromising the service standards that Guam’s business community knows today. That commitment extends to the Commonwealth of the Northern Marianas Islands, the Republic of Palau, the Federated States of Micronesia and the Republic of the Marshall Islands. While we fully expect a new entrant to succeed Horizon Lines in the future, we are confident we can provide the needed stability in the trade during this transition period as well as over the long haul.”

Matson has begun mobilizing its sales and operations teams on the U.S. Mainland and in Guam to meet the challenges faced by the businesses impacted by the upcoming change in service. The company will focus on ensuring that the transition is as smooth as possible and that all service issues are addressed.

Matson provides ocean transportation services to Hawaii, Guam, China and Micronesia, as well as logistics services through its subsidiary, Matson Logistics. Matson is a wholly owned subsidiary of Alexander & Baldwin, Inc. of Honolulu (NYSE: ALEX).

SOURCE: Matson
MatsonJeff Hull, 510-628-4534 (public relations)JHull@matson.com