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Competition: Too Many Ships Ply Asia-Hawaii Routes?
By Michael Hansen @ 4:40 AM :: 1548 Views :: Jones Act

Hansen comments on Asia-Hawaii shipping services with PBN

by Michael Hansen, Hawaii Shippers Council, July 10, 2017

The Pacific Business News (PBN) published on July 7, 2017, a news article, “Japan-based carrier increases frequency of Asia-Hawaii route,” reporting on developments in the direct Asia-Hawaii trade lane and quoting Mike Hansen of the Hawaii Shippers Council.

The long-time incumbent ocean carrier Nippon Yusen Kabushiki Kaisha / NYK Line has added two small containerships to its existing string of three on their direct Asia-Hawaii routing – known as the Asia Hawaii Express (AHX) -- and thereby increasing their service frequency on the route from fortnightly (every two weeks) to weekly commencing with the arrival of the MARE FRIO in Honolulu on August 3, 2017.

The new entrant ocean carrier APL Ltd. has organized a new direct Asia-Hawaii service in direct competition with NYK – known as the Aloha Express (AEX) – that will operate fortnightly with three small containerships commencing with the first arrival of the APL ALOHA on August 13, 2017.

Both the NYK and APL operate their respective Asia-Hawaii services with small gearless foreign-flag containerships.

Key excerpts:

Tokyo-based carrier NYK has increased the frequency of its direct Asia-Hawaii service, a move that could be in response to APL Ltd.’s decision to join the trade route, according to the head of the Hawaii Shippers Council.

NYK said in a release last month that its Asia-Hawaii Express service will increase from once every two weeks to weekly, starting in July.

Hawaii Shippers Council President Mike Hansen said the decision is most likely the carrier’s direct response to APL's deployment of a new fortnightly Asia-Hawaii service.

APL announced the addition of an Asia-Hawaii “Aloha Express” service on June 30, but Hansen said NYK had prior knowledge of the move.

“It was in the works and people knew about it,” Hansen told Pacific Business News. “APL was out in the market in Asia, canvasing shippers with promotional material.”

Hansen said APL’s move into the trade will impact NYK, which has been the sole direct Asia-Hawaii service provider since the late 1970s following the bankruptcy of the U.S. carrier States Steamship Company/States Line.

“The inauguration of the APL service will affect the existing NYK service with competition it really hasn’t had to face for nearly the past 40 years,” he said.

Hansen said the increase in frequency of NYK’s direct Asia-Hawaii service will help merchant cargo owners with inventory management, and APL’s presence will also give them another carrier option, which could allow shippers to negotiate more favorable freight rates.

“Generally, for the Hawaii economy, this high level of service should provide better access and lower logistics costs for Asian goods,” he said. “I would anticipate due to the increase in competition that there will be significant downward pressure on the freight rates between Asia and Hawaii.”

Hansen, however, doesn’t think there will be any further additions to the trade route.

“There is a very real possibility that the Asia-Hawaii trade is over-tonnaged as a result of the inauguration of the APL AEX service and the increase in capacity of the NYK AHX service,” he said. “Over-tonnaged means that the carriers are offering greater ship capacity than there is cargo volume moving on the trade lane.”

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