The liner carrier Hyundai Merchant Marine said Friday it would no longer offer refrigerated container transportation service from the U.S. East Coast to Asia from Jan. 1.
“The decision to suspend the service is based upon prevailing non-compensatory rate levels from the East Coast and longer roundtrip voyages which translate to higher costs for HMM,” the line said in a statement.
It’s the latest hit for reefer cargo shippers, after Maersk Line announced in September it would hike reefer rates globally by an average of 30 percent from Jan. 1. Last week, CMA CGM announced a similar increase of $1,500 per container from the same date.
Lamont Petersen, vice president of transpacific westbound trade for Hyundai, said the longer roundtrip voyages of East Coast services slow equipment velocity and require a much greater commitment of container inventory compared to other trades. With equipment velocity having a significant impact on profits, the contribution margin produced by reefer shipments from the East Coast to Asia generate unsatisfactory returns given the capital investment required to support the service, she said.
“It’s difficult to compete with other trades for the assets with such low contribution levels,” said Petersen, who added that Hyundai did not invest in new reefer units in 2012 due to poor market conditions, so internal competition for the assets is fierce as global demand for refrigerated containers remains robust.
Petersen indicated Hyundai would consider re-entering the East Coast-to-Asia reefer trade if conditions improve in the future. - Eric Johnson