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Matson doubles shipping service to China

Dave Segal

Matson Navigation Co. has initiated its expanded China service with a second five-ship port rotation that will double the ocean shipper’s trade between that country and California.

The addition of port stops in Hong Kong and Yantian, as well as a second call in Shanghai, will boost Matson’s growing China trade, which the company initiated in 2006.

Matson, which is chartering the five ships, said yesterday the expanded service that began this week will complement the company’s existing China operation that uses five Matson-owned vessels. Those ships had been servicing Xiamen, Ningbo and Shanghai. The chartered ships will go directly from Long Beach, Calif., to China and skip stops in Honolulu and Guam. The latter two ports are included in Matson’s existing five-ship rotation.

"Matson’s expanded service is a direct response to the exceptionally positive support we’ve received from customers who have benefited from the numerous advantages of our China service over the past four years," said Dave Hoppes, Matson senior vice president, ocean services.

Alexander & Baldwin Inc., parent company of Matson, said additional containers and equipment that were purchased for the new service cost between $50 million and $60 million and are expected to reduce its ocean transportation operating profit by $10 million to $15 million. Most of the costs associated with the startup will be recognized in the fourth quarter, A&B said.

In July, A&B said Matson’s second-quarter operating profit rose 75 percent to $37 million from $21.1 million a year earlier, largely because shipping rates from China were 50 percent above year-earlier levels and container volume from China rose 35 percent to 15,000 from 11,100.

"We expect that the strength in China’s rates and volumes experienced in the second quarter will continue through the balance of 2010 and into 2011, subject to normal seasonality," Matson President Matthew Cox said on an earnings conference call in July.

A&B President and Chief Executive Officer Stan Kuriyama said on the same call that the expanded service will allow Matson to capitalize on the operating experience, infrastructures and customer base it has developed in China over the past four years.

In addition, Matson spokesman Jeff Hull said the additional port stops will expand the company’s geographic presence in China and help build on "the company’s reputation for expedited and premium service."


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