Ocean cargo transportation firm Horizon Lines Inc. today said its new China service and high fuel prices dragged earnings into the red during the second quarter.

The Charlotte, N.C.-based firm, which operates in Hawaii, reported a net loss of $7 million for the fiscal second quarter ended June 26. That compared with a net profit of $4.1 million for the same quarter last year.

Horizon said cargo volume in Hawaii was down, but still achieved an operating profit.

The company operates 20 U.S.-flag containerships linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico. The company also provides service between the U.S. West Coast and China.