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Thursday, March 12, 2020
Asian Ocean Carriers Duke it Out for Hawaii Market
By Michael Hansen @ 11:57 PM :: 621 Views :: Jones Act

ONE Line’s incumbent Asia Hawaii service facing new competition

by Michael Hansen, Hawaii Shippers Council, March 12, 2020

Ocean Network Express Pte. Ltd. (ONE Line) operates a fortnightly (every two weeks) liner container service with three small feeder class containerships from Asia to Hawaii. It’s code named the Asia-Hawaii Express (AHX).

The ONE Line AHX Service is the incumbent carrier on this trade lane and is facing new competition from APL Ltd. (APL)’s Eagle Express X (EXX) Hawaii service, which inaugurated fortnightly service in August 2019.

ONE Line is a Singapore-based joint venture formed in July 2017 by the major Japanese shipowners and operators Nippon Yusen Kabushiki Kaisha (NYK Line), Mitsui O.S.K. Line (MOL) and Kawasaki Kisen Kaisha, Ltd. (K Line).

NYK Line inaugurated the AHX Service in April 2012, and operated it as an NYK branded service prior to the formation of ONE Line.

The ONE Line AHX Service currently employs three foreign-flag small feeder class containerships, which are defined as container carriers with a nominal (or, profile) container capacity of up to 1,000 Twenty-foot Equivalent Units (TEU).

The AHX Service port rotation (i.e., the regular ports of call in sequential order) is: Busan (or, Pusan), South Korea / Yokohama, Japan / Honolulu, Hawaii / Busan. Its containerships call at the Diamond Head Terminal (Pier 1) in Honolulu Harbor.

The total voyage distance of the AHX Service is approximately 8200 nautical miles, which is relatively long at in terms of the small feeder class containerships it employs. This results in a relatively high unit cost in terms of each TEU carried by the service.

Small feeder containerships are more typically employed in what are known as coastal trades or shortsea shipping feeding the larger mainline containerships by consolidating or distributing loads at entrepots or hub ports over relatively short distances.

The ONE Line AHX Service operates in competition with the East-West Transpacific services typically operating Neo-Panamax containerships (10,000 to 14,000 TEUs nominal capacity) between Asian and U.S. West Coast (USWC) ports combined with transshipment on the Jones Act container shipping services from the USWC to Hawaii.

Although the Transpacific services offer a very high frequency, many ports in Asia by direct call and low freight rates, the high Jones Act freight rates between the USWC and Hawaii limit the competitiveness of this alternative. Those high Jones Act freight rates on the USWC-Hawaii segment allows ONE Line to price their AHX Service at a relatively high level to offset the unit cost of operating small feeder ships on long ocean voyages.

In addition, the ONE Line AHX Service competes with the Transpacific APL EXX Service calling fortnightly the Sand Island Container Terminal in Honolulu Harbor.

In the post-World War II (WWII) era, NYK Line has operated several versions of a Asia-Hawaii service since States Line Inc.’s bankruptcy in December 1978.

For approximately 13 years from 1999 until the AHX Service was inaugurated in April 2012, NYK called at Honolulu, Hawaii, with a Transpacific liner container service known as the “Margarita Service,” which operated fortnightly between North Asian ports and the West Coast of Mexico and Central America with a string of six containerships. The service called at the Diamond Head Terminal (Pier 1) in Honolulu Harbor on a pass-by basis both Eastbound and Westbound giving Hawaii shippers (i.e., cargo owners) many options.

NYK inaugurated a monthly Asia-Hawaii service with a single multipurpose ship in approximately 1980 following the bankruptcy of States Lines Inc. NYK discontinued this service approximately 19 years later when their terminal agreement with Matson Navigation Company Inc. for the U.S. Pacific Coast and Hawaii was terminated in 1999. In response, NYK inaugurated their Margarita Service.

For many years beginning in the aftermath of World War II until bankruptcy in 1980, the subsidized U.S.-flag carrier, States Lines Inc., operated a liner service from a broad range of Asian ports -- from South East Asian to Japanese ports -- calling Honolulu on a weekly frequency.

Further in the past, NYK operated Transpacific liner passenger and cargo steamship services that called at Hawaii on a pass-by basis from the late 19th Century through the late 1930’s and the onset of WW II. Prior to enactment of the Hawaii Organic Act of 1900, NYK carried passengers and cargo between Hawaii and the U.S. Pacific Coast.

LINK: Description (File Ref: PMTC-352) of the NYK / One Line Asia Hawaii service.

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