UPDATE: Maersk Line's corporate response
Q. Is this simply a structural change to Maersk’s routing or does this reflect a continuation of the draw down of Maersk Line services to Charleston?
A. This is both a structural change to our services reflecting a new vessel-sharing agreement with CMA-CGM, as well as a continuation of the previously announced draw down of services to Charleston. We have worked very closely with our customers to ensure that their needs will continue to be met and we believe that this new service, with improved transit times and a wider scope, will provide them with an even more reliable and competitive service.
Q. As such, is this a statement on the state of discussions between Maersk and the SPA?
A. This action is not directly related to the discussions currently ongoing with the SCSPA; it is a reflection of the business case with which we are faced in Charleston. When compared to the cost under our current agreement with the Port of Charleston, other regional ports have provided a more cost-effective option for this service and our deployment reflects this.
However, our discussions with the SPA remain active and positive in nature. If the business case in Charleston were to change in a way that made our costs competitive with other major shipping lines in the port and with our costs in other nearby ports, then we would, as a matter of good business practice, reconsider any further adjustments.
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ORIGINAL REPORT:
By Molly Parker
mparker@scbiznews.com
Published Jan. 28, 2009
Starting in March, Maersk Line’s weekly calls to the Port of Charleston will be fewer by three.
The Danish company announced today that, as part of changes to its WestMed service that runs between the Mediterranean region and North America, it will be routing regional cargo to Norfolk, Va., and Savannah instead of into Charleston.
The changes are brought about by Maersk’s new vessel-sharing agreement with French carrier CMA-CGM.
The news is another blow to the S.C. State Ports Authority, which, along with every other port in the nation, has been hammered in recent months by declining container traffic.
Maersk Line, the world’s largest shipping line and the Port of Charleston’s biggest customer, announced late last year that it would be leaving Charleston at the end of 2010. Negotiations are ongoing among lawmakers, port officials and Maersk representatives to keep the company here.
At press time, a U.S.-based Maersk spokesman was seeking comment from company executives as to whether — and if so, how — this announcement relates to those ongoing discussions. The company’s news release says the change is part of a consolidation necessary for the “overall stability of the trade.”
It does not indicate that the change had anything to do with operations at the Port of Charleston, nor does it explain why Norfolk and Savannah were chosen over Charleston.
Regardless, the end result is one fewer vessel a week calling on Charleston. That’s on top of Maersk’s plan to move its South Atlantic Express to neighboring ports by February. That trade line accounts for roughly two ship calls per week.
Currently, Maersk makes about seven calls a week to Charleston, accounting for 20% of the SPA’s container business. With the loss of those two trade lines, Charleston will see about 40% of its Maersk business move to nearby ports.
SPA spokesman Byron Miller said the move will “impact a number of companies that provide business to the ships and the cargo that they carry.”
“You can be certain that the other carriers in the port, as well as the ports authority, will be working hard to ensure that we keep as much of that cargo as possible here.”
Reach Molly Parker at 843-849-3144.
Isn't it about time that the SPA realizes the need to become competitive with the rates cost agreements? Who would pay more to ship to Charleston when other nearby ports are costing less? 40% loss of the Port business is HUGE! SPA needs to get busy at work and cut rates and fees...AND PENSION PLANS! 100,000+ on severance for quitting a job? Man-we make Washington look financially responsible!
This is pathetic! How could Charleston lose such an important customer! Is it because the "unions" won't compromise? In addition, it's incomprehensible that Bernard Groseclose resigned just moments before he was probably terminated and will still receive half of his salary! What kind of world do we live in????
Perhaps Mayor Riley should be as concerned about our maritime shipping industry as he is about Global Warming and other environmental causes. If that were so, he would tell Dana Beach and other anti-port, anti-growth radicals to draw down and stop hurting our local economy. If I was in Maersk's position, I would quit using a port that suspects me of endangering Right whales and other bogus claims of environmental carnage.
Why are they still going to spend hundreds of millions of dollars to make more port space at the old navyyard when all the container companies are leaving? Maybe its the same HOPE that obama has said that we can spend our way out of debt. Maybe if we spend it the economy will get better. Or spend it so we can ask for more tax money to spend next year. The old goverment saying is spend it or lose it.
Mr. Bates,
You are as clueless as the SPA. It is the unions and the archaic SPA policies that have led us here.
Both Norfolk and Savannah have agreed to slow down ships to protect Right Whales.
Cathy
So, who is loading and unloading the Maersk ships in Savannah and Norfolk? Union labor! How much are the union members being paid in Savannah and Norfolk? The same as union labor in Charleston! The difference is the Port of Savannah and Port of Norfolk make concessions on short fall fees to lower and keep business. The SPA is run like the GSEs (Freddie Mac and Fannie Mae)- maximize profits at the expense of the tax payers but in this case maximize profits at the expense of union labor. That model is quickly sinking and at this point it is probably too late to jump ship. When the Lowcountry was protesting the Global Gateway on Daniel Island, Savannah and Norfolk were expanding and waiting on the tide to turn...
Let's not forget how beautiful Daniel Island looks. Has anyone researched the economic impact of this Grande development vs.what we could have had if the original dream of the Global Gateway had come to life? I gaurantee that we wouldn't be talking about any of this if this new port had been constructed. Instead we are behind as usual. We are surrounded by blinded idiots of any future planning...just like the rest of American politics.
The SPA and the Longshoremens Union prehaps should realize the ripple effect this will cause in the econmomy of the entire Lowcountry. Compounded by the global recession, this loss of commerce will amplify itself in losses not just to the Logistics Industry.It will be felt by almost every business in the region! We need leadership with business savvy now and a restructure of the Port operations that are based on the realities of our times.
Maersk is leaving Charleston to consolidate their East Coast operations. They want to utilize their new state of the art $450 million dollar terminal that can load intermodal double stacked rail trains that enables them to cheaply and quickly move containers to the midwest .
They are also moving more business to Savannah to utilize Savannah's ability to load intermodal trains as well.
Charleston can only put containers on trucks or double handle them to put them in a rail yard where they only go out on much more expensive single car type rates.
This is what Maersk means when it says in its release above:
"we believe that this new service, with improved transit times and a wider scope, "
Trains let them cover more territory economically. Charleston can not provide this service.
The real question is , How uncompetitive is Charleston now on a per container basis as compared to Norfolk and Savannah?
Yes