TROUBLED US Jones Act carrier Horizon Lines is to suspend its transpacific Five Star Express service (FSX), connecting the US west coast, Guam and China with five 2,826-TEU US-flagged ships.
TROUBLED US Jones Act carrier Horizon Lines is to suspend its transpacific Five Star Express service (FSX), connecting the US west coast, Guam and China with five 2,826-TEU US-flagged ships. The last FSX sailing is planned to leave Shanghai today November 2 and Horizon Lines will also suspend ocean services to Guam and surrounding islands from November 10, reports Alphaliner.
Recently delisted on the New York Stock Exchange, after facing crippling federal price fixing fines, Horizon posted an operating loss of US$43.7 million on the FSX in the nine months to September and will take a further $105 million to $110 million pretax restructuring charge in the fiscal fourth quarter of 2011.
The restructuring charge includes costs to return excess rolling stock, facility closures, severance pay and vessel charter expenses.
Following their last voyages, the five ships on the FSX service are expected to be laid up, after the dry-docking of the remaining four vessels. The vessels are bare-boat chartered from Ship Finance International (SFI) for a firm 12-year period from 2006 to 2018- 2019, with an additional optional three-year-period and purchase options after five, eight, 12 and 15 years. Horizon Lines is exploring the possibility of subletting the vessels to partially mitigate ongoing charter and maintenance costs.
Horizon Lines launched the FSX service in December 2010. The FSX offers a fast eastbound transit time from Ningbo and Shanghai to Los Angeles and Oakland.
The westbound leg of the FSX service allows connections to the US west coast, Guam, Micronesia and the Northern Mariana Islands. The discontinuation of the FSX Guam and China services will have no impact on the company's services to Alaska, Hawaii and Puerto Rico.
Without the revenues of an eastbound return voyage from China, the Guam trade is no longer viable, the company said. As of November, Horizon's rival Matson will remain the only carrier to offer a regular container service to connect the US and Guam with its China-Long Beach Express (CLX).
