2010 Mar 11

TCC to launch slimmed-down shipping services

One of the boldest shipping ventures of the past two decades is to start operations next month during the sector’s worst downturn with the first sailing by a simplified container shipping operation.

The first departure in The Container Company’s weekly trans-Pacific service will be from Taicang, near Shanghai, and will head to Los Angeles. The Norwegian-based company plans to launch an Asia to Europe service later this year and to seek a stock market listing. Its shares are already listed on an over-the-counter exchange in Oslo.

The operation is the first major innovation in container service since the mid-1980s, when US Lines unsuccessfully introduced very large slow ships in an effort to economise on fuel.

Jakob Tolstrup-Møller, co-founder of the venture, told the Financial Times that TCC would offer a point-to-point service far simpler than the complex networks of its rivals. Its ships will sail straight from Taicang to Los Angeles and back, instead of making multiple port calls. Unlike most rivals, it will not offer onshore logistics services.

The company would not necessarily be cheaper but would offer clear tariffs based on how much cargo a customer contracted and for how long, Mr Tolstrup-Møller said. There would also be a clear formula for how a fuel price surcharge would vary with the price of ships’ fuel.

“What we will provide is basically a simple service and we will also provide a transparent rate structure,” Mr Tolstrup-Møller said.

The venture has raised $25m, instead of an originally planned $50m to $60m, from US investors and Scandinavian shipowners and institutions. One shipowner had wanted to invest $60m for a controlling stake, Mr Tolstrup-Møller said, but existing investors had been wary of ceding control. It was because of the reduced equity available that launch of the planned Asia to Europe service had been put back.

John Fredriksen, the Norwegian shipping tycoon, had been expected to invest but did not eventually do so because of the potential conflict with his position as the biggest shareholder in Germany’s Tui. Tui owns 43 per cent of Hapag-Lloyd, the world’s number six container line.

Last year was the 53-year-old container industry’s first year of decline, with worldwide volumes falling about 10 per cent. Together with significant ship oversupply, the decline has pushed most large lines into big losses.

TCC hopes to charter some of the hundreds of unemployed vessels available at very low prices. It will need five or six ships for the trans-Pacific service and nine to 10 for its Asia to Europe operation.

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