New Vessel Sharing Agreement

Monday, November 24, 2008

Following the success of a previous vessel sharing agreement, Danish carrier Maersk Line announced the establishment of a new Vessel Sharing Agreement (VSA) with French-based CMA-CGM utilizing both the Panama and Suez Canals, which will commence in May 2009.

Additionally, further adjustments to the Maersk Line network will provide customers with significant benefits. This new VSA follows almost a year of successful cooperation between the two companies in a trans-Pacific agreement, and represents further rightsizing of capacity in the trans-Pacific trade. Demonstrating a new perspective on service to North America, Maersk Line and CMA-CGM provide two strings with new services for customers. The scope of the agreement includes the Far East to the US east coast and Far East to the Pacific Northwest.

"Our customers have been looking for products offering alternative gateways from Asia directly to the east coast via all water routing - and this new vessel sharing agreement represents this option, as well as a new direction for our companies. Our partnership has been tested in the trans-Pacific and we are pleased with the new and dynamic product offering for our customers," commented Bill Woodhour, sales manager for North America for Maersk Line.

There will be two strings on this VSA, one taking advantage of the scale benefits of a Suez Canal crossing, the other utilizing the Panama Canal.

The first string, known as the TP3, will be a pendulum between the Far East, the Pacific Northwest and US east coast. It will serve an eastbound port rotation of Shanghai, Hong Kong, Yantian, Singapore, Newark, Norfolk, with westbound calls at Singapore, Hong Kong, Yantian, and Shanghai via the Suez Canal.

The second segment of the pendulum service will consist of a revised TP9, which will discontinue service to the Pacific Southwest, yet continue to provide access to inland markets in North America through Seattle and Vancouver while avoiding potential congestion often faced in southern west coast ports. The revised TP9 will offer access to multiple Asian markets with calls at Singapore, Hong Kong, Yantian, Shanghai and Busan with improved access to the Pacific Northwest. These services will include 13 vessels with 6,400 TEU capacity. Seven of these vessels will be operated by Maersk Line, the remaining six by CMA-CGM. Services will commence with a first sailing on May 14, 2009 out of Asia.

A second string, known as the TP10, will service an eastbound rotation of Ningbo, Shanghai, Qingdao, Busan, Balboa, Savannah, Newark and Miami. The westbound offering will call Balboa, Ningbo, Shanghai and a return to Qingdao. This string will consist of eight 4,300 TEU vessels; four of which will be operated by each carrier. This service represents unprecedented, timely access to multiple Chinese markets combined with the convenience of all-water routing to East coast ports in North America. An additional call at Balboa will further provide a diverse product to South American and Central American customers. This service will commence with its first sailing on May 9 2009 out of Asia.

Additionally, Maersk Line's TP6 service rotation will be amended to include only Los Angeles on the US west coast. Adjustments have also been made to the current TP7 with improved overall transit times, a focus on southern Chinese ports, and an eastbound call at Yokohama, Japan added to more efficiently serve a wider market.

These changes are made in anticipation of a more difficult trading environment in 2009 and a part of our efforts to further rationalise deployment. These changes result in an 8% net reduction of capacity for Maersk Line between the Far East and North America.

"The new service which utilizes a crossing at the Suez Canal is the first service on post-Panamax tonnage fully dedicated to the Far East to US east coast trade. The transit time offered on this service will be the same as what is currently offered on our TP3 from South China; however, the product from Southeast Asia will be improved from the current transfer product," said Vincent Clerc, Vice President for Pacific Route Management.

He continued, "We are pleased, as well, that this product represents our first Ningbo to the US east cost-direct product."

Under this new agreement, customers will experience an upgrade in Maersk Line’s current coverage for both Vancouver and Seattle, as well as a direct service to the Pacific Northwest on the TP9 from Shanghai, Busan and South China. Additionally, transit times from all locations will be improved as a result of this new schedule.


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