X-Press Feeders sees Chittagong losses rise thanks to locals-only rule
Three X-Press Feeders’ container vessels are facing severe service disruption in Chittagong port due to ...
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By Mike Wackett
The fallout from the demise of debt-ridden US domestic carrier Horizon Lines comes under the microscope of Alphaliner this week, along with the restrictions of a 1920 US law that was designed to protect the US maritime industry, but seems to have had a big ...
Comment on this article
Jeff
November 18, 2014 at 5:24 pmThe author blames the demise of Horizon Lines (HL) on two things: the anti-trust fine and the Jones Act. A simple review of their annual reports spell a different picture. HL started life in 2005 after an IPO with assets of $927m and debt of $530m and they lost $23m that year. Over the next three years, they made $72m, $28m and $3m respectively. After re-stating the 2008 profit of $3m into a $2.5M loss, they incurred losses of $31, $57m, $229m and $94 in ’09, ’10, ’11 and ’12.The 2012 report shows earnings (EBITDA) from 2008 to 2012 on a steady glide slope down from $115m to $39m. IMHO the economic collapse in 2008 sealed the company’s fate, certainly not the Jones Act or the $15m fine.
Mike Wackett
November 18, 2014 at 6:10 pmAgree with you Jeff that the anti-trust fine and the restrictions of the Jones Act were only contributory factors in Horizon’s malaise.
Poor financial management was the main cause – a situation that we see repeated over and over again in the container liner industry today.
Of course the fine did not help and if you recall it was orginally $45m but reduced because of the danger that Horizon would be pushed over the edge at that time.
And with a fleet of old expensive to run ships, the ECAs kicking in and Jones Act restrictions on newbuilds they probably couldn’t see any light at the end of the tunnel.
BarryP
November 18, 2014 at 8:36 pmAlso worth noting is the involvement of not one but two private equity funds in propping up Horizon Lines circa 2003 thru 2006- and leaving it with lots of debt after successful exit via IPO. Jones Act has little to do with the problems since it does not seem to stop Crowley, Tote and Matson- for that matter.
Mike Wackett
November 18, 2014 at 10:21 pmYes noted BarryP, its peers have been judicious in gaining a business advantage from their specially protected status, whereas Horizon gambled it away.
And ultimately the Jones Act left Horizon with no viable economic option for essential vessel upgrades.