News / CULines backs away as US west coast services become loss-makers

Credit CU Lines

Chinese regional carrier China United (CULines), which pulled out of the Asia-Europe lane last December, has now ended its China-US west coast service.

The company notified shippers on Friday and joins a number of long-haul newcomers in withdrawing from the lane as the Covid-fuelled boom ends.

CULines’ last USWC sailing is today, when the chartered 1,800 teu, Adamastos departs Yantian, with its arrival in Los Angeles expected on 25 June.

Market observers told The Loadstar CULines had made “a pragmatic move in today’s market”, as current freight levels of just under $1,400/feu were inadequate to cover operating costs.

Continuing the service would see CULines lose all it earned during the pandemic-fuelled boom of 2021-2022 – profits estimated at more than $300m.

Furthermore, regional carriers, lacking very large ships, do not have the economies of scale to compete against the mainline operators and other players that have reduced their exposure to long-haul routes include Transfar Shipping, TS Lines and SeaLead Shipping.

Shortly before announcing its retreat from Asia-Europe, CULines disclosed the premature termination of long-term charter agreements with fellow China state-owned shipowner Antong Holdings, involving a dozen vessels. Compensation of around $67m was paid to Antong.

CULines launched its US west coast service in 2021, after securing a contract with e-commerce giant Amazon. However, this year, they have reportedly been unable to agree new contractual rates.

Asia-Mediterranean rates have been steady, at around $1,650/teu, although these have plunged from $6,589/teu seen in May 2022. Market observers expect CULines will strive to maintain its Asia-Mediterranean service, which connects Shanghai and Shekou with Haifa, Istanbul and Piraeus.

In addition, CULines has a pair of 7,000 teu ships on order from Shanghai Waigaoqiao Shipbuilding, expected to be delivered next year. These are suitable for the Mediterranean route, and the services to the Persian Gulf CULines also offers.