CULines meeting August

China United Lines has dispelled talk that its chairman and co-CEO, Raymond Chen Honghui, has been detained, with photos of him at a management meeting on Tuesday.

Talk that all was not well with the company started when Mr Chen disappeared from public view more than a month ago, with rumours that he had been detained.

That coincided with CULines retreating entirely from long-haul routes – its Asia-Mediterranean service had its last sailing on 15 July.

CULines was among the opportunistic regional operators that diversified into transpacific and Asia-Europe services during the Covid-19-fuelled boom between 2020 and 2022, but when the market ‘normalised’ late last year, the company withdrew its long-haul routes gradually.

At this week’s meeting, the carrier’s management said it would be refocusing on its core business of intra-Asia shipping, and explained that terminating its long-haul services had been a reaction to the weakening freight rates on those routes.

A CULines statement quoted Mr Chen, who said: “We’re aware of the dynamic market environment and have taken decisive measures to adapt. We need to be agile and adopt long-term strategies.”

The statement also reaffirmed the carrier would take delivery of ordered newbuildings, contradicting market talk that the larger vessels would be sold.

Between October and early next year, CULines will receive two 2,400 teu ships from Yangzijiang Shipbuilding and two of 2,700 teu  from CSSC Huangpu Wenchong Shipbuilding, while two 7,000 teu ships are scheduled for delivery from Shanghai Waigaoqiao Shipbuilding by 2025.

CULines said their financing had been negotiated and the newbuildings would be deployed “according to market demand”.

Meanwhile, an industry source told The Loadstar that Mr Chen had been “released from detention” last weekend. Furthermore, CULines’ co-CEO, former Hapag-Lloyd executive Lars Christiansen, was noticeably absent from the meeting, fuelling speculation he may no longer hold his executive role. Instead, sharing the spotlight with Mr Chen was CULines president Ding Wei.

No mention was made of the planned listing on the Hong Kong Stock Exchange, but Linerlytica analyst Tan Hua Joo told The Loadstar  the initial public offering had lapsed. It generally takes between four and 12 months from the date of an IPO application to the listing, and CULines had filed its application in February 2022.

Mr Tan said: “It won’t be possible to revive the IPO, given the current weak shipping market. The 7,000 teu ships could still be operated by CULines on the Asia-Indian Subcontinent and Middle East routes even though it no longer operates on the transpacific and Asia-Europe routes. However, the ships would also be available for sale.”

Almost every regional operator that expanded into long-haul lanes has pulled out, a situation Drewry senior manager (container research) Simon Heaney expected. He said: “New entrants were able to expand into new markets, despite higher slot costs, simply because freight rates were so high. Now, of course, the breakeven line is much higher and harder to clear, so, sensibly, they are retreating back to lanes where their ships are cost-competitive.

“These always had the feel of opportunistic (and temporary) cash grabs. It’s always good for shippers to have extra options, but unless the new entrants are committed to a trade, it doesn’t foster longer-term partnerships with customers.”

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