Maersk to stop direct Chennai-US service

Maersk to stop direct Chennai-US service

Bangalore: The world’s biggest container shipping firm, Maersk Line, will stop a direct service from Chennai to the US east coast from 5 February and run it from Colombo instead, dealing a blow to the Union government-owned Chennai port’s ambition to become a hub.

At least two Chennai-based shipbrokers familiar with the development confirmed Maersk’s plan, declining to be named as they are not authorized to speak to the media. Maersk is the container shipping unit of Danish shipping and oil conglomerate AP Moller-Maersk Group A/S.

This move will also increase costs and mean delays for shipments from India, eroding the competitiveness of exports, said S.R.L. Narasimhan, secretary of the Western India Shippers Association.

The Maersk service, introduced in 2007 to tap the boom in container shipments to and from the US, is being stopped as traffic between the countries has dropped as the effects of the global slump have made the service unviable, shipping executives in Chennai said.

Clients in south India will now have to ship cargo to the Sri Lankan port on smaller feeder vessels, a process known as trans-shipment, which will add three-four days to the process.

Other trans-shipment destinations from India are Singapore, Port Klang in Malaysia, Dubai or Salalah in Oman.

India spends at least Rs1,000 crore a year on trans-shipment alone, as big ships are not able to call at the country’s ports due to depth restrictions, according to the Union shipping ministry.

From Jawaharlal Nehru Port, India’s busiest container port located in Mumbai, there are three separate weekly direct services to the US. One is run by Maersk, the second by a consortium comprising Hapag-Lloyd AG, CMA CGM SA, APL Ltd and NYK Line and, the third by a consortium of UASC Ltd, Hanjin Shipping Co. Ltd, K Line and Yang Ming Marine Transport Corp.

According to the terms of a contract signed with the Union government-owned Chennai port in 2001 for operating the terminal, DP World has to ensure that big main line vessels call at the port to haul cargo directly to destinations. This clause stipulated that at least 30% of the total container cargo handled at the terminal had to be moved in this way as part of efforts to make Chennai a container cargo hub on the east coast.

Maersk Line confirmed it was making changes to the existing MECL2 service between Chennai and North America from 5 February.

“We will offer multiple feeder sailings from Chennai to Colombo for onward connection to the MECL2, thereby providing more frequent sailing options to our customers," said Rajiv Arvind, an executive looking after corporate communications at Maersk Line India.

DP World did not respond to an email seeking comments.