Business

Industry

The ‘no-frills’ shipping format arrives— Los Angeles

Preface

When the Taicang Dragon docked in the Port of Los Angeles yesterday at the end of a 16-day voyage across the Pacific and unloaded its cargo of Chinese bicycles, woolly blankets and umbrella strollers, Oslo ship-broker Jakob Tolstrup-Møller could finally allow himself a smile as broad as the ocean.

Tolstrup-Møller, Shipping, Trade, Transport

3 May 2010

When the Taicang Dragon docked in the Port of Los Angeles yesterday at the end of a 16-day voyage across the Pacific and unloaded its cargo of Chinese bicycles, woolly blankets and umbrella strollers, Oslo ship-broker Jakob Tolstrup-Møller could finally allow himself a smile as broad as the ocean.

When his ship came in, the 45-year old had passed that tipping point known to all successful entrepreneurs – the elating moment when carefully concealed self-doubt becomes, yes… this is going to work.

In a bloated container-shipping industry of mammoth ships, multiple port calls and complex hub and feeder networks, Tolstrup-Møller’s weekly no-frills point-to-point service between LA and Taicang, 40 miles north-west of Shanghai, has been hailed as the first major innovation to the trade in 25 years. It is set to do for shipping what low-cost pioneers Southwest, Ryanair and easyJet did for flying, and help bring down the cost of a range of goods.

But launching the service has been far from plain sailing. “A lot of people were sceptical that we’d get this first ship out of Taicang,” admits Tolstrup-Møller.

With the whole industry down 10 per cent and one in 10 ships lying idle, many container lines including Maersk, Hapag Lloyd and Neptune Orient suffered nine-figure losses last year.

And yet Tolstrup-Møller, managing partner at Boxton Maritime, and partner Franck Kayser, a former director with Maersk Line, believe the worst downturn in container shipping’s half-century history is the perfect time for a change of course. “We’d looked at the idea a couple of times before,” says Tolstrup-Møller, “but after the collapse of Lehman Brothers it became clear this was the time to do it.”

His Containership Company (TCC) offers manufacturers and logistics companies a simple fixed price for moving their boxes along its trans-Pacific “conveyor belt”. There are no delivery or collection services provided at either port… but no surcharge surprises either.

“With other carriers it’s like renting an office and each month the landlord announces he’s increasing your rent because of a window polishing surcharge, or carpet cleaning surcharge. You have no idea what’s coming next,” says Tolstrup-Møller.

“If ever there was a good time for launching a new service in this business, it’s now, thanks to the low cost of chartering and buying ships,” agrees Graeme Murray, head of the container division of London shipbroker Clarksons.

But another analyst, who asked not to be named, remains cautious: “The major lines don’t take kindly to people opening on their doorsteps, so I’d be surprised if they didn’t respond.”

Tolstrup-Møller is already planning a second string across the Pacific, buoyed by news that Samsung and General Electric have booked on the second sailing from Taicang – the port where explorer Zheng He began his epic voyages of 15th-century discovery.

It’s taken almost 600 years for Zheng He to get the credit for his pioneering efforts. Today, Tolstrup-Møller feels confident his payback will come a little sooner.

Monocle 24

× Midori House

  • A one-hour news show airing at 18.00 London time. Get the views of our editors and correspondents around the world.
Loading

0:00:00 0:01:00

Drag me