Horizon Lines looks like it is sinking fast, and industry experts say it likely has two choices: sell off some of its trade lines, or perish.
The company, which has major markets in Hawaii, Alaska and Puerto Rico, has been struggling for years. But it appears as if time is running out for the shipping group, which has been hounded by talks of being acquired by its competitors.
Horizon is based in Charlotte, North Carolina, but has a major presence in Jacksonville, with three ships that sail between Jacksonville and San Juan, Puerto Rico: the Trader, the Discover and the Navigator. It operates two sailings a week, which take three days to get from Jacksonville to San Juan, according to the schedule posted on its website.
Yesterday, Horizon Line, a US Flag Jones Act container ship operator, announced that it was ending operations. It had sold its Alaskan service to Matson, its Hawaiian operations to Pasha Group, and would be shutting down its operations to Puerto Rico. This was not a great surprise as the company has been under financial strain for some time. Its ships average 37 years old. The firm has considerable debt, and operating revenues never quite recovered from the recession.
In a larger sense, Horizon Line’s demise marks the end of an era. To some, the Horizon logo may look familiar. It modeled on the logo of it predecessor company, Sea-Land, the first, and once the largest container ship operator in the world. In 1956, Malcom McLean, a trucking company owner from North Carolina, loaded fifty-eight 35-foot shipping containers on the Ideal X, a T2 tanker. McLean was not the first to understand that value of containerization, but he was the first to make the containerization of general cargo work. He built Sealand Services into the largest container ship operator in the world. mcLean is often referred to as the “father of containerization.”
The “container revolution” dramatically improved efficiency, reducing shipping time by 84% and reducing costs by 35%. Containerization also made the world fleet of breakbulk cargo liners obsolete in a matter of a few years. Currently over 90% of all non-bulk cargoes are carried in containers.
In 1969, McLean sold Sealand to Reynolds Industries, which up tp that time had been primarily a tobacco grower. Sea-Land was acquired in 1988 by CSX and in 1999 was acquired by AP Moller – Maersk. The only portion of the firm that they did not acquire was the coastal operations, which were spun off as Horizon Lines in 2003. Horizon represented roughly 37% of all US container shipments linking the continental United States to Alaska, Hawaii and Puerto Rico.
Malcom McLean’s first shipping operations were between the East Coast of the US and Puerto Rico. Fifty six years later, these services have come to an end with shuttering of Horizon Lines.
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