By Brian Dunn

With the shipping industry limping along with no clear turnaround in sight, you would think Atlantic Container Line (ACL) President and CEO Andrew Abbott would be having second thoughts about the order ACL placed last year for the five largest RORO/Containerships (CONROs) in the world with Hudong-Zhonghua Shipbuilding of Shanghai. The Generation 4 (G4) CONRO vessels that will replace ACL’s existing fleet of G3 CONROs are almost similar in terms of draft and length, but the G4s will have a capacity of 3,800 TEUs for containers versus 1,850 TEUs for the G3s and RORO space of 28,900 square metres vs. 18,500 square metres. The new generation ships will also have space for 1,307 cars versus 1,000.

“We don’t need to operate at full capacity (to be profitable), because smaller crew size (16 vs. 21), greater fuel-efficiency (70 tonnes of fuel burn per day vs. 75 tonnes) and less on-going maintenance will make the G4’s more profitable at lower levels of capacity utilization. In fact, half capacity on the G4s is close to being equal in terms of profitability as full G3s. Plus, a lot of our customers are on allocation, so we should have no problem filling them.”

Mr. Abbott was heading over to Shanghai on September 2 to see the first cutting of steel for the ships which are scheduled to be delivered between January and December, 2015. A decision to either scrap or sell the five G3s will be made before the end of the year or early next year, said Mr. Abbott.

“We might sell them to the U.S. military or continue to run them in our African service. It would be a shame to chop them up as they’re in pretty good shape. They’re 25 years old, but we drydocked them every three years, so the hulls are equivalent to eight or nine-year-old hulls. The last option would be to scrap them, but we would still get double-digit millions for (each of) them.

While the new ships provide new opportunities, there will also be important decisions to make, Mr. Abbott noted. In order to fill the G4s, New Jersey-based ACL has to expand service south beyond Halifax, New York, Baltimore and Norfolk and is considering Charleston, Savannah or Jacksonville. “But steaming further south means more travel time so we’ll have to drop something. We’ll go where customer support is. We’ll look at cargo flows as the market changes all the time.”

In terms of opportunities, the south has a vibrant car manufacturing market along with chemicals and forestry products. But ACL can’t go after new customers until it starts operating its G4s. “A big chunk of our business is smaller clients, but we can’t afford to lock up capacity with one or two clients, as it’s too risky,” said Mr. Abbott.

ACL, a division of the Grimaldi Group of Italy, is operating with the same volumes as a year ago, according to Mr. Abbott. “Westbound is pretty solid with rates holding. We’re pretty much full coming in. Going out, containers are reasonably solid, but RORO exports are only at 75 per cent capacity. We’re getting the leftovers of what’s happening in the Far East, but our Atlantic trade is solid.”

Asked if there were any positive signs on the horizon, Mr. Abbott was hard-pressed to come up with anything. “I see Europe getting worse before it gets better. The U.S. auto sector is better, but the housing market is up and down. Canada’s economy is fairly stable. Europe is the real problem with its austerity issues which means spending is down. The whole economic machine has slowed down with the exception of Germany.”

Despite the gloom, ACL has no intention of entering into any kind of operational alliance similar to the P3 pact between Maersk, MSC and CMA CGM on the Asia/Europe, Transpacific and Transatlantic tradelanes. “We have our swap charter agreement with Hapag-Lloyd and we like being independent.”