By Brian Dunn
China Shipping (Canada) Agency Co. Ltd. (CSCA) has just increased the tonnage on its weekly service to Vancouver’s Deltaport via Seattle by replacing its six 2,500-TEU vessels on the route with vessels having a capacity of 4,000 TEUs. In mid-May, CSCA entered a vessel sharing agreement with United Arab Shipping which will operate two of the six vessels. Vancouver accounts for about 60 per cent of total volume on the shared route.
“It shows our optimism that trade is improving and it shows our commitment to grow our Canadian and U.S. business,” said Brad Carter, General Manager, Sales and Marketing, during an interview at CSCA’s Toronto office. The office opened in August 2000, along with an office in Montreal, after CSCA opened its Vancouver head office in February 2000. CSCA also has a sub-agent in Halifax where most of its swap charters are handled with ZIM Integrated Shipping Services Ltd. The total Canadian workforce is around forty, including ten who have been with the company from the beginning.
Commenting on the new fleet, the larger vessels are not only bigger, but also faster than the ones they’re replacing “which will improve on-time performance and which we’ll use as a selling feature,” said Mr. Carter. “But a Seattle only call would never work. They have to have increased volume through Vancouver to make it viable.”
CSCA is a wholly owned subsidiary of China Shipping Container Lines (CSCL) which is a subsidiary of China Shipping (Group) Company, established in Shanghai in 1997. It is a multinational and multidimensional conglomerate that is involved in shipbuilding, terminal operations, container lines, tankers, airlines, air freight and container manufacturing among other activities.
China Shipping Group anticipated a strike in Los Angeles in 2002. As a pre-emptive move, it relocated containers from Asia to other ports on the west coast to replace a shortage of containers and to prevent loss of business in Los Angeles. The company claims this strategic move marked a turning point in its growth and garnered it some important new business.
CSCL is the Group’s principal subsidiary, and is one of the fastest growing container lines in the world with about 150 vessels globally, of which 60 per cent are owned and 40 per cent chartered. Total capacity is around 570,000 TEUs, according to Mr. Carter, ranking the company the eighth largest container carrier in the world. One of its affiliates, China Shipping Terminals, operates facilities in Seattle and Long Beach. It also has a 60-per-cent interest in a terminal in Rotterdam in addition to terminals throughout China.
“CSCA handles every aspect of Canadian operations and we’re unique in that we have physical bodies in all three cities to take care of our customers, while other companies have opted for call centres,” Mr. Carter pointed out. “Our main service is ANW1 which covers the full scope of ports in China, including Nansha, Hong Kong, Yantian, Shanghai, Ningbo and Pusan.” From Vancouver, containers move inland by CN Rail, CSCA’s predominant partner, said Mr. Carter, adding that his company is “exclusively focused on container operations.” Inbound cargo is a broad range of products for major retailers including Canadian Tire, Loblaw and some toy importers. “We do a lot of business for international NVOCCs (Non Vessel Operating Common Carriers),” Mr. Carter added.
Despite a slowdown in the oil sector, CSCA also handles project cargo such as piping and machinery for Alberta’s oil sands. “There’s a lot of committed business in the oil industry and we’re still seeing some pretty decent demand.”
Outbound cargo is dominated by raw materials such as waste paper for re-pulping, logs, lumber and wood pulp, although these shipments are supplemented with more value-added goods such as industrial products and vehicles, including recreational vehicles. “The economic landscape is changing in China which is developing a large middle class with more disposable income, so there is a growing demand for cars and RVs.” Last year was one of the company’s best, with volume up 10 per cent from 2011. This year started off well, but the recovery following Chinese New Year in mid-February, (traditionally a slow period) had been slower than usual, according to Mr. Carter. “There was a delay in restarting production in China, Europe is struggling, the U.S. economy is still slow and the Canadian economy is sluggish. But we expect more growth leading up to the peak period of July to October for the Christmas selling season, when there is typically a peak season surcharge which is important for carriers to generate some extra revenue.”
China Shipping has ordered five new 18,400-TEU vessels worth $700 million with deliveries to start in late 2014. “They will be the largest vessels on the water which shows the company is optimistic about prospects two to three years down the road.”
Mr. Carter has been with CSCA since it first opened the Toronto office. In fact, the 52-year-old has been in the shipping business for the last 34 years working for major North American carriers such as the former CP Ships, Christianson Canadian African Lines (now part of Hapag Lloyd) and other lines that no longer exist plus a few different agencies. “When CSCA opened its offices in Toronto and Montreal, we started with a mix of chartered vessels and operated like a shotgun, going after business where we could find it. Now, the company is more focused on what makes sense to make money, which includes some solid and regularly based cargo. We’ve also topped that up with reefer business where we’ve had some good success.”
While nothing keeps him awake at night, Mr. Carter hopes import volumes remain steady, “because imports drive everything we do. Without those deliveries, we couldn’t develop our export business.”
In terms of size, CSCA is probably ranked sixth or seventh out of sixteen competitors for inbound traffic for all of Canada, Mr. Carter estimated. Outbound would be a little lower. “Canadian exports are a lot heavier than imports so our lift capacity gets a little restricted by weight. But that wouldn’t be different from any of our competitors.”
In terms of seeing a bigger role for Halifax, Mr. Carter would like to see head office in China stretching one of the routes calling into one of the U.S. east coast ports or possibly starting a new dedicated service. “The challenge with that timingwise right now is that there is already an increase in capacity coming into Halifax with the G6 lines extending service. But it is something we’re looking at in terms of an alternate gateway.”
The Montreal office is a tough business to sell due to direct callers into the port which CSCA doesn’t offer. But from a sales perspective, it’s extremely important to attract cargo to enter Canada via Vancouver and to a lesser extent via Halifax. There is also a strong import business in Quebec.
“In terms of exports, there is quite a lot of lumber and minerals from companies like Montreal-based Rio Tinto Alcan which is a CSCA client. Montreal also has a strong base of international forwarders and shippers. But that has shifted a bit with the growth of the Asian economy.” A lot of the business out of Toronto is from companies headquartered in the Greater Toronto area, including new entrant Target Canada in Mississauga.
As for future growth, Mr. Carter said the company can only import so much based on what consumers can buy. “With larger vessels, our task is to fill them with a relatively small but dedicated sales force in Canada.”