Matson has cut capacity and is in wait-and-see mode when it comes to customers as it prepares for the container shipping market to come off its pandemic-fuelled highs.
The New York-listed, Honolulu-based container ship owner’s chief executive, Matt Cox, told analysts on the company’s third quarter earnings call that axing its CCX service cut a quarter of its transpacific capacity as retailers wait to see how consumers will spend ahead of the peak holiday season.
“Other carriers … have done or will do in the coming months to reduce capacity to the market demand level. I think that process is just underway now. Many were surprised by the slow pace of the reduction in demand, and we’ll be adjusting their fleet, I think, accordingly over time,” Cox said.
The CCX service ran from Oakland to China, then to Long Beach with a stop in Honolulu. The temporary service was cut in mid-October, six weeks ahead of its scheduled closure.
On the call, Cox said the peak season really came in the first half of the year, before Matson's customers saw large inventories on their balance sheets, which prompted them to cancel purchase orders.
Now the market is waiting to see how quickly they can reduce their inventory overhangs and how high demand is for consumer goods.
“Some of our wholesalers are saying they're looking forward to hearing, in discussion with their customers, about orders for spring merchandise,” Cox said.
“There’ll be cargo movement, certainly, but just at a lower level through there. I think ultimately, what happens after that, we’re not really commenting on, and perhaps it will be partly decided by whether we enter a recession.”
How deep that recession is will also factor into the equation, he said.
Matson had forecast that a dip in its financial performance was coming, with Cox telling investors in August that various factors were holding down consumer spending and publishing preliminary third quarter results last month suggesting profit would drop year-over-year.
The company's results ultimately came out ahead of those preliminary results, with profit hitting $266m, more than the $257m to $262m forecast, but still lower than the $283m recorded for the third quarter of 2021.
Its shipping segment brought in $315m, in line with the high end of its mid-October expectations.
Container volume on its Hawaii service came in at 37,000, a drop of 2,900 containers, or 7.1%, compared to the same period of alst year. The company carried 39,500 containers from China, a drop of 7,000 or 15.1% versus the third quarter of 2021.
Increased seafood cargoes from Alaska helped boost the company's Alaska volumes by 2,300 to 24,100 from the third quarter of last year, a jump of 10.6%.
