APL isn't too concerned with Matson's attempt to strip federal subsidies from two of its ships.
Tuesday, the Hawaiian boxship owner sued the US Department of Transportation, alleging it wrongly allowed to APL ships into the $300m Maritime Security Program, providing them subsidies that give the CMA CGM subsidiary an unfair leg up in the Guam trade. The suit does not name APL as a party.
"We remain confident that Matson's challenge to our MSP participation is completely lacking in merit," an APL spokesperson said in a statement Tuesday night.
This is the third time Matson — which dominated the Guam trade for years until APL began challenging them in late 2015 — has sought to block the payments. The company mounted a challenge, via an administrative appeal with the Maritime Administration, after the ships were admitted, then sued in a federal appeals court. Both attempts failed, with the appeals court determining it did not have jurisdiction over the case.
The Guam trade has been a weak spot in Matson's domestic operations since APL started running ships to the territory weekly in late 2015 and biweekly in 2016.
Between 2011 and 2014, container volume to Guam jumped more than 60%, according to annual filings with the Securities and Exchange Commission. Since, it has declined by 17.5%.
The drop comes as container volumes to Hawaii have grown. Matson posted nine-figure profits for four consecutive quarters and it moved into the Alaska trade with the 2015 acquisition of Horizon Lines.
The MSP provides eligible ships engaged in foreign trade a subsidy in exchange for their use during wartime or in a national emergency.
Matson's complaint alleges the two ships APL runs on its Guam service, the 1,089-teu APL Guam (built 2001) and the 1,638-teu APL Saipan (built 2002) are engaged in domestic trade as defined by law, and thus ineligible for the subsidies.
There are 60 ships in the MSP.
