US containership owner Matson lost a legal challenge against the US Maritime Administration (MarAD) that it argued would unfairly subsidise two boxships operating in Matson's Pacific basin market.

On Tuesday, a US appeals court dismissed a case brought by Matson last year to overturn the enrollment of two vessels owned by American President Lines (APL) into the US Maritime Security Program (MSP).

APL, which is controlled by France's CMA CGM, enrolled two US-flagged, geared containerships, the 1,078-teu APL Guam(built 2001) and the 1,638-teu APL Saipan (built 2002) into the MSP.

The MSP provides a $5m annual stipend to 60 US-flagged merchant ships in return for their being ready to be chartered by the US government in a national emergency.

In the absence of military work, the vessels are free to engage in commercial trade. APL used both ships for container service between the US mainland and Guam, a market currently served by Matson.

Without mentioning APL, Matson chief executive Matt Cox said on the company's last earnings conference call that the company expected to face "continued competitive pressure" in the Guam market.

In dismissing the challenge, the appeals court essentially said it lacked jurisdiction to hear Matson’s challenges. In a statement to TradeWinds, Matson said it is reviewing the decision.

The court cited both the timeliness of Matson's legal challenge given that one APL vessel went into the MSP in 2015 as well as whether the venue itself was appropriate for this challenge.

"It's definitely a lawyer's decision," said Charlie Papvizas, a partner at Winston & Strawn. He followed the case, but is not a direct party to it.

Papavizas says the challenge for any maritime case is that "you might end up in the wrong court." The issue was also complicated due to the citizenship determination for APL to engage in the Jones Act trade, as well as Guam's place as an American territory in the cabotage trade.

"So much of what MarAd does is some type of citizenship determination," Papavizas said. "Is this is Jones Act trade or not? The US and Puerto Rico are clearly defined Jones Act trades, but Guam is in special place where it's in between those two."