AirCraft Section 301 (1)

Singapore-based carrier Pacific International Lines (PIL) has recently announced plans to withdraw from the Trans-Pacific marketplace.

Why They’re Exiting the Market

In a February 14 statement, the company cited results from its recent strategic review as the primary driving factors for its decision, emphasizing their desire for a realignment of services and increased optimization of network efficiency. The focus of their corporate strategy going forward will deal with the strength of their positioning “in North-South trade such as Africa, the Middle East/Red Sea, India Sub-Continent, Latin America, and Oceania”.

In the past, PIL has had to compete heavily with external forces – other carriers offering more varied container volumes, the U.S.-China trade war, alliance discrepancies, and most recently, the coronavirus outbreak. Because the carrier only represented about 1.5% of the market share, according to this trade analysis, cooperative agreements and alliance connections, rather than competitive advantage, was what tied PIL to the Trans-Pacific marketplace in the first place. In fact, most of its participation has been in slot-charter arrangements.

The Impact

The loss of a top ten Trans-Pacific carrier couldn’t have come at a time of more uncertainty for the global shipping market. With Chinese suppliers starting up again in the wake of the coronavirus and a depression developing within the market, PIL’s exit will mean less options for shippers across the board at a time when they need a choice the most.

To lose strong players in Trans-Pacific shipping like PIL’s fleet of 150 ships (including some ultra large-class vessels in cooperation with carriers like COSCO and Ocean Alliance), despite their niche appeal within the market, will mean many shippers scrambling for new options.

The last Trans-Pacific PIL sailing has been set for March 2020. If you have any further questions, reach out to us.

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