Horizon Lines

Horizon Lines was a U.S. domestic ocean-shipping and logistics company headquartered in Charlotte, North Carolina. Its business focused on maritime links between the continental United States and the noncontiguous U.S. markets of Alaska, Hawaii, and Puerto Rico, with additional service historically extending to Guam and China. The company operated in a market shaped by the Jones Act, which generally requires cargo moved between U.S. ports to be carried on vessels that are U.S.-built, U.S.-owned, U.S.-flagged, and operated primarily by U.S. citizens. This regulatory structure gave Horizon an important position in domestic container transportation while also imposing high capital and operating costs. The Horizon Lines identity emerged from the domestic liner operations of Sea-Land Service. Those operations were sold in 2003 and subsequently operated as Horizon Lines. The business inherited a substantial domestic network, port infrastructure, vessel fleet, and customer base. Its customers included consumer-goods manufacturers, industrial companies, government agencies, the U.S. Department of Defense, and the U.S. Postal Service. In addition to containerized freight, the company handled vehicles and household goods and provided related terminal and logistics services. At its height, Horizon was described as the largest Jones Act-compliant maritime shipping and logistics company and accounted for a significant share of container movements between the U.S. mainland and Alaska, Hawaii, and Puerto Rico. The company operated cargo terminals in those markets, contracted for terminal services in several mainland ports, and maintained a fleet that reached 13 Jones Act-compliant container ships and roughly 31,000 containers in 2014. Its Alaska and Hawaii networks generated regular calls at Tacoma, Washington, which served as an important mainland gateway. Horizon became a public company in 2005, but its later years were marked by financial pressure, legal problems, an aging fleet, and weakening commercial conditions. Investors criticized the continued operation of older vessels, including steam-powered Lancer-class ships whose age was well above the typical service life of many modern container ships. The company also lost an important contract with Maersk Line and faced difficulties maintaining profitable Puerto Rico operations. In 2011, Horizon pleaded guilty to price-fixing conduct involving the Puerto Rico market, paid a reduced criminal fine, and reached additional civil settlements. It also pleaded guilty in 2012 to falsifying oil-record documents, leading to a criminal fine, a payment to the National Fish & Wildlife Foundation, probation, and an environmental compliance program. Horizon completed a major refinancing in October 2011 in an effort to avoid bankruptcy. Its financial condition nevertheless remained weak, and the New York Stock Exchange suspended trading in its shares after the company fell below the exchange's continued-listing market-capitalization requirement. Horizon's stock subsequently traded on the OTCQB market. Continued losses and the expense of operating its steam-powered fleet led the company to sell its remaining businesses. In late 2014 it announced agreements under which Matson acquired the Alaska operation and The Pasha Group acquired the Hawaii trade-lane business. Horizon ended its Puerto Rico service in December 2014. Matson's acquisition of the remaining company was completed on May 29, 2015, ending Horizon Lines as an independent operating brand.

Horizon Lines developed from the domestic liner operations of Sea-Land Service, a major U.S. container-shipping pioneer. Sea-Land's domestic operations were sold in 2003 and were subsequently placed under the Horizon Lines name. The new company inherited a network designed around the distinctive requirements of U.S. domestic maritime trade: cargo moving between mainland ports and Alaska, Hawaii, and Puerto Rico had to comply with the Jones Act. That requirement limited direct competition from foreign-flag carriers but also required the use of U.S.-built, U.S.-owned, and U.S.-flagged vessels with predominantly U.S.-citizen crews. Horizon established itself as a specialized domestic carrier rather than a conventional global liner. Its principal services connected the mainland with Alaska, Hawaii, and Puerto Rico. It also historically served Guam and operated trans-Pacific services to Guam and China until November 2011. The company moved containerized consumer and industrial products, as well as vehicles and household belongings. Government business was important, with customers including the Department of Defense and the U.S. Postal Service. Horizon also operated terminals in Alaska, Hawaii, and Puerto Rico and contracted for terminal services in seven mainland ports. The business became publicly traded in 2005 through a New York Stock Exchange listing. At its strongest point, Horizon was regarded as the largest Jones Act-compliant maritime shipping and logistics company. In 2014 it had approximately 13 compliant container ships and about 31,000 containers. Its network made frequent use of Tacoma, Washington, with approximately 150 annual calls associated with Alaska and Hawaii services. The company later encountered a combination of commercial, financial, legal, and technical challenges. Some investors objected to the age of its vessels, particularly the continued use of C6 and C7 Lancer-class steam-powered ships. One vessel, SS Horizon Discovery, had originally been built in 1968 for United States Lines. Older tonnage increased maintenance and operating burdens in a market where container ships were often retired at much younger ages. Horizon also faced serious legal exposure. In 2011 it pleaded guilty to price-fixing in the Puerto Rico market. The Department of Justice reduced the fine from $45 million to $15 million, in part because the larger penalty could have pushed the company toward bankruptcy after it lost a contract with Maersk Line. Horizon separately settled claims brought by Puerto Rico shippers. In 2012 it pleaded guilty to falsifying oil-record documents from a vessel operating in the West Coast–Hawaii trade. The resulting sanctions included a $1 million fine, a $500,000 charitable payment, three years of probation, and an environmental compliance plan. Horizon carried out a $653 million refinancing in October 2011 to avoid bankruptcy. Its financial position remained fragile, however. The NYSE suspended trading after its market capitalization fell below the exchange's continued-listing standard, and the shares moved to the OTCQB market. The company reduced Puerto Rico service and continued to experience losses. In November 2014 it announced the sale of its operations: Matson agreed to acquire Alaska operations for $469 million, while The Pasha Group agreed to acquire the Hawaii trade-lane business subject to regulatory approval. Puerto Rico service ended in December 2014. The final sale was completed on May 29, 2015, when Matson acquired the remaining Horizon Lines business. Horizon consequently ceased to operate as an independent company.

• 2015

  Matson completes acquisition

  [1]Horizon Linesen.wikipedia.org

  The final sale of Horizon Lines was completed on May 29, ending the company's independent operations.

• 2014

  Asset-sale agreements announced

  [1]Horizon Linesen.wikipedia.org

  Horizon announced agreements to sell its Alaska operation to Matson and its Hawaii trade-lane operation to The Pasha Group.

• 2012

  Environmental-record case resolved

  [1]Horizon Linesen.wikipedia.org

  Horizon pleaded guilty to falsifying oil-record documents and agreed to financial penalties, probation, and an environmental compliance program.

• 2011

  Puerto Rico price-fixing case and major refinancing

  [1]Horizon Linesen.wikipedia.org

  Horizon pleaded guilty to price-fixing in the Puerto Rico market and completed a $653 million refinancing intended to prevent bankruptcy.

• 2011

  NYSE trading suspension

  [1]Horizon Linesen.wikipedia.org

  The NYSE suspended trading in Horizon's shares after the company failed to meet the exchange's continued-listing market-capitalization requirement.

• 2005

  Horizon Lines becomes publicly traded

  [1]Horizon Linesen.wikipedia.org

  Horizon Lines began trading publicly on the New York Stock Exchange.

• 2003

  Sea-Land domestic liner operations adopt the Horizon Lines identity

  [1]Horizon Linesen.wikipedia.org

  The domestic liner operations of Sea-Land Service were sold and subsequently operated under the Horizon Lines name, creating the independent company identified with U.S. domestic ocean shipping.

A regulated domestic ocean carrier focused on reliable container and logistics links between the U.S. mainland and noncontiguous U.S. markets. Its competitive position came from Jones Act compliance, established terminals, specialized domestic routes, and government and commercial customers rather than from global-scale liner operations.

• Ocean freight · 2003

  Domestic container shipping

  Horizon Lines transported containerized consumer and industrial cargo between the continental United States and Alaska, Hawaii, and Puerto Rico under the Jones Act. The service relied on a dedicated domestic network, compliant vessels, port terminals, and regular mainland gateway calls. It was the company's central offering and accounted for its position as one of the most important U.S. domestic container carriers.

• Logistics services

  Government and military logistics

  The company provided maritime transportation for government customers, including the U.S. Department of Defense and the U.S. Postal Service. These contracts complemented commercial cargo from consumer and industrial companies and used Horizon's domestic network to connect mainland ports with U.S. noncontiguous markets.

• Specialized freight

  Vehicle and household-goods transportation

  Alongside containerized freight, Horizon offered transportation for vehicles and household belongings. These services addressed the practical movement of personal property and equipment between the mainland and Alaska, Hawaii, Puerto Rico, and other served destinations.

• Port services

  Terminal and port logistics

  Horizon operated cargo terminals in Alaska, Hawaii, and Puerto Rico and contracted for terminal services in seven continental U.S. ports. These facilities supported vessel loading, container handling, inland coordination, and the transfer of cargo through its domestic network.

• 2012

  Falsified oil-record documents

  Horizon pleaded guilty to two counts involving false oil-record documents from a vessel serving the U.S. West Coast–Hawaii route. The resolution included a $1 million fine, a $500,000 contribution to the National Fish & Wildlife Foundation, three years of probation, and an environmental compliance plan.

  Source

• 2011

  Puerto Rico price-fixing case

  Horizon pleaded guilty to price-fixing in the Puerto Rico shipping market. The criminal fine was reduced to $15 million, and the company later agreed to a $13.75 million settlement with remaining shippers that had opted out of a direct-purchaser antitrust settlement.

  Source

Read more

• 2014

  Sell the operating businesses and wind down the brandM&A

  Background

  Persistent losses, reduced Puerto Rico service, and the cost of maintaining older steam-powered vessels made continued independent operation difficult.

  Action taken

  Horizon agreed to sell Alaska operations to Matson for $469 million and the Hawaii trade-lane business to The Pasha Group, subject to regulatory approval. Puerto Rico service was ended in December 2014.

  Aftermath

  Matson completed the acquisition of the remaining Horizon Lines business on May 29, 2015, ending Horizon as an independent operator.

  Purchase price for Alaska operations. $469 million (Announced November 2014)

  Source

• 2011

  Complete a large refinancing to avoid bankruptcyStrategy

  Background

  Horizon faced losses, legal liabilities, an important contract loss, and pressure from bondholders. The company's financial position created concern that it might have to seek bankruptcy protection.

  Action taken

  The company completed a $653 million refinancing in October 2011.

  Aftermath

  The refinancing provided near-term support, but Horizon continued to face weak finances, an NYSE trading suspension, and structural problems associated with its aging fleet and underperforming routes.

  Refinancing. $653 million refinancing completed (October 2011)

  Source

1. 1Horizon Linesen.wikipedia.org