When The Containership Company started its so called “low cost” Great Dragon Service across the Pacific from Taicang to Los Angeles in April last year, it took the market by surprise.

There were few positive comments and most predictions from the industry were that the line would not succeed, especially with the service starting from the little known Yangtze River Delta port of Taicang.

Those dire predictions have come true and today market intelligence provider PR News Service reported that TCC was discontinuing its transpacific service.

Of the carrier’s five chartered 3,000 TEU vessels, California Dragon and Nanjing Dragon will not leave Taicang port and Jiangsu Dragon and Shenzhen Dragon will remain in Los Angeles. It is believed that the fifth vessel, Taicang Dragon, is not on the transpacific service.

Its undignified demise aside, the TCC business model was a great one for its customers. It offered a contract with a fixed volume and a freight rate that varied every week, or every month, in line with the spot market. On a trade lane governed by annual contracts that don’t take into account severe rate fluctuations, this was a welcome relief.

Customers had the security of guaranteed space with a rate that could be competitive from week to week.

So what happened? The company ended 2010 about US$7 million in the red before tax, not much if you are Maersk but a not unsubstantial amount for a small carrier. The line also bought Taicang Dragon for US$28.8 million.

Still, in financial terms, TCC was not in bad shape.

There are indications that fierce port competition may have taken its toll on the carrier. In the Yangtze River Delta there are several ports competing heavily for cargo and undercutting each other in order to get it.

Not long after starting its transpacific end-to-end service between Taicang and Los Angeles, TCC added Ningbo. Then it added Qingdao. So from offering a straight-there-and-straight-back service, two other China ports in the same area were on the rotation.

This seems to indicate that the carrier was losing cargo as its price-conscious customers switched to other ports in search of a better deal, forcing TCC to add Ningbo and Qingdao to increase container volume and boost vessel utilisation.

Of course, that’s just a theory while we wait to hear the real story, but running a string of 3,000 TEU ships is an expensive business and the vessels need to be kept full to be profitable.

We still don’t know whether the TCC has gone under or if it will be resurrected in some way, but it certainly doesn’t look good from here.