As container freight rates continue to climb to stratospheric levels CMA CGM has made the decision to suspend all spot rate increment until 1 February 2022.
The measure announced on 9 September is effectively immediately covering all the French group’s brands – CMA CGM, CNC, Containerships, Mercosul, ANL, and APL.
Spot rates for container shipping have been driven to unprecedented levels by port congestion, supply chain disruption and demand spikes. Drewry reported that as of 9 September spot rates Shanghai – Los Angeles were $11,568 per feu, up 199% year-on-year, while Shanghai – Rotterdam stood at $14,287 per feu, up 564% year-on-year.
It’s a situation that has led to increasingly irate and frustrated shippers, who struggle to find space at short notice, have to pay astronomical sums when they do, and still face delays to their shipments due to congestion.
CMA CGM said it was suspending spot rate increases to prioritize long-term relationships with its customers in the face of what it described as “unprecedented situation in the shipping industry”.
“Although these market-driven rate increases are expected to continue in the coming months, the Group has decided to put any further increases in spot freight rates on hold for all services operated under its brands,” it said.
The move by CMA CGM places the ball in its competitors court, while the line still stands to continuing benefiting from already sky-high freight rates.
Writing on LinkedIn Bjorn Vang Jensen, VP Advisory Services – Global Supply Chain for Sea-Intelligence, described it as “brilliantly executed”.
“Worst case, CMA in isolation looks like a hero. Best case, the industry will be forced to follow – in which case CMA still looks like a hero,” he said.
CMA CGM is the world’s third largest container line according to Alphaliner with a slot capacity of 3.01m teu.