French container line CMA CGM halts global spot rate hike to merchants’ relief
CMA CGM SA, one of the world’s largest container companies, has frozen spot rate hikes until February next year as several countries set fire to unprecedented spike in shipping costs global containers since January, upsetting exporters and importers.
French container line CMA CGM said it had halted spot rate increases from September 9 to February 1, 2022.
Pressure on shipping companies
The Group prioritizes its long-term relationship with its customers in the face of an unprecedented situation in the shipping industry, said the third largest container line in the world.
“Since the start of 2021, container shipping spot freight rates have continued to increase due to port congestion and the major imbalance between demand and effective sea container shipping capacity,” CMA said. CGM.
“Although these market-induced tariff increases should continue in the coming months, the Group has decided to suspend any further increase in spot freight tariffs for all services operated under its brands (CMA CGM, CNC, Containerships, Mercosul, ANL, APL), ”the line said.
CMA CGM seeks to provide some “price visibility during the peak Christmas season” to its customers, a source from the container shipping industry said.
Other global container companies such as Hapag-Lloyd AG, Maersk Line and Mediterranean Shipping Company SA are expected to join CMA CGM in detention rates.
“The kind of pressure that the Indian government, Federation of Indian Export Organizations, export promotion boards and shippers have put on shipping companies, other companies could also stop tariff increases,” TS believes. Ahluwalia, President of the Northern India Shippers Association (NISA).
“There is a lot of pressure on the shipping lines to stop rate increases. Every country is watching them closely, ”Ahluwalia said.
Sea freight charges have risen sharply from India since the start of the year. For example, the fare to the Port of Felixstowe, which was $ 1,000 in February, now hovers at $ 7,000, while the fare to New York is currently $ 12,000 from $ 2,000 in February.
The freight rate to Australia has increased from $ 1,500 to $ 8,000, while the rate of container shipping to Toronto has increased from $ 2,500 to $ 17,000.
The rate to South Africa rose to $ 6,000 from $ 1,500 in February.
Soaring freight rates helped container lines achieve windfall profits in the first half of calendar year 2021.
If freight rates continue to rise, container lines could collectively generate $ 100 billion in operating revenue in 2021, according to Drewry Maritime Research.
The German Hapag-Lloyd AG has earned more in the last six months than in the previous ten years combined.
Danish shipping giant Maersk Line is expected to earn around $ 14.5 billion this year, analysts say.
“Looking at the market environment today, however, we don’t think the situation will return to normal anytime soon – despite all the efforts and the additional container capacity being injected. We currently expect the market situation to improve only in the first quarter of 2022 at the earliest, ”said Rolf Habben Jansen, CEO of Hapag-Lloyd, on August 12, announcing the company’s half-year results.
“Rates are expected to stabilize at current levels,” Ahluwalia said, noting that rates must “stop somewhere”.
“The other shipping companies will not be able to freely increase their prices. They need to review the dynamics of the market. Thus, on current rates, there will be no significant jumps and rates could stabilize at current levels, ”he added.
However, the rate cuts will not be visible until major ports in the United States, Europe and China return to normal in their operations, he added.