CMA CGM decided to stop increasing all spot container freight rates

As freight rates have risen to sky-high levels and to support customers, CMA CGM has taken the decision to suspend spot freight rate increases immediately until February 1, 2022.

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Container ship of CMA CGM (Image: CMA CGM)

This decision was announced by CMA CGM on September 9 with immediate effect for all brands of the French group including shipping lines: CMA CGM, CNC, Containerships, Mercosul, ANL and APL.

CMA CGM mentioned "Since the beginning of 2021, container shipping spot freight rates have continued to rise due to port congestion and the major imbalance between demand and maritime container transport effective capacity".

And, “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 (CMA CGM, CNC, Containerships, Mercosul, ANL, APL)”.

Spot rates for container shipping have risen to unprecedented levels due to port congestion, supply chain disruptions and spikes in demand. Drewry reported on September 9 that the Shanghai-Los Angeles spot container freight rate was $11,568/FEU, an increase of 199% year-on-year, while the Shanghai-Rotterdam service stood at a flat rate 14,287 USD/FEU, up 564% over the same period last year.

It was a situation that resulted in increasingly angry and frustrated shippers, who had to struggle to find space on board in the short term, and had to pay horrendous sums of money for it, but still had to deal with shipping delays for their shipments due to congestion.

CMA CGM said it is pausing short-term freight rate increases to prioritize long-term relationships with its customers as they face an unprecedented situation in the shipping industry.

"Through these measures, CMA CGM aims at strengthening its valuable customer relationships and providing support as they navigate today’s difficult supply chain challenges," announced CMA CGM.

The move of CMA CGM has put the ball in the feet of competitors, while the company has decided to stop not increasing freight rates, but only continue to benefit from the already high freight rates up to now.

Writing on LinkedIn, Bjorn Vang Jensen, Sea-Intelligence's Vice President of Advisory Services - Global Supply Chain, describes this 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 said it is also investing heavily to strengthen its service delivery capabilities. The group has increased the capacity of its operating fleet by 11% as of December 31, 2019, through the adding new ships and buying second-hand vessels. Over the past 15 months, the Group has also increased its container fleet by 780,000 TEUs.

CMA CGM is the world's third largest container shipping line with a fleet capacity of 3.01 million TEUs, according to Alphaliner.

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