Shippers hope that more carriers will follow CMA-CGM and Hapag-Lloyd to freeze freight rates.

Increasing market share is a new concern of shipping lines; freight rate freezes are seen as a precursor to a pricing war; Lack of space and equipment remains a major concern for shippers.

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Shipping lines CMA-CGM and Hapag-Lloyd freeze freight rates (Photo: Phaata)

The recent announcement of a rate freeze by CMA CGM and Hapag-Lloyd has given shippers hope that many other shipping lines will follow in the footsteps of this event and hope to reduce the possibility of soaring container freight rates in coming time.

“To me this is a quick jump on the bandwagon to address deteriorated customer relationships in a longer [term] perspective” said Bilal Khan, Pakistan Enterprise Business Lead of HashMove digital logistics platform.

"With this new announcement they're are trying to shock the system in hopes of increasing their market share with all this new capacity that they will soon have on their hands," an Indonesia-based freight forwarder about CMA CGM. The company also added that this could be a harbinger of a "pricing war".

Another freight forwarder, based in India, believes that the major shipping lines may have lost some of their customers to small companies and carriers outside the three major alliances. "Now that all these companies are cash rich, one thing they will do is use it against each other--either by buying some companies or cutting their profit margins to challenge the others."

However, schedule reliability remains a top concern for shippers, alongside freight rates.

Peter Sundara, Vice President of Global Ocean Freight Management, LF Logistics, said: “Freezing sharp rate increases via premium and other surcharges is very much welcome but our main concern is how the carriers are going to prioritize releasing space and equipment when we continue to face huge vessel delays and port congestion.”

Sundara added that it is unlikely that the day-to-day challenges will disappear because of this announcement. "It also remains to be seen if the carriers will drive customers to use more of their online quotes which are charged at premium levels and what would likely be the impact of this for 2022."

CMA CGM and Hapag-Lloyd have announced the suspension of short-term rate increases, in the context of freight rates fluctuating at record highs on most shipping routes. While CMA CGM said it would not raise rates until February 1, 2022, Hapag-Lloyd said it would avoid a spike "for the time being."

The German carrier will also limit any sharp increases in warranties and other surcharges, a company spokesman told S&P Global Platts on September 13.

According to Platts data, the current general cargo rate (FAK) on the North Asia to North American West Coast route is at $9,000/FEU, compared to the price with a package of premium fee between $15,000-$22,000/FEU.

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