CMA CGM caps spot freight rates increase
French shipping giant has put a cap on all spot freight rates as it looks to prioritise its long-term relationship with customers during the current market conditions. CMA CGM noted in its statement it has put increases in spot freight rates on hold until February 1, 2022.
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. 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. The decision has come into effect immediately, the group said.
CMA CGM has also been joined in the decision by the German counterpart Hapag-Lloyd that reportedly put a freeze on its spot rates increases a while ago without making any public announcements. The companies are looking to encourage customers to avoid high spot rates and secure longer-term deals at lower prices, that are still above those in the pre-pandemic period.
However, such pricing levels are to be expected as it was explained by Jeroen De Ryck, director of projects and machinery division at Ahlers, a logistics company in an interview recently done with Project Cargo Journal. He noted that it is unlikely prices will return to pre-Covid levels but rather to acceptable levels. He stressed that pre-Covid prices have been way too low which the container carriers tried to improve through container market consolidation.
CMA CGM is also investing heavily to strengthen its service offering. The group has increased the capacity of its operated fleet by 11 percent since December 31, 2019, through the addition of new vessels and the purchase of second-hand vessels. Over the last 15 months, the group has also increased its container fleet by 780,000 TEUs.