CMA CGM freezes bookings for Asia-Europe trade lane

CMA CGM has informed its customers that it will not accept bookings for the transport of containers from Asia to Northern Europe for the time being. It is the latest development in an unprecedented situation which spurred DSV to charter three multipurpose vessels to ensure ample supply for its customers. 

“Due to the strong demand for containers from Asia and the backlog in recent weeks, CMA CGM is informing you (…) about a booking stop in Asia-Northern Europe traffic for weeks 49, 50, and 51. The booking freeze concerns all transactions”, the French shipping company says in a circular to customers.

The decision seems to be related to the enormous shortage of containers, especially in China. This stems from the explosive growth in exports in the second half of the year when the Chinese factories started operating again after the lockdown in the second quarter. This in turn coincided with strong growth in consumer demand in Europe and the US and the traditional peak in the third quarter related to Christmas sales.

Thus far, CMA CGM seems to be the only major carrier to declare a booking freeze. Hapag-Lloyd, for example, is still accepting new bookings, but has announced a significant rate increase for Asia-Europe transport. As of December 15, the base rate will be USD 2,945 per TEU for Northern Europe and USD 3,330 for congested UK ports.

Sharp price increases

The sharp price increases in recent months – shippers now pay on average almost three times more than a year ago – has raised many eyebrows. US regulator FMC has tightened up oversight of the three major container alliances and Chinese authorities have “requested” shipping companies to respect tariff ceilings. This has not been reported by China itself, but by CMA CGM.

The question is whether the booking stop will actually cost the shipping company a lot of cargo since the majority of the available capacity is booked in advance. However, the company will have to say “no” to spot bookings, which are booked at the last minute. The shipping company posted a staggering profit of USD 576 million in the third quarter, nearly thirteen times more than last year. In the quarterly report, the shipping company said it expected a further improvement in results for the fourth quarter.

“Extraordinary” situation

The container industry finds itself in an extraordinary situation. Demand for container transport is extremely high, motivating some carriers to charter multipurpose tonnage to fill supply gaps. At the same, DSV, a major customer of the container carriers, has chartered its own multipurpose vessels to get containers from Asia to Europe.

“It’s important to emphasize that this is not a service, but three individual sailings from China to Denmark with chartered vessels. Each ship sails one trip”, DSV’s head of corporate communications told Danish shipping newspaper Shippingwatch. She added that this is an “extraordinary initiative driven by the extreme lack of [container] capacity in the market.”

Author: Tobias Pieffers/Rob Mackor

1 comment op “CMA CGM freezes bookings for Asia-Europe trade lane”

Aleena Mishal|14.12.20|09:18

shortage of shipping containers will increase the cost for shipping and it will directly affect on the customers and the sellers who import and export something, shipping company like my us, planet express, global shopaholics. It has to been resolve quickly.

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