Topic of the week: CMA CGM delays US East Coast container surcharge amidst Longshore contract talks
In a move that may impact global trade, French shipping giant CMA CGM has delayed the implementation of a key surcharge on cargo moving from the Indian subcontinent, Middle East Gulf region, Red Sea, and Egypt to the US East and Gulf coasts. The surcharge, initially set to take effect on January 1, has been pushed back to January 15.
The decision comes as negotiations between the International Longshoremen's Association (ILA) and United States Maritime Alliance (USMX) are expected to resume soon, following a breakdown in talks last November. The ILA and USMX have been in talks to reach a new collective bargaining agreement, which could impact the shipping industry.
CMA CGM's decision to delay the surcharge may be a strategic move to avoid disrupting the market and to give itself more time to negotiate with the ILA and USMX. The company has been the only major container carrier to continue operating in the Red Sea, despite attacks on merchant vessels by Yemen-based Houthis, and has been able to maintain its operations at a lower cost than other lines that have diverted services around the Horn of Africa.
In addition to the delayed surcharge, CMA CGM has announced two new surcharges that will take effect on January 18. The first surcharge will apply to containers moving from the Mediterranean to the US East and Gulf Coast ports, with rates ranging from £1,300 to £2,500 per container, depending on size and type. The second surcharge will apply to cargo moving from the South America west coast via the Panama Canal to the US and Canada, with a rate of £150 per twenty-foot equivalent unit.
These surcharges are part of CMA CGM's efforts to manage demand and recover costs associated with congestion and increased operational expenses. The company has also introduced a Panama Canal Transit surcharge, which went into effect on January 1, to recover costs associated with the new booking reservation system implemented by the Panama Canal Authority.
Overall, CMA CGM's decisions to delay and implement new surcharges reflect the company's efforts to adapt to changing market conditions and to manage its costs in a competitive industry. As the shipping industry continues to evolve, carriers like CMA CGM will need to remain agile and responsive to changing market conditions to remain competitive.
Sea:
- Over the last two weeks China/East Asia to North America West Coast spot rates have decreased by 1.6% from $4,904/FEU to $4,825/FEU according to Freightos data.
- China/East Asia to North America East Coast spot rates have risen over the last two weeks, increasing by 0.32% to $6,115/FEU.
- Global container spot prices have risen over the last two weeks, and are now sitting at $3,804/FEU, a 3.9% increase over the last two weeks and a 64% increase from spot rates this time in 2024 according to the Freightos Baltic Index (FBX)
Air:
- Global Air Freight spot rates currently sit at $2.32, as rates continue to fluctuate according to the Freightos Air Freight Index (FAX)
- Europe to Northern America spot rates currently sit at $2.3 (100-3000kg), says FAX, decreasing by 18%
- Europe to Asia, Greater China spot rates currently sit at $1.15 (100-3000kg), says FAX, decreasing by 4%
That’s all for this week’s update…
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