Expert reveals what CMA CGM’s spot rate freeze may mean for capacity prioritization

You can read this article in 3 minutes

In a surprise move, shipping giant CMA CGM announced yesterday that it would stop all spot rate increases until February 1st 2022. Reacting to the news, renowned shipping expert Lars Jensen has said the announcement appears to represent a change in the way capacity is prioritised on CMA CGM's vessels.

Expert reveals what CMA CGM’s spot rate freeze may mean for capacity prioritization

In its statement announcing the stoppage of spot rate increases, CMA CGM said that continual spot rate rises since the start of the year had continued “due to port congestion and the major imbalance between demand and maritime container transport effective capacity.”

CMA CGM said that its decision, as well as its recent investments in its service offering, was aimed at “strengthening its valuable customer relationships and providing support as they navigate today’s difficult supply chain challenges.”

Shipping expert Lars Jensen, CEO of Vespucci Maritime (formerly SeaIntelligence Consulting), provided his thoughts on the announcement earlier today on LinkedIn.

Jensen admitted that the spot rate cap may be perceived as responsible behavior by some, and a marketing gimmick by others.

However, in his own words, Jensen stressed that there is a “more important element in this that especially shippers should take note of.”

Jensen then went on to explain that the announcement from CMA CGM appears to signal a change in the way the shipping giant handles the prioritization of the capacity onboard its container ships.

As the expert pointed out, amid the capacity crunch, cash has been king as far as priority is concerned:

The market is still in a situation where there is a lack of capacity. When there is insufficient capacity, you need to prioritize who gets space and who does not get space. Until now the prioritization especially of the last marginal slots on a vessel has been done on the basis of price. Pay a sufficiently high premium and you might get space.

However, Jensen believes this may be about to change to the benefit of loyal customers:

The development indicated by CMA CGM would appear to lead in a direction where the prioritization will lean more towards contractual customers and customers with stronger pre-existing relationships. This will consequently be an advantage for customers with such relationships and a disadvantage for – typically smaller – customers who might have a preference for shopping around in the market to find the best transportation deals for each individual shipment.

Trending articles
Trending articles