Shortly after France’s CMA CGM announced that it would suspend spot freight increases globally for the next five months, another global shipping giant, Hapag-Lloyd, also responded quickly and promised not to make further increases in the next few months. Increase the market spot freight rate (Spot Rate)!
Responses from major shipping companies
In In an exclusive interview with Lloyd’s List, shipping giant Hapag-Lloyd, also from Europe, said: “We have been doing this for a few weeks, and it is temporary. Because in this challenging market, shipping We are facing increasing pressure from shippers and regulators. We also believe that spot rates have peaked and we are not looking for further increases. We are hopeful that the market will slowly start to calm down.”
However, unlike CMA CGM, which has clearly given the validity period of the price increase suspension (September 9, 2021 to February 1, 2022), Hapag-Lloyd has not yet given an expiration date for this freeze. schedule of freight rates and said a freeze on spot freight increases would be “temporary” in effect.
In response to CMA CGM’s move, the well-known shipping media ShippingWatch contacted ONE, OOCL, Maersk and MSC, hoping that they would comment on CMA CGM’s actions, but so far they have only received ONE and Maersk’s response.
Maersk responded to CMA CGM’s move: “We are committed to transforming our business and becoming an end-to-end full-service integrator of container logistics. This is Why our focus is on creating long-term value for our customers. To achieve this, we are pursuing a greater share of long-term contracts, which has now increased to approximately 60% of our total orders.”
ONE’s position on freezing spot freight: “We are aware of CMA CGM’s statement. Nonetheless, ONE’s pricing policy will remain unchanged and our prices will be determined entirely by market conditions.”
As we all know, since the outbreak of the epidemic, especially in the past year, current ocean freight rates have been pushed up to unprecedented levels due to tight shipping capacity and strong market demand. Among them, spot freight accounts for a large proportion of the market.
WSC: Shipping companies are not the only pricing parties in the market
A few days ago, John Butler, chairman and CEO of the World Shipping Council (WSC), a carrier representative, was asked, “Why don’t shipping companies simply decide to lower charges?”
Mr. Butler pointed out that the World Shipping Council does not determine the pricing of its members. Shipping companies are not the only price setters in the market. There are far more freight forwarding companies than shipping companies that set prices in the market. So the idea that the shipping companies can somehow get together and all decide to charge less is incorrect.
Reacting to accusations of profiteering by shipping companies, Mr Butler said: “It’s easy for people to do what the market dictates, but that’s not the way business works.”
Freight forwarders and shippers have received a lukewarm response
However, shippers and freight forwarders are not “cold” by the remarks of the chairman of the World Shipping Council, and even think that his assessment of the maritime market is “unsatisfactory”.
In an initial response to CMA CGM’s announcement, James Hookham, secretary-general of the Global Shippers Forum, said that many small shippers are likely to lose their jobs before Christmas. Bankruptcy.
These small shippers have been locked out because they signed contracts with customers in the spring at reasonably low prices that did not take into account today’s high freight costs, and now They will have to pay high shipping costs and face hefty breach of contract penalties if they don’t meet deadlines.
At the same time, Jordi Espin, policy manager for maritime affairs at the European Shippers Council (ESC), believes that this is one of the reasons why carriers will shift shippers to long-term contracts with high freight rates. A “trick”.
“Should we be happy that freight rates are at these extremely high levels? This could be a sign of a global economic slowdown, and if shippers agree to contract at higher rates Long-term contracts, this will be a big problem.”
The response from freight forwarding companies is also not ideal.
One of the freight forwarders said: “I completely believe this is just a simple marketing ploy. Liner companies have raised freight rates to completely unreasonable levels, draining small importers of exports. merchants and freight forwarding companies. CMA CGM’s net profit in the second quarter increased by as much as 2,458% year-on-year, and now they attribute the growth solely to port congestion and demand imbalance.”
Another freight forwarder The company said it “hopes other companies will follow suit and remain stable. I suspect they are seeing a drop in demand as I know some major retailers have canceled up to 30% of their orders. I wouldn’t say this is an olive branch.” , more to save face and try to look like a good person at the moment.”
A third freight forwarding company pointed out: “They mentioned stopping price increases, but they will use PSS and congestion surcharge as a way to increase shipping costs.”
But no matter what, it must be done for ocean freightThumbs up to CMA CGM, who fired the first shot in the cost-blocking battle, Hapag-Lloyd has followed suit, and other shipping companies should also respond in the future! </p
