CMA CGM Announces Possibly Trend-Setting Fee & New Service

 In 2M, cargo, container carriers, container shipping, freight forwarders, International Shipping, Maersk, P3 Alliance, P3 Network, shippers, shipping

CMA CGM Launches New Fee

CMA CGM container ship

CMA CGM Hydra

CMA CGM just made a move that we could see ripple through the international shipping industry. The carrier will charge a fee to shippers who are “no-shows” with their cargo or who cancel or transfer their cargo within a week of shipping.

Gavin van Marle reported in The Loadstar:

The line says it will apply a $150 per teu cancellation fee on all equipment types, except reefer containers, from 1 June on applications to cancel or transfer a booking made less than seven days before the sailing date.

The fee will also apply to no-shows and will be applied to the party that made the booking – principally freight forwarders.

This fee is actually on European shippers and forwarders failing to deliver on booked container shipments to the Indian subcontinent, Middle East Gulf, and Red Sea ports according to the article. However, it doesn’t take much imagination to envision similar fees being levied on other routes, such as transpacific ones between the U.S. and Asia, and by other carriers.

Generally, when one carrier makes a move like enacting a general rate increase (GRI), the other carriers do likewise. It would be no surprise for CMA CGM’s cancellation fee to set a trend among carriers.

From what I’ve seen, no-shows from shippers along with rollovers from carriers are larger problems for shipments in Europe than in the U.S.; however, there is an industry wide reliability issue between shippers and ocean carriers.

Because the issue seems more prevalent in European trade routes, we could just see such fees spread across the other carriers when it comes to these European routes. Such fees on U.S. cancellations and transfers would likely garner complaints from shippers and freight forwarders to the Federal Maritime Commission (FMC).

Perhaps the best ground such complaints would have of convincing the FMC not to allow the fee is that shippers and freight forwarders would not have a similar recourse against carriers for blank sailings or container rollovers that can be so costly for shippers, delaying the receipt of cargo.

Of course, it makes sense that CMA CGM would issue this fee, combating a costly issue for the company. According to van Marle’s article:

“CMA CGM has been facing a large number of shortfalls due to late cancellations preventing us from accepting bookings on behalf of other valued customers,” the company said in a statement.

It will be interesting to watch if CMA CGM’s new fee really does become a trend throughout the international shipping industry.

CMA CGM Launches New Service

Speaking of CMA CGM, the carrier is working with Hamburg Süd to launch a new container service between the U.S. and Central and South America. Working with Hamburg Süd probably really means working with the biggest trend setter of all the carriers in the international shipping industry, Maersk Line.

An American Shipper article by Elizabeth Landrum reports:

French ocean liner CMA CGM will launch a new container service called “Azteca” connecting the U.S. West Coast with Central and South America later this month, the company said Tuesday.

The weekly loop will be operated in conjunction with north-south specialist Hamburg Sud of Germany, which was sold to industry leader Maersk Line…

The Azteca service will have a port rotation of Oakland, Los Angeles, Lazaro Cardenas, Puerto Quetzal, Acajutla, Corinto, Buenaventura, Puerto Caldera, Puerto Quetzal, Lazaro Cardenas, Los Angeles and Oakland.

The connection to Maersk is a nice bonus for CMA CGM in launching this new service.

CMA CGM is the third largest carrier in the world by capacity. In front of it are Maersk and the other member of the 2M carrier alliance, Mediterranean Shipping Company (MSC).

CMA CGM tried to enter an alliance called the P3 Network with Maersk and MSC until China halted those plans. Maersk and MSC quickly replaced the P3 alliance with the 2M. CMA CGM is now in the Ocean Alliance with China Cosco Shipping Corporation, Evergreen Line, and OOCL.

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Showing 2 comments
  • Gary Ferrulli
    Reply

    It’s been tried before by Hapag and Maersk and because the market wouldn’t follow,
    failed. Will it work now? My personal feeling is no, because the exceptions would become
    the rule and —– . Carrier’s just can’t seem to tolerate having shippers upset, the ones who
    try are told “we’ll pull the plug, no one else will do it” and so it goes.
    It would actually do much good as it would stop or curtail the multiple bookings done to
    “make sure we are covered”, and in a tight market that has cargo being booked three or four weeks
    out that could move in a week but doesn’t because the ships are overbooked with ghost cargo
    by big shippers/nvo’s. But with no consequence, why would they care?

    • Jared Vineyard
      Reply

      Completely agree, Gary. I’ll likely quote you in an article I’m putting together now on Hapag-Lloyd issuing this fee again.

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