French line CMA CGM has put itself in a win-win position by being the first to freeze spot rates for containers in soaring markets, according to one shipbroker.
The containership operator took matters into its own hands earlier this month as freight rates on three major east-west trades hit record highs.
Germany's Hapag-Lloyd followed suit and several other lines are expected to make the same move.
Alex Karydis, director of chartering and sale and purchase at German broking shop Hanse Bereederung, told TradeWinds the freeze may have been some sort of reaction to huge shippers like Walmart, Ikea and Home Depot chartering boxships, slots or containers.
"Somebody had to do it. CMA CGM was the one who decided to take the first bullet and Hapag-Lloyd seems to have the same idea, but did CMA CGM really take the first bullet?" he said.
Karydis argued that the French operator will not lose at all.
Lone pioneers — or trendsetters?
"If the other lines decide to go their own ways, they are the pioneers, because they went against the curve. Or, if the [other lines] decide to follow, CMA CGM is still in a leading position, because they started the trend that saved the charterers' situation," Karydis added.
Freight rates from Shanghai to the US west coast have risen to $20,586 per 40-foot equivalent unit (feu), which is over 453% higher compared with the same time last year, according to the Freightos Baltic Index.
Karydis said he thought the spot freeze would happen on a more collaborative basis, with the big two or three lines coming together and saying "this is too much".
"It's not the high rates, it's the congestion for companies like Walmart, driving them to charter ships," he said. "Boxes are in the wrong places most of the time."
Making the big boys mad
Karydis said moves by shippers to take control of the situation has "infuriated" the lines.
Their long-term charters of tonnage or space mean that companies like AP Moller-Maersk, CMA CGM and Mediterranean Shipping Co are losing freight.
Karydis believes some ships have been booked by cargo owners on 12-month deals, but others just for round trips from Asia to the US west coast, due to huge demand.
"What is driving this is basically the US," the broker said. A round voyage is way above $100,000 per day, Karydis explained.
Numbers add up
"And clients do it, because the price of a 40-feu container is $20,000, and you have to ship 1,000 boxes," he said.
"With the value of the cargo, they have a huge profit margin. The cargo itself is worth more than the vessel."
And Karydis said: "When you have a billion-dollar-listed company waiting for cargo the stress is limitless."
CMA CGM said its freeze will last until at least February 2022, with immediate effect.
The French liner giant added it was "prioritising its long-term relationship with customers in the face of an unprecedented situation in the shipping industry".
Hapag-Lloyd later said it thought freight rates were "too high".
