Shippers are all in hope of more carries to follow the suit as market sources expect some relief from the ever-increasing container freight which may come in the near term as CMA CGM and Hapag-Lloyd recently announced rate freeze. The rate freeze is reportedly expected to result in influx of new customers for the two carriers and other companies may follow suit to retain their market share and stay in the game, according to industry participants.
According to S&P Global Platts’ report, Bilal Khan, Enterprise Sales Leader, Pakistan digital logistics platform HashMove said, “To me this is a quick jump on the bandwagon to address deteriorated customer relationships in a longer [term] perspective.” Furthermore, a freight forwarder based in Indonesia told S&P Global Platts referring to CMA CGM, “With this new announcement they're are trying to shock the system in hopes of increasing their market share with all this new capacity that they will soon have on their hands,” adding that this may be a precursor to a pricing war. India-based freight forwarder further added that the large carriers may have lost some of their business to the small players and the shipping lines that are outside of the three major alliances. “Now that all these companies are cash rich, one thing they will do is use it against each other; either by buying some companies or cutting their profit margins to challenge the others,” he said in his statement to S&P Global Platts.
Other than freight rates, schedule reliability remains a huge concern for shippers. As per reports, Peter Sundara, Vice President-Global Freight Management, Global Ocean Procurement, LF Logistics said, “Freezing sharp rate increases via premium and other surcharges is very much welcome but our main concern is how the carriers are going to prioritize releasing space and equipment when we continue to face huge vessel delays and port congestion. It is unlikely that the day to day challenges will disappear because of this announcement. It also remains to be seen if the carriers will drive customers to use more of their online quotes which are charged at premium levels and what would likely be the impact of this for 2022.”
Last week, CMA CGM and Hapag-Lloyd announced a halt in the spot rate, in between freight rates hovering at record highs on most trade routes. Reportedly, CMA CGM said that it will not increase the freight rates till February 1, 2022, Hapag on the other hand suggested that it will avoid the surge for the time being. Besides, the German carrier is also expected to limit any sharp increases in the premium and other surcharges.