News / CMA CGM axes SEA-X – prelude to the end of transpacific premium products?

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CMA CGM appears to be set to close its transpacific express container shipping service, after worsening congestion at Los Angeles port impacted delivery guarantees.

According to Alphaliner, the French carrier has closed its transpacific premium SEA-X service, and is set to launch a new route between China and rival west coast ports of Oakland and Seattle.

The SEA-X service offered shippers a money-back if containers were not ready to pick up at its Los Angeles terminal by an agreed date.

“It is obvious that severe port congestion at Los Angeles has made it very tricky for CMA CGM, indeed for almost all carriers, to guarantee such on-time deliveries,” Alphaliner noted today.

The SEA-X service was operated outside the Ocean Alliance’s transpacific network and deployed six vessels of 3,700-6,300 teu capacity. Alphaliner understands that three of the vessels have already been transferred to the new Golden Gate Bridge service.

Its port rotation will be Shanghai-Yantian-Oakland-Seattle-Kaohsiung.

The final call of the SEA-X service will be the CMA CGM Elbe, due to arrive at Los Angeles on 13 February.

Launched amid some fanfare late last year, the SEA-X service targeted shippers willing to pay a premium to bypass congestion in southern California. However, that congestion has since spread, according to Simon Heaney, senior manager of container research at Drewry, and could spell the end of premium services on the trade altogether.

“Congestion created the demand for those premium products, but the problem has deteriorated so quickly that we might have tipped over to the point where they will struggle to deliver on promises and be forced to refund the guaranteed element of the freight rate (in at least one carriers’ case they are liable for a 200% refund).

“This is important, because it now means carriers have a vested interest to help repair the supply chain. With competition regulators breathing down their necks, it also gives lines an opportunity to showcase their good side.

“In order to avoid delays and improve port congestion, Drewry expects carriers to adjust their operations down to fit with the struggling landside operations, giving them space and time to get right. This will involve more flexible services that avoid the most congested locations,” he wrote in a research note this week.