News / CMA CGM makes bold pitch for premium business on booming transpacific

Copyright: Port of LA

Transpacific ocean carriers are ramping up their premium services to take full advantage of the continued demand spike on the route.

Recently during an earnings call, niche US flag carrier Matson chairman and CEO Matt Cox gave investors “a sense of the demand right now”.

He said: “On our CLX and CLX+ services each week we are turning away more cargo than we are carrying.”

CMA CGM announced today that, from the end of the month, it would launch SEAPRIORITY Express ‘Go’ and ‘Get’ premium products, connecting Ningbo and Yantian with Los Angeles.

‘Go’ is similar to rival premium products in offering priority for equipment release and space onboard its ships. However, with ‘Get’, shippers will receive priority discharge upon arrival at LA and will also be allocated a chassis within 24 hours to enable prompt onward haulage.

The carrier is offering a money-back guarantee on both products, but did not offer an insight into the additional fees for them.

A Chinese forwarder source told The Loadstar CMA CGM would likely to seek at least $2,000 a box, on top of the current spot rate of circa $4,000 per 40ft for its equipment and space product.

“For the priority discharge and chassis product it can probably charge what it likes at the moment,” he added. “There seems no limit to what shippers are prepared to pay to unblock their supply chains.”

But, he cautioned: “It has to work; some of the other premium products in the market still mean depots are not releasing equipment and boxes still get rolled.”

Carriers are especially keen to get an edge over their rivals on the profitable route and maximise earnings while the market continues to boom. The Shanghai Containerized Freight Index (SCFI) US west coast component has surged by some 200% on 12 months ago, while rates to Europe have spiked by a relatively more modest 130%.

According to Alphaliner, because carriers are seeing a better return on the transpacific, they have added more tonnage on this tradelane than on Asia-Europe.

“Current available capacity on the transpacific is 32.7% higher compared with May (when carriers blanked the most sailings), whereas the capacity increase on Asia-Europe was only 15.4% over the last six months,” said the consultant.

“The transpacific is the more lucrative of the two routes. Despite recent increases in Asia-Europe spot rates, the transport of a 40ft container from Shanghai to Los Angeles or Long Beach will generate an income of $3,913, based on the SCFI spot rate on 20 November. The average rate is only $3,288 for a Shanghai-North Europe trip, which is twice as long,”