MSC, Mærsk & CMA CGM – where rivalry doesn't matter (and where it does)
Behind closed doors
© Robert Hale
Forwarders have slammed major container lines for “egregious surcharging practices” prompted by the US/Israeli war against Iran, claiming that not only are the surcharges excessive in cost, but they provide “zero” additional protection for shipments.
In the wake of Donald Trump and Benjamin Netanyahu launching attacks against Iran, Hapag-Lloyd, Maersk, and MSC rolled out a slew of surcharges, which have aroused the ire of the forwarding community.
“What is being presented as a ‘war-risk surcharge’ is, in practice, an undefined pricing instrument, with no standardisation, no cost transparency, and no clear articulation of what shippers are actually paying for,” several disgruntled forwarders told The Loadstar.
“Critically, the surcharge does not entitle the cargo owner to any additional protection, priority, or service level. It’s a price increase – but one that comes without a corresponding service enhancement.”
CMA CGM, Hapag-Lloyd, Maersk, MSC, and ONE all implemented war-risk surcharges (WRSs), albeit some opted for a different name, within a few days of each another at the start of March for shipments destined for the Gulf and Middle East.
Pricing for WRSs is dependent on size and box type, with standard teu units subject to charges ranging from $1,200 (ONE) to $2,000 (CMA CGM); pricing per 40ft jumps beyond $3,000, and CMA CGM announced reefers would face a $4,000 WRS.
The infuriated forwarders said: “When surcharges exceed base freight rates, the question is no longer about cost recovery. It becomes a question of proportionality and whether pricing is reflective of risk or of market leverage.
“In disrupted markets with constrained capacity, pricing behaviour tends to reflect market power rather than underlying cost movements. The current surcharge environment is consistent with that pattern.”
Such a forwarder response may have been expected, but could be said to be justified ,considering the apparent post-Covid effort of carriers to try and win their customers back after having been widely condemned for pandemic-induced abuses of power.
Since the lockdowns brought supply chains to a standstill, forwarders have repeatedly expressed grievance at liner “temerity” in “acting as though we’re all in this together”, fearing that standard operating procedure would prevail should another crisis arise.
As to any benefit forwarders could expect from paying WRSs, one forwarder said there was none, pointing out that “the structure effectively transfers risk downstream while monetising it upstream. Carriers price the risk, but they do not absorb it”.
This, they added, meant it was the cargo owners who were left carrying the underlying exposure; but more worrying than this, according to the collective of forwarders who spoke to The Loadstar, was the sense that there was something in it from those who paid.
One forwarder pointed out that there was a misconception among forwarders that the WRSs directly related to insurance – “they do not”, the forwarder said, noting: “Cargo interests remain fully exposed unless they have separate war-risk cover in place.”
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