FT: China presses shipping line to rein in record freight rates

© Feng Yu

THE FINANCIAL TIMES reports:

China is putting pressure on CMA CGM, one of the world’s biggest shipping companies, to keep a lid on record container freight costs, which have been driven up by a recovery in demand following the coronavirus pandemic. “The market is so strong that they feel, the Chinese authorities, that at one point in time there needs to be a ceiling,” said Rodolphe Saadé, chairman and chief executive of Marseille-based CMA CGM in an interview with the Financial Times.

“And that is why they are saying you cannot do whatever you want, there are rules that need to be followed.” The Chinese transport ministry is particularly concerned that higher freight rates would slow exports to the US and “watching extremely carefully what is happening”, added Mr Saadé, without saying if he would cap or cut rates.

The cost of shipping goods has jumped worldwide in the past few months as factories in Asia reopened and cargo capacity was quickly used up, forcing up transport costs to western shores. This followed the cancellation of hundreds of trips at the outset of the pandemic. Freight costs on routes between China and the west coast of the US began to increase over the summer as American companies bolstered heavily depleted inventories caused by shocks to supply chains earlier in the year, and as people stuck at home shopped online. 

“Usually in the US when people go to work, they will stop by a Starbucks, buy a muffin and a coffee . . . But now they cannot go to the office, they are staying at home, they need to have breakfast, they need toasters,” said Mr Saadé.

“So they are buying heavily from China, I mean, millions of toasters via Wal-Mart, via Amazon, via Costco, via whomever. And we ship them,” added Mr Saadé, who has co-opted ships from other routes to try to meet demand.

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