Unpredictability seen negatively impacting supply chains

Return to the Suez Canal

CMA CGM has announced its FAL1, FAL3 and MEX services connecting Asia and Europe, which recently began transiting Suez Canal again on backhaul voyages, will return to sailing around the Cape of Good Hope.

CMA CGM cited the “the complex and uncertain international context” in reversing its decision to return to the Red Sea.

 

 

Xeneta analyses in a communique:

“Shippers crave predictability in supply chains. Carriers taking the decision to return to the Red Sea, then reversing that decision - even if it is done for important safety reasons - still risks undermining confidence in schedule reliability and eroding trust in partnerships,” says Destine Ozuygur, Senior Market Analyst at Xeneta - the ocean and air freight intelligence platform.

Latest data from Xeneta shows full loop transit times on the FAL1 service - connecting China and Singapore to six European ports including two dedicated calls to Southampton - decreased from 105 days to 98 when ships began transiting Suez Canal again. It also saw one vessel slot removed.

Ozuygur said: “Unpredictability is toxic for supply chains.  Shippers want certainty over when containers arrive at port, even if that means longer transit times around Cape of Good Hope.”

Ozuygur warns this unpredictability could spread across services and carriers. This includes CMA CGM INDAMEX service, which is currently still scheduled to transit Suez Canal on fronthaul and backhaul legs.

Xeneta data shows transit time from Port Qasim in Karachi to New York on the INDAMEX fell from 40 days to 36 days after returning to the Suez Canal in January.

Ozuygur said: “There has not been a CMA CGM announcement on the INDAMEX service, but shippers will look at the decision on FAL and MEX services and fear containers will be arriving later than planned. Do shippers plan for a transit time of 40 days or 36 days? What impact does this have on warehousing or detention and demurrage fees?

“Multiply this uncertainty across all services and carriers and the risk of widespread disruption becomes clear.”

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