CMA CGM forms an alliance with 6 shipping companies! Seize the Asian market!

2024-05-16 10:46
In order to consolidate its position in intra-Asian trade routes, CMA CGM is deploying three ships to operate a unique "Butterfly" network through cooperation with an alliance of six intra-Asian shipping companies. The service network consists of two routes, named VGI, and is designed to connect intra-Asian markets such as India, the Middle East, Malaysia, Vietnam, Thailand and Singapore.

The vessel share includes three vessels from Emirates Shipping Lines and one vessel each from five companies: PIL, RCL Feeder, KMTC, CU Lines and Global Feeder Shipping. The vessels have a capacity of 4,000 to 6,000 between standard boxes.

The VGI-1 route will call at Laem Chabang, Singapore, Port Klang, Nawa Sheva, Jebel Ali, Daman, and then return to Nawa Sheva, Port Klang and Vung Tau ports. The maiden voyage was launched from Laem Chabang on the 16th by the "Zhong Gu Shen Yang".

The VGI-2 route calls at Vung Tau, Jakarta, Port Klang, Mundra, Jebel Ali, Daman, and then returns to Mundra, Port Klang and Laem Chabang. It was launched by the "ESL Kabir" in May. Arrive in Vung Tau on the 19th for its maiden voyage.

CMA CGM said the VGI network provides competitive transit times and is designed to serve the rapidly growing import and export needs of the Southeast Asian market. In particular, through direct flights to Jebel Ali and Dammam, customers will be able to more easily access core markets in the Middle East and further expand to other ports through feeder services.

According to industry sources, in addition to intra-Asia cargo, alliance members can also opt for Gulf cargo exported from Jebel Ali or Dammam to be transshipped at hub ports such as Port Klang and Singapore, thereby expanding Service area.

CMA CGM has connected some Gulf cargo to Colombo through branch lines, but capacity issues at the Sri Lankan hub port have caused serious concerns for shipping companies. Recently, the ENNORE port on the east coast of India has also encountered operational problems, mainly due to overloading of transshipment calls diverted from Colombo.

Nonetheless, return freight is more attractive for intra-Asia service calls at Indian ports. Stable cargo volumes have kept ocean freight rates positive in recent months. According to market sources, shipping companies are currently able to sell space from Singapore to Navasheva at US$800 per TEU and US$1,100 per FEU, which is an increase from US$750 and US$900 a week ago.

An executive of a large freight forwarding company in Mumbai pointed out that trade between India and the US East Coast has recently experienced severe price shocks due to the new WIN service launched by ONE, which has greatly disrupted the market. The executive further emphasized that unless demand conditions improve significantly, prospects for freight rate recovery appear to be quite difficult.

According to sources, compared with April, booking prices from India to the East Coast of the United States dropped significantly in May, with specific decreases of approximately US$1,600/TEU and US$2,000/FEU. Traditional market leaders such as Hapag-Lloyd, CMA CGM and MSC may need to re-strategize their operations to cope with the challenges.