CMA CGM Sets $35/TEU Black Sea War Risk Surcharge From November 9

The Analysis

CMA CGM put a number on the Black Sea this week and the number is 35. From 9 November, every container moving into or out of the Black Sea countries carries a war risk surcharge of USD 35 per TEU. The United States and its territories, Australia, New Zealand and Latin America wait until 1 December, because somebody has to file the paperwork first. The wires carried the figure and moved on. My job is to ask what base that 35 sits on, whether it is a premium or a margin, and where the line falls between your risk and the carrier's.

The surcharge did not appear from nowhere. On 16 September the Joint War Committee, the body that draws the map insurers price against, listed the Black Sea as a war risk area. When JWC redraws a listed area, underwriters reprice the hulls and the cargo moving through it, and the carrier's premium line jumps before anyone touches a freight rate. The 35 is what CMA CGM decided to pass downstream, and passing downstream is a decision, not a physical law.

What follows is the dissection of that 35 dollar figure, the two date split that turns one cargo into two prices, the clause in a CIF or FOB contract that decides who eats it, and the arithmetic that tells you when 35 per TEU stops being noise and starts being a margin call. Every number comes from the published announcement and the JWC listing date; every assumption I add is labelled as mine.

Start with what 35 is measured against, because the unit tells you who pays. It is USD 35 per TEU, which is twenty feet of box, so a standard forty foot move pays about 70 dollars, and a forty foot high cube pays the same 70 because the charge is tied to the box, not to the weight or the value inside it. Pull that apart and the first oddity appears. War risk in insurance is priced on value times rate. Hull coverage tracks the ship, cargo coverage tracks what is inside, and both scale with how much money is exposed. A per box surcharge throws that principle out and replaces it with a flat toll. A container of household appliances and a container of steel both pay 35. That is convenient to administer and blunt as a risk instrument.

So the question I keep returning to is whether 35 reflects a premium or a management fee dressed as one. Cargo war risk for a single voyage through a listed area typically prices at a small fraction of one percent of insured value, and the exact fraction is the underwriter's business, not mine. Take a box of appliances worth 40,000 dollars and a cargo war risk rate near 0.05 percent. That is 20 dollars of actual premium on the exposure. Take a box of steel worth 15,000 dollars at the same rate and the pure premium is 7.50. The carrier is asking 35 from each.

On the steel box the surcharge runs near five times the plausible premium; on the appliances it is under two. Nobody publishes the breakdown, and I am not claiming the gap is pure profit, because the carrier also carries the JWC risk assessment, the claims handling, and the extra port calls a listed area forces on it. What I am claiming is that 35 per TEU is not a clean pass through with one number attached. It is a blended charge in which high value cargo subsidises low value cargo, and you should know which side of that line your boxes sit on.

Here is the part the headline buried. The two dates split the same voyage into two prices, and the line falls on the loading date, not on the cargo. Everything loaded from 9 November pays 35 per TEU. Cargo loaded on 8 November does not, even if it is still afloat off Constanta when the surcharge goes live. The US, Australian and Latin American trades then get their own start on 1 December, which means a box leaving Odesa for Los Angeles and an identical box leaving Odesa for Rotterdam on the very same ship can carry different effective prices if one trade falls under a filing that slips to the second date.

The stated reason for the delay is regulatory filing, and that reason matters to you, because it tells you the surcharge is a tariff like instrument the carrier must lodge rather than a spot quote it can invent at the counter. If it has to be filed, it is also reviewable, and it can land on bookings already on the books unless your contract says otherwise.

Now the contract clause nobody reads until it fires. Under CIF the seller arranges and pays freight to the destination port, so the seller eats the surcharge, and if it priced the deal before 9 November without a surcharge clause, the seller eats it straight out of margin. Under FOB the buyer books the freight, so the buyer eats it, and the buyer is the one holding a container that suddenly costs 70 dollars more with no prior warning. Both structures share one escape hatch, and it is a single line in the freight clause.

Does it say the rate is fixed, or does it say the rate is subject to surcharges as actually levied on the date of shipment. If it says the latter, you pay and you have no argument, because the carrier wrote the clause correctly and you signed it. If it says the former, you have a case, but you have to raise it before the booking is invoiced, not after. The carriers are not hiding this. They are relying on you not having read it.

Where does the money actually land, and how big is it? I will run the arithmetic openly. Assume a mid sized importer moving 200 TEU a month out of the Black Sea, a mix of appliances, auto parts and general merchandise, which is exactly the cargo profile of Constanta, Odesa, Novorossiysk and Poti. At 35 per TEU that is 7,000 dollars a month and 84,000 a year, on top of ocean freight. Take it down to a single shipment. If your product sells at a landed cost of 400 dollars a unit and a container carries 500 units, the surcharge adds 70 dollars to a 200,000 dollar shipment, which is 0.035 percent.

On a bulky, low value steel cargo carrying the same 500 units at a 40 dollar landed cost, the same 70 dollars is 0.35 percent of a 20,000 dollar shipment, ten times the burden. That is the entire argument against a flat per box charge in one comparison. It is invisible on high value cargo and punishing on low value cargo, and low value cargo is a good part of what the Black Sea carries.

The figure moves most for the people it looks smallest to, and that is the importer of heavy, cheap goods. Appliances, steel, construction material, general merchandise in bulk. If you ship those, 35 per TEU is not a rounding error, it is a line item that eats a slice of your contribution margin every single month, and unlike a freight rate it does not move with the market in your favour when volumes soften. It stays until the JWC delisting, and the JWC is not in the habit of delisting quickly.

Now the point the wires did not make, and it is the one I would staple to the wall. The JWC listing is not an exclusion and the surcharge is not a refusal to cover. Some shippers read war risk area and hear we will not pay if something happens. That is backwards. War risk is an add on cover that insurers write on top of the standard policy precisely so that cargo through the listed area stays insurable. The carrier is not declining the risk, it is buying it and charging you for the purchase. The practical consequence is that if you, the cargo owner, hold your own cargo war risk cover, the carrier's surcharge and your premium are two charges for overlapping exposure, and you should check whether your policy already covers the Black Sea leg before you accept the surcharge as unavoidable.

Many all risks cargo policies exclude war by default and require a bought back war clause. If yours has that clause and it already lists the Black Sea, you are paying twice for one risk. If it does not, the carrier's cover may be the only cover in the chain, and 35 looks different.

Then there is the critical value, the one number that tells you when to stop shrugging. Express the surcharge as an implied premium rate, which is what it really is. 35 dollars against a cargo value of 40,000 dollars is 0.0875 percent. Against 15,000 dollars it is 0.233 percent. Against a 7,000 dollar container of low value general goods it is 0.5 percent. So the same flat charge implies a premium rate that swings by a factor of nearly six, purely on what is inside the box. The break point where 35 per TEU stops being trivial sits around 100,000 dollars of cargo value per box, where it drops under 0.035 percent and starts to behave like a rounding item. Above that value, treat it as noise and move on. Below 20,000 dollars of value per box, treat it as a cost line and start negotiating or re routing.

Why now, and not in September when the JWC listing actually changed? That gap of almost two months is itself a data point. The carrier watched the listing, watched the underwriting repricing, and then waited for the moment when the charge would meet the least resistance. Early November is that moment. Black Sea volumes into the year end are thin, the December contract round is opening, and a surcharge introduced now lands as a defensive measure rather than a grab. The delay is not indecision. It is timing, and the timing was chosen to make the charge look like a consequence rather than a decision.

If you want to know whether a carrier expects the surcharge to stick, watch how it treats cargo already booked before the effective date. A carrier confident of the number applies it broadly and fast. A carrier unsure issues the announcement and quietly grandfathers the awkward bookings. Ask your forwarder which of the two happened on your account, and you will learn more about the durability of the charge than any analyst note will tell you.

There is a subtler trap in the loading date line, and it is the kind of thing that costs real money in a week when everyone is trying to beat a deadline. If the cut is by loading date, the natural reaction is to pull sailings forward and load everything before 9 November. That reaction is where the losses hide. Rushing cargo to the quay to beat a 70 dollar charge invites two costs that dwarf it: expedited inland transport to make the earlier cut off, and the risk of a shipped-on-board date that rolls into the next window anyway because the vessel was full.

In the busiest weeks the box that arrives early and does not load early pays both the rush and the surcharge. Before you move a single container forward to chase the date, price the inland expedite against the 70 dollars, and if the inland premium exceeds it, let the box sail late and pay the surcharge. The flat fee is often the cheaper option, and almost nobody runs that comparison when a deadline is in the air.

Step back and look at how many charges now sit on a single Black Sea move, because the surcharge is rarely alone. You have the base ocean freight, you have the bunker adjustment, you have the peak season surcharge if the trade is in season, and now you have 35 per TEU of war risk. Each one was added for a respectable reason and each was defended in isolation. Together they change the shape of the lane, because they are mostly flat or per box rather than value based, so the more of them stack, the more the total cost diverges from the value of the cargo inside.

The importer of high value electronics barely notices. The importer of low value bulk feels every one of them. When four flat charges stack, the low value shipper is not paying a higher rate for the same service, they are paying a different pricing model that was never designed for their cargo. That is the structural point the headline number hides, and it outlives this particular 35.

What flips the whole conclusion? Three things. A JWC delisting of the Black Sea would remove the premise and the surcharge with it, and that is the single biggest lever. A widening of the listed area beyond the current borders would turn a per box toll into a per voyage exposure, and the number would have to be re set, likely upward. And a carrier that opts to absorb the surcharge to hold Black Sea volume would break the price leadership, because CMA CGM moving first is exactly what invites the others to file the same charge within weeks. Watch whether a second carrier matches. One carrier charging 35 is a trial. Two carriers charging it is a floor, and floors get inherited by every contract signed after them.

The second item in the same CMA CGM announcement got a fraction of the attention, and it deserves more. Dangerous goods from North Europe, the Mediterranean and North Africa into Jeddah and Port Sudan carry a surcharge of USD 150 per TEU, effective 27 October. That is more than four times the war risk number, it took effect earlier, and it is aimed at the Red Sea corridor rather than the Black Sea. If you move dangerous goods into the Red Sea ports, your billing changed a week before the Black Sea news broke, and the two charges can stack on the same account. Dangerous goods also carry their own documentation and stowage constraints, so the re routing alternatives are thinner than for general cargo. Check the two announcements against your actual booking mix, not against the headline that happened to trend.

Run the re routing question with numbers, because the instinct to avoid the surcharge by avoiding the sea is usually wrong. Suppose you shift a Black Sea destination, say a delivery to Bucharest, onto rail into Constanta instead of an all sea move. The surcharge that disappears is 35 per TEU. The cost that appears is a rail leg whose rate per TEU has to be quoted fresh, plus a longer door to door transit, plus a new set of documents and a new partner. On a 40 foot box the saving is 70 dollars against an alternative leg that rarely costs less than a few hundred dollars more, so the surcharge almost never justifies a mode switch on its own.

It only justifies one when it stacks on top of a base freight gap that was already tipping the decision, which is why I treat the 35 as a tie breaker, not a trigger. The charge that should trigger a re route is the 150 per TEU on dangerous goods into Jeddah and Port Sudan, because at that level the maths can actually move. Do not let the smaller, noisier number set your strategy while the larger, quieter one sits unexamined on your Red Sea account.

So what do you do this week? Start by finding out which side of 9 November each open booking lands on, and for the US and Latin American trades which side of 1 December. That single date check decides whether you pay 70 dollars per forty foot box or not, and it costs you an afternoon. Then read the freight clause in every live contract for the words as actually levied. If it is missing, the next contract gets it. Then price the surcharge into your landed cost per unit, not just per container, because the per box framing hides the percentage that actually hits your margin.

Then check whether your own cargo war risk clause already covers the Black Sea, because paying twice for one risk is the easiest loss here to stop. And then decide, coldly, whether the Black Sea lane still earns its place against the alternatives, because a 70 dollar per forty foot charge on top of ocean freight and war risk pricing is exactly the kind of slow drag that makes a lane quietly uncompetitive over a year.

One closing note on how I read carrier behaviour. A war risk surcharge is one of the few charges a carrier can raise without an index print and without a contract round. It is manual, it is defensive in tone, and it is easy to justify. That is why it tends to be the first charge to move and the last to fall. Do not wait for a headline to tell you it is over. Watch the JWC listing, and when it changes, watch your invoice within the same fortnight.

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— By Vivian Zhao