CMA CGM and HMM stack peak-season surcharges on Asia-U.S. cargo

The Analysis

It is the afternoon before a sailing, and the only question on the desk is which open order actually makes the boat. On 10 July, CMA CGM puts a 4,000-dollar-per-FEU peak-season surcharge on all Asia-to-US cargo. Five days later, on 15 July, HMM layers another 3,000 dollars per FEU onto the same lane. Both of them sit on top of the mid-June hikes that already pushed the West Coast spot rate past 7,000 dollars a box and the East Coast past 8,600. And Drewry counted six to eight blanked trans-Pacific sailings. Read that last number twice, because it is the one that decides whether your container moves at all.

I don't run a rate desk. I run the last mile, so let me tell you the order I read those numbers in. The surcharges are the headline. The blanked sailings are the story. A surcharge changes what you pay; a blanked sailing changes whether you ship. One is a line on an invoice, the other is a date on your buyer's door that quietly stops being true.

Two carriers, two effective dates, five days apart. 10 July and 15 July. That gap is the whole game for anyone deciding what goes into which box before the counter closes. Same cargo, same lane, same week, different bill, depending on the hour your container is locked. So before you ask me about rates, tell me your cut-off.

A blanked sailing is a scheduled ship that simply does not go. The weekly service is still printed on the schedule, the vessel that was going to carry your box is withdrawn, and the space you thought you had is now space you share with everyone else whose box got rolled off that ship. Six to eight of these across the trans-Pacific in a peak season is not a rounding error. It is the difference between your container leaving on this week's ship and leaving on next week's. And a week, on my side of the fence, is not one week. It is every promise date inside that window moving at the same time, each one moving by the same week.

Nobody pulls capacity out of a peak season unless they can hold price with it. That is the mechanism. Take eight sailings out, keep the rest full, and let the surcharge do the rest. Demand is the excuse; withdrawn capacity is the lever. So this is not a peak charge you can just wait out. It is a function of how tightly space is held, and the space is being held on purpose. That is also why the two surcharges land five days apart instead of together. Each carrier reads the same tightness and moves when it wants to move.

Who gets hurt is not who you would guess. If you are a big contract shipper with a fixed all-in rate and a named weekly allocation, most of this passes over your head. You have a number, you have space, and the surcharge is somebody else's argument. If you are the small or mid-sized exporter booking spot week to week, filling a fraction of a box, you are exactly the cargo that gets rolled first, because when space is rationed a carrier keeps the accounts it wants and drops the ones it doesn't. The surcharge and the rollover land on the same people. That is not a coincidence. That is design.

Now convert it, because this is where I live. Your buyer never receives an FEU. They receive a parcel, or forty parcels, or a pallet that gets broken into parcels at the destination. So 4,000 per FEU means nothing to your delivery date until you divide it. Assume a 40-foot box carries 2,000 sellable units. That assumption is mine, put your own number in. 4,000 divided by 2,000 is two dollars a unit on the ocean leg. Add HMM's 3,000 from 15 July and the stack is 7,000 a box, which is 3.50 a unit. That is the surcharge talking. It is not the number that scares me.

Here is the part no headline carries. When your container is rolled because the sailing was blanked, your cargo does not sit quietly and then arrive a week late at the same cost. What actually happens is that somebody on your side panics about a promise date, and the fastest fix on the table is to pull the urgent piece off the water and put it on a plane or into the express network. That is a different order of money. Air and express on the same lane are not a few percent more than ocean; they are multiples. The 4,000-dollar surcharge you spent a week arguing about is a rounding error next to what one air-lifted pallet costs. The surcharge gets the attention. The air bill gets the damage.

So watch hours, not the rate. The surcharge dates are 10 July and 15 July, but a surcharge does not attach to a booking date. It attaches to a loading date. Your box is assessed on when it locks for the sailing, and that lock is set by a cut-off that runs hours before the ship closes, and the cut-off moves earlier when the terminal is congested and the ship is full. On a calm week there is a comfortable buffer. On a blanked-sailing week there is no buffer at all, because every rolled box from the withdrawn ship is now fighting for the same slots, and the cut-off comes at you with no brakes. Ninety minutes can be the difference between the old box and the new one, the old rate and the new one, the promise kept and the promise broken.

Let me put money on it, assumptions on the table. Say you ship 12 FEU a month on this lane. Say the surcharge stack, baseline to peak, is 7,000 a box, because from 15 July both CMA CGM's 4,000 and HMM's 3,000 are in force. Twelve boxes at 7,000 is 84,000 dollars of surcharge in a month, by itself. Now say three of the twelve get rolled in a given week, and on two of them you decide the promise is worth saving, so you air one pallet each, and a pallet of air costs you 6,000. Pick your own number, because yours is the only true one. That is 12,000 dollars of air to rescue two promises. The surcharge on those three rolled boxes was about 21,000; the rescue air is 12,000 on top. The rollover, not the surcharge, is what wrecks the month.

And here is the trade inside that. You did not have to air the whole container. You air the SKU with the hard date, the one with the marketplace penalty, the one the customer ordered three times and returned twice, the subscription that cancels if it is late. The rest of that box can wait. The mistake people make is treating the container as one thing and either flying all of it or none of it. It is not one thing. It is a handful of urgent parcels and a lot of patient pallets, and the whole job is telling them apart.

So on a blanked-sailing week the desk question is not whether the container is late. It is which parcels inside it die if they are late, and which ones survive. Rank them. Hard promise dates first: pre-orders, launch dates, guaranteed marketplace windows, anything with a penalty or a chargeback attached. Then the relationships you cannot afford to burn this quarter. Then the returns-heavy SKUs, because a late delivery becomes a return, and a return becomes two more moves. Everything else waits for the next ship and you eat the surcharge, not the air. And do that ranking when you book, not at four in the afternoon on cut-off day, because at four in the afternoon the only lever left is the expensive one.

Now the flip side, because there always is one. If the carriers un-blank those sailings and space comes back, the surcharge loses its teeth fast, because a surcharge on abundant space is just a discount waiting to be argued away. If demand cools, the same carriers who added 4,000 and 3,000 will subtract it just as quickly, and whoever re-signed at the peak number will be the one explaining it. And if you are already inside a fixed all-in contract with a weekly allocation through the peak, none of this touches your profit; your risk is the rollover and the cut-off, not the headline number. So the real question is not how high rates will go. It is whether you can get allocation, and hold your cut-off steady, through the weeks that matter. A rate is a price. Allocation is a promise. Buy the promise.

One more turn of the numbers, because the per-parcel view is the only view a seller actually feels. Assume your average order is three units and your box carries 2,000 units, so about 660 orders a box. At 7,000 a box of peak surcharge, that is a little over ten dollars of extra ocean cost per order. Ten dollars and change. If your margin on that order is twelve dollars, the surcharge just ate your profit and your lunch. If your margin is forty, you shrug. That one division, surcharge per box divided by orders per box, is the only arithmetic that tells you whether this summer is an emergency or an annoyance. And you cannot do it without knowing your units per container, which half the sellers I talk to cannot tell me on the spot.

There is one more wrinkle in those five days, and it is worth money. For a shipment that can be tendered either side of the split, the last sailing that escapes CMA CGM's 4,000 is the one that locks before the 10 July cut-off, and the last one that escapes HMM's 3,000 is the one that locks before the 15 July cut-off. In plain terms, the week between the two dates is a window where one carrier has already moved and the other hasn't, and whether you are inside it or outside it is decided by hours, not by which company you like. If your box can make the earlier loading date without breaking a promise, that is the difference between carrying both surcharges and carrying one. Tell your forwarder which date is the line, to the hour, and let them tell you which side you land on.

And here is the second-order effect nobody prices in. Every rolled ocean box that gets rescued by air takes air space on the same lane, and air space is not infinite. So an ocean-capacity crunch does not stay an ocean story for long. A few hours later it shows up as an air-rate crunch, and the express network feels it next, including on the parcels you did not pull off the ship. The lane is one system. Squeeze it at one end and you pay at the other end, usually within the same day.

The gap between a seller who survives a rollover week and one who doesn't is not effort. It is the hour they act. The one with a rescue list already drawn moves at nine in the morning, at a normal air rate, and gets the parcel on a plane. The one without a list moves at six in the evening, at panic rates, and sometimes does not get on the plane at all. Same cargo, same day, wildly different bill, and the only thing that separated them was whether the decision had been made before the clock forced it.

And do not forget what a late parcel actually costs beyond the air bill. A missed promise date is a return waiting to happen, and a return is two extra moves, one back and one out again, plus the handling and a customer who now trusts you a little less. On some categories the return rate after a missed date doubles. So when you decide whether to air a parcel, you are not choosing between paying for air and paying nothing. You are choosing between paying for air and paying for the return, the reship and the relationship. Put that second number next to the first before you decide, and suddenly more parcels are worth flying than you thought.

So what to do, starting now. In the next few hours, get the sailing dates for every open order you have on this lane and mark which side of 10 July and 15 July each one actually loads. Not booked, loads. The booking date lies; the loading date is the truth. If your box loads on the ninth, CMA CGM's 4,000 is not yours; if it loads on the eleventh, it is. Two hours of work and you know which of your open orders just got more expensive, and by how much.

By the end of today, take the three or four open orders with hard promise dates and decide, one at a time, whether they stay on the water or come off it. Not the whole order, the urgent part. The SKU that dies if it is late goes air or express; the patient pallet stays. And write down who owns that call and by what hour it has to be made, because on cut-off day the call has to be already made, not being made.

Within twenty-four hours, ask your forwarder, in writing, two things: what allocation you actually hold for the next four sailings, and what the real cut-off is for each, to the hour. Not the cut-off printed on the booking confirmation, the cut-off the terminal will actually enforce that week. If they cannot give it to you in hours, you do not have space. You have hope.

This week, build the per-parcel number so you stop negotiating blind. Units per container times the number of containers, divided into the surcharge stack. If it comes out under a dollar a parcel, stop worrying and go work the accounts that move the needle. If it is five dollars and up, this is a pricing decision, not a logistics one, and the person who should be in the room is whoever sets your customer price.

For the next four sailings, set a rollover threshold and a rescue rule. Threshold: if the chance of a rollover on a booking goes above what you will accept, call it one in five, you switch that SKU's urgent part to air early, before the rollover lands, because air booked at the last hour on a tight lane is the most expensive air there is. Rule: any parcel inside a hard promise window gets flagged at booking, not at cut-off.

Keep one person watching the cut-off clock every sailing day, hour by hour, from seventy-two hours out. On a full ship the cut-off moves earlier, and it moves without an announcement. If nobody is on the clock, the first time you learn the cut-off moved is when your box is not on the ship, and by then the only lever left is air, at the worst price of the week.

On alternatives, be honest about the costs. Air is the fast fix and the expensive one; use it surgically, not wholesale. A different origin port can dodge a jammed gateway but adds its own transit hours and its own cut-offs, and on a peak Asia-to-US lane re-routing usually buys a week of confusion for a bit of speed. Holding cargo back to wait out the rollover is fine for the patient pallet and fatal for the promised parcel. There is no free move. Decide which cost you are willing to eat, and eat that one on purpose.

Two traps, and both of them cost real money. First, the trap of the booking date: people look at when they booked, think they know their rate, then the invoice arrives carrying the loading date's surcharge. Match the rate to the loading date, every time. Second, the trap of the old base: the mid-June hike already pushed the West Coast past 7,000 and the East Coast past 8,600, and that is the floor you are adding 4,000 and 3,000 to, not the pre-June number you remember. Anyone still costing this summer off last spring's rates is short by thousands a box and finds out at the worst possible hour.

So if this were my desk, here is the order. Take the open orders, mark each to its loading date against 10 July and 15 July. Pull the urgent SKUs off the slow boxes and put them where they will actually make the date. Get allocation and the real cut-off hours in writing for the next four sailings. Put one person on the clock every sailing day. And keep the reason in front of you: none of this is to save the four thousand. It is to keep the promise your buyer is holding you to. The surcharge is a number. The promise is the business. Save the promise first, and argue about the number second.

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— By Nadia Pryce