CMA CGM lifts FAK rates and peak surcharges on Mediterranean, Gulf and Red Sea

The Analysis

Six thousand one hundred to six thousand seven hundred dollars per 20ft. Six thousand three hundred to six thousand nine hundred per 40ft and high cube. That is the Mediterranean to Gulf band in CMA CGM's July tariff. The Red Sea column is a different animal: 2,100 to 3,200 on 20ft, 2,300 to 3,400 on 40ft. From 8 July, a peak season surcharge of 100 per 20ft and 200 per 40ft. The package phases in between 5 and 25 July.

Three weeks, one announcement, and exactly one single-valued number in the whole release. That last part is the story. Everything else is a range, and a range is not a price. It is an invitation to a conversation whose terms are set somewhere other than the press release.

I read tariff sheets for a living, and this one contains an anomaly worth more than the surcharge. We will get to the ratio. The money comes first.

Start with the surcharge, because it is the only number that cannot argue with you. Two hundred dollars on a 40ft box against a FAK of 6,300 to 6,900 is 2.9% to 3.2%. On a 20ft, 100 against 6,100 to 6,700 is 1.5% to 1.6%. The Red Sea column applies the same absolute amounts to a much lower base, so the same 100 and 200 run from 3.1% to 8.7% depending on box size and where in the band you land. That is the entire quantitative content of the surcharge: between one and a half and eight point seven percent, decided by which column and which end of the range you happened to be quoted. A budget built on the PSS is a budget built on the smallest line on the page.

Now the range. The Mediterranean to Gulf 20ft band is 600 dollars wide on a 6,100 floor, which is 9.8% of the floor. The 40ft band is 600 on 6,300, or 9.5%. The Red Sea 20ft band is 1,100 wide on 2,100, which is 52%. The 40ft Red Sea band is 1,100 on 2,300, or 48%. A published range that is half as wide as its own floor is not a price list. It is a statement that the carrier does not know, or does not wish to say, what the Red Sea will cost three weeks from now. Either way, the number you actually pay is decided at the booking desk, not in the announcement.

Here is the number that did not make the release. Divide the 40ft by the 20ft on the same lane, same week. Mediterranean to Gulf: 6,300 over 6,100 is 1.033, and 6,900 over 6,700 is 1.030. Red Sea: 2,300 over 2,100 is 1.095, and 3,400 over 3,200 is 1.063. A 40ft box is priced at 3% to 10% above a 20ft box on the same sailing. Assume a 40ft carries roughly twice the cargo of a 20ft, which is my assumption and not a figure from the release. On that basis, two 20ft boxes at the Gulf floor cost 12,200 against 6,300 for one 40ft, so the 40ft is about 48% cheaper per unit of cargo. On the Red Sea floor it is 4,200 against 2,300, about 45% cheaper. The surcharge you are arguing about is worth 3%. The box type is worth 45 to 48%. One of those deserves a meeting.

A wide band on a short leg and a narrow band on a long one is a statement about the booking book, not about cost. A narrow band means the carrier is confident about the next three weeks of that trade. A wide band means the opposite, and it usually means the low end is a number nobody will actually be given. The three-week phase-in does the same work in the time dimension. Three effective dates inside one announcement is three chances to re-price without publishing a new one. Read the calendar as a pricing instrument and the sheet stops looking like a price list. It starts looking like a set of options the carrier has written to itself, and you are the counterparty whether you signed anything or not.

Then there is the gap that should stop you before you benchmark anything. Same carrier, same announcement, same day: Red Sea from 2,100 on a 20ft, Mediterranean to Gulf from 6,100. Three times. Either the voyage is a third as long, or the commodity scope differs, or the two columns are not quoted on the same basis. Port to port against door, dry against reefer, a single origin pair against a whole range. If a war-risk premium sits outside the FAK, then 2,100 is not the cost of moving a box through the Red Sea; it is the base to which a separate line gets added. Put the two numbers in the same column of a comparison table without checking the basis and you will conclude that the dangerous route is the cheap one. Get the tariff sheet with origin and destination pairs, commodity scope, and the full surcharge list attached. If all three are missing, you do not have a quote, you have a headline.

Who feels it first. A shipper moving low-value heavy cargo in 20ft boxes on the Red Sea gets the worst combination: the highest percentage surcharge and the widest band, with no way to consolidate into 40ft because the cargo will not cube out. A shipper moving high-value cargo on the same lane is paying a rate that is small against duty and inventory, and should be buying schedule reliability instead of arguing about 200 dollars. A large importer on an annual contract does not pay this month's FAK at all. The July print is the reference that will be used against them at the Q4 renewal, and that is where the 9.8% band actually costs money. A smaller shipper booking two weeks out gets the top of the band by default, because the low end is allocated to volume and lead time, not to need.

The effective dates are 5 to 25 July for the FAK and 8 July for the PSS, and the only date that matters is the last booking that sails before your lane's effective date. Whether the trigger is the bill of lading date or the sailing date depends on the tariff wording, and those two can be a week apart. Cargo booked on 4 July and sailing on 9 July is exactly the case where people assume they are covered and are not. Ask in writing which date governs, and keep the answer. The cost lands on the importer's landed cost one transit time later, so August for the Gulf, and it lands in the next tender as a reference point whether anyone accepts it or not.

What the coverage missed is the ratio, and it missed it because the ratio requires division. Every story led with the level of the FAK and the return of the peak surcharge. Neither is actionable on its own. A 1.03 multiplier between the 20ft and the 40ft on the same sailing is actionable, because it says the container mix, not the rate negotiation, is where the money sits on this lane. The second thing missed is the direction of the phase-in. Three effective dates inside one announcement means the announcement is a schedule of re-pricing opportunities, and the correct response is to be booked before the first one rather than to argue after the last one.

Run a small one. Assume 40 boxes a month on the Gulf lane, all quoted at the midpoint of the band rather than the floor, because that is what a mid-sized shipper without a volume commitment actually gets. The midpoint is 6,600 on 40ft. Against the floor of 6,300 that is 300 a box, 12,000 a month, 144,000 a year, for the same service on the same string. Then assume 20 of those boxes are 20ft and the cargo would fit into 10 40ft, which is my assumption, not the release's. Twenty 20ft at 6,100 is 122,000. Ten 40ft at 6,300 is 63,000. The saving is 59,000 a month. These are the published numbers, and the ratio is not normal. That is exactly why you verify it against your own quote before acting on it. If your quote shows the same 1.03, the box type is the conversation.

The trap is unit discipline. A 20ft rate and a 40ft rate are not comparable without division, and a per-box surcharge is not comparable to a percentage without a base. The second trap is treating the PSS as the event because it is the only clean number in the release. Two hundred dollars on a 6,500 dollar box is 3.1%. You can win that argument and still lose 48% on the box type, and the carrier will happily let you win it. Lock the band position before 5 July, on the box type you actually need. If the 40ft quote comes back above 6,600, do not ask for a discount. Ask what the 20ft equivalent is and do the division yourself. The surcharge is the part of the bill they want you to look at.

↑ Back to the key points

— By Vivian Zhao