Date: Monday, May 16th, 2022
Source: The Maritime Executive
CMA CGM Group is implementing the shipping industry’s first early container return incentive program focusing on the Port of Los Angeles and key Midwestern return locations in the United States. According to the company, it is the latest in a series of steps it has taken to improve the supply chain with this 60-day program specifically designed to accelerate the return of empty containers with a goal of providing greater equipment access to U.S. exporters.
The shipping lines have been under pressure from a broad range of U.S. organizations and government agencies to take steps to improve access to equipment as part of an effort to stem the dramatic fall in U.S. exports and specifically in the food and agriculture sectors. Exporters have argued that the carriers are too focused on the surge of imports and rushing empty containers back to Asia to meet the demand.
The U.S. Department of Agriculture and Transportation joined together in efforts designed to support exporters while also calling on the carriers to improve their services for exports. The secretaries for the two agencies said they would seek action from the Federal Maritime Commission if the carriers failed to respond. Exports were also one of the issues driving the pending reform to the Shipping Act and while the bill waits for a conference committee in the U.S. Congress, last week Senators Dianne Feinstein and Alex Padilla, from California, wrote to the 13 major carriers calling on them to secure additional containers to support the export of U.S. agricultural products.
“CMA CGM is committed to doing everything we can to increase the fluidity and velocity of America’s supply chain,” said Ed Aldridge, President of CMA CGM and APL North America, announcing the carrier’s incentive offer to shippers. “Our new program will result in an incentive credit for our importers, improve equipment availability for our exporters, and expedite the flow of goods into and out of America’s heartland.”
The carrier is offering a $300 credit per dry container returned within four days to either the FMS terminal in Los Angeles or to all CMA CGM return locations in Chicago, IL; Dallas, TX; Kansas City, KS; and Memphis, TN. The program runs from May 16 to July 15 and according to CMA CGM is projected to result in approximately 43,000 dry containers being put back into circulation within four days of pickup.
CMA CGM acknowledges that “exporters have been impacted particularly hard by the challenges, with the lack of equipment making it more difficult to get their goods to market in a timely manner.” They noted that the shipping industry has experienced an unprecedented spike in demand, leading to severe congestion throughout North America’s supply chain.
Port of Los Angeles Executive Director Gene Seroka endorsed the program saying that it should help U.S. exporters get their products to destinations around the globe more quickly. He said that CMA CGM has been “a driving force for change throughout the spike in demand,” saying that the new program would facilitate a more robust flow of goods through the Port of Los Angeles.
In addition to the new incentives, CMA CGM’s other actions have included adding route capacity in North America as well as being the first carrier in the fall of 2021 to freeze spot rates. The company also implemented a program to encourage the early pickup of containers, which they said resulted in a 73 percent decrease in dwell of CMA CGM containers over nine days in Southern California. They are confident that the return incentives will have a similar positive effect on increasing the availability of equipment.