Monday, September 14, 2009

CMA CGM to charge "reefer consumption surcharge"

This is the explanation from CMA CGM as to their new "reefer consumption surcharge".

“One of the main differences between dry containers and reefer containers is the energy consumption needed to maintain the temperature during transportation, as well as to properly ventilate containers carrying perishable commodities. The electricity used for reefers aboard container vessels means extra fuel consumption, thus extra cost for both Shippers and Carriers. With this Reefer Consumption Surcharge, CMA CGM and affiliates provide customers with a more transparent and balanced segregation of costs.” , explains Claus P. Ellemann-Jensen, Vice President Reefer, CMA CGM Group.

Well, what's wrong with the logic is firstly, the reefer (as in refrigerated) rates are (or should be) higher, because they do require the extra energy. Unless CMA CGM messed up and agreed to contract rates including the bunker surcharge, they will be getting more money in the bunker surcharge whenever the fuel costs increase.

Now, having said that, and re-reading their press release, perhaps they were charging a flat bunker surcharge per container, rather than a percentage, which was always the norm. But if that is true, all they need to do is change the bunker surcharge to have a new category for reefers. I trust there is a different charge for 20ft or 40ft drys, and they should have a different (and much higher) charge for reefers.

My guess is they got into some contract rates for reefer cargo which really didn't cover their true costs. Now, when money is tight, everyone is taking a close look at how much money they make (or lose) on each container.

Because they can't increase the rates, they devised a "new" surcharge, which will apply to all rates and contracts, even if someone signed a contract valid for a year.
The only way a customer can be exempt is if they managed to get a contract specifically stipulating "no other new charges or surcharges can be applied during this contract period".

I suspect there will be some very unhappy customers. A carrier can only get away with doing this one time. The next round of contract talks, you can bet the customers will insist on the above mentioned wording.

Here's the link to the CMA CGM web-site with the press release.

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