Supply chain disruptions loom after CMA CGM abandons Suez legs: analyst

It may signal weak schedule reliability and partnership trust amongst services and carriers.

Xeneta warned that unpredictability may disrupt ocean container supply chains after CMA CGM announced the transfer of its backhaul voyages from the Suez Canal to the Cape of Good Hope.

CMA CGM, which recently began transiting on the canal, said that its FAL1, FAL3, and MEX services connecting Asia and Europe will sail on the cape, according to Xeneta.

The ocean and air freight intelligence firm added that CMA cited "the complex and uncertain international context” in reversing its decision to return to the Red Sea.

“Carriers taking the decision to return to the Red Sea then reversing that decision - even if it is done for important safety reasons - still risks undermining confidence in schedule reliability and eroding trust in partnerships,” said Destine Ozuygur, senior market analyst at Xeneta, in a statement.

“Shippers crave predictability in supply chains,” the analyst added.

Xeneta said that its data showed that full loop transit times on the FAL1 service decreased to 98 days from 105 days, when ships began transiting Suez Canal again. It also saw one vessel slot removed.

The FAL1 service connects China and Singapore to six European ports, including two dedicated calls to Southampton.

“Unpredictability is toxic for supply chains,” Ozuygur said. “Shippers want certainty over when containers arrive at port, even if that means longer transit times around Cape of Good Hope.

CMA CGM’s decision to return services via the cape may lead shippers to perceive them as the riskier choice against their peers, the analyst added.

CMA CGM was previously the most pro-active major carrier in returning the Red Sea, and reversed its decision after Maersk, generally the most risk averse carrier, announced its MECL service will begin transiting Suez Canal again.

Xeneta said that the CMA CGM INDAMEX service is currently still scheduled to transit Suez Canal on fronthaul and backhaul legs.

The firm’s data showed that transit time from Port Qasim in Karachi to New York on the INDAMEX fell to 36 days from 40 days after returning to the Suez Canal in January.

Ozuygur said that whilst there has not been a CMA CGM announcement on the INDAMEX service, shippers will look at the decision on FAL and MEX services and fear that containers will be arriving later than planned.

“Multiply this uncertainty across all services and carriers and the risk of widespread disruption becomes clear,” the analyst said.