CMA CGM switches fast service to Oakland after Los Angeles traffic jams

Container line CMA CGM SA has restructured its expedited Transpacific service to utilize Oakland, Calif., as its first stop rather than Los Angeles. The Golden Gate Bridge replaces SeaPriority Express which, as discussed in Panjiva's research of Aug. 24, 2020, was designed to provide a differentiated product. 

Continued congestion at the port of Los Angeles has undermined the reliability of container shipping services more broadly and has led the big three shipping alliances to reset their schedules by blanking sailings during the Lunar New Year. The routing will include Oakland and Seattle on the U.S. side and Kaohsiung in Taiwan, and Shanghai and Yantian in China on the Asia side. The vessels used are smaller scale, reflecting the lower demand and limited calls for the services.

The company's U.S. region head, Ed Aldridge, stated the it "had to find an alternative solution that allows supply chains to remain relatively intact and improve transit times" and does not expect the problems to change until June, Journal of Commerce reports.

Panjiva's data shows that shipments from Yantian to Los Angeles handled by CMA CGM, the main lane for the SeaPriority but including all CMA CGM services on the route, have surged since the service's introduction in fall 2020. Imports in the fourth quarter of 2020 climbed 55.7% year over year, while shipments in the first three weeks of January jumped 73.0% year over year. The latter may also reflect vessels that had been held up in December 2020 due to congestion being unloaded later than expected.

Importers to southern California might not find drop-offs in northern California to be as useful given the potential additional transit needs for eastbound shipments from the ports. That could leave CMA CGM competing for customers who already use Oakland from the three Asian ports covered by the service.

The largest shipping line to Oakland on that route in 2020 was Evergreen Marine Corp. (Taiwan) Ltd. with a 19.3% share of shipments after a 27.7% year-over-year slide in the fourth quarter of 2020. That was followed by CMA CGM's own non-expedited services, which had a 16.0% share and had declined by 1.4% in the fourth quarter of 2020. CMA CGM could rebuild its business by offering the expedited service to existing importers that have included Costco Wholesale Corp. and The J. M. Smucker Co., among others. Third place was Ocean Network Express Pte. Ltd. with a 9.9% share after building its market share with growth of 20.8%.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.