CMA CGM is providing discount vouchers to boost cargo volumes from India as exports experience a decline
2 weeks ago
CMA CGM is providing discount vouchers to boost cargo volumes from India as exports experience a decline
The increasing pressure on cargo capacity is prompting container lines operating in Indian markets to implement innovative strategies to attract shipments and maximize vessel utilization.
CMA CGM, one of the key players in this sector, is rolling out discount vouchers for customers booking shipments through its spot window. For instance, this week, the French carrier offered a "SpotOn" discount of $300 per TEU on shipments from India to Australia, according to a Mumbai-based freight forwarder.
A sales executive from the freight forwarding company noted that the discounts vary based on the specific trade and vessel utilization rates. He remarked, “Rather than adjusting spot rates directly with market conditions, CMA CGM is opting to provide discounts via vouchers.” This approach diverges from the typical industry practice, where most carriers align their spot rates closely with demand. Instead, CMA CGM’s tactic resembles the promotional strategies employed by e-commerce platforms like Amazon, which offer e-gift cards to incentivize consumer purchases.
Recent data indicates that spot ocean rates on major trade routes from India, particularly to Europe and the US, have plummeted over the past two months. For example, average rates from West India to North Europe have fallen to approximately $2,000 per TEU, down from $5,000 per TEU in August.
As container volumes decline, aggressive pricing strategies are becoming more prevalent, with carriers even within alliances undercutting each other on booking rates. The influx of capacity—stemming from adjustments to longer transit times around the Cape of Good Hope, alongside prior service expansions anticipating sustained trade growth from India—has also contributed to these rate decreases.
Indian exports across most sectors have faced challenges in recent months, driven by geopolitical tensions. Ashwani Kumar, president of the Federation of Indian Export Organisations (FIEO), highlighted that heightened tensions between Israel and Iran have created logistical hurdles, particularly for trades to Europe, Africa, the CIS, and the Gulf, which typically rely on the Red Sea route.
Additionally, high credit costs continue to weigh heavily on Indian exporters facing declining demand. Reports suggest that the Indian government is contemplating a more favorable interest subvention scheme to assist exporters during this difficult period. Kumar emphasized the need for immediate liquidity support, advocating for deeper interest subvention and the extension of the interest equalization scheme for a minimum of five years to foster a more predictable business environment.
On a positive note, FIEO expressed cautious optimism based on recent trade data. National goods exports by value in September showed a modest rebound, reflecting a 0.5% year-on-year increase following a significant 9% decline in August. “This slight uptick is a positive sign,” the federation noted.
Source: The Loadstar