CMA CGM Reverses Route For INDAMEX Service Due To Customer Pressure

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French shipping line CMA CGM has reversed its decision to operate its INDAMEX (Indian Subcontinent-US East Coast) service via the Cape of Good Hope, opting instead for the Suez Canal route after customer pushback. Originally, CMA CGM had chosen the Cape route to avoid potential disruptions from Houthi attacks in the Red Sea area. However, pressure from cargo insurers and customers, who faced challenges in securing coverage, appears to have influenced the company’s decision to revert to the Suez route.

Key Changes in INDAMEX Service

  • Initial Route:
    • Launched in August, INDAMEX initially took the Cape of Good Hope route for security reasons, using nine ships with capacities of 9,000-10,000 TEUs.
  • New Route via Suez Canal:
    • This month, CMA CGM updated its INDAMEX schedule to once again use the Suez Canal, with 11 ships in the 8,500-9,950 TEU range.
    • The first ship on the revised route, CMA CGM Pelleas, is expected to begin transit mid-month.

Reasons Behind the Route Change

  1. Customer and Insurer Pressure:
    • Customers reportedly expressed concerns, with cargo insurers unwilling to cover the Cape route due to ongoing Houthi-related risks in the Red Sea.
  2. Existing Arrangements:
    • According to industry analyst Tan Hua Joo, CMA CGM already operates other services through the Suez Canal, particularly those involving Lebanon. This may have made the Suez route a more convenient option logistically.
  3. Industry Trend:
    • Despite security issues, most Asia-Europe liner services use the Suez Canal, leaving CMA CGM’s Cape route decision an outlier among major shipping lines.

Industry Response

Vespucci Maritime’s Lars Jensen commented that CMA CGM’s quick decision to revert to the Suez route highlights the influence of customer concerns on operational choices in the shipping industry. Moreover, Alphaliner noted that Houthi rebels do not typically target certain routes, such as those involving Lebanon-bound services, adding a layer of complexity to route planning amid security concerns.

This shift underscores the importance of balancing operational security with customer and insurance requirements in today’s challenging maritime landscape.

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Source: THE LOADSTAR