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International Cooperation Department
Tel.: (+86-21) 65853850-8034
Fax: (+86-21) 65373125
E-mail: ICDept@sisi-smu.org
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International Shipping |
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| CMA CGM profits nosedive as box shipping market normalizes |
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Date:2023-11-15 Readers:
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FRENCH shipping giant CMA CGM saw a significant decline in profit during the third quarter of 2023, as the container shipping market continued to return to pre-pandemic conditions.
Despite similar volumes to last year, the company's net income dropped to US$388 million in Q3 2023, down from over $7 billion in Q3 2022 - highlighting the container shipping industry's abrupt 180 after a two-year pandemic-fuelled bull run as new capacity hitting the water sinks freight rates.
The container shipping industry, as a whole, reached peak profits in the Q2 2022 after seven straight quarters of earnings growth as strong consumer demand combined with widespread port congestion pushed freight rates to records, reports gCaptain, Ventura, California.
"The industry continued to normalize in the third quarter, with a return to pre-pandemic market conditions. Our performance remained very solid however, confirming the relevance of our growth strategy in terminals and logistics. We are consequently more resilient as we enter this new cycle," said Rodolphe Saade, chairman and CEO of the CMA CGM Group.
Mr Saade acknowledged that the global economic slowdown is expected to continue affecting the industry but highlighted the company's commitment to controlling operating costs and focusing on decarbonization and digitalization of the supply chain to meet customer needs.
In Q3 2023, CMA CGM reported revenue of $11.4 billion, with a shift in contributions from maritime shipping and logistics. Despite a 51.8 per cent decrease in revenue from shipping operations volumes increased by 0.9 per cent compared to the same period last year, reaching 5.7 million TEU. The company said growth in volumes was seen in North-South and short-sea lines, while East-West lines experienced normalization due to inventory drawdowns and moderate household consumption.
Logistics operations revenue in Q3 reached $3.7 billion, with a 3.0 per cent decrease in EBITDA compared to the previous year. CMA CGM said the stability of the logistics business is attributed to strong service offering and resilience, while other activities like port terminals and air cargo reported increased revenue but decreased EBITDA due to normalized volumes, congestion, and weak demand in the air freight market.
Looking ahead, CMA CGM expects a return to pre-Covid conditions in the transport and logistics markets, but global economic activity in 2023 is forecasted to be below historical averages. There is no anticipated recovery in 2024, and the introduction of new capacity may offset the expected rebound in world trade and impact freight rates.
However, CMA CGM says it plans to address challenges by maintaining operating cost discipline, pursuing decarbonization, integrating strategic investments, and monitoring the geopolitical environment.
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