10 November 2023 (Lloyd's List) - CMA CGM has joined other major carriers in announcing a focus on cost controls as the market continues its reversion to mean.
“The slowdown in the global economy is expected to continue weighing on our industry in the period ahead, but volumes carried are still robust,” chief executive Rodolphe Saadé said on the release of the company’s third-quarter results.
“We remain committed to controlling our operating costs, and are continuing to focus on decarbonising and digitalising the supply chain.”
The third quarter confirmed the trend towards normalisation in the transport and logistics markets, with a return to 2019 pre-Covid conditions, the company said.
“Inventory drawdowns and inflation pressure continued to weigh on performance across the sector,” it said.
Macroeconomic forecasts pointed to a “relative resilience” in global economic activity in 2023, albeit at a level below the historical average, it added. But a recovery in 2024 was not anticipated.
“However, this outlook contrasts with an expected rebound in world trade in 2024. New capacity expected on the market in 2024 will likely continue to pull down freight rates,” CMA CGM said.
“In this context, CMA CGM will continue to focus on maintaining operating cost discipline, rolling out its decarbonisation policy and successfully integrating the strategic investments made over the last two years. The group will also remain attentive to the geopolitical environment.”
Saadé said the company’s performance had remained “very solid” and confirmed the relevance of its diversification strategy in terminals and logistics.
“We are consequently more resilient as we enter this new cycle,” he said.
Group revenues of $11.4bn were down 42% on the corresponding quarter last year. Operating earnings of $2bn were down almost 80%, while net income fell from $7bn to just $388m.
CMA CGM’s shipping segment saw the worst impact of the downturn, with revenues down by more than half to $7.6bn. This was despite a 0.9% increase in volumes to 5.7m teu. But average revenue achieved fell to $1,322 per teu, putting it on a par with Hapag-Lloyd, but still ahead of Maersk.
“Volumes continued to grow on the north-south and short-sea lines, while further normalising on the east-west lines, due to inventory drawdowns in the US and more moderate household consumption in an inflationary environment,” CMA CGM said.
The company’s logistics division did better, however. Revenues of $3.7bn were largely flat on last year’s, and earnings before interest, taxes, depreciation and amortisation of $348m was only down 3% year on year.
“The stability of the logistics business, at a time of declining trade, reflects on one hand the slowdown in freight markets and on the other hand the strengthening of the service offering and the resilience of certain activities,” CMA CGM said.
CMA CGM’s terminals division, which was expanded in August with the $2.8bn acquisition of the renamed Port Liberty Bayonne and Port Liberty
New York, was the only segment to see revenues rise, but here too ebitda was down, mainly due to falling volumes at its terminals and a decline in storage revenues linked to congestion.
