The French shipping giant, CMA CGM, heralds an optimistic future for container freight demand starting next year. However, the company anticipates steady profits for the rest of this year, pinned down by a fragile economy and a downward trend in freight rates from all-time highs. These predictions were made public on Friday, painting a hopeful yet realistic picture of the shipping sector.
Despite active family ownership by the Saade family, CMA CGM’s net profit fell to a humble $1.3 billion in the second quarter, a significant drop from the $7.6 billion recorded in the corresponding period of the previous year, and $2.0 billion in the first quarter of this year. The company believes that its first-quarter earnings might represent 2022’s peak profitability bracket.
Navigating the Rough Seas of the Pandemic
Last year, CMA CGM, like several other shipping companies, reaped record profits as a consequence of the COVID-19 pandemic sparking a frenzy in maritime transport. The company astutely funneled these generous earnings into strategic acquisitions to bolster its logistics business and secure a foothold in the media industry.
Describing the current situation, CFO Ramon Fernandez characterized it as a gradual landing process, in line with the company’s expectations. He pointed out that the company continues to weave its operations around the reality of subdued global demand. Fernandez expressed optimism about a slow and steady recovery from next year leading into 2025.
Freight Rates and Future Acquisitions: Fernandez Speaks
Fernandez drew attention to the stabilization of international freight rates in recent weeks. He also highlighted that the company hiked some prices from August 1, reflecting a strategic change in the pricing infrastructure.
In an additional noteworthy development, the logistics operations of conglomerate Bollore are set to merge with CMA CGM. The company had agreed to procure Bollore earlier this year in a deal valued at 5 billion euros. Following the deal’s completion, Bollore is slated to be assimilated into CMA CGM’s burgeoning empire in early 2023, as confirmed by Fernandez.
A New Dawn for the Shipping Industry
With carefully thought-out strategies and steady navigation, CMA CGM is set to steer its way through the choppy seas created by the pandemic. As the company anticipates a resurgence in container freight demand and reaps the fruits of its strategic acquisitions, the shipping industry may soon witness a brand-new dawn. Casting a hopeful ray on the sector’s future growth, CMA CGM’s forecasts chart a course towards a promising horizon, a beacon to others navigating their future trajectories.
