“The transport and logistics market remains depressed,” the French company controlled by billionaire Rodolphe Saade and his family said in an earnings statement Friday. Sluggish economic growth and persistent inflation is expected to weigh on consumer spending for the rest of the year, while deliveries of new vessels in the market could hurt rates.
The closely held company’s second-quarter net income fell about 83% to $1.3 billion from a record $7.6 billion in the same three months of the previous year. The profit margin narrowed to 21.1% from 49.2%.
A rapid downturn that began in the final six months of 2022 has shaken the container transport industry that had enjoyed an unprecedented boom during the pandemic fuelled by a surge in consumer demand for goods. CMA CGM rival ZIM Integrated Shipping earlier this month cut its full-year forecast due to weak rates, while A.P. Moller-Maersk A/S and Hapag-Lloyd AG are scheduled to report results next month.
East-West shipping routes are “under more pressure and dropping faster than the North-South trade, which remains pretty dynamic,” CMA CGM Chief Finance Officer Ramon Fernandez told reporters Friday. He citing China export volumes dropping 25% to the US — with destocking not yet complete — and 5% to Northern Europe, but rising by double digits to Africa, Latin America and the Middle East.
CMA CGM is raising rates on Aug. 1 for most trade leaving Asia, Fernandez said, adding that the prices for freight transport in the spot market have somewhat stabilised in recent weeks. New vessel capacity arriving on the market is likely to weigh on rates, particularly on East-West lines, the company said. It has about 100 new vessels on order that will be added to a 623-strong fleet, Fernandez said.Record profits over the previous two years filled the coffers of the Saades and rival European shipping tycoons like Gianluigi Aponte, founder of Mediterranean Shipping Co., and Klaus-Michael Kuehne, who has stakes in logistics and shipping companies.
CMA CGM went on a buying spree with the windfall, most recently bolstering its media assets by finalising on Thursday the purchase of La Tribune newspaper. The company is also working to close its biggest purchase to date: Bollore SE’s logistics arm for an enterprise value of €5 billion ($5.5 billion).
While second-quarter revenue from containers plunged 48% to $8.35 billion, sales at the company’s logistics unit were flat at $3.78 billion.
The Saade family is worth about $23 billion, according to the Bloomberg Billionaires Index.
