CMA CGM, the world’s third-largest container carrier, reported a second-quarter jump in cargo volumes and signalled freight rates have probably peaked for now despite bottlenecks at Mediterranean ports.
The French company controlled by billionaire Rodolphe Saade and his family said shipping volumes increased by 6.8 per cent from April to June, led by household demand for goods from China and firms rebuilding their inventories. CMA CGM has experienced 10 per cent growth in Chinese exports to the US – twice last year’s rate.
The demand improvement likely also came from the anticipation of higher American tariffs on Chinese products later this year and the risk of a dockworker strike, chief financial officer Ramon Fernandez said on Thursday (Jul 25).
“There is undoubtedly some front-loading,” he said.
Maritime transport prices look to have peaked, with spot container rates softening in recent weeks after a second-quarter spike blamed partly on the longer route between Asia and Europe via southern Africa to avoid Houthi attacks in the Red Sea.
The disrupted flow of cargo has created port congestion, especially in the Mediterranean, and has absorbed a lot of the vessel overcapacity that had been built up, Fernandez said.
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Freight rates “seem to be reaching a plateau, especially for Asia-North Europe and Asia-Mediterranean lines which were the most impacted by the situation in the Red Sea”, he said. “I can’t say what will happen in the next quarters.”
The Iran-backed Houthi militants, who say they are targeting Israeli-linked cargo ships, have caused the most significant diversion of seaborne trade in decades by forcing vessels to go around the Cape of Good Hope.
Most CMA CGM vessels take this route, although when possible some continue to use the Red Sea under military escort, the CFO said, adding that customers pay the same rates regardless of the route.
On Thursday, the Marseille-based company reported a second-quarter profit of US$661 million compared with US$1.3 billion a year earlier. Contributing to the drop were investments totalling about 350 million euros (S$510 million) in a French government-backed fund for shipping decarbonisation, the Kyutai artificial intelligence research laboratory, and a new port hub in the French Antilles.
The company has ordered 12 liquefied natural gas vessels with a capacity for 15,000 20-foot container units from Hyundai Heavy Industries as part of a fleet renewal programme, according to the statement.
The Saade family is worth US$34 billion, according to the Bloomberg Billionaires Index. BLOOMBERG
