CMA CGM’s earnings have fallen considerably in a container ship market that the liner operator considers weak and expects to remain so for the latter half of this year.
The family-owned French container carrier reported a $1.33bn profit for the second quarter, down from $7.6bn in earnings during the same period last year. Second-quarter revenue dropped 36.9% from a year ago to $12.3bn.
“First-quarter 2023 trends remained at play in the second quarter of 2023, with deteriorated market conditions in the transport and logistics industry,” Marseille-based CMA CGM said in a statement.
“Despite a rebound in demand for transport in the second quarter of 2023 compared with the previous quarter, driven by a degree of macroeconomic resilience and lower energy prices, the transport and logistics market remains depressed.”
Volume for its shipping business came in at 5.6m teu for the second quarter, down slightly from 5.62m teu in volume a year earlier.
Cargo volumes remained high on lines sailing longitudinally, but the slowdown in household consumption and dealer inventory drawdowns have hurt volumes on transpacific and Asia-to-Europe lines, CMA CGM said.
Shipping revenue for the quarter fell 47.9% compared to the same period of last year, reaching $8.35bn as average revenue per teu slipped 10.3% to $1,491 per teu.
“As expected, our industry continued to normalise in the second quarter and, despite difficult market conditions, our performance remains robust,” chief executive Rodolphe Saade said in a statement.
“In recent years, we have significantly strengthened our two strategic pillars: transport and logistics.”
Logistics revenue for the second quarter remained flat from a year ago at $3.78bn.
“The stability of the logistics business, in a context of declining trade, reflects both the slowdown in freight markets and the strengthening of the end-to-end supply chain services,” CMA CGM said.
“Contract logistics activities are recovering in Europe but remain generally affected by the weakness of the e-commerce segment, particularly in the United States.”
Second-quarter revenue from port terminals and CMA CGM Air Group fell to $474m, a drop of 5.3% from a year ago due to lower volumes in port terminals and a weaker air transport market, the company said.
Looking ahead, CMA CGM said it expects the transport and logistics industries to remain “deteriorated” in the second half of 2023 as a result of an anticipated weak global economy.
“Macroeconomic forecasts for the second half of 2023 anticipate sluggish global growth given the persistent inflationary pressures weighing on consumer spending as well as the measures taken by central banks in response, and geopolitical uncertainties,” CMA CGM said.
“In light of uncertain demand, new capacity arriving on the market is likely to weigh on freight rates in shipping, particularly on East-West lines.”
But the company said it is confident that it can “weather the cycle” with its combined transport and logistics strategy and its financial strength.
“Given the inflationary environment, we are being particularly vigilant about keeping operating costs under control.”
