French logistics company CMA CGM Group has reported a 50% decline in net income for the second quarter of the year.
Its chairman and CEO Rodolphe Saadé says in the quarter, the company was able to adapt to current conditions by redeploying capacity in response to the operational challenges caused by major disruptions on the main shipping routes.
The Group reported net income of $US661 million, down from $US 670 million.
Red Sea still causing waves
The Red Sea is a crucial corridor connecting the Mediterranean Sea, the Indian Ocean, and beyond. Its strategic location gives shippers access to Europe, Asia, and Africa. The Red Sea route is the natural sailing route between these regions.
The industry has been keeping a close eye on freight rates. In announcing the financial results, the company says the increase in spot freight rates that began in the first quarter continued into the second.
“Amid sustained demand, the situation in the Red Sea and the rerouting of vessels via the Cape of Good Hope continued to weigh on available shipping capacity.”
Supply chain distributions
In June CMA CGM launched its French peak service for high Asia-Europe demand. This initiative is set to increase capacity by 25% on this busy route. It is also expected to ease the high demand from CMA CGM’s French clients and supply chain pressures.
Locate2u previously reported that companies are stocking up, which has caused shipping rates to spike. Companies are actively working to plan ahead for the holiday season.
Data released by Xeneta, the ocean and air freight rate benchmarking and market analytics platform, shows that average spot rates from the far East to the US East Coast increased by 3.7% on 15 July to stand at $US 10,045 per FEU (40-ft equivalent shipping container). On the US West Coast, spot rates increased by 20% to stand at US$8,045 per FEU.
CMA CGM business developments
The Group has made some notable business moves recently. It acquired France’s third-largest media company, Altice Media.
What about sustainability?
The CMA CGM Group has ordered twelve 15,000 TEU liquefied natural gas (LNG) vessels from Hyundai Heavy Industries. This investment is part of their fleet renewal program and supports their goal of achieving Net Zero Carbon by 2050. The new vessels will start service in late 2027.
In April, the company joined Volvo and Renault as a founding member of the next generation of electric vans venture, Flexis SAS. This initiative aims to spearhead the decarbonization efforts in the transport and logistics industries.
Photo Credit: CMA CGM
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About the author
Sharl is a qualified journalist. He has over 10 years’ experience in the media industry, including positions as an editor of a magazine and Business Editor of a daily newspaper. Sharl also has experience in logistics specifically operations, where he worked with global food aid organisations distributing food into Africa. Sharl enjoys writing business stories and human interest pieces.
