Business, Feature, Freight News, Sea

CMA CGM Looks Back on ‘Year of Contrasts’

[ March 1, 2024   //   ]

French-based CMA CGM Group said 2023 was a year of transition and normalization in the transport and logistics industry, and the company is positioning itself to weather an “uncertain 2024.”
After “extraordinary years” in 2021 and 2022, CMA CGM said 2023 was marked by major inventory reductions as supply chains readjusted, followed by a second half in which widespread inflation impacted household purchasing power in Europe and the U.S., reflected in dampened demand for consumer goods.
Further impacting shipping and logistics demand, economic growth was muted in 2023 following post-pandemic recovery, rising inflation and consumer spending shifting to services. Further, late 2023 saw tensions rise in the Red Sea, with targeted attacks on merchant ships creating major risks and uncertainty.
As a result, CMA CGM reported year-on-year declines in revenue and operating profit.
Full-year revenue plummeted 36.9 percent to US$47 billion as maritime shipping conditions deteriorated. EBITDA fell 25.5 percent to US$9 billion, representing a margin of 19.2 percent. Net income was US$3.6 billion for the year, and with net debt of US$3.7 billion, provides the company a firm foundation “to weather the cyclical downturn with confident, while continuing to invest.”

Maritime and Logistics

CMA CGM saw a year of contrasting halves for the maritime industry. In the first half container volumes slipped 2.7 percent due to sluggish demand for goods and resultant inventory reduction, which weighed on freight rates.
Demand bolstered in the second half as volumes increased 3.8 percent, though freight rates were undermined by the addition of new shipping capacity tipping the scales.
The result of the combined halves was a net volume increase of 0.5 percent to 21.8 million TEUs. Revenue from shipping operations fell 46.percent to US$31.4 billion, while EBITDA was US$7.4 billion, compared with US$31.billion in 2022.
Revenue from logistics slid 5.5 percent to US$15.2 billion, reflecting the return to normal operating conditions. EBITDA improved 12.5 percent to US$1.4 billion. CMA CGM reached agreement in 2023 to acquire Bolloré Logistics which, including acquisitions of CEVA Logistics and Ingram Micro CLS, Colis Privé and GEFCO in 2022, raises the company to one of the world’s top five transport and logistics services providers.
“Our group now stands on two solid pillars (maritime and logistics), which will enable us to weather cyclical changes more efficiently,” said Rodolphe Saadé, chairman and CEO of the CMA CGM Group.


Despite this challenging environment, the CMA CGM Group said it leveraged its financial strength by investing in its shipping, port, logistics and air freight capabilities, while maintaining its commitment to the energy transition.
CMA CGM boosted its U.S. East Coast footprint with completion of the US$2.8 billion acquisition of the GCT Bayonne and New York container terminals, now renamed Port Liberty Bayonne and Port Liberty New York.
Other investments include:
• A five-year investment of US$1.63 billion to create PULSE – CMA CGM Energy Fund to transition the group’s worldwide maritime, overland and air freight shipping and logistics base. In 2023, PULSE committed about US$491 million for 40 projects.
• More than US$15 billion invested for a fleet of nearly 120 LNG and methanol-powered ships by 2027.
• Upgrading its operating assets to improve energy efficiency and performance of its fleet by exploring hydrodynamics, aerodynamics and other design factors.
• Took delivery of the CMA CGM Mermaid, the first in a series of 10 containerships aimed at improving energy performance.
“Backed by our financial strength and the commitment of our employees, we will continue to invest in the transformation of the group, particularly decarbonization and artificial intelligence, in order to pursue our sustainable and profitable development,” Saadé said.

2024 Outlook

CMA CGM said 2024 is likely to be shaped by sluggish global economic growth, although global trade for goods is expected to rebound from 2023 lows, driven by consumer spending and replenishing inventories. Volume growth should remain strong in the first half, but the second half looks more uncertain.
With new container shipping capacity expected to come into service, excessive supply is expected to adversely impact freight rates.
“In this environment, the group is paying close attention to the changing economic and geopolitical situation, while remaining confident in its ability to weather the cycle thanks to its business diversification and financial strength,” CMA CGM said.

CMA CGM’s LNG-powered Jacques Saadé. PHOTO: CMA CGM Group