By Brian Dunn
To hear some of the shipping companies tell it, the long-awaited recovery is just over the horizon, based on a slow uptick in recent activity at three of the major players in Canada, namely CMA CGM, MSC and Hapag-Lloyd.
As previously reported, for example, CMA CGM has added its own vessel to a slotting arrangement it has with Maersk Line out of Montreal and Halifax. It will continue with the arrangement, but will provide one of the four vessels in the weekly Montreal-Halifax-Rotterdam-Bremerhaven-Antwerp-Montreal service. CMA CGM has renamed the 2,700-TEU container ship Antje Wulff, CMA CGM Montreal for the service.
In addition to giving the company greater flexibility to accept out-of-gauge cargo and breakbulk, it allows it to offer reefer service as well, explained CMA CGM (Canada) General Manager Lionel Chatelet who celebrated his first anniversary heading up the Canadian operations in Montreal in August.
“In my first year, we’ve become more customer-oriented and improved our VIP desk to serve our main export customers,” said the 40-year-old boss who transferred from Head Office in Marseille where he began his career at CMA CGM six years ago in its Rail Link subsidiary. Before coming to Montreal, Mr. Chatelet was working in the agency department in charge of the Americas, “from Alaska to Argentina,” he pointed out.
Founded in Marseille in 1978, CMA CGM Group is the third-largest container shipping company worldwide and number one in France. It calls on some 400 ports in more than 150 countries through its network of over 650 agencies, with more than 18,000 employees globally, including 4,700 in France. It operates a fleet of about 428 vessels (81 company-owned), with 42 per cent over 7,500 TEUs and 55 per cent less than five years old, Mr. Chatelet noted. Its largest vessel is the CMA CGM Jules Verne with 16,020 TEUs capacity. The company’s annual volume is roughly 11.4 million TEUs. It posted revenues of $ 15.9 billion U.S. in 2013 through a number of subsidiaries, including Delmas (serving Africa), ANL (Oceania), CNC (Intra-Asia) US Lines (Oceania and North America West Coast), MacAndrews (Europe) and Comanav in North Africa.
Other CMA CGM activities & subsidiaries include CMA Ships, for vessel fleet and crew management, CMA Terminals & Terminal Link, for terminal construction, acquisitions and operations around the world, CMA CGM Logistics, for integrated global logistical solutions, Intermodal Transport Solutions around the world, and Greenmodal Transport in Europe.
In Canada, where it began operations in 2000 through different types of partnerships, CMA CGM has about 100 employees in Montreal, Toronto and Vancouver, and an agent in Halifax. Although headquartered in Montreal, roughly three-quarters of its Canadian business is generated out of Vancouver from which the company operates a shared weekly service from Seattle to China, South Korea, Japan and Malaysia through a 50-50 partnership of 16 vessels with Maersk Sealand. The average size of vessel deployed on the route is 8,500 TEUs.
“Our services in Canada are considered among the most effective within the company,” said Mr. Chatelet. “And one of the reasons we decided to use our own vessel (in the slotting agreement with Maersk) was to show our commitment to the Port of Montreal.”
In terms of new business, Mr. Chatelet sees opportunities by expanding beyond the local markets of Montreal and Toronto and looking at Northern B.C. and Alberta. Last year, CMA CGM handled 300,000 TEUs of import and export cargo in Canada, up eight per cent from 2012. This year will be more stable following the end of a strike by Port of Vancouver container truck drivers in March, said Mr. Chatelet. “The impact of the strike plus a long winter affected rail operations which was a challenge for us, because we have to ensure proper dwell times. First quarter growth was linked to orders from North American importers,” he added.
Another challenge which continues today, is dealing with the fallout after China nixed the P3 Network shipping alliance involving CMA CGM, Maersk and MSC. While none of the three are Chinese, groups only have to make $64-million (U.S.) in annual sales in the People’s Republic to face scrutiny under its new competition law.
“The scuttling of the Alliance was a major setback and one of the main reasons for freezing a lot of other projects and now it’s a question of stabilizing products offered to our North American customers. Since the end of the project, we have been looking at new initiatives.”
What makes CMA CGM stand out is its regional expertise and local know-how, according to Mr. Chatelet. “Our company is 100 per cent focused on containers and the shipping business needs to have local expertise. In Canada, that includes intermodal and Head Office (in Marseille) has experts in every domain we cover. We (in Canada) are an independent body. We don’t report to the U.S. office, but directly to Head Office. There are few layers before you reach top management and we’re hands-on. There are not a lot of tasks that are transferred to Head Office. Most decisions in Canada are made locally.”
As for local industries, the pulp and paper market is booming as Canada is taking over some mills in the U.S., noted Mr. Chatelet who expects that export market continue to grow. “On the East Coast there a lot of little players, while there fewer but larger accounts on the West Coast. In terms of local issues, the biggest challenge is the ability to sustain growth in Vancouver. There will be lots of opportunities on the East Coast once the new Canada-EU free trade agreement is signed.”
Canada’s overall economy is strong and its GDP growth is impressive with a lot of pension funds looking for investment opportunities, said Mr. Chatelet. “There are a lot of positive signals that growth is sustainable. We estimate our market share in Canada is seven per cent, which is under our world market share of nine per cent. But five years ago, it was only two per cent in Canada. With the possible addition of Saint John on the East Coast and Prince Rupert out west, we believe our market share in Canada could match our global share.”