By Mike Wackett
CMA CGM recorded a net profit for 2017 of $701 million to easily outperform its peers and wrench the mantle as the industry’s most profitable global container line from Maersk Line. And the French carrier’s order of nine LNG-powered 22,000 TEU ultra-large container vessels (ULCVs), confirmed in November, is a bold step to out-think on cost competitiveness its Danish rival, currently preoccupied with its own restructuring.
CMA CGM’s strategy is to take advantage of the up-coming 2020 IMO’s 0.5 per cent global sulphur limit on bunker fuel, which many in the industry consider to be a game-changing event in liner shipping, given the higher cost of low-sulphur fuel or the significant cost for the installation of exhaust gas cleaning scrubbers.
2017 revenue was up 32.1 per cent to $21.12 billion on the previous year, but significantly the French carrier’s turnover in the fourth quarter was ahead by 19.9 per cent on the same period of 2016, when APL was included, to reach $5.48 billion. And while the number of containers carried by the CMA CGM group leaped 21.1 per cent to 18.95 million TEUs in 2017, on a like-for-like basis including APL, there was a jump of 10.9 per cent in fourth quarter numbers to 4.93 million TEUs. This was particularly impressive, given the industry average of a 5 per cent expansion last year.
Although CMA CGM’s improvement in its average revenue per TEU at 8 per cent was not as good as Maersk’s, which came in at 10 per cent, this does not necessarily point to a market share grab underpinned by a strategy of heavy discounting, according to Lars Jensen, Chief Executive and partner at SeaIntelligence Consulting. “CMA CGM’s average revenue per TEU did not grow quite as much as Maersk’s, but the difference is relatively small and clearly shows that the volume growth has not primarily been driven by pricing action,” said Mr. Jensen.
Commenting on the financial result, CMA CGM Chairman and Chief Executive Rodolphe Saade said: “Quarter after quarter, CMA CGM demonstrates its ability to outperform its peers and these annual results confirm our group’s position as a leading player in the container shipping industry.” CMA CGM attributed its performance last year to “the quality of the Ocean Alliance service” and specifically the transpacific market where it claimed CMA CGM and APL brands “are particularly strong”.
The fully-integrated APL contributed 5 millionTEUs to CMA CGM’s liftings in 2017 and added operating income of $340 million. Mr. Jensen identified CMA CGM’s year-on-year 14.4 per cent increase in fleet capacity in the fourth quarter to 2.53 million TEUs, as the carrier’s “only potential operational weakness” given that it was “significantly higher than the 10.9 per cent growth in volumes”. However, he noted that as the carrier does not provide transparency on volumes carried per tradelane it was not possible to analyze the numbers in detail.
The CMA CGM group includes Australian National Lines (ANL), intra-Asia specialist Cheng-Lie Navigation and the European shortsea operator MacAndrews (incorporating OPDR). It is currently the third-ranked carrier, behind Maersk and MSC, with a fleet of 2.5 million TEUs and an order book of 305,000 TEUs.
Reprinted courtesy of The Loadstar (www.theloadstar.co.uk)