By Mike Wackett

CMA CGM moved back into the black in the fourth quarter of 2016, recording a net profit of $45 million, but that could not prevent the French carrier posting a full-year loss of $452 million against a profit of $567 million in 2015. However the figures are distorted by the outlay to purchase NOL.

Chief Executive Rodolphe Saade said 2016 had been a “landmark year” for the carrier, with its acquisition of NOL and the subsequent creation of the Ocean Alliance vessel sharing agreement with Cosco, Evergreen and OOCL. CMA CGM will be the lead line when the alliance commences operations next month.

Mr. Saade attributed the positive performance in the fourth quarter not only to improving freight rates, but also to the carrier’s focus on the “volumes generating the highest contributions”.

However, excluding the NOL business, CMA CGM’s liftings were actually down 1.3 per cent on 2015, at 12.8 million TEUs – in stark contrast with the 9.4 per cent organic volume growth at rival Maersk Line. Including NOL, carryings increased 20.4 per cent on 2015, to 15.6 million TEUs.

Total turnover, including NOL, was up 1.9 per cent on the previous year, at $16 billion, but if the NOL revenue is stripped out, CMA CGM turnover slumps 14.7 per cent. NOL’s overall net contribution for the year was negative, dragging down the full-year result by $127 million.

Lars Jensen, Chief Executive and partner at SeaIntelligence Consulting, commenting on the result, said: “It is also clear that the French carrier joins the group of Zim and Hapag Lloyd where overall volume growth has been below market growth, and hence they have chosen a path of yield management rather than market share.”

Mr. Jensen noted that CMA CGM did not appear to have benefited in terms of volume growth from the collapse of Hanjin Shipping, which had resulted in around 1 million TEUs being “up for grabs”.

Although it did not release an exact figure, CMA CGM said its average rate per TEU last year fell 13.6 per cent year-on-year, but improved by 2.9 per cent between the third and the fourth quarters. This was significantly better than Maersk Line, which recorded an average rate decline of 19 per cent for 2016, versus the previous year, to $897 per TEU, as it opted for a strategy of market share growth.

Mr. Saade said he was optimistic about the prospects for 2017 and noted that “the market is expected to continue its recovery. CMA CGM will pursue its strategy of development and innovation, in order to consistently offer its customers more high value-added services and thereby differentiating ourselves from the competition,” added Mr. Saade.

CMA CGM’s combined vessel fleet stands at 453 vessels for 2.2 million TEUs, making it the third-largest carrier in the world, behind Maersk and MSC, comfortably ahead of Cosco’s some 1.7 million TEUs of capacity.

The carrier said “it does not anticipate any new ship orders on a short-term basis in order to maintain the still delicate balance between supply and demand”. Furthermore, CMA CGM advised it had postponed the delivery of three newbuild vessels this year until 2018

Reprinted courtesy of The Loadstar (