CMA CGM profit plunged 87 percent in 2008
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CMA CGM profit dropped by almost 87 percent to $124 million in 2008 from $966 million in 2007 as freight rates plummeted on all of its major trade lanes.
The French carrier, the world’s third-largest by capacity, reported a 28 percent increase in revenue, which hit $15.1 billion, compared with $11.8 billion in 2007.
Volume increased 15.6 percent to 8.9 million containers from 7.7 million in 2007.
“We managed to remain profitable in 2008, although it was obviously not as successful as 2007, which was an exceptional year,” said Rodolphe Saade, chief executive vice president of the Marseilles-based container line, in a telephone interview.
“2009 will be a more difficult year, but the company is taking every step to reduce costs, and we have a massive program in place to recuperate the lost revenue,” he said.
He said the company had managed to make a profit in 2008 by “adjusting capacity to the market needs, constantly reducing costs by slow-steaming and by rerouting ships around the Cape of Good Hope to avoid the costs of the Suez Canal tolls and by renegotiating contracts with terminals and vendors throughout the world.”
Saade said the line is in discussions with both the Panama Canal Authority and the Suez Canal Authority about lowering their tolls or postponing scheduled toll increases.
“They do understand the situation. It seems that the Panama Canal is ready to make a move, while we have not heard yet from the Suez Authority,” Saade said.
He said rumors that CMA CGM has asked the French government for financial help during the current global recession were “absolutely incorrect”.
“CMA CGM is a family company and we do not need the help of the French government.”
In response to what he called “a more difficult 2009,” he said the company is planning to cut its operating costs by $600 million this year in a number of ways.
“We are rationalizing or merging some of our services with other shipping lines that will allow us to take advantage of economies of scale by deploying big ships and sharing the capacity with our partners,” he said.
Saade said one of the advantages CMA CGM enjoys during the current downturn in global demand is that three-quarters of its fleet is chartered. That gives it the flexibility to adjust its fleet to slowing market demand.
He said more than 180 ships will come out of charter this year, so the carrier will turn some of them back to their owners and renew or replace others at what it termed “attractive contract rates, leading to substantial cost savings.”
“We have idled a few ships in Asia, not more than 10,” he said. “Most of our ships have been cascading on other routes in the network.”
Saade said the company has a massive order book, with deliveries scheduled from 2009 through 2012. “We have not cancelled any of our orders, but we are trying to defer some of our installment (payments) to shipyards, or, if possible, postpone the delivery of some ships.”
He said 97 percent of the ships that CMA CGM has ordered had already been financed “before the current crisis.”
“As far as we are concerned we do not have issues with ship financing since they have been financed a while ago.”
As for signs of revived demand in global markets, “the light seems to come from you in the U.S.,” he said. “We are getting some positive signs in the U.S. that the market is starting to pick up a little, although nothing tangible as of yet. The U.S. has more light than we do in Europe.”
Saade said the company will continue to invest in container terminals around the globe. “The issue we have is that terminal investment costs a lot of money, so we need to make sure the terminals we invest in offer a strategic advantage to the group.”
He said the company is looking at investing in terminals in the U.S., “because for us the U.S. is an important market. We are also looking in Africa, where the group is expanding its presence, and in China, where we are a very strong player.”
The French carrier, the world’s third-largest by capacity, reported a 28 percent increase in revenue, which hit $15.1 billion, compared with $11.8 billion in 2007.
Volume increased 15.6 percent to 8.9 million containers from 7.7 million in 2007.
“We managed to remain profitable in 2008, although it was obviously not as successful as 2007, which was an exceptional year,” said Rodolphe Saade, chief executive vice president of the Marseilles-based container line, in a telephone interview.
“2009 will be a more difficult year, but the company is taking every step to reduce costs, and we have a massive program in place to recuperate the lost revenue,” he said.
He said the company had managed to make a profit in 2008 by “adjusting capacity to the market needs, constantly reducing costs by slow-steaming and by rerouting ships around the Cape of Good Hope to avoid the costs of the Suez Canal tolls and by renegotiating contracts with terminals and vendors throughout the world.”
Saade said the line is in discussions with both the Panama Canal Authority and the Suez Canal Authority about lowering their tolls or postponing scheduled toll increases.
“They do understand the situation. It seems that the Panama Canal is ready to make a move, while we have not heard yet from the Suez Authority,” Saade said.
He said rumors that CMA CGM has asked the French government for financial help during the current global recession were “absolutely incorrect”.
“CMA CGM is a family company and we do not need the help of the French government.”
In response to what he called “a more difficult 2009,” he said the company is planning to cut its operating costs by $600 million this year in a number of ways.
“We are rationalizing or merging some of our services with other shipping lines that will allow us to take advantage of economies of scale by deploying big ships and sharing the capacity with our partners,” he said.
Saade said one of the advantages CMA CGM enjoys during the current downturn in global demand is that three-quarters of its fleet is chartered. That gives it the flexibility to adjust its fleet to slowing market demand.
He said more than 180 ships will come out of charter this year, so the carrier will turn some of them back to their owners and renew or replace others at what it termed “attractive contract rates, leading to substantial cost savings.”
“We have idled a few ships in Asia, not more than 10,” he said. “Most of our ships have been cascading on other routes in the network.”
Saade said the company has a massive order book, with deliveries scheduled from 2009 through 2012. “We have not cancelled any of our orders, but we are trying to defer some of our installment (payments) to shipyards, or, if possible, postpone the delivery of some ships.”
He said 97 percent of the ships that CMA CGM has ordered had already been financed “before the current crisis.”
“As far as we are concerned we do not have issues with ship financing since they have been financed a while ago.”
As for signs of revived demand in global markets, “the light seems to come from you in the U.S.,” he said. “We are getting some positive signs in the U.S. that the market is starting to pick up a little, although nothing tangible as of yet. The U.S. has more light than we do in Europe.”
Saade said the company will continue to invest in container terminals around the globe. “The issue we have is that terminal investment costs a lot of money, so we need to make sure the terminals we invest in offer a strategic advantage to the group.”
He said the company is looking at investing in terminals in the U.S., “because for us the U.S. is an important market. We are also looking in Africa, where the group is expanding its presence, and in China, where we are a very strong player.”