What goes up must come down – and that’s the reality facing the shipping industry which is seeing profits plummet as the market begins to normalise.
French shipping major CMA CGM is the latest carrier to announce underwhelming third quarter results – reporting revenue of $11.4 billion, with a gradual rebalancing of contributions from the Group’s maritime shipping and logistics businesses.
Ebitda was recorded at $2.0bn, 78.2% lower than the third quarter of 2022. The Ebitda margin came in at 17.5%, down 28.5 points, while the Group’s net income amounted to $388 million. The debt net of financial resources totalled $1bn at September 30.
Commenting on the results for the period, Rodolphe Saadé, chairman and chief executive officer, said despite a return to pre-pandemic levels, the carrier’s performance “remained solid”.
“The slowdown in the global economy is expected to continue weighing on our industry in the period ahead, but volumes carried are still robust.”
First-half 2023 trends remained at play in the third quarter, with deteriorating market conditions in the transport and logistics industry.
The Group is however continuing to invest in its operating assets and in the energy transition for shipping and logistics.
At the end of August 2023, it completed its $2.8bn acquisition of the GCT Bayonne and New York container terminals, renamed Port Liberty Bayonne and Port Liberty New York.
It is also continuing to diversify the energy mix of its vessels, aiming to achieve net-zero carbon by 2050. It has already invested more than $17bn in a fleet of nearly 120 LNG- and methanol-powered ships to be delivered by 2027.
Consolidated revenue from the Group’s shipping operations amounted to $7.6bn, down 51.8% year-on-year (y-o-y), reflecting the ongoing normalisation of freight rates. Ebitda totalled $1.6bn, 81.6% lower than in third quarter 2022. The Ebitda margin came in at 21.0%, down 34 points while the revenue per TEU amounted to $1 322, down 52.3% y-o-y.
Volumes carried were up 0.9% compared to the same period in 2022, representing a total of 5.7m TEUs. Volumes continued to grow on the North-South and short-sea lines, while further normalising on the East-West lines, due to inventory drawdowns in the United States and more moderate household consumption in an inflationary environment.
Saadé says the stability of the logistics business, at a time of declining trade, reflects on one hand the slowdown in freight markets and on the other hand the strengthening of the service offering and the resilience of certain activities.
In terms of outlook, the third quarter has confirmed the trend towards normalisation in the transport and logistics markets, with a return to 2019 pre-Covid conditions. Macroeconomic forecasts point to a relative resilience in global economic activity in 2023, albeit at a level below the historical average, but they do not anticipate a recovery in 2024. However, this outlook contrasts with an expected rebound in world trade in 2024.
New capacity expected on the market in 2024 will likely continue to pull down freight rates.
