CMA CGM shipping container
HONG KONG: CMA CGM SA sketched out a sombre outlook for the shipping industry, with the world’s third-largest container line saying freight rates remain weak and a steep slump in US demand for goods out of China isn’t over.
“The transport and logistics market remains depressed,” the French company controlled by billionaire Rodolphe Saade and his family said in an earnings statement.
Sluggish economic growth and persistent inflation is expected to weigh on consumer spending for the rest of the year, while deliveries of new vessels in the market could hurt rates.
The closely held company’s second-quarter net income fell about 83% to US$1.3bil (RM5.9bil) from a record US$7.6bil (RM34.6bil) in the same three months of the previous year. The profit margin narrowed to 21.1% from 49.2%.
A rapid downturn that began in the final six months of 2022 has shaken the container transport industry that had enjoyed an unprecedented boom during the pandemic fueled by a surge in consumer demand for goods.
CMA CGM rival ZIM Integrated Shipping earlier this month cut its full-year forecast due to weak rates, while A P Moller-Maersk A/S and Hapag-Lloyd AG are scheduled to report results next month.
East-West shipping routes are “under more pressure and dropping faster than the North-South trade, which remains pretty dynamic,” CMA CGM chief finance officer Ramon Fernandez told reporters.
He citing China export volumes dropping 25% to the United States – with destocking not yet complete – and 5% to Northern Europe, but rising by double digits to Africa, Latin America and the Middle East.
CMA CGM is raising rates tomorrow for most trade leaving Asia, Fernandez said, adding that the prices for freight transport in the spot market have somewhat stabilized in recent weeks.
New vessel capacity arriving on the market is likely to weigh on rates, particularly on East-West lines. — Bloomberg
