French container ship giant CMA CGM once again delivered a stellar financial report. Its second-quarter profit doubled from the same period last year and also increased compared with the first quarter, but the company echoed peers and warned that the shipping industry’s prosperity will decline Slower, as consumer spending is falling, affecting demand for ocean freight and the outlook for freight rates.
CMA CGM announced on Friday (2nd) that its second-quarter net profit was US$7.6 billion, more than double the US$3.5 billion in the same period last year and higher than the US$7.2 billion in the first quarter. CMA CGM said that while operating costs rose during the quarter (ship fuel costs rose by nearly 75% year-on-year), this was offset by a rise in container shipping revenue.
Like its peers, CMA CGM also said that the maritime industry is beginning to feel the economic pressure, the hot demand during the epidemic has cooled, and spot freight rates in some areas have begun to fall in recent weeks.
“The decline in global consumer spending was already noticeable this summer, which will normalize international trade in the second half of the year and lead to a drop in demand for ocean freight,” said Rodolphe Saade, chairman and chief executive of CMA CGM.
The financial report shows that CMA CGM’s container volume in the second quarter decreased by 1.3% year-on-year, mainly due to port congestion, although the container volume rebounded by 6% compared with the first quarter.
The unlisted company, which is controlled by France’s Saade family, this year offered discounts on freight rates for shipments to France in response to the French government’s request for companies to ease inflationary pressures.
CMA CGM said that the company uses 90% of its profits for commercial activities, is continuing to expand non-sea logistics, and promotes an air freight partner program, which will become a shareholder of Air France this year.