2023-11-11 19:00:00
After the exceptional profits observed during the Covid-19 pandemic, the return to normal is confirmed for maritime transport players. In line with the sharp drop in profits in the third quarter presented at the beginning of November by the Danish shipowner Maersk, the French carrier CMA CGM (owner of La Tribune) also reported a sharp decline in its quarterly profit on Friday. Net profit in fact amounted to 388 million dollars between July and September compared to more than 7 billion recorded the previous year. EBITDA (earnings before interest, taxes, depreciation and amortization) increased from $9.1 billion last year to $2 billion this year. All for a turnover of $11.4 billion, down 42.6%. Even though it is down 28.5 points, the margin remains high at 17.5%.
« The normalization of our sector continues in the third quarter, with a return to the market conditions we experienced before the pandemic. Our performance, however, remains robust and confirms the relevance of our development strategy in terminals and logistics. This allows us to be more resilient as we enter this new cycle,” Rodolphe Saadé, CEO of CMA CGM, said in a press release.
Price drop
After the decline recorded in the first half, however, volumes increased by 0.9% year-on-year. The strong demand observed on the North-South lines has in fact offset the drop on the East-West lines affected by destocking in the United States, explained Ramon Fernandez, the financial director of CMA CGM. On the other hand, the slowdown in the economy has accentuated the decline in maritime transport prices compared to the record levels reached following the pandemic. Shipping a standard 40-foot container by boat now costs just $1,216, according to the Freightos Baltic Index. Far from the record $11,109 of September 2021. This index, which measures the weekly price of container transport, even fell at the end of October to $1,049, its historic low since its launch in 2016. Several maritime routes barely reach the threshold profitability. For example, the transpacific flow – between Asia and North America – which is the ” main global flow of container ships », According to Arthur Barillas de Thé, general manager of the transport agent Ovrsea.
« This is the flow that rose the highest during Covid and it is also the one that collapsed the fastest. This is a good example of a route where companies are probably below their break-even point. “, he explains. Even the transatlantic flow, traditionally more profitable, has declined significantly, according to Arthur Barillas de Thé. “ Today it is no longer a depreciation for companies », he notes.
And global economic indicators do not encourage optimism. “ Consumer spending likely to stagnate in higher interest rate environment » in major global economies, underlines Jonathan Roach, analyst specializing in container transport for Braemar.
Caution for 2024
If freight rates have stabilized around 2019 levels, it is very difficult to anticipate the trend in 2024, argued Ramon Fernandez. “ There are arguably more risks than opportunities on the demand side “, he said. CMA CGM is also cautious for 2024. The prospects of a rebound in world trade when American companies have finished reducing their inventories are tempered by weak economic growth and expected new capacities which will continue to weigh on rates. freight.
New abilities
And for good reason: a potential increase of 9% in global capacity in 2024, in addition to expected growth of 5% in the second half of 2023, raises concerns. The scrapping of older ships, partly motivated by the adaptation of the sector to new environmental regulations in Europe, would be crucial to balance supply with demand, defended the financial director of CMA CGM, specifying that the group had canceled any of his orders.
Braemar forecasts average annual fleet growth of around 5% to 5.5% between 2023 and 2027. The excess supply of vessels is then expected to reach 20% compared to 2020.
However, the sector is not in crisis, insists to AFP Niels Rasmussen, chief analyst for Bimco, the main global association of maritime carriers. In 2008, before the financial crisis, the order book for new ships was equivalent to 60% of the global fleet in service. “ Today it is 27% “, he specifies.
Large companies are also “ much more financially healthy because they benefited from very high profits » of the Covid years and have diversified into logistics in particular, notes Camille Egloff, maritime transport specialist at the Boston Consulting Group.
And if East-West trade is in decline, “iThere is greater resilience in intra-regional and North-South trade » which can act as shock absorbers, believes Camille Egloff.
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