Maritime transport expects more difficult months, after two years of historic surge

A CMA CGM container ship docks at the seaport of Pointe-à-Pitre, on the island of Guadeloupe, on May 25, 2023.

Container ship owners have been expecting this for months: the slowdown in world trade in manufactured goods has led to a return to normal freight rates and an acceleration of the decline in profits that began in the second half of 2022. French CMA CGM announced, Friday, May 26, a net result of 2 billion dollars (1.86 billion euros), very far from the 7.2 billion garnered a year earlier. As for the turnover, carried by the maritime sector, which is only one of the areas of activity of the transport group, it fell by 30% (12.7 billion), “in a deteriorated market environment”.

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The Japanese Ocean Network Express was the first to announce, at the end of April, a profit down 45% for its last quarterly exercise. Then the Danish Maersk, world number two behind the Italian-Swiss Mediterranean Shipping Company (MSC), published on May 4 a result divided by three, to 2 billion euros.

“The continued decline in stocks and the easing of congestion [portuaire] led to lower volumes in all segments”, according to the flagship of Danish industry. As for the German Hapag-Lloyd, its 1.89 billion euros pales in comparison to the 4.2 billion in the first quarter of 2022.

Return of the risk of overcapacity

CMA CGM managers indicate that this first quarter will be “the best of the year” and expect more difficult months. Competition will intensify between the giants of shipping. Like its competitors, the Marseille group will have to fill its container ships to the maximum, capable of transporting up to 24,000 “boxes”, when the threat of overcapacity reappears, a recurring evil in the sector. The price war should exacerbate between the major shipowners.

Most of them have ordered ships from Chinese and Korean shipyards to be delivered between 2024 and 2026. MSC will very quickly cross the bar of 5 million containers, according to the firm Alphaliner, which also sees CMA CGM overtaking Maerk in number of ” boxes”. The French group has ordered more than sixty container ships, including twenty powered by liquefied natural gas and methanol.

Ships delivered by 2026 will increase global capacity by 30%, calculates a CMA CGM executive. Will demand be able to absorb them, even if boats are scrapped? “Deliveries of new capacities over the coming quarters should continue to weigh on freight rates”recognizes CMA CGM, in a press release where the CEO, Rodolphe Saadé, makes no statement.

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