A downturn that began in the second half of last year “remains at play in 2023 as market conditions in the transport and logistics industry continue to deteriorate,” the world’s third-largest container line said in a statement on Friday. The company cited a sharp drop in freight rates, geopolitical tensions and economic uncertainty.
The French transport company’s bleak prospects are in line with those of European rivals AP Moller-Maersk A/S and Hapag-Lloyd AG and point to a slowdown in the notoriously cyclical shipping market. The pandemic had fueled a spike in consumer demand for goods that disrupted global supply chains and drove freight rates and shipping profits to unprecedented heights. These weakened significantly at the end of last year.
CMA CGM net income more than halved to $3.04 billion in the fourth quarter, from $6.71 billion in the last three months of last year. Despite the decline, full-year profit for 2022 rose to a record $24.9 billion, surpassing $17.9 billion in 2021.
“The balance between supply and demand is expected to remain difficult as capacity is expected to increase,” the company said, citing an easing of port congestion and the delivery of new vessels in shipping and more cargo capacity in aircraft. CMA CGM has ordered 63 new vessels, the company says.
Still, the company said “certain macroeconomic signals are stabilizing,” with US consumers and jobs remaining resilient, a European recession “avoided for now” and some emerging markets in Latin America and Asia remaining strong.
The pandemic boom filled the coffers of the Saades and rival European shipping magnates like Gianluigi Aponte, founder of the Mediterranean Shipping Co., and Klaus-Michael Kühne, who has interests in logistics and shipping companies. The tightly held CMA CGM has yet to announce a 2022 payout.
The latest findings could help pull CMA CGM out of political hot water in France, where some lawmakers have called for a windfall tax on the company due to its high profits. Saade, the second-generation head of the airline, has so far avoided such a penalty. He has invested some profits to reduce carbon emissions and expand operations in ports, logistics, air freight and media.
With a private fleet of around 593 ships, the Saade family is worth $24 billion, according to the Bloomberg Billionaires Index.
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