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CMA CGM says transpacific revival boosts profit
Global freight company reported a 19% jump in revenue and a 6% rise in container volumes
Key Takeaways:
- CMA CGM said July 28 that rebounding Chinese exports to the U.S. boosted second-quarter revenue and profit as companies rebuilt inventories.
- Revenue rose 19%, EBITDA increased 31% and container volumes grew 6% as transpacific demand offset added shipping capacity and higher Middle East-related costs.
- CMA CGM said restocking could continue for months while carriers still divert many vessels around Africa and limit Red Sea transits when security permits.
CMA CGM SA, the world’s third-largest container line, said a surge in Chinese shipments is boosting earnings as U.S. companies pad inventories while President Donald Trump rebuilds a tariff strategy dealt a setback in February by the Supreme Court.
“Over the past months there has been a rebound of Chinese exports to the U.S. compared to what was seen over the previous year,” Chief Financial Officer Ramon Fernandez said on a call July 28 about second-quarter results. “This window of opportunity of sorts has led companies to reconstitute their stocks.”
The transpacific cargo revival is continuing and restocking could last for months, he said, noting that any trade decoupling between the world’s largest economies “didn’t happen” last quarter.
CMA CGM reported higher second-quarter sales and profit as a rise in freight volumes offset new shipping capacity coming into the market and higher costs related to the war in the Middle East that has led to disruptions through the key Strait of Hormuz.
The Marseille-based company controlled by the billionaire Saade family, along with rivals MSC Mediterranean Shipping Co. SA and A.P. Moller-Maersk A/S, have for months confronted trade volatility due to Trump’s tariff policies and uncertainty stemming from conflicts in the Middle East
Fearing a flareup in attacks on commercial shipping, the major containers carriers are still diverting vessels around Africa’s Cape of Good Hope instead of sailing through the Red Sea.
Red Sea worries
While CMA CGM said it now has four remaining vessels blocked in the Persian Gulf due to hostilities between the US, Israel and Iran, the company is still only transiting the Red Sea “when security permits.”
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The company reported a 19% jump in quarterly revenue and a 31% rise in earnings before interest, taxes, depreciation and amortization, according to a statement Tuesday. Container volumes increased 6% over the period.
CMA CGM operates a fleet of more than 700 vessels and has expanded into logistics, air cargo and media businesses.
Earlier this month the company announced plans to buy FedEx Corp.’s supply chain unit for about $1.4 billion — a major increase in its North American presence in contract logistics.
The Saade clan is worth about $45 billion, according to the Bloomberg Billionaires Index, a fortune rooted in the shipping line headed by one of the founder’s sons, Rodolphe Saade.
CMA CGM ranks No. 6 on the Transport Topics list of the largest global freight companies. MSC ranks No. 9 and Maersk ranks No. 7.
