CMA CGM REPORTS LOWER PROFIT, RAPID GROWTH FOR 2001

CMA CGM REPORTS LOWER PROFIT, RAPID GROWTH FOR 2001

   CMA CGM, the expansion-driven French shipping line, posted a 74-percent fall in net profit for 2001, to 28 million euro ($25 million), despite a 17-percent increase in the volume of containers carried.

   The 2001 net result compares with a profit of 107 million euro in 2000.

   CMA CGM’s revenues rose 11 percent last year, to 2.2 billion euro ($1.98 billion), from 2 billion euro in 2000. Containers carried soared to 1.9 million TEUs, from 1.6 million TEUs in 2000, as a result of increases in market shares and the launch of new container services. However, CMA CGM said lower freight rates negatively impacted its profits.

   Operating profit decreased 61 percent, to 45 million euro ($40 million), from 116 million euro in 2000.

   “The year 2001 has been a difficult year for the maritime industry,” said Jacques Saade, chairman of the executive board of CMA CGM. The company said sharp decreases in freight rates last year followed the slowdown in trade growth and the rise in global containership capacity.

   “Shipowners and operators faced an overcapacity problem,” Saade said. “The east/west trades were the hardest hit.”

   Saade acknowledged that CMA CGM’s 17-percent volume last year exceeded by a large margin the average growth of 3 to 4 percent of the global container shipping market last year.

   “This growth was a bit distorted because we took delivery of our new ships (of 6,600 TEUs) in 2001,” he added. CMA CGM deployed eight new 6,600-TEU in the Asia/Europe trade. CMA CGM was “forced to increase its volumes” in this trade because of its additional ship capacity, Saade said.

   Last year, CMA CGM also launched several new container services, in the Asia/West Africa, North America/East Coast South America and other trades, accounting for half of the additional container volume carried.

   The carrier increased its volume to and from the United States by 45 percent last year, to 275,000 TEUs, and expects to raise U.S. trades volumes by another 24 percent this year, to 340,000 TEUs, said Rodolphe Saade, vice president of CMA CGM in charge of U.S. trades. The transpacific accounts for 60 percent of the company’s U.S. trades volumes, he said.

   CMA CGM has expressed an interest in buying a stake in CNAN, the state-owned national shipping line of Algeria, and in Comanav, the state-owned carrier of Morocco. Both companies, which are losing money, are expected to be privatized. “We are interested and motivated in participating in the privatization of the shipping companies of Algeria, Morocco and, later, Tunisia,” Jacques Saade said. CMA has had the experience of acquiring the former state-owned carriers CGM and Australian National Line, and subsequently turned them around, he said.

   CMA CGM now plans to continue to lower costs, through merging its head offices based in Paris and Marseilles into single headquarters in Marseilles, and diversifying into supply chain management and, to a limited extent, roll-on-roll-off shipping.

   The carrier said its strategy of developing slot-exchange and other partnership agreements with other container carriers will continue.

   CMA CGM will start exchanging space with Lloyd Triestino in the transpacific trade in May. Evergreen, Lloyd Triestino’s parent company, started exchanging slots with CMA CGM on the Asia/Europe route in March.

   Following the sudden departure of National Shipping Company of Saudi Arabia from a vessel-sharing agreement with CMA CGM on the Asia/Europe trade, effective in June, CMA CGM said it would continue the services with the current capacity. Slots on the Asia/Europe services will be sold to China Shipping. ANL Container Line, an affiliate of CMA CGM will also enter the trade and take space on the Asia/Europe services.

   Saade reported that container-shipping markets from Asia have returned to rapid growth in recent weeks, which indicates “a reversal of trends that remains to be confirmed.”

   The carrier said its ships are sailing full from Asia to Europe and from Asia to North America, and that freight rates are increasing as a result. In the transpacific trade, CMA CGM said it has seen positive indications that service contracts being negotiated to start on May 1 will be at higher rates.

   Saade predicted that, following rate increases, he expects CMA CGM’s profits to be a little higher than in 2001.