A model of a cargo ship represented in front of the CMA CGM logo
CMA CGM benefited in the first quarter of 2024 from a rebound in demand for consumer goods and an increase in freight rates linked to disruptions in the Red Sea, but expects an influx of new vessels to weigh on the market later in the year, the maritime group said on Friday.
French company CMA CGM, the world’s third-largest container carrier, posted a net profit of $785 million (722.84 million euros) in the first quarter, recovering from a loss of $90 million in the last quarter of 2023.
The group’s revenues are down compared to net profit of $2.01 billion in the first quarter of 2023. CMA CGM then took advantage of the post-pandemic shipping boom, which allowed it to achieve record profits and a wave acquisitions in port terminals, logistics and media.
The core profit margin of the group’s main maritime business increased to 24.8% in the first quarter, compared to 9.5% in the previous quarter. This increase was supported by dynamic demand, notably due to the restocking of companies in the United States, and rising shipping prices, as ships diverted from the Red Sea absorbed excess fleet capacity.
Strong demand is expected to continue, but most of the expansion in overall fleet capacity, expected between 9% and 10% in 2024, will occur over the rest of the year, Chief Financial Officer Ramon Fernandez said during a conference call.
“As a result, the impact of the situation in the Red Sea which is observed on freight rates, whatever the duration of the conflict, should mechanically gradually be absorbed, especially in the second part of the year of course, and would bring the maritime freight market to the overcapacity situation which marked the end of 2023”, he declared.
CMA CGM’s rivals, such as Maersk and Hapag-Lloyd, also cited favorable early-year trends and risks of overcapacity.
(Gus Trompiz report, French version Alban Kacher, edited by Sophie Louet)