In the face of an anticipated increase in shipping capacity and a global economic downturn, CMA CGM SA is bracing for a potential price war that could depress freight rates. The shipping giant, controlled by billionaire Rodolphe Saade and his family, reported a steep decline in third-quarter profits, with net income plummeting 94% to $388 million.
100 new vessels
CMA CGM’s Chief Financial Officer Ramon Fernandez pointed out the cyclical nature of the shipping industry, marked by periods of boom and bust. This cautionary outlook follows the company’s announcement of plans to expand its fleet by 100 new vessels, adding to its current tally of 621 ships.
The broader shipping industry shares CMA CGM’s concerns, as evidenced by similar statements from A.P. Moller-Maersk A/S and Hapag-Lloyd AG last week. Both companies have highlighted challenging market conditions, with Maersk responding by cutting at least 10,000 jobs to maintain profitability.
Despite these challenges, CMA CGM has continued to diversify its business interests. The company has expanded into media assets, acquiring La Tribune newspaper, and is close to finalising its largest acquisition to date—the logistics arm of Bollore SE.
While CMA CGM has announced measures to reduce costs, it has not specified whether this will involve job cuts. The company’s strategic moves come as it navigates an increasingly volatile market landscape that could reshape the shipping industry in the years ahead.
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Source : Uk. Investing