Image: CMA CGM
In a recent interview with Bloomberg, Rodolphe Saade, the billionaire CEO of CMA CGM SA, the world’s third-largest container line, has raised alarm bells about the shipping industry’s future. Saade, a prominent figure in maritime circles, predicts a rocky road ahead as new vessels ordered during the pandemic shipping boom are set to flood the market in 2024.
Speaking at an event in Paris, Saade highlighted the looming risk of an imbalance between supply and demand in the sector. He expressed concerns about the influx of container ships entering the market, a scenario that could potentially disrupt the delicate equilibrium the industry strives to maintain.
Saade’s warning comes amid a gloomy outlook for the shipping sector, with major players like A.P. Moller-Maersk A/S, Hapag-Lloyd, and CMA CGM reporting significant slumps in third-quarter earnings. Analysts fear that this downturn may persist through 2024, adding to the challenges faced by an already volatile industry.
“We’re expecting between 2% and 3% of trade growth next year,” Saade stated, emphasizing that CMA CGM is well-prepared to weather the storm. He reassured stakeholders that the company is financially solid, boasting substantial market share in the countries where it operates.
Saade acknowledged the cyclical nature of the shipping industry, noting that after stellar results in 2021 and 2022, the sector is entering a phase of normalization. Despite the upcoming challenges, he remains optimistic, citing the industry’s resilience in navigating through highs and lows.
The maritime sector has witnessed shifts and realignments in response to the pandemic-induced boom and subsequent slump. Earlier this year, Maersk and Mediterranean Shipping Co., the two largest container lines globally, decided to terminate their vessel-sharing partnership after a decade, citing heightened competition in global logistics.
Saade, however, expressed satisfaction with CMA CGM’s membership in the Ocean Alliance, which includes China’s state-owned Cosco Shipping Holdings Co. He downplayed concerns about industry dynamics, stating, “Everyone has their own problems. I’m happy with Cosco. It’s our big partner.”
Unlike some competitors facing financial challenges, CMA CGM has strategically utilized its pandemic windfall. The company invested in expansion, acquiring ports, logistics, and air transport assets. Notably, it sealed its largest-ever deal, acquiring Bollore SE’s logistics arm for €5 billion ($5.4 billion).
CMA CGM, a family-controlled business started by Saade’s father, Jacques, has undergone diversification under Rodolphe’s leadership. The company extended its reach into the media, acquiring newspapers such as La Tribune and La Provence.
Despite the uncertain future for the shipping industry, Saade remained tight-lipped when questioned about potential interest in BFM radio and television assets owned by fellow French billionaire Patrick Drahi. Drahi’s telecom empire, burdened with significant debt, adds an intriguing layer of complexity to industry dynamics.
In a nutshell, the maritime sector braces itself for the challenges forewarned by Rodolphe Saade. As the industry navigates these turbulent waters, stakeholders are closely watching how companies, including CMA CGM, adapt to the evolving landscape.
Source: Bloomberg, Tara Patel and Benoit Berthelot
