Tonnage Titans – 7. CMA CGM

Rodolphe Saadé

Rodolphe Saadé. Credit: Getty Images

As it celebrates the 40th year of its foundation in Marseilles, France’s CMA CGM group, the third-largest global container ship operator, has never looked stronger or more confident in its future.

The group, which began with the creation of a line between Beirut, Latakia, Livorno, and Marseilles using a single ship and then built up an international presence through its astute use of chartered vessels, today operates a fleet of more than 500 vessels which carried 18.95 million teu last year. According to IHS Markit data, the group’s total tonnage currently stands at 15,618,427 gt.

The group’s route has not been all plain sailing, however. Nine years ago, it was engulfed by a debt crisis that threatened its very existence and the Saadé family was obliged to fight tooth and nail to keep control over it.

Helped by outside investors, it has recovered spectacularly to the extent that, today, it looks able to withstand whatever vagaries the container shipping market can throw at it and play a leadership role in the sector.

In November 2017, CMA CGM became the first container shipping major to order ultra-large container carriers fuelled by liquefied natural gas (LNG) after it announced that nine 22,000 teu vessels it had ordered from Chinese yards during that summer would use LNG as their primary fuel.

Shortly afterwards, the group completed the inevitably sensitive hand-over from father to son at the head of the group as Rodolphe Saadé officially replaced his father Jacques as chairman, adding the chairmanship to the chief executive role he had assumed a little over nine months earlier.

Since then, the group has continued to show its strength. In March, it posted the strongest operating profits in the container shipping sector, helped by its USD2.4 billion takeover of Neptune Orient Lines (NOL) and its liner subsidiary APL in 2016. After having been loss-making along with the rest of the group in 2016, APL contributed USD340 million to the group’s USD1.5 billion operating income last year.

The group is still in expansion mode. Having demonstrated its ability to integrate and turn around loss-making NOL, it has set about developing its landside operations.

In April, it signed a memorandum of understanding with Nigeria’s new Lekki Deep Sea Port to become the operator of its container terminal. The port is due to begin operations in 2020 and will act as a hub in order handle expected future trade growth in the region.

Just days later, it announced that it planned to invest up to USD450 million to acquire a 25% stake in leading third-party logistics operator CEVA Logistics as part of a USD1.2 billion initial private offering by the group on the SIX Swiss Exchange.

The group’s efforts to expand its position in the terminal and logistics business, after a period of contraction during which it was dealing with its debt crisis, is taking place alongside a major drive for leadership in the technology sector, which it sees as the key to improving competitiveness and customer service.

In September 2017, it announced that it had agreed a seven-year partnership deal with leading global IT group Infosys and, in January, said it had appointed Infosys Europe head Rajesh Krishnamurthy as it senior vice-president for IT and transformations.

All these initiatives followed what was, arguably, the major event of 2017 – the launch on 1 April of the Ocean Alliance by CMA CGM with its partners COSCO, Evergreen, and OOCL.

Described by CMA CGM as the biggest operational alliance ever formed by shipping companies, Ocean Alliance was given a first birthday makeover in April as the French group and its partners launched the Ocean Alliance Day Two Product. The new service offering makes use of 340 container ships, 122 of which are provided by CMA CGM, to provide 41 services worldwide.