More warning signals on cooling off shipping and freight market demand emerged, with French shipping giant CMA CGM SA warning of a steep drop in demand so far this year, extending a slump that led to a more than halving of its quarterly profit.
A downturn that began in the second half of last year “remained at play in 2023, as market conditions in the transport and logistics industry continue to deteriorate,” the world’s third-largest container line, controlled by the billionaire Rodolphe Saade and his family, said in a statement, Bloomberg reported.
The company also cited a sharp decrease in freight rates, geopolitical tensions and economic uncertainty.
The bleak outlook from the French transporter is in line with European rivals A.P. Moller-Maersk and Hapag-Lloyd AG.
It pointed to a cooling period in the notoriously cyclical shipping market.
The Covid-19 pandemic had fuelled a surge in consumer demand for goods that snarled global supply chains, propelling freight rates and shipping profits to unprecedented levels.
These weakened significantly at the end of last year.
CMA CGM’s net income more than halved to $3.04 billion during the fourth quarter from $6.71 billion in the final three months of the previous year.
Despite the drop, full-year profit for 2022 rose to a record $24.9 billion, surpassing its 2021 profit of $17.9 billion.
“The balance between supply and demand is expected to remain challenging, as capacity is expected to increase,” the company said, referring to an easing of port congestion and delivery of new vessels in shipping and more cargo capacity on planes.
CMA CGM had 63 new vessels on order, the company said.
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