CMA CGM revenue plunged more than 30% as spot freight rates plunged in Q1
French container shipper says market is seeing a “rapid normalization” due to drop in household consumption of goods, retail inventory levels.
Logistics and transportation provider CMA CGM Group says its revenue dropped more than 30% in the first quarter compared to the same period last year, and profits dropped more than 60% as spot freight rates plunged in a “rapid normalization” from their pandemic highs.
That trend has continued from the fourth quarter of 2022, as challenging market conditions in the transport and logistics industry include a slowing in freight demand.
By the numbers, the French company said its first quarter revenue stood at $12.7 billion, down 30.2% from Q1 2022 level of $18.2 billion. And its earnings before interest, taxes, depreciation, and amortization (EBITDA)—a measure of profit—was $3.4 billion, down 61.3% from $8.8 billion in Q1 2022.
Most of that revenue comes from the group’s maritime shipping business, which slumped 40.3% from $14.8 billion to $8.8 billion. That decrease was due to a 5.3% drop in the number of twenty foot equivalent units (TEUs) its container ships carried.
According to CMA CGM, the factors causing that drop included:
- household consumption of goods in Europe and North America has fallen sharply amid A. price inflation and B. a rebound in consumer spending on services, especially tourism, leisure, etc.
- inventory adjustments in these regions continued, weighing on imports, especially from Asia, particularly in the retail and lifestyle sectors.
- the relatively brisk activity in regions such as Latin America and Africa, together with eased congestion, were insufficient to offset the decline on the main East-West routes.
Despite those challenges, the company’s logistics business actually posted an increase year over year, with revenue rising 14.1% to $3.8 billion. The company said that rise reflected its acquisitions of Ingram CLS, Gefco, and Colis Privé, which strengthened its offering of end-to-end supply chain services for its customers.
"After two exceptional years, our industry has entered a phase of normalization due to the slowdown in global growth, inflation, and a destocking phenomenon that is continuing in many parts of the world,” Rodolphe Saadé, chairman and CEO of the CMA CGM Group, said in a release. “Despite this deteriorated context, our first-quarter results are extremely solid. They are the fruit of our investments - more than USD $30 billion committed over the past two years - which enable us to constantly broaden and strengthen our range of transport and logistics solutions for our customers.”
