Giant Shipping CMA CGM reports loss amid US-China Trade War

Shipping giant CMA CGM expects volumes to continue growing  in 2019 as increasing activity from Southeast Asia towards the US helps make up for the slowing China-US trade that dragged on its first quarter.

French-based CMA CGM, the world’s fourth-largest container shipping firm, reported on Wednesday a

first-quarter net loss of $43m, compared with a $77m loss in the same period on 2018.

Group sales surged 36.9% to $7.41bn, supported by a 4.4% increase in shipped volumes and the inclusion of CEVA Logistics, but core earnings were stable when removing the effect of CEVA and an accounting change relating to leases.

“We are very confident about seeing our volumes grow in 2019, regardless of the geopolitical climate,” CFO Michel Sirat said.

“We had a slightly mixed performance in the first quarter,” he said. “There was something of a ricochet from what happened in the previous quarter.”

Brisk China-US traffic, partly due to US importers anticipating further tariffs in a trade dispute between Washington and Beijing, buoyed CMA CGM’s activity in the second half of 2018.

But the resulting easing of China-US flows at the start of 2019 weighed on CMA CGM’s performance, Sirat said. He added that profitability generally tended to be weaker in the first half before strengthening during a traditional second-half peak in US demand.

CMA CGM was, however, seeing higher volumes from Southeast Asia towards the US, reflecting a shift in sourcing of goods from China to countries such as  Vietnam in response to US tariffs, while increased traffic from Asia to Europe was also offsetting the reduced China-US trade.

The company expected to achieve full-year growth of 5%-7% in shipped volumes, outperforming the industry and helped by intra-regional services, he said.

Sirat noted that the French group was more optimistic than market leader AP Moller-Maersk, which last week warned that trade tensions and an economic slowdown were slowing growth in global freight.

At the same time, CMA CGM said it had raised its cost-cutting target to $1.5bn from $1.2bn initially announced in March, with savings partly to come from simplifying routes.

Sirat also reiterated an objective to bring loss-making CEVA to break even at the end of 2019. The takeover of CEVA, which CMA CGM estimates will cost it $1.6bn, is aimed at expanding the shipping firm’s presence in land transport.

• Reuters