CMA CGM revenue fell more than 30% due to a fall in spot freight rates in the first quarter
Logistics and transportation provider CMA CGM Group says its first-quarter revenue fell more than 30% year-over-year, while profits fell more than 60%. as spot freight rates “normalized quickly” from peak levels of the pandemic..
This trend has continued since the fourth quarter of 2022 as challenging market conditions in the transport and logistics industry include a slowdown in freight demand.
In numbers, the French company said its first-quarter revenue was $12.7 billion, down 30.2% from its first-quarter 2022 revenue of $18.2 billion. And its earnings before interest, taxes, depreciation and amortization (EBITDA) — a measure of earnings — was $3.4 billion, down 61.3% from $8.8 billion in the first quarter of 2022.
Most of that revenue comes from the group’s offshore shipping business, which fell 40.3% from $14.8 billion to $8.8 billion. This decrease was due to a 5.3% decrease in the number of twenty-foot equivalent units (TEUs) carried by its container ships.
According to the CMA CGM, factors that caused this drop included:
household consumption of goods in Europe and North America fell sharply on the back of A. price inflation and B. recovery in consumer spending on services, especially tourism, leisure, etc. Inventory adjustment continued in these regions, putting pressure on imports, especially from Asia, especially in the retail and lifestyle sectors. Relatively high activity in regions such as Latin America and Africa, coupled with reduced congestion, has not been enough to offset the decline on major East-West routes.
Despite these challenges, the company’s logistics business actually increased year-over-year, with revenue up 14.1% to $3.8 billion. The company said the growth reflects its acquisitions of Ingram CLS, Gefco and Colis Privé, which strengthened its offering of end-to-end supply chain services to its customers.
“After two exceptional years, our industry has entered a phase of normalization due to the slowdown in global growth, inflation and the depletion phenomenon that continues in many parts of the world,” Rodolphe Saade, Chairman and CEO of CMA CGM Group. , the press release says. “Despite the deterioration of the situation, our results for the first quarter are extremely stable. They are the result of our investments – more than 30 billion US dollars invested over the past two years – which allow us to constantly expand and strengthen our range of transport and logistics solutions for our customers” .