PARIS: Cheap oil lifted French shipping company CMA CGM’s profitability in the second quarter, adding to the impact of fuel consumption reduction measures taken in the past years.
CMA CGM, the world’s third largest container shipper in terms of volume, said its net profit in the second quarter rose 67% from the same period last year to $156 million even though overall revenue dipped 2.1% as freight prices also fell during the period.
The company managed to bring down cost per container by 11% during the period. Lower fuel prices accentuated the effects of improved average ship fuel-efficiency achieved in recent years. CMA CGM had gradually reduced the fuel it uses by operating larger ships and reshaping existing ships’ hulls to reduce friction. Average freight prices fell by 7.8% in the second quarter from the same period in 2014.
Container shipping, which carries about 95% of the world’s manufactured goods, has suffered for the past decade from overcapacity that has led to falling freight rates, which major operators have described as unsustainable. Dozens of smaller operators regularly undercut freight rates from Asia to Europe and across the Atlantic and Pacific Oceans, hoping to stay in business until the industry recovers.
In response to falling prices, the largest operators are competing to have bigger ships as a way to reduce costs, bringing down freight prices even further on the busiest lines such as between Western Europe and China.
To weather the enduring crisis, CMA CGM has also turned aggressively towards businesses that are both more profitable and growing faster such as the shipping to and from U.S. ports and the transportation of refrigerated containers.
