E-commerce growth leads to rise in shipping and investments: CMA CGM chief
THE head of French shipping giant CMA CGM says the future of the world's fourth-largest container line will increasingly be built on e-commerce
20 September 2020 - 19:00
Chairman and chief Executive of CMA CGM, Rodolphe Saade said in a recent interview that the shipping company is bringing the logistics business it acquired last year more deeply into its operations as the carrier takes on bigger trade volumes aimed at online consumers.
'Clients like Amazon and Walmart are looking for one entity for all their shipment needs,' he said.
The company has swapped out the management of Ceva Logistics AG, the big logistics operator it acquired last year, and moved its headquarters from Switzerland to the shipping company's base in Marseilles. Mr. Saade said the moves are aimed at turning the loss-making Ceva profitable while embedding its inland distribution specialties into the shipping line's own port-to-port operations.
CMA CGM is seeing signs of changing distribution patterns in the recent container import surge that hit US shores in the third quarter. 'Amazon and Walmart are increasing significantly their volumes coming out of Asia to the US. People don't go to the malls with the pandemic, but they buy on the internet,' he said. 'These clients are increasingly asking for warehousing and last-mile services.'
Shipping executives and brokers estimate that up to a quarter of all container volume heading into the US from across the Pacific in recent months has been destined for e-commerce distribution centres and that demand continues to grow. CMA CGM is one of the biggest operators on trans-Pacific container lanes.
The company's logistics investments are part of a broader move in the maritime sector.
Companies including AP Moller-Maersk are investing in warehousing, customs clearance and truck capacity to cater to the growing demand. The Danish company said earlier this month that it will consolidate its supply-chain services by having its logistics division absorb Damco, a separate arm of the group that provides air and ocean freight forwarding, according to the Wall Street Journal.
CMA CGM is betting on Ceva to fulfil that part of the supply chain. The shipping line spent US$1.65 billion last year to buy the third-party logistics operator. The loss-making company is a top-10 global freight forwarder in terms of revenue, but lags behind fellow European firms DHL Global Forwarding and DHL Supply Chain, Kuehne + Nagel International AG and Schenker AG.
Mr. Saade said he expects Ceva, which lost $1 million in the second quarter, to show a profit next year. The CMA CGM group, which includes the main shipping arm with a fleet of 500 ships, made a profit of $136 million in the quarter, after a $109 million loss last year.
'This year our profit is coming from shipping,' Mr. Saade said. 'Tomorrow, most probably it will be divided between shipping and inland logistics, maybe half and half, over the next five years.'
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