Full speed ahead for CMA CGM's upbeat boss, despite CEVA and debt woes
DESPITE slipping from third to fourth place in Alphaliner's ocean carrier rankings and carrying a debt load of US$18 billion against an annual revenue of $30 billion, all's well at CMA CGM, chief executive Rodolphe Saade told London's Lloyd's List
17 March 2020 - 19:00
Partly because it acquired once Dutch, and now Swiss logistics major CEVA, the French shipping giant finds itself if not behind the eight ball then at least behind Cosco, MSC and Maersk in carrier standings.
Mr Saade, took over as chairman and CEO in 2017 from his famous father, the late Jacques Saade, and pursued a similar bold strategy.
Mr Saade is unfazed by the huge debt numbers, pointing out that it has been inflated by new global accounting rules, and that it will shrink on the sale port assets.
'The number is big, but I am not concerned,' he said, noting that the group has plenty of assets such as ships, with a book value of $12.8 billion at the end of 2019, plus containers, equipment and properties, to offset liabilities.
'We are taking all the necessary actions to ensure we have enough cash available,' he said.
CEVA Logistics has proved far more of a challenge, with several top management reshuffles and restructurings as Mr Saade tries to make a success of the investment in the face of considerable industry scepticism.
'I do not regret at all having bought CEVA,' he said.
He is convinced, though, that it was right to buy CEVA. By the end of the year, we will see significant signs of recovery
'I really believe in developing a logistics division so that we are in a position to offer our customers end-to-end solutions,' he said.
'I am very confident that by the end of the year, we will see significant signs of recovery, so I do not regret at all having bought CEVA.'
He is convinced he was right to buy CEVA. 'I really believe in developing a logistics division so that we are in a position to offer our customers end-to-end solutions,' he said.
He also remains committed costly environmental protection, and is a big backer of liquefied natural gas (LNG). The first in the series of nine, the 23,000-TEU CMA CGM Jacques Saade, is about to enter service and will be formally inaugurated at a ceremony in Marseilles in June.
CMA CGM also has ordered another 10 ships of 15,000-TEU for delivery from 2021 that will be powered by LNG.
'We firmly believe that LNG is the best fuel for today. Maybe tomorrow, the industry will come up with something better for the environment, but today, LNG is the right choice,' he said.
Yet CMA CGM has fitted scrubbers on about 60 ships, while the rest will burn low-sulphur fuel, so he is still hedging his bets in the great fuel debate.
He is forecasting a recovery in freight rates in the second quarter of the year as shippers scramble to replenish inventories and protect supply chains. CMA CGM expects all its ships that have been idle during the past few weeks to be back in operation by early April.
The wild card is the coronavirus scare. 'We are not used to a virus that spreads so quickly all over the world, but we believe the fact that China is rebounding is a positive sign.'
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