Posted By Uma Rajagopal
Posted on November 9, 2024
By Gus Trompiz
PARIS (Reuters) – Strong global demand pushed up CMA CGM’s third-quarter profit while the current quarter was seeing a rush to ship goods from China, the shipping group said on Friday as it played down the risk to trade from possible U.S. tariffs.
The French company reported a net profit of $2.73 billion for third quarter, up from $388 million in the year-earlier period, supported by a 5.5% increase in volume for its main ocean shipping division.
Like other shipping firms, CMA CGM has benefited from restocking by U.S. companies this year, amplified by concerns that geopolitical tensions and a recent labour dispute at U.S. East Coast ports would hurt trade.
Businesses are waiting to see if Donald Trump will impose tariffs on China and other countries as he promised during his victorious U.S. presidential campaign.
China’s exports grew at their fastest in more than two years in October, which analysts saw as a sign of front-loading before potential U.S. and European Union tariffs.
We observe that demand remains strong and also that there seems to be earlier than usual anticipation of the Lunar New Year in China,” CMA CGM’s Chief Financial Officer Ramon Fernandez told reporters on a call.
While it was too early to predict the impact on trade flows from the upcoming Trump presidency, the global economy appeared robust and previous experience showed adjustments to tariffs can be made, with Mexico and southeast Asia taking share from China in U.S. imports, he said.
Favourable demand was helping stabilise freight rates after they retreated from a peak at the end of July as new vessels entered the market, he said, adding that the sector may face overcapacity next year, particularly if normal traffic resumes through the Red Sea.
Vessel re-routing away from the Red Sea, due to attacks by Yemen’s Houthi militants, has lengthened Asia-Europe voyages but benefited operators by absorbing fleet capacity and boosting freight rates.
In France, CMA CGM continued to work on the assumption it will face an exceptional tax of around 800 million euros ($861.44 million) on its shipping profits as part of government proposals to stem a budget deficit, Fernandez said.
The levy would curtail its investments but it was too early to say which projects might be affected, he added.
($1 = 0.9287 euros)
(Reporting by Gus Trompiz, Editing by Louise Heavens)
