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Monday, 23 November 2015 00:00 - - {{hitsCtrl.values.hits}}
Reuters: France’s CMA CGM, the world’s third-largest container shipping firm, said freight rates should recover next year after a market downturn led to a sharp fall in its third-quarter profits.
The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, hit a new all-time low on Friday, pulled down by a vessel glut and slowing industrial demand from China.
“Freight rates are expected to remain weak in the fourth quarter of 2015. The market should rebalance during 2016,” family-owned CMA CGM said in its third-quarter results statement on Friday. The slide in freight prices has added pressure on a shipping sector grappling with overcapacity and CMA CGM, like container shipping market leader Maersk Line, has tried to use larger ships and consolidation to ride out the downturn.
Both companies are in preliminary discussions with Neptune Orient Lines Ltd (NOL) about a potential acquisition of the Singapore-based container liner, NOL said this month. CMA CGM’s core earnings before interest and tax fell 36.5% from the third quarter of last year to $ 158 million, while consolidated net profit, group share, dropped by 74.8% to $ 51 million, it said.
Revenue was down 9% at $ 3.977 billion, with the company saying a 3.4% rise in volumes carried help limit the sales decline. It did not give guidance for its full-year results but said it expected to “continue to outperform the industry average going forward.”
The merger deal of China’s two shipping giants China Ocean Shipping Co., or Cosco, and China Shipping Group that could create the world’s fourth largest container operator is expected to get approval by Chinese government by January, reports WSJ.
The companies have been working out a deal for months, centred on combining the two companies’ container-shipping units. They are also looking into merging tanker, dry-bulk and port operations, the people said.
The tie-up is part of Beijing’s strategy to consolidate state behemoths in many industries so they compete effectively with international peers. In creating a global shipping giant, a merger could also touch off consolidation in the highly fragmented world of container shipping.
Cosco Container Lines operates 175 container vessels and CSCL operates 156, making them the world’s sixth- and seventh-largest container companies in terms of capacity, with a combined global container capacity share of around 8%.
The merged entity would become the world’s fourth-largest container company, behind the Maersk Line unit of Denmark’s A.P. Møller-Mærsk A/S, Geneva-based Mediterranean Shipping Co. and France’s CMA CGM SA.
