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CMA CGM joins the list of carriers, including Maersk, Hapag-Lloyd , to report a significant earnings lift for the second quarter, as disciplined capacity management pays dividends. The group’s operating result improved by more than 26% during the three-month period to more than $1.2bn.

Source: CMA CGM CMA CGM saw carried volumes fall by more than 13% in the second quarter at the hands of the coronavirus backdrop.

CMA CGM has joined the list of lines to post a profit hike for the second quarter in a further sign of the positive impact of astute capacity management evident across the container shipping industry during the height of the coronavirus pandemic.

The world’s third largest box line noted how it improved profitability across all business sectors despite a 9% drop in revenues to $7bn, as container volumes contracted for the first time since 2009 due to global lockdown restrictions.

It said in a statement that volumes carried were down 13.3% in the three-month period, however, slightly less than the 15% drop it had anticipated.

The group’s operating result, or earnings before interest, tax depreciation and amortisation, increased by 26.3% on the corresponding period of 2019 to reach more than $1.2bn.

This too mirrors similar improvements reported by fellow European and indeed global operators Maersk,  Hapag-Lloyd last month, as the industry mitigated for the slump in quarterly volumes with a disciplined approach to capacity, which, in turn, lifted freight rates above 2019 levels.

CMA CGM also improved its earnings before interest, taxes, depreciation, and amortisation margin to 17.2% against the 12.4% reported in the second quarter of last year, while the group managed to post a positive net income of $136m compared with a $109m loss. 

“Despite the pandemic, our group reported excellent results during the second quarter, thus strengthening our financial structure,” said chief executive Rodolphe Saadé.

“Thanks to our agile business model and synergies between our shipping and logistics business activities, we were able to adapt our service offerings to meet our customers’ fast-changing needs.”

He said the group managed to significantly reduce costs during the quarter, while the drop in oil price was also to the CMA CGM’s advantage. 

In terms of ocean freight revenues, the pandemic and subsequent volume slump led to a 10.9% drop to $5.3bn, however, average revenue per teu was up 2.8% on-year to $1,112. 

Unit cost by teu was down 4.6% compared with the second quarter of 2019, at $892 due to the decline in oil prices, the group’s cost-cutting initiatives and the reduction in the fleet of vessels and containers deployed, according to CMA CGM.

The French carrier said it expects the recovery in volumes seen in recent months to continue through the third quarter on most routes, “driven by faster recovery in the consumption of goods than of services, the growth of e-commerce, and usual seasonality”, which it added has helped to drive rates on the transpacific trade, where it is a major player, to historical highs in recent weeks.

“The current strong momentum of the shipping market, driven by both volumes and freight rates, should allow the group to further significantly improve its operating margin compared with the second quarter,” it said.

In light of improving market sentiment, the group is also anticipating a rise in volumes in the second half of 2020 over the past year.