But net profit still sags from year earlier levels due to higher fuel bills.
CMA CGM reported strong 2018 revenue, driven by higher container volumes gains, including the trans-Pacific. But the fourth largest ocean carrier by fleet size could not escape rising fuel costs putting a dent in earnings,
The carrier reported full-year revenue of $23.48 billion, up 11 percent from a year ago. The gain came on the back of total volume carried rising 9 to just over 20.7 million twenty-foot equivalent unit (teu).
Fourth-quarter revenue saw even higher growth of 15 percent to $6.3 billion against an 8 percent gain in volume, which hit 5.3 million teu in the quarter. A strong rise in spot shipping rates, driven by the fears of U.S. tariffs on Chinese good, helped drive the rise.
CMA CGM credited “commercial dynamism” of specific trade lanes, such as trans-Pacific, India-Oceania and Africa for the rise.
Still, earnings took a hit from higher costs for marine fuel. Earnings before interest and taxes for the year were $610 million, compared to $1.575 billion in 2017. EBIT margin for the year was 2.6 percent, with the margin reaching 3.1 in the fourth quarter. Net income for the year was $34 million, compared to $679 million in the previous year. .
“In 2018, in a difficult environment, the group posted a sharp rise in volumes and a record revenue,” said Rudolph Saade, Chairman and Chief Executive Officer. “Despite an increase in oil prices, our recurring EBIT margin remains considerably above the industry average.”
In light of the tough comps, CMA CGM said it plans to cut costs by $1.2 billion.
Yet the French liner company continues to invest in future developments as it looks to brand itself at the forefront of new digital initiatives in shipping.
Those include offering “smart” container tracking and visibility with Traxens, the two-year old start-up backed by CMA CGM and Mediterranean Shipping Co.
It also introduced its Reeflex product, which allows for the transport of bulk liquids in temperature-controlled containers. And it has introduced Climactive containers to preserve freshness of fruit and vegetables shipped via ocean freight.
CMA CGM also implement onboard artificial intelligence from Shone Automation to support crews’ decision-making. It is also pioneering use a blockchain-enable bill of lading from BuyCo.
CMA CGM is also an investor in Nyshex, which is creating a digital market for ocean freight contracts, and e-dray, a software platform designed to improve container handling operations in terminals.
Regarding its interest in Ceva Logistics, CMA CGM said it’s developed a strategy with Ceva for adding third-party logistics services to its core ocean carrier business. CMA CGM said it will be able to “offer a complete range of logistics services covering the entire logistics chain, from production logistics to last-mile delivery, and including air, sea and land transport services as well as warehousing services”
That includes the sale of CMA CGM Log, the ocean carrier’s logistics unit, to Ceva. CMA CGM said the move will “increase Ceva’s footprint in ocean freight forwarding and to allow economies of scale.”
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