For several weeks now, Asian ports have been saturated, while local industries that are running at full capacity have, as a result, struggled to export their products. Customers wait but until when? Some are already talking about abandoning the products ordered. No room on ships, freight rates continuously increasing. Some destinations from Asia see their transport costs increase fourfold or even more….On this background of crisis, the CEO of CMA-CGM speaks in the newspaper of Le Monde .

The The resumption of world trade leads to a shortage of boats and containers

According to Rodolphe Saadé, CEO of the shipowner CMA CGM , volumes transported between Asia and the United States will increase in 2020. Despite the re-containments in Europe, the group is expected to have an exceptional year.

The Covid-19 pandemic is not weakening and economic growth is thuring. Sea freight is expected to experience a 4.1% drop in volumes in 2020, according to an estimate by the Un Conference on Trade and Development (Cnuced), published on Thursday (November 12th). For container trade alone, the drop is expected to exceed 6% over the year as a whole.

Nothing compares, however, to the annus horribilis of 2009, after the financial crisis, when CMA CGM had almost collapsed. "After a difficult sta[2020]rt to the year, the turnaround in volumes began in the second quarter, and growth will be sustained in the third and fourth quarters," said CEO Rodolphe Saadé in an interview with Le Monde. "This is very impressive on trans-Pacific routes, where volumes have already helped to catch up with the decline at the beginning of the year, with overall growth of 1.7% from January to September. On the other hand, the increase in those transported in September and October on the Asia-Europe route has not yet made up for the decline seen at the start of 2020.

The boss of the world's fourth-largest shipowner first sees the effect of Washington's massive stimulus package on its economy. "Americans consume a lot and buy most of their products in Asia. China remains the factory of the world, but there is stronger growth in Southeast Asian countries, such as Vietnam or Thailand, he says. Sino-U.S. tensions are affected by our shipments: some customers, including Chinese, are relocating production to these countries. »

The pandemic has also changed consumption – "fewer services and more products purchased on the Internet, for the home or the garden," an e-commerce that carries container transportation. Not to mention the "catch-up" that followed the first containment. This demand, which "surprised the profession", explains that the global fleet is now fully used. "There is a shortage of boats, but also of containers," says Rodolphe Saadé. Today, everything available is on the seas. »

"Trade is more difficult than it was a decade ago"

This allows shipowners to raise their freight rates (tariffs), which have risen sharply since July, according to the British firm Drewry. However, there is a distinction between rates on trans-Pacific routes, which soared between January and September, and the Sino-European route, where freight rates remained stable for nine months.

Can this exceptional dynamic continue? "Activity is expected to remain strong until the Chinese New Year in February 2021," says Mr. Saadé. However, if 2021 is to be a positive year, it should not be as exceptional as 2020."

Despite these positive prospects, maritime transport remains particularly exposed to economic and geopolitical vagaries.

"Between the ban on working in some countries and tariffs, trade is more difficult than it was a decade ago," says the leader. There has never been so much tension in the world. Those with China will not go down. The election of Joe Bid[à la présidence des Etats-Unis]en will not bring about profound changes, even if he puts more diplomatic forms into it. It will be necessary to "adapt" to it, by having "a more detailed analysis of each country" and by strengthening the diplomatic approach to business.

The health crisis confirmed the "relevance" of the CMA CGM leader's strategy: to become a major logistics

In this context, the consolidation of the shipping sector is no longer on the agenda. In 2018, Rodolphe Saadé had approached the German Hapag-Lloyd for a merger, but he no longer believes in a "major consolidation" between the behemoths Maersk, MSC, Cosco, CMA CGM , Hapag-Lloyd or Evergreen Line, especially for antitrust reasons. "The group has reached a size sufficient to advance alone or with its partners (such as China's Cosco). It will continue to grow with the market," he announces, warning competitors who are too greedy: "I'd rather be the hunter than the prey. »

On the other hand, the health crisis confirmed the "relevance" of its strategy, stresses the son of Jacques Saadé, the founding patriarch of the empire in Marseille, in 1978, who died in 2018: to become a great logistics. CMA CGM has acquired Swiss Ceva Logistics in 2017-2019, and says the subsidiary's results, which have been in the red for several years, are "clearly improving." The group continued its diversification by taking a 30% stake in Air Caribbean to acquire air cargo assets.

Energy transition

"Our customers are demanding a global offer, and they are offered transportation, storage and delivery at the last mile," he says. We are twelfth in the world in logistics, there is room. Mr. Saadé wants to increase this division: "We will look at targets to strengthen us," he promises, while the sector is still very fragmented. Assets are already on the market, such as XPO's European subsidiary, the former Norbert Dentressangle.

Can CMA CGM afford it, with a debt of $18 billion (15.2 billion euros), half of which is for its ship leases? "For the sake of security, in March we asked for a government-guaranteed loan of 1 billion euros," replies the CEO. Growth was strong and our results were much better than expected. So I decided to prepay about $700 million, including part of the government loan. It also does not close the door on an IPO. It would be a revolution for this multinational with a strong family tradition.

The other big deal for the third generation of entrepreneurs Saadé is the energy transition. CMA CGM will take delivery of 26 container ships powered by liquefied natural gas (LNG) by 2022. "I'm committed to the next orders for large ships that they'll all be LNG," he says. Today it is the best energy for the environment[– 20 % de dioxyde de carbone, – 99 % de particules fines et d’oxyde de soufre] and costs. In a few years, we may say that we need to use hydrogen. I can't wait ten years. »

CMA CGM , still the only one to have chosen LNG, "wants to structure the sector". The Jacques-Saadé, the first giant container ship powered by liquefied gas, took place on 12 November in Rotterdam. "The 9 ships of 23,000 containers on the Asia-North Europe lines will be refuelled in the Dutch port," he said. And in Fos-Marseille, the 15,000-container boats on the Asia-Mediterranean lines will be on from the end of 2021. "Everything we can do for the planet, we have to do," concludes Rodolphe Saadé, who has promised a "carbon neutral group in 2050." »