CMA CGM became the latest shipping line to report a solid second-quarter performance with expectations to take that momentum into the third quarter.
Container traffic volumes decreased for the first time since 2009 as a result of lockdown measures in several countries resulting in the shutdown of production units, in particular in China, during the first quarter. This was then followed by a sharp downturn in global consumer demand in March and April.
The CMA CGM Group noted that all supply chains were able to adapt to avoid disruption and deliver supplies — especially medical equipment. As lockdown measures were gradually lifted, carried volumes bounced back strongly as of May under the combined effect of inventory rebuilding and the sharp recovery in the consumption of goods, notably in the United States.
Increased in income despite a drop in volumes
During the second quarter of 2020, CMA CGM saw improved profitability in all its business activities.
"During the second quarter of 2020, the CMA CGM Group posted positive net income, Group share of US$136 million, up sharply, compared with a loss of US$109 million during the second quarter of 2019, and a benefit of US$48 million during the first quarter of 2020," CMA CGMA said in its Q2 earnings report.
“Despite the COVID-19 pandemic, our Group reported excellent results during the 2nd quarter, thus strengthening our financial structure ... CEVA Logistics’ turnaround plan is underway and in line with our expectations ... Third quarter results should mark a new improvement in our performance," said Rodolphe Saadé, chairman and CEO of the CMA CGM Group.
CMA CGM noted that the Group's Q2 performance benefitted from the strong airfreight business "thanks to air charters compensating the absence of regular capacity" as ground activities progressed further on their recovery — offseting the weakness of sea freight.
The Group noted that logistics net loss continued to recover during the second quarter, reaching US$ -1 million, compared with a net loss of US$32 million during the second quarter of 2019.
Rebound in international trade to boost Q3
CMA CGM said the recovery in container shipping seen since April "should continue" during the third quarter of 2020 for most routes, driven by a faster recovery in the consumption of goods than of services, the growth of e-commerce, and usual seasonality.
"Considering the uncertainties relating to the current health and economic environment, the CMA CGM Group remains cautious .... the Group will carefully monitor the development of the situation, which remains uncertain," it said.
"However, the Group is confident in its business outlook for the third quarter of 2020: 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."