CMA CGM Predicts Decline in Cargo Rates Due to Increased Fleet Size

CMA CGM SA, the third-largest container shipping company globally, anticipates a decrease in ocean freight rates as new vessels boost capacity. This follows a period of tight supply due to ship rerouting to avoid Red Sea conflicts.

The French firm, led by Rodolphe Saade and his family, returned to profitability in the first quarter after a loss in late 2023. This improvement was driven by regional conflicts and strong cargo demand, but these conditions are expected to change.

CFO Ramon Fernandez noted that new capacity introduced in the first quarter was absorbed by the Red Sea situation. He predicts freight rates will fall in the second half of the year as the conflict’s impact fades and demand stabilizes.

Freight rates spiked earlier this year as ships took longer routes to avoid Houthi attacks, reducing capacity. New vessels ordered during the pandemic are now entering service, increasing capacity. Fernandez warned that detours will soon be insufficient to handle overcapacity, predicting a global fleet expansion of up to 10% this year.
CMA CGM continues operations in the Red Sea conflict zone with naval escorts. Following A.P. Moller-Maersk’s forecast, CMA CGM expects overcapacity to lead to lower rates later this year.
The pandemic surge allowed CMA CGM to diversify into logistics, air cargo, and media, recently acquiring Bollore SE’s logistics arm and planning to complete the purchase of Altice Media this summer.

Stay up-to-date with our latest news – > REGISTER HERE