CMA CGM posts record 2017 revenue, volume, aided by APL buy

CMA CGM posts record 2017 revenue, volume, aided by APL buy

CMA CGM carried 19 million TEU in 2017. Photo credit: CMA CGM.

CMA CGM reported record revenue and volume in 2017 with APL contributing strongly in its first full financial year as a subsidiary of the French container shipping group. The carrier expects strong volume growth to continue through 2018.

In a result that CMA CGM chairman and CEO Rodolphe Saadé described as an “excellent performance,” the Marseilles-based carrier handled almost 19 million TEU in 2017, a year-over-year increase of 21 percent with APL contributing 5 million TEU to the group volume. 

CMA CGM also reported a 32 percent increase in revenue compared with the previous year, passing the $20 billion mark for the first time and ending the year on $21.1 billion. APL's contribution to operating income for 2017 was $340 million.

Helping the carrier report its best ever operating result was the average revenue per TEU that was up by more than 9 percent year over year. At the same time, unit costs only rose 1.6 percent, despite a 42 percent increase in bunker fuel prices. Further boosting its operations was the launch of the Ocean Alliance on April 1, 2017, with its 40 services and more than 320 ships.

Core earnings before interest and taxes (EBIT) reached $1.5 billion with a core EBIT margin of 7.5 percent, up 7.3 percent compared with the previous year, while net income of the CMA CGM Group in 2017 reached $700 million compared with a 2016 loss of $452 million.

CMA CGM began to accelerate down the road to digital transformation during 2017 and its investment fund, CMA CGM Ventures, invested in the New York Shipping Exchange, a digital marketplace for ocean freight contracts, and in e-dray, a software platform designed to improve drayage operations in port terminals.

CMA CGM seeks to create all-encompassing digital ecosystem

In tandem with this focus on technology is a drive by the carrier to become more than just a “price tag” and to be more responsive to customer needs. CMA CGM will introduce electronic bills of lading, worldwide electronic payment, and data analysis platforms to help shippers optimize their supply chains with the goal of creating an all-encompassing digital ecosystem that will enable the entire shipping process from booking to dispute resolution to take place electronically. 

The company plans to introduce a trade finance initiative and recently launched its “Serenity” program, wherein a shipper pays a small fee and, should anything happen to their cargo, CMA CGM will compensate them for the value of the cargo.

Another trend emerging as container lines try to differentiate themselves is a move deeper into landslide operations. In an increasingly commoditised business, this is also a strategy being pursued by CMA CGM that holds a controlling share of container port operator Terminal Link. The carrier has launched a new customer approach where it will supplement its shipping services with inland and logistics offerings.

Given the continued oversupply, product differentiation is key to breaking away from commodity-level returns, according to Steve Saxon, partner at McKinsey & Company Shanghai.

“One way to differentiate the product is to integrate deeper into the landside. Being able to provide priority terminal handling, seamless visibility as it moves onto rail and trucks does meet customers’ needs, and lead to a higher willingness to pay,” he said. “We would expect therefore to see more partnerships, or even vertical integration, between liners and terminals, and liners and logistics companies.”

Maersk Group in February announced that it would be transforming into an integrator of global container logistics, using its terminal unit APM Terminals and logistics operator Damco to give customers a one-stop service offering.
“The advantage of full control from the liner is the ability to develop a differentiated product for their customers. For example, priority berthing for own vessels, priority unloading and stowage for key customers, late cutoffs, first train out, etc. This is easier with control than with a partnership,” Saxon said.

In November, CMA CGM selected liquefied natural gas to propel its nine new vessels of 22,000 TEU, which are expected to be delivered from 2020 onward. In early 2018, CMA CGM took delivery of its new flagship, the 20,600 TEU Antoine de Saint Exupery, the largest container ship flying the French flag.

Contact Greg Knowler at and follow him on Twitter: @greg_knowler.