CMA CGM Sees Shipping Demand Holding Up After Restocking Wave

Shipping giant CMA CGM said on Thursday that brisk international trade and Red Sea disruption supported its main maritime division in the second quarter and should limit any market slowdown later this year as new ship capacity arrives.

The world's third-largest container shipping line reported a 6.8% year-on-year increase in volumes in the second quarter. Volumes also rose more than 6% from the first three months of the year when the group started seeing an upturn in demand.

Restocking by U.S. firms continued in the April-June quarter, partly due to concerns that geopolitical tension with China may disrupt trade, as well as the risk of strike action by U.S. East Coast port workers, Chief Financial Officer Ramon Fernandez said.

But CMA CGM viewed its strong volumes mainly as a reflection of a solid overall economy, he told reporters on a call.

"The pace of restocking, which is supporting demand, is in line with economic activity and so we are not worried about an abrupt reversal in the trend," he said.

The group's volumes from China to the United States were up 10% so far this year, twice the pace observed during 2023 as a whole, he added.

CMA CGM expected the shipping market to steady later this year after a brisk first half and remain relatively balanced in 2025 with demand projected to remain solid while an influx of new ships should abate, he said.

Rival container lines Maersk and Hapag-Lloyd both raised their full-year profit outlook in recent weeks due to brisk demand. CMA CGM does not give financial forecasts.

Vessel rerouting away from the Red Sea due to attacks by Yemen's Houthi militants again absorbed excess fleet capacity, with CMA CGM sending most of its ships around southern Africa, it said.

This was notably causing congestion at Tangier in Morocco and Algeciras in Spain, which have become transhipment hubs for Mediterranean destinations deprived of their normal link to Asia via the Suez Canal, Fernandez said.

But congestion in Asian ports, highlighted by Maersk last week, was starting to ease, he added.

CMA CGM's results continued to retreat from the record levels posted during a post-COVID shipping boom that fuelled its acquisitions in port terminals, logistics and the media.

Second-quarter net profit halved to $661 million from $1.33 billion a year earlier.

(Reuters - Reporting by Gus Trompiz; Editing by Sudip Kar-Gupta and Kirsten Donovan)