Wednesday, December 7, 2011

Giant Container Shipping Lines Agree To Freight Sharing Partnership

MSC and CMA CGM Team Up As Times Get Tough
Shipping News Feature

WORLDWIDE - In a joint press release the world’s second and third-largest container shipping companies have announced the signature of a major agreement. The two family-owned freight companies, the Swiss-Italian MSC and France’s CMA CGM, have agreed to form a broad-based operating partnership spanning several trades, including Asia-Northern Europe, Asia-Southern Africa and all of the South American markets. The companies say that the agreement is designed to improve the two partners’ respective performance and will help to drive ‘extensive operating synergies and enhance quality of service for all of their customers.’

On certain trades, the partners say they will also be able to deploy the best ships in each of their fleets, while increasing the number of ports of call and frequency of sailings. The pressure of extra tonnage coming in stream in the past couple of years has caused the world’s container groups to adopt new measures, such as slow steaming, to try and offset the influence of new build vessels ordered during the heady days of the last boom in world trade. Speaking of the new agreement Diego Aponte, Vice President of MSC, said:

“We are very happy to have signed this broad-based partnership, which will unite our two family-owned companies in the years ahead. The agreement offers us new opportunities to optimise the use of our respective fleets, improve our transit times and increase our performance.”

Rodolphe Saadé, Executive Officer of CMA CGM Group, commented:

“For more than 30 years, our two companies have followed the same trajectory and for a number of years we’ve cooperated on a few lines. Based on this experience and our shared vision of the shipping industry, we have decided to step up our partnerships, which reflect a commitment to long-term cooperation and will enable us to offer customers improved solutions and services.”

Sharing routes is by no means a new development but the fact that the two companies have made such a formal announcement indicates the need to close ranks with potential competition against the might of groups such as Maersk, the world leader in the container field, particularly in the light of the well publicised difficulties which have beset companies such as the French box carrier.

This week CMA CGM announced volumes carried rose by 10% year-on-year to 2,604 million TEU’s in the third quarter of 2011, whilst over the first nine months of the year, volumes carried were up by 9.4%, for a total of 7.42 million TEU’s. Consolidated revenue stood at $3,856 million for the quarter, only up 2.8% over the 2010 period, and at $11,086 million for the first nine months, up 5.2% year-on-year.

To try and avoid further problems the company has stated it is deploying ‘a vigorous action plan to reduce full-year costs by $400 million, which will deliver its full impact in 2012.’ This involves rationalisation of lines and capacity, renegotiating vessel charter rates, technical innovations to reduce fuel consumption and continuing to dispose of unwanted vessels and container assets.