CMA CGM Increases French Discounts to Head Off Windfall Profit Tax
Responding to political pressures and the threat of a windfall profits tax, CMA CGM Group announced it will expand its discounts for French shippers and exporters in an effort the shipping giant says is designed to support the purchasing power of French households. Today’s announcement expands previously announced discounts from the carrier and was after the company’s chairman and CEO spent two hours before a committee from the French Senate defending his company.
Attention has centered on the CMA CGM which reported a net profit of nearly $18 billion in 2021 followed by a tripling of its net profit in the first quarter to $7.2 billion while France like most of the developed world is struggling with rampant inflation and the effects from the Russian invasion of Ukraine. Government officials had singled out CMA CGM, TotalEnergies, and Engie saying that the time had come for a temporary windfall profits tax as high as 25 percent to help out struggling French households.
Last month, France’s Finance Minister Bruno Le Maire went on TV discussing the merits of a windfall profit tax. He highlighted that “A small number of companies have during the crisis made profits in sectors such energy or transport ... I want them to give me strong proposals so that they give back a part of their profits to the French people."
While both CMA CGM and Total had announced plans to offer discounts in France, Le Maire said their efforts were not enough.
Rodolphe Saade, Chairman and CEO of CMA CGM spent two hours on Wednesday, July 20, speaking before the Commissions for Economic Affairs and Regional Planning and Development sharing his vision of the maritime and logistics industry according to the company. Media reports however said he was forced to defend the company and its profits emphasizing the strategic importance of the shipping group to France. He reportedly told the lawmakers that a profits tax would place pressure on the company as it seeks to invest in its operations for the good of France. He emphasized the actions of the company while saying they should be looking at his competitors as the tax would make CMA CGM less competitive in the world markets.
“Faced with the current context of inflation, the group has decided to strengthen its commitment made on June 30 to directly support the French economy and French households,” CMA CGM Group said in an announcement released in France on Friday, July 22. The company is increasing both the scope and size of the previously announced discounts as well as offering an additional discount for exporters.
The initial plan offered France’s 14 largest retail chains a reduction on freight rates for 40-foot containers of €500 on all imports from Asia and a similar discount for all imports into France’s overseas territories. The company said it would amount to a 10 percent discount for imports into France and 10 to 20 percent depending on the destination in the overseas territories.
Faced with political pressure, public sentiment, and further negotiations brokered by Le Maire, CMA CGM announced today that the discounts will be expanded to €750 per container for all imports by all customers into France and for imports into the overseas territories. In addition, they also announced a reduction of €100 for each 40-foot container of French exports. The company said this represents a discount of up to 25 percent. The program begins on August 1 and continues for one year.
CMA CGM emphasized that it is essential that these reductions be passed on in the price of products to the consumer. They called on the government to ensure that the discounts reach consumers. The scope of the reductions, the company reported, had been defined in consultation with the Ministry of the Economy, Finance and Industrial and Digital Sovereignty, and have been the subject of discussions with the group's customers and certain federations, including the CPME (Confederation of Small and Medium-Sized Enterprises).
TotalEnergies also responded to the government announcing price cuts on fuel prices until the end of the year. Reports indicated that the lawmakers were satisfied by the latest move and planned to withdraw an amendment that called for the windfall profit tax.