French Government Pressures CMA CGM to Offer Discounted Rates
French shipping giant CMA CGM Group is taking steps to reduce shipping costs on imports into France and French overseas territories. The move came in response to calls from the French government for the shipping and oil industries to use part of their profits to help with the fight against inflation. France is the latest country to single out the dramatic profit increases for container shipping lines realized from the surge in shipping over the past two years.
Finance Minister Bruno Le Maire reportedly had approached both CMA CGM and TotalEnergy telling the companies that he wanted them to contribute to the government’s efforts to control price increases. Reuters is citing unnamed sources at the ministry as saying they were specifically targeting shipping costs for materials such as those used in construction and energy prices. The report said that the government was also asking banks and insurance companies to take steps to help their customers as well.
This week, Le Maire went on French television saying, “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." He said on C News TV that if the companies did not take more action, it would become the responsibility of the government. Reuters concluded that he was indirectly raising the prospects of a potential windfall tax similar to steps taken in the UK and elsewhere.
In a statement released today only in France, CMA CGM Group reported after consultation with the Ministry of the Economy, Finance and Industrial and Digital Sovereignty, “The CMA CGM Group has decided to implement targeted measures to contribute to the effort to moderate consumer prices for French households.” The discount will last for one year starting on August 1, while the shipping line said it was also taking efforts that “will ensure the impact of these measures on the prices of products purchased by the French.”
The CMA CGM Group said it is ready to grant its distributor customers a reduction of €500 ($520) per 40-foot container for consumer goods imported via French ports. The measure represents a nearly 10 percent reduction in freight rates according to CGM CMA targeted to its major retail customers. While the goal is to reduce shipping costs the company, however, emphasized that the brands and retailers must pass this along to consumers.
In addition to the price reduction for the domestic import market, the line is also providing reductions for French overseas territories. For these markets, CGM CMA has decided to apply a reduction of up to €500 ($520) for a 40-foot container carrying imports. This amounts to between a 10 and 20 percent discount depending on the destination.
The shipping line said that the state will be able to control the price of consumer products but that it was working to support the efforts. This is in addition, the shipping line noted, to its previous efforts. “To meet these challenges and expectations of its consumers, the group has implemented numerous actions,” said CMA CGM in its statement. They highlighted freezing floating freight rates starting in May 2021 for the French overseas territories and since September 2021 on all its shipping lines. They said they have also been allocating dedicated capacity to smaller shippers, especially in Europe and North America, at rates normally only available to customers with larger volume commitments.
Driven by strong demand and freight rates, the CMA CGM Group achieved reported results in 2021. The company reported a net profit of nearly $18 billion in 2021 with analysts projecting that the company is on track to achieve possibly even stronger profits in 2022.