CMA CGM Wants "Decent" Price War

container ship

By MarEx 2016-10-26 18:40:58

Other container shipping firms may join Hanjin Shipping in receivership before the industry emerges from its current shakeout, says the vice chairman of world number three player CMA CGM.

Bringing freight rates down to rock bottom was not the answer, however, said Rodolphe Saade. "There will be a price war but we need a 'decent' price war." 

Saade was speaking at the Danish Maritime Forum in Copenhagen on Wednesday, and he admitted that shipping lines could be creating problems by ordering new, increasingly large ships.

Outlining his predictions for the next three to five years for an industry struggling with overcapacity and sluggish demand, Saade said consolidation was "the name of the game." 

CMA CGM acquired Neptune Orient Lines earlier this year. China's two biggest carriers Cosco Container Lines and China Shipping Container Lines are merging, and Hapag-Lloyd is in the process of acquiring United Arab Shipping Company after earlier acquiring CSAV.

Saade believes there will be more consolidation to come.

South Korea's Hanjin filed for protection from creditors in late August, stranding $14 billion in cargo and sending shockwaves through global trade networks.

Looking to the Ships of the Future

Saade’s views come days after an announcement indicating the company’s confidence in its own future and fleet development. CMA CGM and ENGIE signed a Memorandum of Understanding to promote LNG as the marine fuel on October 19. The two firms consider that the use of LNG as a marine fuel is destined to expand in the near future and intend to be active players in its development.

The agreement rounds out the research program undertaken since 2011 by CMA CGM to design ever more environment-friendly large capacity container ships. In that regard, CMA CGM participates in two programs:
•    The first involves the development of a dual-fuel large capacity container ship. Launched in 2011 by CMA CGM, through its subsidiary CMA Ships, in partnership with the Korean shipbuilder DSME, the design of this vessel, as a proof of its success, was approved by Bureau Veritas.
•    The second project aims at designing a large capacity container-ship using a combined gas and steam turbine system to power this ultra large container ship. The "PERFECt" project was launched in 2015 in partnership with DNV GL, GTT, ABB, Caterpillar, and OMT.