The president and founder of CMA CGM, the world’s third largest container shipping line, has said the company now has a few years’ breathing space before again facing serious competition from Maersk Line, the world number one.
Jacques Saadé was speaking to the Financial Times after AP Møller-Maersk, Maersk Line’s parent, on Friday announced an unprecedented cull of senior management apparently aimed at reversing nearly two years of poor performance at a shipping business with twice the capacity of its nearest competitor, Mediterranean Shipping Company.
The Maersk changes included the early departure of Jess Søderberg, group chief executive, Tommy Thomsen, a senior partner in the business, and Knud Stubkjaer, joint chief executive of Maersk Line. Mr Søderberg will hand over in December to Nils Smedegaard Andersen, currently chief executive of Carlsberg, the brewer.
Mr Saadé said it would be some time before new managers with little knowledge of shipping could evaluate Maersk’s problems and decide how to resolve them.
“I think we have space for a few years before they are active – active in the sense of increasing their fleet and their volumes,” Mr Saadé said.
Mr Saadé also drew lessons from Maersk’s experience for his own acquisition strategy. Many of Maersk Line’s problems date back to the €2.3bn ($3.1bn) botched integration of P&O Nedlloyd, in 2005.
Mr Saadé said his company would continue to consider acquisitions, but he believed with acquisitions it was a case of “small is beautiful”.
“Whether it’s Hapag-Lloyd or Maersk, they’ve suffered from these big takeovers,” Mr Saadé said of his rivals. “The acquisition of P&O Nedlloyd was too big to be immediately absorbed and included in your information system, in your back office and so on. So I think no one can and no one should make big takeovers.”
Plenty of small companies that cannot cope with the competition in the container market would become available for sale in due course, Mr Saadé added.
CMA CGM was also in discussions with four financial institutions – which Mr Saadé declined to name – about setting up a port investment fund to provide port facilities in key locations for the line. “We will certainly look forward to signing an agreement in the near future,” he said.
CMA CGM – which is privately held by Mr Saadé and his family – had also recovered from a slump in freight rates last year and was seeing strong demand, particularly on the key Asia-Europe route, Mr Saadé claimed.
His comments are the latest of several signs that container lines are recovering from the slump, which started early last year as lines cut prices because of fears that new ships were creating excessive capacity.
“Everybody is making money – except one or two and they are the exceptions,” Mr Saadé said.