French shipping giant CMA CGM Group is taking steps to reduce shipping costs for imports into France and French Overseas Territories. The move came in response to French government demands for the shipping and oil industries to use part of their profits to fight inflation. France is the latest country to highlight the dramatic profit gains for container shipping companies that have been fueled by the surge in shipping over the past two years.
Finance Minister Bruno Le Maire had reportedly reached out to both CMA CGM and TotalEnergy, telling the companies he wanted them to contribute to government efforts to control price increases. Reuters cites unnamed sources at the ministry as saying they are specifically targeting shipping costs for materials used in construction materials and energy prices, for example. According to the report, the government also urged banks and insurance companies to take steps to help their customers as well.
This week, Le Maire said on French television: “A small number of companies have made profits during the crisis in sectors such as energy or transport… I would like them to make strong proposals to me so that they return part of their profits to the French people.” He said on C News television that if companies didn’t take further action, it would be the government’s responsibility in the UK and elsewhere.
In a statement released today only in France, the CMA CGM Group, after consulting the Ministry of Economy, Finance and Industrial and Digital Sovereignty, reported: “The CMA CGM Group has decided to implement targeted measures to contribute to efforts to moderate consumer prices in French households The rebate will apply for a year from August 1, while the shipping company said it was also making efforts to “ensure the impact of these measures on the prices of products bought by the French”.
CMA CGM Group said it is willing to offer its distributor customers a €500 ($520) rebate per 40-foot container for consumer goods imported through French ports. The move represents a nearly 10 percent reduction in freight rates, according to CGM CMA, and is aimed at its large retail customers. While the goal is to reduce shipping costs, the company stressed that brands and retailers need to pass this on to consumers.
In addition to the price reduction for the domestic import market, the line also offers discounts for the French overseas territories. For these markets, CGM CMA has decided to offer a rebate of up to €500 ($520) for a 40ft container carrying imports. Depending on the destination, this amounts to a discount of between 10 and 20 percent.
The shipping company said the state will be able to control the price of consumer goods but is working to support the effort. This is in addition to their previous efforts, the cruise line said. “To meet these challenges and the expectations of its consumers, the group has taken numerous measures,” CMA CGM said in its statement. They pointed out that freight rates will freeze floating freight rates from May 2021 for the French overseas territories and since September 2021 for all its shipping companies. They said they have also allocated dedicated capacity to smaller shippers, particularly in Europe and North America, at prices normally only available to customers with larger volume commitments.
Driven by strong demand and freight rates, CMA CGM Group delivered reported results in 2021. The company reported nearly $18 billion in net income in 2021, with analysts predicting that the company is on track to potentially post even stronger earnings in 2022.