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Container shipping industry expects a rebound
March 18, 2018
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PARIS: Container shipping group CMA CGM said it expects a rebound in the industry to continue this year on the back of brisk economic growth, playing down the immediate impact of geopolitical tensions.

French-based CMA CGM, one of the world’s biggest container lines, reported on Friday a $701 million net profit for last year, confirming its turnaround after a shipping downturn in 2016 when it suffered a $452 million loss.

“We are rather optimistic about 2018, despite the geopolitical problems,” Chairman and CEO Rodolphe Saade told Reuters by telephone. “It’s too early to say if it will go as well as 2017 but the indicators are positive.”

Still, tensions ranging from protectionist trade measures taken by the United States to a diplomatic spat between Britain and Russia or political uncertainty in Italy, were a source of concern as they could affect business and consumer confidence.

CMA CGM, controlled by the Saade family, said its operating margin of 7.5 per cent in 2017, up from 0.2 per cent in 2016, was the best in the container shipping sector and reflected healthy demand allied to efficiency measures.

Its volumes increased 21.1 per cent last year to nearly 19 million containers, including a 10.9 per cent year-on-year rise in the fourth quarter.

CMA CGM had benefited from consolidation in the sector, including its acquisition of Singapore-based APL line in 2016 and last year’s launch of vessel-sharing partnership Ocean Alliance with Asian partners, it said.

Saade said there were few remaining takeover targets in container shipping after a wave of deals since 2016 but his group would remain to open to opportunities.

The consolidation, including market leader Maersk’s takeover of Hamburg Sud, has almost halved the number of global container shipping firms since 2015.

Meanwhile for all the promise of blockchain technology, much of what we’ve seen so far is potential or even simply conceptual, rather than physically real. One area in which tangible progress has actually been made, however, is logistics, and particularly shipping.

Commodities trader Louis Dreyfus recently completed the export of 60,000 tonnes of soybeans to China, with every stage of their journey tracked on the blockchain. Of the efficiency gains, Louis Dreyfus head of trade operations Robert Serpollet, said, “our expectations were high but the results were higher again.”

Now Danish company Blockshipping plans to bring the benefits of the blockchain to the multi-billion dollar container-shipping industry. 60% of all sea-borne trade is conducted through the world’s 25 million shipping containers. However, the current system is full of inefficiencies, prone to manipulaton and ripe for improvement. Blockshipping CEO Peter Ludvigsen explains that, “many millions of containers are constantly shifting location, incurring payments, and changing ownership.”

As there is no central registry or real-time tracking, “a huge number of empty containers are being moved around unnecessarily,” leading to unnecessary costs and pollution.

The industry is also plagued by other issues including unnecessary capacity and the need to comply with more stringent environmental regulations.

There is, then, a need for transparency, efficiency and secure tracking – a perfect fit, it seems, for the blockchain.


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