September 6, 2018 / 12:03 PM / 2 months ago

Shipping group CMA CGM sees brisk China-U.S. trade for now

LE HAVRE, France (Reuters) - CMA CGM, one of the world’s largest container shipping lines, is benefiting from strong trade flows between China and the United States for now, the French group’s chief executive said.

A tug sails near the CMA CGM Antoine de Saint Exupery container ship where it sits docked during its official inauguration in Le Havre, France September 6, 2018. REUTERS/Benoit Tessier

Despite tit-for-tat tariffs imposed by Washington and Beijing, the traditional third-quarter ‘peak season’ of Chinese exports to the United States ahead of the year-end shopping period was particularly robust this year, CEO Rodolphe Saade said.

“The third quarter is looking good for us, especially on transpacific routes,” Saade told Reuters on the sidelines of a ship launch at the northern French port of Le Havre.

“We’re making the most of this during the third quarter but if an economic war between China and the U.S. really sets in then we expect there will be an impact on volumes.”

The brisk flows were supported by a strong U.S. economy and signs of precautionary buying by U.S. firms wary of further tariffs in a trade dispute between Washington and Beijing, Saade said.

Transpacific trade has grown in importance for CMA CGM since its takeover of Singapore-based APL two years ago, part of consolidation in a sector that has struggled with vessel overcapacity.

Family-owned CMA CGM would continue to look at acquisition opportunities despite bringing to an end its interest in German peer Hapag-Lloyd (HLAG.DE), Saade said. He declined to comment on potential targets.

Saade confirmed his group had looked at German firm Hapag-Lloyd but said the “matter was closed”.

MEGA-SHIPS

Saade was speaking at a launch ceremony for the 400 metre (1,312 ft) long Antoine de Saint-Exupery vessel, named after the legendary French aviator, one of a generation of giant container ships built for greater efficiency.

Such mega-ships have been blamed for contributing to overcapacity, but CMA CGM argues they are suited to busy trade routes, regardless of geo-political headwinds.

“Perhaps today people are talking about an economic and trade war between the U.S. and China, but this won’t last a lifetime,” Saade said.

“We are making long-term investments because we are convinced that global trade will continue to expand, that people will continue to buy goods in China and Asia, and that we need to invest in capacity.”

CMA CGM has also stressed the reduced environmental impact of its newest vessels, at a time when the shipping industry is facing a 2020 deadline to meet lower limits for sulphur emissions.

Saade said it was too early to estimate the cost for CMA CGM of adapting its fleet but that customers would have to share the expense which would be too heavy for shipping lines to bear alone.

Reporting by Gus Trompiz; Editing by Richard Lough and Elaine Hardcastle

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