Lower Bunker Prices Help CMA CGM Keep "Tight Rein" on Q3 Costs

CMA CGM says lower bunker prices helped the group keep a "tight rein" on costs during 2016's Q3.

CMA CGM S.A. (CMA CGM) on Friday, in the release of its 2016 third quarter (Q3) results, attributed lower bunker prices to helping the group keep a "tight rein" on costs during the period.

Excluding the results of recently acquired Neptune Orient Lines (NOL), CMA CGM notes it achieved a 9.7 percent year on year reduction in unit costs.

The group says that it carried a total of 4.5 million TEU during the period, a nearly 36 percent year on year increase, which it credits to its acquisition of NOL. 

Outside of NOL's contributions, CMA CGM says that the company carried a total volume of 3.2 million TEU during Q3, which is a 2.7 percent year on year decline - a "slight contraction" that the group attributes to its focus on high contribution freight.

"CMA CGM's operating performance, although unsatisfactory, was among the most resilient in the industry thanks to operating discipline, which notably involves keeping a tight rein on costs and being selective about the freight carried," said CMA CGM.

"In a market environment shaped by continued pressure on freight rates, average revenue per TEU, excluding NOL, was down 13.9 percent from third-quarter 2015 but up 3.8 percent on second-quarter 2016, bringing an end to a downward trend that had lasted for more than a year," explained CMA CGM.

The group says that, as a result, revenue saw an almost 34 percent year on year increase to $4.47 billion during Q3.

"Shipping companies have continued to take measures to adjust the deployed capacity hence resulting in a better alignment between effective capacity (net of scrapped vessels) and volumes carried. Freight rates have improved slightly but remain nonetheless at a historic lows," commented the group.

CMA CGM says the it will continue to work on the integration of NOL's APL in order to provide further cost savings and increased service quality for customers.

Last month, CMA CGM announced that it had signed a Memorandum of Understanding (MoU) with ENGIE to promote liquefied natural gas (LNG) as bunkers for container vessels.