Sailing Toward Consolidation

Why sail solo? That’s the question France-based CMA-CGM is asking, as the world’s fifth largest container-ship company braces for a storm of industry consolidation. The fragmented shipping business, with more than 30 international players, is consolidating as fuel prices soar and the number of ships, boosted by expanding Chinese production, is increasing faster than the volume of trade. Says CMA CEO Jacques Saadé: “[Big] shipping companies have made good profits over the past few years; they have the means to buy smaller companies.” CMA had $4.95 billion in revenues last year and has been expanding rapidly, particularly in China. To that end, CMA partnered with the state-controlled China Shipping Group, the industry’s eighth largest, in a joint bid for CP Ships, valued at $1.46 billion. A share of CP’s 80 vessels would bolster the 193-ship CMA fleet, and the partnership would help strengthen CMA’s position in China. In 2004, 46% of U.S. containerized imports came from China, and shipments from China to American shores grew 32% last year alone. No wonder there’s a trade imbalance. –By Jeremy Caplan