CMA CGM forecasts decline in cargo rates amid surge in new vessel deliveries

Posted on May 24, 2024   |  

CMA CGM, the world's third-largest container shipping company, forecasts a decline in ocean freight rates as the delivery of new vessels accelerates, expanding capacity that was previously restricted by ship diversions in the Red Sea.

Shipping costs spiked until January 2024, as vessels took a longer route via southern Africa to avoid Houthi attacks in the Red Sea, leading to a temporary reduction in available shipping capacity.

Carriers are now increasing capacity with the introduction of new ships ordered during the pandemic boom, which is expected to lower freight rates.

On May 17, CMA CGM reported a first-quarter profit of $785 million, down from $2.01 billion the previous year, but an improvement from a $93 million loss in the final quarter of 2023.

The addition of new ships aims to offset the capacity reduction caused by longer routes, contributing to the anticipated decrease in freight rates.