CMA CGM has taken another ambitious step in the development of its presence in air freight.Yesterday, May 18th, the Marseilles-based shipping company announced both a sales-relationship with the cargo arm of Air France-KLM and an investment in the airline.
In a statement both companies said that they had “signed a long-term strategic partnership in the air cargo market. This exclusive partnership will see both parties combine their complementary cargo networks, full freighter capacity and dedicated services in order to build an even more competitive offer”.
The scope of the deal is remarkable. For the next ten years the two companies will effectively merge their airfreight operation, market the combined fleet of 10 freighters, which will expand over the next few years by a further 12 aircraft. The “partnership” will also market AirFrance-KLM’s belly freight capacity.
All of this will be managed by what appears to be a merged sales team, although it is unclear who will take the lead in this. AirFrance-KLM has around the sixth largest conventional international air cargo business in the world however it has long wrestled with the management of its freight business and CMA CGM has what is probably a more powerful marketing capability in its Ceva division. Who will take the lead in managing these resources is unclear.
In addition to the sales relationship, CMA CGM has said that it will take a large share of AirFrance-KLMs equity stating that it “has the firm intention to take up to 9% of Air France-KLM’s ex-post share capital, for a period consistent with the implementation of the strategic commercial partnership” describing it as “a new reference shareholder”. Essentially CMA CGM is participating in the re-capitalisation of AirFrance-KLM but also becoming an influential, if not dominant, shareholder.
This move is remarkably aggressive by CMA CGM. It is one thing to acquire a large fleet of freighter aircraft but quite another to buy into a large airline and assume much of the responsibility for running part of it. Rodolphe Saadé, Chairman and CEO of the CMA CGM Group commented that the move will allow “us to significantly accelerate the development of our air division, CMA CGM Air Cargo, which was created just over a year ago, and to position our two companies among the world’s leading players in air freight” and that “this partnership is fully in line with CMA CGM’s strategy and its ambition to become a leader in integrated logistics”. Certainly, Mr Saade’s ambition is transforming CMA CGM and it is possibly a vision which will influence some of its rivals.
Source: Transport Intelligence, 19th May 2022
Author: Thomas Cullen