In the fiercely competitive shipping industry, France's CMA CGM has emerged as a formidable player. After consolidating its position as the world's fourth-largest container shipping company, the Marseille-based giant continues its aggressive expansion with strategic acquisitions in logistics and African port operations.
Securing CEVA Logistics: A Pivotal Acquisition
The battle for CEVA Logistics showcased CMA CGM's determination to expand beyond maritime transport. Despite competing offers from DSV, the French carrier ultimately prevailed, now controlling nearly 90% of the Swiss logistics firm. The acquisition process, initiated in October 2018, reached its final stages through a public tender offer (PTO) valuing shares at 30 Swiss francs (approximately $30) each.
CMA CGM's recent acquisition of an additional 38.9% stake in CEVA—combined with its existing 50.6% holding—demonstrates its commitment to vertical integration. The company plans another PTO round through April 2019 to achieve full control, marking a significant milestone in its logistics sector ambitions.
Financial Implications: Balancing Growth and Debt
This expansion comes at considerable financial cost. Alphaliner reports CMA CGM's debt reached $9.18 billion by 2018's end. With investments in scrubber technology, new accounting standards, and the CEVA acquisition, analysts project total debt could balloon to $15 billion in 2019—presenting substantial financial management challenges.
The strategic rationale mirrors industry leader Maersk's approach: controlling supply chains from end to end. By integrating CEVA's freight forwarding expertise with its shipping operations, CMA CGM aims to create synergies that enhance competitiveness amid shifting global trade patterns.
African Frontier: The Modjo Port Partnership
Concurrently, CMA CGM is extending its reach into Africa through a joint venture with Ethiopia's MACCFA to operate Modjo Dry Port. This inland hub serves as Ethiopia's primary gateway for international commerce, positioning the French company to influence regional logistics networks.
The Ethiopian venture complements CMA CGM's existing African operations, which include 40 weekly services across 42 African ports. Controlling port infrastructure allows for streamlined operations and improved service reliability—critical advantages in emerging markets.
Integrated Supply Chain Vision
These parallel expansions reveal CMA CGM's comprehensive strategy: transforming from a pure shipping company into an integrated logistics provider. The CEVA acquisition enables door-to-door service capabilities, while port investments secure critical nodes in global supply chains.
As customers increasingly demand single-source solutions encompassing shipping, warehousing, customs clearance, and final delivery, CMA CGM's investments position it to compete with industry leaders. However, the company must carefully manage its financial leverage while integrating these diverse operations to realize their full potential.