The Merchant · n°144 · May 1, 2025

SMEs face high risk from de minimis changes

🚢 Paradoxical rates
🇫🇷 A giant's appetite
✈️ Manufacturer seeks buyer

Figure of the week

$2,300,000,000 The purchase price of the Santos Brasil container terminal, the largest in Latin America, by CMA CGM.

Quote of the week

“Virtually all shipments from China for major retailers and manufacturers have stopped.” Gene Seroka, executive director of the Port of Los Angeles, on Thursday, April 24.

Paradoxically stable rates

Despite some suspensions of customs surcharges decided by China and the United States, the trade war continues to rage. The cancellation of crossings is the most immediate consequence. Six trans-Pacific services have already been suspended, notably by MSC, Zim and Premier Alliance. Bookings of Chinese cargo bound for the United States fell by 54% in April.

Despite a dizzying drop in volumes, carriers are trying to stabilize freight rates. That is the whole paradox. To cope with this collapse, ocean carriers have withdrawn more than 20% of their capacity from the trans-Pacific route and increased blank sailings, which should represent 18% of supply in May. In a context of collapsing demand, the aim is to avoid too sharp a drop in prices while supply remains heavily in surplus: the global fleet has just exceeded 32 million TEU. A record, which does not come at the best time. For Drewry, if the situation were to persist, a structural resizing of the fleet would have to be anticipated, through the idling or accelerated demolition of ships. Otherwise, a new overcapacity crisis looms.

Paradoxically, spot rates show surprising stability. According to the Shanghai Containerized Freight Index (SCFI), rates from China to the west coast and the east coast have remained stable, despite a very slight decline attributable to the context. For Lars Jensen, founder of Vespucci Maritime, this resilience is due above all to a tacit truce between exporters and carriers: while waiting for a possible Sino-American trade deal, professionals are maintaining the status quo.

The appetite of a French giant

A few weeks ago, CMA CGM announced a historic partnership with Mistral AI, notably to optimize its maritime and logistics solutions. Over the past few days, the company confirms its momentum and demonstrates its appetite for international growth with several major operations.

On Friday, the French giant announced the acquisition of a majority stake in Santos Brasil, operator of the largest container terminal in South America, for about 2.3 billion dollars. Already holding 3.1% of Santos Brasil’s shares, CMA CGM acquired an additional 47.9% from the Opportunity fund for 1 billion dollars. This is the conclusion of a deal initiated last September. Ultimately, the company intends to acquire all the shares. Tecon Santos, the centerpiece of Santos Brasil, can handle 2.5 million TEU, with an extension planned to 3 million. This terminal represents 16% of Brazil’s container volume and can handle ships of up to 14,000 TEU.

CMA CGM also continues its expansion in the field of land logistics thanks to its subsidiary CEVA Logistics. It has just acquired Borusan Tedarik, a major player in the Turkish market, for 440 million dollars. The operation should make it possible to almost double CEVA’s warehousing capacity in Turkey. It will also increase its ocean volumes by 25%. For Mathieu Friedberg, CEO of CEVA Logistics, Turkey is a “strategic” territory for the company’s growth.

Finally, CMA CGM is strengthening its presence in India. The group plans to move one of its ships under the Indian flag - a first for a company of this importance. This announcement is in line with the statements of Rodolphe Saadé, CEO of CMA CGM. A month ago he affirmed his desire to accelerate the development of his activities in the India-Middle East-Europe economic corridor, considered a possible alternative in a context of high uncertainty over the traditional routes of world trade.

In short, in this uncertain spring, the French company is setting off to conquer the seven seas!

Multinational seeks plane enthusiasts

The trade war between Washington and Beijing is claiming heavyweight victims. Boeing is paying the price for the policy of the American administration. Under the effect of the new customs tariffs, many Chinese airlines have canceled nearly fifty aircraft orders, forcing Boeing to repatriate its planes and look for new buyers. Historically, the manufacturer exported a quarter of its production to China. This share is today reduced to 10%, notably to the benefit of its competitor Airbus, but also of local players, such as the Chinese company Comac, which has developed a first commercial medium-haul aircraft.

This commercial challenge comes as Boeing is in difficulty, at a time when it must preserve its cash and limit its debt. Nevertheless, in a tense aeronautics market, Boeing wants to be reassuring, its chief financial officer Brian West evoking strong global interest in these aircraft. Some candidates have moreover shown interest in the idea of buying back the aircraft now stranded. The new Saudi company Riyadh Air positioned itself on Monday, April 28, affirming it was ready to acquire all the available aircraft.

Given Boeing’s importance, its difficulties could directly affect the United States. If the company were unable to deliver these fifty aircraft, this blockage could even affect the American trade balance! One more sign that the United States is highly exposed to the Chinese market in this trade war.

👋 See you next week, The Merchant team

Sources

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