Singapore to lead Asia digital push by CMA CGM

Singapore

IN a vote of confidence in Singapore, CMA CGM said the Republic will lead the world's third biggest shipping group's Asia digital strategy.

The French shipping giant, which completed shifting its regional headquarters from Hong Kong to Singapore early this year, recently appointed its new Asia chief digital officer based in Singapore.

In an interview with The Business Times on Monday, newly-appointed chairman Rodolphe Saade said: "We do believe that Singapore is ahead of the curve in terms of the digital business."

"We could have had someone from China or Hong Kong, but we decided that the place to be in Asia to develop our digital activity is Singapore."

"The world is changing and we are becoming more digital ... and this will play an important role in the company's operations."

In a nod to greener vessels and recovering demand for container services, the group earlier this month announced a stunning US$1.2 billion order for the world's biggest container ships that will run on liquefied natural gas (LNG).

Mr Saade, who is also group chief executive, told BT that the group is expecting real, not speculative demand when it decided on the order. "When we order ships, we are not doing it out of speculation. We order them because we believe we can fill them up."

Each of the nine ultra-large container ships will have a capacity of 22,000 twenty-foot equivalent units (TEUs) - the largest to hit the market.

They will rank among the world's first and biggest ocean-going ships to be powered by LNG, in compliance with a global sulphur cap set to take effect in 2020.

These ships are scheduled for delivery in 2020, and will be commissioned to ply the lucrative long-haul Asia-Europe trade routes, allowing CMA CGM to "take advantage of economies of scale, and be extremely competitive", noted Mr Saade.

"So even though there are ships on order in the market, we are confident that we will be able to utilise these ships as there is growth, as the world economy moves up."

Mr Saade's comments come as the global container shipping industry is slowly emerging from a protracted slump, although the problem of a capacity glut has remained unresolved.

He noted that 2017 has been a good year for the industry so far - much better than the year before.

"What we believe is that the shipping industry will keep on growing. Volumes are up, the world economy is doing well, and therefore we are confident and cognisant of the fact that we need more ships to grow with the increasing volumes. We want to grow with the market," he said.

CMA CGM posted a stellar set of third-quarter results earlier this week, with net income of US$323 million on a 28 per cent jump in sales to US$5.7 billion, in contrast to a US$268 million loss in the same period a year earlier. In terms of volumes, it carried a record high of nearly five million containers thanks largely to strong growth through the group's Ocean Alliance.

Mr Saade expects the growth of the Ocean Alliance - comprising some of the world's biggest container operators, including China Cosco Shipping - to translate into higher activity in Singapore.

Today, CMA CGM has 27 services calling at the Port of Singapore each week. The carrier made an average of 126 calls a month here over the last four months, accounting for 12.8 per cent of its total calls in the whole of Asia.

Mr Saade noted that CMA CGM has been taking steps to strengthen its presence in Asia by consolidating its operations in Singapore following its acquisition of home-grown Neptune Orient Lines (NOL) in a S$3.38 billion deal.

Turning to the role of the group's Asia chief digital officer, Mr Saade said he will look out for transportation and logistics startups, including those in Singapore, that can complement CMA CGM's services. This comes as the shipping line is looking at further developing its digital and e-commerce business, such as by offering end-to-end solutions.

Since the completion of its NOL acquisition in the latter half of 2016, CMA CGM has relocated its regional headquarters from Hong Kong to the Republic, and has set up a container joint venture terminal with port operator PSA. It expanded capacity at the joint venture terminal just earlier this year to four million TEUs - double the initial annual capacity of two million when the terminal first started operations in July 2016.

In April, the company set up CMA CGM Academy here in partnership with IE Business School, Singapore Management University, and Sciences Po Institute to develop its staff in the region. CMA CGM has around 8,000 employees in Asia, including some 1,000 in Singapore, out of a global headcount of more than 29,000.

"Singapore has become a very strong base in Asia for us now, and we hope that this will continue in the years to come," said Mr Saade.