The billionaire head of shipping giant CMA CGM SA pushed back against a plan by some French lawmakers for a windfall tax on excessive corporate profits to fund measures to soften the impact of inflation on households.
“We are putting money on the table and it’s not only charity. We are helping consumers,” Chief Executive Officer Rodolphe Saade told a French Senate hearing Wednesday in Paris. “What I want is that we stop looking at CMA CGM and we start looking at my competitors.”
Saade was speaking as the world’s third-largest container carrier comes under increasing political pressure for its extraordinary profits. Strong demand for consumer goods has helped raise shipping rates more than ten-fold during the pandemic.
A group of French lawmakers is calling for a temporary tax of as much as 25% on what it calls the “superprofits” of energy and transport giants including CMA CGM, TotalEnergies SE and Engie SA. The money is meant to help fund measures aimed at protecting consumers’ purchasing power. While the plan doesn’t have government backing, it has shone a spotlight on the closely held Marseille-based shipping firm whose net income more than tripled to $7.2 billion in the first quarter.
During his more than two-hour testimony, Saade portrayed CMA CGM as a “patriotic” French champion that has put down deep roots in the country, reinvests profits and hires local workers. The firm operates a fleet of some 580 vessels and this year invested in flag carrier Air France-KLM.
“When my freight rates were at $350, where were you?” Saade asked senators during the hearing. “We weren’t sure at one point if we would get through the week. No one came to speak with us or say something. We had to figure it out.”
CMA CGM has already ceded to French government pressure to help offset inflation by agreeing to cut shipping rates by 500 euros ($510) per container starting next month on consumer goods imported via French ports, as well as on all imports to the country’s overseas territories. Last September, the company had capped its spot freight rates.
While shipping rates have since come down somewhat, they remain elevated enough to likely result in “peak earnings” for the industry this year, Bloomberg Intelligence analyst Lee Klaskow said in a note this week.
Saade said he’s expecting a gradual slowdown and “normalization” of global trade after months of supply bottlenecks, and added that he’s noticed over the past weeks that demand is falling.
“Some are talking about a recession, I would speak more of a soft landing,” he said. “This will normalize trade and necessarily lower prices of freight.”
–With assistance from Brendan Murray and Ania Nussbaum.