According to Bloomberg, CMA CGM rejects French lawmakers’ income tax to soften the impact on inflation
The billionaire boss of shipping giant CMA CGM SA has rejected a plan by some French lawmakers for an extraordinary tax on excessive corporate profits to finance measures to soften the impact of inflation on households.
“We are putting money on the table and it is not just charity. We are helping consumers,” Chief Executive Rodolphe Saade said at a French Senate hearing in Paris on Wednesday. “What I want is for us to stop looking at CMA CGM and start looking at my competitors.”
Saade was speaking as the world’s third-largest container carrier faces mounting political pressure over its windfall profits. Strong demand for consumer goods has helped push shipping rates up more than tenfold during the pandemic.
A group of French lawmakers is calling for a temporary tax of up to 25% on what it calls the “super profits” of energy and transport giants, including CMA CGM, TotalEnergies SE and Engie SA. The money is intended to help finance measures aimed at protecting the purchasing power of consumers. While the plan does not have government backing, it has put the spotlight on the Marseille-based shipping company, whose net income more than tripled to $7.2bn 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 company operates a fleet of some 580 vessels and this year invested in the flag carrier Air France-KLM.
Air France-KLM says carrier CMA CGM will participate in cargo pact
“When my freight rates were $350, where were you?” Saade questioned the senators during the hearing. “We weren’t sure at one point if we would make it through the week. Nobody came to talk to us or say anything. We had to figure it out.”
CMA CGM has already bowed to pressure from the French government to help offset inflation by agreeing to cut shipping rates by 500 euros ($510) per container from next month on consumer goods imported through 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 come down somewhat since then, they remain high enough to deliver “peak profits” for the industry this year, Bloomberg Intelligence analyst Lee Klaskow said in a note this week.
Saade said he expects a gradual slowdown and “normalization” of global trade after months of supply bottlenecks, adding that in recent weeks he has noticed demand falling.
“Some talk about a recession, I would talk more about a soft landing,” he said. “This will normalize trade and will necessarily reduce freight prices.”
Source: Bloomberg, With the help of editors Brendan Murray and Ania Nussbaum