CMA CGM's acquisition met with crass critique from logistics lobby

The major acquisition of Bolloré Logistics only proved feasible on account of carriers’ favorable taxation terms, says European industry association.
Carriers use the money made at sea liable to favorable tax schemes as a way of outmaneuvering fowarders on land, Clecat maintains. | Photo: Michael Macor/AP/Ritzau Scanpix
Carriers use the money made at sea liable to favorable tax schemes as a way of outmaneuvering fowarders on land, Clecat maintains. | Photo: Michael Macor/AP/Ritzau Scanpix

Shipping group CMA CGM’s latest acquisition were only feasible on account of the tax benefits awarded to the maritime industry alone.

The European freight forwarding association CLECAT issues harsh criticism of CMA CGM’s very imminent acquisition of forwarder Bolloré Logistics.

The association has criticized carriers for using money made at sea for inland acquisitions in direct competition with forwarders paying regular company tax instead of the more favorable tonnage tax. 

”There is a free market and consolidation happens in all sectors. Major logistics operators also buy companies. But what is of concern to us is the level playing field,” says CLECAT general director Nicolette van der Jagt.

”This would not have been possible under normal competitive circumstances and fair tax regimes,” she says in writing to ShippingWatch.

The acquisition propels CMA CGM’s logistics division to the major leagues. According to the carrier, the business, mainly comprised by Ceva Logistics and Bolloré, will be the world’s fifth-largest after DHL, Kuehne + Nagel, DSV and DB Schenker.

However, CLECAT calls foul play on box carriers for paying hardly ever taxes on earnings, which certainly was the case in 2022, enabling them to outbid other buyers on the market while driving prices up.

In addition to the major profits reaped by container carriers in 2022, low service levels and extensive ship delays have rubbed logistics operators, among the carriers’ biggest clients, the wrong way.

Last year, CMA CGM bagged profits of USD 24.8bn, while Maersk profits came in at USD 30.9bn.

Tax rates vary from carrier to carrier, but efficient rates of low percentages are not uncommon. Maersk payed USD 910m in taxes last year, equivalent to just shy of 3 percent in 2022.

Mounts pressure on forwarders

According to analytics company Xeneta, the deal is important for CMA CGM on account of the company’s strategic aim of bolstering its business with land-based logistics through acquisitions.

”Bolloré is a major global player, roughly ranking as number ten in the world, and CMA CGM is sure to benefit from this in their efforts to expand their end-to-end logistics. This is a definite bolstering atop the Ceva acquisition,” says chief analyst Peter Sand, expecting CMA CGM to continue its logistics purchase spree.

Since buying logistics operator Ceva five years ago, CMA CGM has absorbed US Ingram Micro CLS in a deal worth USD 3bn, Colis Privé and Gefco.

In June 2022, Ceva acquired a majority stake in AMI Worldwide, a company with a strong foothold on the African continent.

Sand believes that CMA CGM’s new logistics leap mounts pressure on forwarders.

”It piles natural pressure on other players within end-to-end logistics. I’m talking Maersk, wanting to grow within integrated logistics, but especially small and mid-sized forwarders in welcoming yet another cash-rich rival into their midst,” he says.

Complained to the EU Commission

It is not the first time the logistics industry directs criticism at the container carriers’ special tax conditions.

Almost a year ago, the International Transport Forum (ITF), under OECD, pointed to the market skewing that follows from the carriers’ lenient tax incentives.

According to the ITF, the tonnage tax offers carriers an economic padding that gives these an unjust market advantage over the logistics companies that the carriers are either acquiring or competing with in daily business.

CLECAT also complained about the carrier privileges to the European Commission last year, but it remains unclear whether the commission plans to act or not.

Recently, DSV’s chief operating officer offered these somewhat indirect and discreet comments to ShippingWatch on the carriers’ low tonnage tax:

“Of course, we’d like the same sort of terms and conditions.”

CMA CGM heralds the agreement as a game changer for the shipping group’s efforts towards growth within the logistics segment.

Following the acquisition, CMA CGM will see an annual revenue of USD 24bn within logistics. Maersk’s 2022 revenue within the same segment reached USD 14bn.

Maersk was the first box carrier that decided to go all in on land-based logistics. Since then, CMA CGM and, to a lesser extent, MSC have also decided to venture down this path.

German carrier Hapag-Lloyd has on multifarious occasions underscored that it will stick to sea freight and port terminals.

English edit: Simon Øst Vejbæk & Christian Radich Hoffman

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