(Commonwealth_ The proposed windfall tax is part of a broader strategy that includes additional tax increases on affluent households and various spending cuts aimed at addressing a substantial €60 billion deficit in the national budget. Several profitable companies, including CMA CGM, would be required to contribute to this tax, with an expected payment of approximately $870 million over the next two years.
Despite this expectation, there seems to be some internal disagreement within CMA CGM regarding the windfall tax. The company’s chief financial officer, Ramon Fernandez, has publicly stated that the levy poses a “competitive disadvantage” for the firm. He argues that it diverts funds that could otherwise be reinvested into the company’s fleet. In contrast, CEO Rodolphe Saadé had previously indicated a willingness to comply with the windfall tax, stating last month, “We’ll be there,” when asked about the tax’s implementation. Saadé acknowledged that if a solidarity contribution was required from profitable companies, CMA CGM would fulfil its obligations. However, he reiterated his opposition to any alterations to the tonnage tax, a system that has significantly benefitted many European shipping companies, particularly in the wake of the COVID-19 pandemic.
The historical context of CMA CGM’s financial struggles highlights the significance of the current situation. Back in 2009, the company was approximately $5 billion in debt. Jaques Saadé, Rodolphe’s father and the founder of CMA CGM, called upon French employers to unite in support of major European maritime companies, stressing the importance of safeguarding the maritime sector in Europe. In 2020, as the pandemic began to impact global trade and shipping, the French government once again stepped in to support CMA CGM, providing a state-guaranteed loan of $1.05 billion to help the carrier navigate the anticipated massive losses.
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Despite these past challenges, CMA CGM and other shipping companies not only survived the pandemic but also thrived, reporting collective profits exceeding $300 billion. In fact, CMA CGM announced impressive net income figures of $17.9 billion in 2021, $24.88 billion in 2022, and $3.64 billion in 2023. These figures underscore the remarkable turnaround and profitability of the company in recent years. Saadé has not always been in favor of the windfall tax. During a Senate hearing in Paris, he questioned the government’s commitment to the maritime industry during tougher times. “When my freight rates were at $350, where were you?” he asked, referring to the lack of support during challenging periods when the company was uncertain about its future. He emphasized the struggles the company faced, recalling a time when they had to navigate the situation independently without government intervention or support.
In a detailed testimony lasting over two hours, Saadé characterized CMA CGM as a ‘patriotic’ French enterprise with deep-rooted connections in the country. He asserted that the company reinvests its profits locally and creates jobs for French workers, emphasizing its commitment to the national economy. Saadé’s statements aimed to position CMA CGM as a vital player in France’s economic landscape, deserving of understanding and support, especially in light of its significant contributions to the shipping industry.
As the discussion surrounding the windfall tax continues, it raises broader questions about the balance between taxation and corporate sustainability in the shipping sector. The potential impacts of this tax on CMA CGM and its competitors will be closely monitored, particularly as the company navigates its financial strategies while aiming to maintain its competitive edge in a rapidly evolving industry. The contrasting views within CMA CGM highlight the challenges faced by companies operating in a global market while attempting to contribute to national goals. The outcome of this proposed tax and the ensuing negotiations will undoubtedly shape the future of CMA CGM and the broader shipping landscape in France and beyond.
