The CMA CGM shipping group was founded in Marseille in 1978 with a single ship operating between Syria, Lebanon, France, and Italy. Since then, it has grown to serve over 420 of the world’s 521 commercial ports, making it one of the major players in world trade. Venture spoke to Ahmad Armoush, Chairman of CMA CGM Jordan, to discuss the history of its operations in Jordan, its growth, development, and challenges over almost four decades, usual clients and its future in the country.
When was CMA CGM established in Jordan, and how has it’s growth been?
CMA started serving Aqaba Port in 1979. In 1997, CMA acquired CGM, the French national shipping line at the time, to become CMA CGM, the first and largest French container shipping line operating on a global level, then in 2006, it became the world’s third largest shipping line.
Over the past forty years, CMA CGM-Jordan strengthened its position in the market as a major liner serving the country. This began in the early 1980’s when it was one of the main carriers transporting cargo into Iraq through Aqaba, during the Iran-Iraq War; then in the 1990s, CMA CGM became one of the official carriers that delivered cargo into Iraq under the ‘Oil for Food’ program. Since the break of the millennium, CMA CGM Jordan has remained among the main players in the region through its ability to adapt to the constant changes across the Middle East.
What made Jordan attractive to CMA CGM?
CMA CGM perceives Jordan as the gateway to Iraq, and, of course, their interest in promoting the Jordanian trade environment has always been at the forefront for imports and encouraging exports by offering competitive rates with short delivery times.
What does CMA CGM offer the Jordanian market?
The Jordanian containers market is highly competitive and the location of our only port further intensifies the competition. CMA CGM offers a highly competitive and professional service serving the requirements of Jordanian trade and the Jordanian industrial sector with our shipment businesses, due to their global reach, and competitive time frames.
Who are your typical clients?
Are main clients come form all the major trading houses in Jordan, in addition to smaller importers and exporters, as well as international organizations, but we are ready to serve any and all traders from all sectors. We mainly work with merchants and industrialists, in addition to individual businesses in Jordan.
What have been the main challenges that you face doing business in Jordan? How have you worked on overcoming them?
The instability of the region as a whole, with regard to the political and the economic situation, has undoubtedly affected the business environment in general. More importantly, the unfavorable and downward trends in international trade over the past couple of years have amplified the pressure to operate in an ever-changing market. Add to this certain regulations enforced by government institutions such as the Ministry of Transport, customs and clearance associations. However, we, as veterans in the shipping industry, have managed to achieve great success despite the obstacles and have become more agile.
How were you affected by the closure of the borders with Iraq and Syria? What effect did these have on the volume of your business?
Although shipment in transit (via land) to Iraq has ceased, a new route for shipping exports is now being used, via Aqaba by sea, so the negative effects caused by the closure have been compensated, and we have actually seen exports to Iraq from Jordan soar. In fact, exports to Iraq by sea currently represent about 25% of the Jordan global exports volume.
Trade with Syria has traditionally taken the land transport route, but the closure of the border has shifted the means of trade to sea transport, which favorably affected our volumes, as trade between Jordan, Lebanon, Turkey and Syria is now performed by sea.
The Iraqi border is expected to re-open next year, how do you expect this will affect the volume of your business?
In this line of business, the geopolitical changes in the region impose a negative as well as a positive impact. For instance, the closure of the Iraqi border last year resulted in an increase in exports to Iraq shipped through Aqaba Port to Um Qasr Port. Likewise, in the event of re-opening the borders, it may be assumed that import shipments into Aqaba in transit to Iraq are likely going to increase dramatically, and not only increase the shipping needs to Aqaba, but land transport via Aqaba to Iraq will improve.
Are you happy with the existing infrastructure in Aqaba? What can be done to improve it?
The current level of infrastructure is satisfying. And with the new terminal management company that had a concession contract to operate the container terminal in 2006, the operational system has become modernized whereby the equipment provided is of the highest standards and the operation itself has become automated instead of manual, and the berth capacity has been increased from 440 meters to 1000 meters. Having said that, the handling productivity at Aqaba Container Terminals can be increased to operate at optimal capacity. Even more, the yard capacity should be expanded.
Where do you see CMA’s operations in Jordan heading in the next 5 years?
With regard to the changes in the global shipping market, CMA CGM is expected to enforce its position both globally and locally. The exit of certain shipping lines, and the formation of new alliances amongst the main players in the industry are expected to change the liner shipping map and will positively influence the position of the relatively stronger lines.
Consequently, 2016 has been a prosperous year for the CMA CGM group for two reasons; first, the acquisition of American President Line (APL), the 10th shipping line globally, is likely to embed our position in the world ranking; and, secondly, the formation of the Ocean Alliance, which is the largest operational agreement in the history of shipping brings together four renowned partners offering 40 services on East-West trades for 10 years starting April, 2017. This will enhance our main commitment to our clients by serving them in the best possible manner and at very competitive freight rates for all Jordan and Iraq Clients.
This is part seven of a nine-piece story. Other pieces include: