The rise of Beirut Port with strong growth of freight volumeand earnings since late 2004 is partly due to the Frenchshipping firm with Lebanese roots, CMA CGM. With claims tobe the world’s third-largest container shipping line sinceacquiring Delmas—another French shipping line with strongAfrican business—in 2006, CMA CGM has demonstrated a visionfor its Beirut location that includes on the one hand aproject to construct a new office building and on the otherhand involves the group’s reliance on Beirut as a port ofcall and transshipment hub.
However, the company’s two recent activities—finalizing athree-year contract with the Beirut Port Authority at thestart of 2007 and laying the cornerstone for the newregional operations building with capacity for 400 employeesat the port’s free zone in April—are in no way interlaced,insists the general manager for CMA CGM (Compagnie Maritimed’Affrètement-Compagnie Générale Maritime) in Beirut,Georges Kurban who told Executive that it is “wrong” to askabout the two issues in one question.
Building in Beirut
In the core of the matter, the company’s decision to buildits own offices in Beirut is the older of the two moves andrelated to its global strategy. “The project has beendecided long time ago because this is our homeland, wherethe roots and origins of CMA CGM are. This step is withinthe process of the image of the company to have offices invarious parts of the world,” Kurban said.
Other office development projects of the firm include a newoperations center in Marseilles and a regional office inAlgiers, as well as a building in the American seaportVirginia Beach. While the international center of CMA CGMactivities will expand in Marseilles, the Beirut premiseswill also house Merit Corporation, the holding companythrough which CMA CGM’s Lebanese founder and presidentJacques Saade and his family control the shipping firm andseveral smaller sister companies involved in freightforwarding, overland transport, real estate ownership, andtrade in office supplies.
Active for decades
The company has been active in Beirut for decades, Kurbansaid, serving clients in Lebanon and the hinterland. Itexpanded its activities significantly in recent yearsthrough adding the port to its weekly shipping service onthe route that originates in the industrial ports ofnorthern China and Indonesia’s Port Kelang and offersservice to Jeddah, the Mediterranean, and Northern Europe,and last November on the reverse route from Europe to theFar East that also facilitates shipments from Beirut toJeddah and other Red Sea ports.
The weekly stops which CMA CGM secured through its newcontract with the Beirut Port Authority brought business andjobs to the port. When total container movements at the portin January and February increased by 70% from the sameperiod a year ago to over 154,000 twenty-foot-equivalentunits (TEU), transshipment activities by CMA CGM and itslarger rival MSC, which also transships at Beirut, can beexpected to have contributed significantly to the strongrise in traffic, on top of increases in Lebanon’s nationalexports and imports that have given some hopeful indicationsfrom the start of this year.
Kurban did not specify the number of containers which CMAvessels has loaded and unloaded in Beirut per month sincethe company started calling on the port on both legs of itsnorth China route but he confirmed that volumes coming fromChina are generally larger than the volumes traveling theother way.
The importance of the contract that secures CMA CGM’susage of the Beirut Port container terminal at Quay 16clearly lies in the fact that it brings transshipmentbusiness. Attracting major shipping lines to make Beirut ahub for regional traffic was one of the main objectivesbehind the expansion and rehabilitation of Beirut Port thatstarted in the 1990s and resulted in an operationalcontainer terminal with the installation of modern gantrycranes about three years ago.
On the strength of these cranes, which can transfercontainers between CMA CGM’s 6,500 TEUs carrying mothervessels and four (on average) smaller feeder vessels perweekly visit, the company serves its clients in easternMediterranean ports between Mersin in Anatolia and Damiettain Egypt from Beirut. In total, the hub operation coversseven ports in Turkey, Syria, Cyprus, and Egypt.
Beirut’s evolution into a successful transshipment centershows how much the port could achieve after years ofinfighting and various obstacles to its start of containeroperations were removed. It also proved skeptics—which in the past few years have included members of theshipping industry and the port administration—wrong in theirassumption that cargo increases at the port would mainly bedriven by terminating trade and not by transshipment trafficto other destinations.
Beirut’s ‘gift of nature’
For Kurban, the reason why Beirut could win the businessof major shipping lines is a mixture of the liftingcapacities, trained operators, and what he called a “gift ofnature”. “In comparison with other ports in the region,Beirut has new terminal and services that other ports cannotoffer. It also has a natural advantage in the water depth atthe quay that other ports cannot provide,” he said.
However, Kurban added that the gantry cranes of Beirutwith their 60-ton lifting capacity could soon enough beensurpassed by regional deployment of cranes with 100-toncapacity that can move containers at higher speed. Dependingon cargo flows and the services they offer, other nearbyports thus could in future successfully angle for becomingregional hubs.
He sees the future of shipping on global scale influencedpositively not only by China but also by the development ofcountries such as India and Vietnam or Latin Americancountries which claim greater manufacturing roles. “Theshipping industry from 20 years ago is totally differentfrom the shipping industry today, because of the developmentof the countries and the development of bigger and fasterships that offer better revenues and lower costs,” he said.He expects good development of the shipping and freightforwarding industry to continue further “but I believe noone can give you a date” on how long the industry will boomas it did in recent years.
With about 1% of the company’s global work force basedhere, Beirut cannot be expected to be an overpoweringrevenue factor in the books of CMA CGM. The company,according to its results presentation for last year fromMarch 2007, achieved a worldwide turnover of $8.4 billion ona shipping volume of 5.9 million TEUs, representingincreases of 33% and 28% respectively, as the groupintegrated the Delmas company from January 1, 2006. Netprofits last year increased by 5% to $611 million.
Growth strategies of CMA CGM include more acquisitionsworldwide, a near-term increase of its fleet to over 300vessels (on the back of accomplishing a 50% increase in itsfleet size to 286 vessels at the end of last year), andopening of new routes. In North Africa, the group has boldplans for Algeria, including financial services and railservices. In the Middle East, Iraq is a country where Kurbansees a strong role for CMA CGM as soon as the situationimproves, based on the company’s long presence andexperience in the area.
Kurban, on whose desk sat a brochure on an expansionproject of Lattakia Port at time of his interview withExecutive, said that the company’s growth plans for theEastern Mediterranean include operations in Syria andbidding for port projects there and wherever attractivecontracts are being offered. CMA CGM, which manages Maltaport under an exclusive agreement and has operatoragreements in 15 ports overall, had been a bidder for thecontainer terminal operator contract at Beirut Port but didnot win the deal.
In this age when the position of Beirut is that of a portcompeting with several others for a regional role in theEastern Mediterranean and the idea of ever seeing a sizeablecommercial fleet of Lebanese-flagged ships is remote, thefamily-run CMA CGM group built by entrepreneur Jacques Saadeinto a modern-day shipping firm with 11,500 employees (andan active global employer of Lebanese) is the closest thingto a Phoenician maritime trader empire which one can find inthe early 21st century.