According to reports from multiple industry media on June 12, CMA CGM the world’s fourth-largest container shipping line is pushing forward an investment plan for the freight business owned by SNCF French National Railway Company and plans to acquire a 49% equity stake in its subsidiary Rail Logistics Europe RLE.

As one of the largest rail freight operators across Europe RLE will become a crucial inland transportation link in CMA CGM’s global logistics network if the deal is finalized.

This is not CMA CGM’s first move in European rail freight business. Days ago the shipping giant completed the acquisition of British rail freight firm Freightliner. One month earlier it purchased a 20% stake in EUROGATE container terminal at the Port of Hamburg in Germany. These successive strategic moves serve one core goal to complete the last-mile connection of sea rail intermodal transportation.

It is noted that the acquisition of 49% equity stake in RLE is still under assessment and has not been finalized yet.

CMA CGM Bets On European Rail Freight To Build Integrated Supply Chain

CMA CGM’s rail freight deployment in Europe focuses on two core markets the United Kingdom and France.

As a leading provider of rail freight and multimodal logistics services in the UK Freightliner covers rail and road transportation inland terminal operation and independent brand services. CMA CGM announced the acquisition of Freightliner last September and closed the transaction in January this year. Under the agreement Freightliner will maintain independent operation and retain its existing team while gaining access to CMA CGM’s global logistics network. The move consolidates CMA CGM’s market foothold in the United Kingdom a pivotal European market.

Rail Logistics Europe RLE is the core freight platform under SNCF. It runs a full range of businesses including rail freight intermodal logistics railway infrastructure services and freight forwarding operating one of the most extensive rail service networks in Europe. Media reports state CMA CGM is assessing the feasibility of buying its 49% stake with the enterprise valuation of RLE standing at about 800 million euros. Though the deal stays in the evaluation phase it will substantially boost CMA CGM’s influence over European continental rail freight business once completed.

The completion of both UK and French rail acquisition deals will enable CMA CGM to realize barrier-free cargo transit across the English Channel and unimpeded operation along major European rail trunk lines.

Reasons For Shipping Giant’s Heavy Investment In Land Transportation

Why does a shipping enterprise focusing on maritime transport keep expanding land transportation business?

The core reason lies in changing demands of cargo shippers. Traditional port to port maritime service can no longer meet the operational needs of modern complex supply chains. Currently shippers prioritize factory to store full chain seamless logistics solutions. Logistics players that deliver cost effective low carbon inland cargo transportation will gain competitive edges in the industry competition.

Rodolphe Saadé Chairman and CEO of CMA CGM clarified the strategic orientation during the Freightliner acquisition. He noted the takeover aims to expand the group’s multimodal logistics business in the UK integrate maritime rail and road transportation services and provide clients with low carbon transport solutions to advance global trade decarbonization.

Besides increasingly stringent EU environmental regulations and rising carbon taxes force shipping carriers to accelerate business transformation. Shifting road freight volume to rail transport is a key approach to supply chain decarbonization. By holding stakes in rail freight enterprises CMA CGM can independently launch end to end low carbon logistics products for clients. The layout helps the group comply with regional environmental policies and build long term industry competitive barriers.

Impacts Of The Layout On Freight Forwarders Engaged In European Routes

CMA CGM’s serial European asset layouts send three clear signals to freight forwarders focusing on European shipping business.

First end to end logistics services will become more stable while pricing modes will be updated. CMA CGM is standardizing sea rail intermodal docking procedures which will improve cargo transportation efficiency and stabilize shipping schedules from Asian ports to European inland destinations. Meanwhile the original single ocean freight pricing model will be replaced by one document integrated pricing covering ocean freight and auxiliary rail fees. Freight forwarders need to master the composition of inland rail charges in advance to offer competitive door to door quotations for clients.

Second client inquiry focus is shifting to European inland transportation. Ocean freight rates have become highly transparent in recent years. Forwarders capable of cutting costs and improving efficiency for clients’ inland haulage business will win more orders. European route forwarders are advised to connect with CMA CGM’s European rail network actively promote sea rail intermodal transportation as a core value added service and clearly compare the cost and efficiency differences between full truck haulage and sea rail combined transport in quotations.

Third forwarders shall track congestion and transfer efficiency of major European ports. Expanded rail connection capacity is mainly designed to ease road collection and distribution pressure at core European ports including Hamburg Rotterdam and Antwerp. When designing shipment plans for clients forwarders can add rail transit schemes at above ports as alternative options.

CMA CGM’s global layout follows two major industry trends global supply chain restructuring shifting from globalized operation to regionalized layout and industry development upgrading from maritime dominated transportation to multimodal intermodal transportation. With rail networks covering European inland areas CMA CGM no longer merely provides container shipping space but reliable door to door logistics commitment.

Freight forwarders need to translate this logistics commitment into competitive quotations and standardized services. To seize market advantages forwarders shall adapt to the industry trend reserve sea rail intermodal solutions in quotations and polish client communication strategies in advance so as to stand out in the integrated end to end logistics era.