One of the largest transport and logistics companies in the world, the French CMA CGM Group, has sold 50% of the Russian container operator Logoper, according to the Unified State Register of Legal Entities. Since April 12, the former top manager of Russian Railways, Alexander Kakhidze, who previously owned the second half of the company, consolidated all 100%.
“The deal was carried out at a price of €1, but with an option to return the partner to the business in the future,” Kakhidze told RBC. According to him, CMA CGM has made an “invaluable contribution” to the development of Logoper: thanks to the wide geography of shipping lines, the fleet of container equipment and offices in various countries, the Russian operator was able to establish cooperation with new customers and offer them an attractive service for organizing international transportation.
Under the current conditions, the CMA CGM group would not be able to receive a significant amount for a stake in Logoper, Mikhail Burmistrov, CEO of INFOLine-Analytics, believes: a deal for € 1 is a fee for the ability to quickly exit the Russian asset. By and large, other options are not even visible – it is now extremely difficult to organize a deal at a real price, given the latest decisions of the government commission (the price should be at least 50% less than the market price, tougher requirements for contributions to the budget, etc.), he explains.
RBC sent a request to the press service of CMA CGM Group.
What is known about former partners
The French CMA CGM Group ranks third among the world’s largest container shipping companies. The total capacity of its fleet, according to Alphaliner, is more than 3.4 million containers of a 20-foot equivalent unit (TEU). In 2022, CMA CGM Group generated $74.5 billion in revenue and $24.9 billion in net profit. The company is controlled by the family of Lebanese-born shipping tycoon Jacques Saade (who died in 2018). His son, Rodolphe Saade, Chairman of the Board of Directors and CEO of CMA CGM Group, with an estimated fortune of $ 9.8 billion, is among the 200 largest billionaires in the world according to Forbes.
CMA CGM became the owner of 50% of Logoper in February 2018. Shortly before that, in December 2017, Rodolphe Saade wrote a letter to President Vladimir Putin about the company’s desire, in partnership with Logoper, to acquire a controlling stake in the largest Russian container operator, TransContainer (at that time owned by Russian Railways). According to him, participation in the CMA CGM deal will be “a clear demonstration of Russia’s intention to attract foreign investment.” But in the end, CMA CGM did not participate in the auction, and Sergey Shishkarev’s Delo Group became the new owner of TransContainer.
Alexander Kakhidze worked in the structure of Russian Railways, including being the head of the department for customs brokerage activities of the monopoly, and adviser to the vice president of the company on commercial issues and logistics. In 2019, he became the owner and head of the Fininvest group, which includes transport and logistics centers on the Russian Railways network, the container operator Logoper and the maritime logistics provider Panda Express Line.
In 2022, Logoper transported over 120,000 TEU. According to the results of the first quarter of 2013, the company entered the top 5 rail container operators in Russia in terms of the volume of containers transported, its representative claims. Logoper’s revenue doubled last year, to RUB 15 billion, net profit is not disclosed (in 2021 it amounted to RUB 903 million).
Why CMA CGM Group sold the asset
After the start of a special military operation in Ukraine against Russia, including its transport industry, international sanctions were imposed. Against this background, global logistics companies have begun the process of leaving the country, selling off assets. Thus, the French operator of container terminals CMA Terminals, which is part of the CMA CGM group, has left the shareholders of the Russian terminals Moby Dik (St. Petersburg) and Yanino (Leningrad region), both managed by Global Ports. Saade noted that, together with the French Foreign Ministry, the CMA CGM organized several large-scale humanitarian operations to assist the Ukrainian population. And Danish Maersk, a leader in container transportation and port management, sold 30.75% of Global Ports to Delo Group.
The most tangible for the Russian market was the departure of such players as the German Hapag-Lloyd, the Singapore Ocean Network Express alliance, the American UPS and FedEx, the South Korean HMM, the Danish Shipco and the Taiwanese Yang Ming, says Kirill Latinsky, commercial director of SOTA Logistics. “Many international transport and logistics companies have decades of experience. Everything that has proven itself in Western markets has been implemented in Russian realities in accordance with our legislation,” he explains. The most sensational case in the express delivery market in 2022 is the termination of the provision of services within Russia by DHL, adds Deputy Executive Director of Courier Service Express Maria Martynova: “This was the biggest shock for the express delivery market, where DHL had been a kind of standard of quality.” According to her, the presence of such international investors in the market is a real investment in the development of logistics in Russia, an increase in the level of expertise and quality.
Partnership relations between Russian and international logistics companies were based primarily on equal principles, notes Nikita Makhovsky, head of the strategic planning and forecasting group of the Economics of Infrastructure Branches department of the Center for Strategic Research. Foreign investors acquired Russian assets (terminals, port facilities, etc.), and Russian companies, in turn, got the opportunity to promote their services in foreign markets with the assistance of foreign partners, he points out.
How will the departure of foreigners affect the development of companies
The share of the largest players such as Maersk, CMA CGM, Hapag-Lloyd, Ocean Network Express – ONE and Taiwanese Yang Ming in the transport logistics of Russia exceeded 50% until February 2022, says Elina Kulieva, Corporate Ratings Director at Expert RA. “Obviously, their departure from March 2022 led to a significant transformation of the logistics market in Russia, because of this, we will continue to observe the impact on cargo transportation throughout this year,” the expert believes.
Logoper is “thankful to CMA CGM for working together, but today it is entering a new stage in its development”: the provision of full-cycle multimodal logistics services, says Kakhidze. “We are faced with the task of increasing the volume of both the container fleet, which currently has 28,000 containers (56,000 TEU), and the fleet in operation, as well as the further development of regular services based on the core network of terminal and logistics centers ( 10 TLCs are planned),” he added. Indeed, large Russian transport and logistics companies, like the Delo Group and Fesco, will increase their capacity and cargo transportation, Kulieva agrees.
According to Latinsky, now we should expect expansion on the Russian market from Chinese players. “China has become Russia’s number one trading partner, and geopolitical and economic trends predict further, closer integration. This is facilitated by the geographical location of countries in relation to each other,” he explains. According to Aleksey Bezborodov, managing partner of Infra Projects, investors from China do have prospects, but without investing in Russian infrastructure, since they are unlikely to be allowed there.
It is also quite probable that partners from the CIS countries, for example, Kazakhstan, Azerbaijan or Uzbekistan, will participate in the capital of Russian companies, Bezborodov believes. In the current macroeconomic situation, Russia is considered by transport and logistics companies from friendly countries as a strategically important partner, options for creating partnerships are being actively explored, Makhovsky continues. The arrival of foreign players in the capital of Russian companies is not only possible, but expected and obvious, says Nadezhda Malysheva, development director of the industry agency PortNews. “There are already examples: a stevedoring company with Iranian capital operates in Astrakhan. The Iranians are also aiming to launch shipping lines in the Caspian Sea. And Turkish shipowners are present in the Azov-Black Sea basin,” she notes.