news

April 28th, 2023

CMA CGM, the world’s third largest liner company, has sold its 50% stake in Logoper, Russia’s top 5 container carrier, for only 1 euro.

The seller is CMA CGM’s local business partner Aleksandr Kakhidze, a businessman and former Russian Railways (RZD) executive. The terms of the sale include that CMA CGM can return to its business in Russia if conditions permit.

According to experts in the Russian market, CMA CGM has no way to get a good price at present, because sellers now have to pay to give up a “toxic” market.

The Russian government recently passed a decree requiring foreign companies to sell their local assets for no more than half the market value before leaving Russia, and to make substantial financial contributions to the federal budget.

CMA CGM took a stake in Logoper in February 2018, a few months after the two companies attempted to acquire a controlling stake in TransContainer, Russia’s largest rail container operator, from RZD. However, TransContainer was eventually sold to local Russian transport and logistics giant Delo.

Last year, CMA Terminals, a port company under CMA CGM, reached a share swap agreement with Global Ports to withdraw from the Russian terminal handling market.

CMA CGM stated that the company has completed the final transaction on December 28, 2022, and has suspended all new bookings to and from Russia as early as March 1, 2022, and the company will no longer participate in any physical operations in Russia.

It is worth mentioning that the Danish shipping giant Maersk also announced an agreement in August 2022 to sell its 30.75% stake in Global Ports to another shareholder, Delo Group, the largest container ship operator in Russia. After the sale, Maersk will no longer operate or own any assets in Russia.

In 2022, Logoper transported more than 120,000 TEUs and doubled revenue to 15 billion rubles, but did not disclose profits.

In 2021, Logoper’s net profit will be 905 million rubles. Logoper is part of the FinInvest Group owned by Kakhidze, whose assets also include a shipping company (Panda Express Line) and a railway container hub that is under construction near Moscow with a designed handling capacity of 1 million TEU.

By 2026, FinInvest plans to build nine more terminals across the country, from Moscow to the Far East, with a total design throughput of 5 million. This 100 billion ruble (about 1.2 billion) freight network is expected to help Russia Exports are diverted from Europe to Asia.

More than 1000 enterprises

Announced withdrawal from the Russian market

In April 21, according to reports from Russia Today, the American battery manufacturer Duracell has decided to withdraw from the Russian market and stop its business operations in Russia.

The company’s management has ordered the unilateral termination of all existing contracts and the liquidation of inventories, the report said. Duracell’s factory in Belgium has stopped shipping products to Russia.

According to previous reports, on April 6, the parent company of the Spanish fast fashion brand Zara has been approved by the Russian government and will officially withdraw from the Russian market.

Spanish fashion retail giant Inditex Group, the parent company of fast fashion brand Zara, said it has obtained approval from the Russian government to sell all its business and assets in Russia and officially withdraw from the Russian market.

Sales in the Russian market account for about 8.5% of Inditex Group’s global sales, and it has more than 500 stores across Russia. Shortly after the Russian-Ukrainian conflict broke out in February last year, Inditex closed all its stores in Russia.

In early April, the Finnish paper giant UPM also announced that it will officially withdraw from the Russian market. UPM’s business in Russia is mainly timber procurement and transportation, with about 800 employees. Although UPM’s sales in Russia are not high, about 10% of the timber raw materials purchased by its Finnish headquarters will come from Russia in 2021, the year before the conflict between Russia and Ukraine broke out.

The Russian “Kommersant” reported on the 6th that since the outbreak of the Russia-Ukraine conflict, foreign commercial brands that have announced their withdrawal from the Russian market have suffered a total loss of about 1.3 billion to 1.5 billion US dollars. The losses incurred by these brands could exceed $2 billion if the losses from the suspension of operations over the past year or more are included.

Statistics from Yale University in the United States show that since the outbreak of the Russia-Ukraine conflict, more than 1,000 companies have announced their withdrawal from the Russian market, including Ford, Renault, Exxon Mobil, Shell, Deutsche Bank, McDonald’s and Starbucks, etc. and restaurant giants.

In addition, a number of foreign media reported that recently, officials of the G7 countries are discussing a concept-strengthening sanctions against Russia and adopting a near-comprehensive export ban on Russia.

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