Jamaican media and politicians have questioned CMA CGM’s takeover of Kingston Container Terminal after credit rating agencies downgraded the carrier’s debt.
In April 2016, Standard & Poor’s and Moody’s downgraded their long-term credit ratings on CMA CGM because of low freight rates and challenging conditions in the container shipping industry.
According to Jamaican newspaper The Sunday Gleaner, this downgrade left senior government members worried that the company would not be able to fund the dredging of Kingston harbour when it takes over the terminal on July 1.
Anonymous sources told the paper that the administration was concerned the process was in danger of collapsing as reports surface that CMA CGM was having difficulties raising money for its Jamaican operations.
To combat these doubts, CMA CGM officials met with the Jamaican government and agreed to pay a US$30m deposit.
When it takes over, through its subsidiary Terminal Link, CMA CGM is expected to deepen the navigation channel and expand the terminal’s capacity from 2.8m teu to 3.2m teu within six years and then to 3.6m teu at a later date.
The takeover has already postponed once, as it was originally scheduled for the first quarter of 2016.
CMA CGM made a loss of US$72m in the first quarter of 2016 as its revenues, like those of its competitors, were hit by falling freight rates.