M. Friedberg - Ceva Logistics : "On fait comme tous les acteurs économiques africains, on s'adapte"

Hello.

Listen. Well, perhaps just to go back a bit. So indeed, I joined the group in '95 when it was only called CMA, before the CGM acquisition. So it was indeed at the time, we were essentially a shipping company present on maritime routes between Asia and the Mediterranean and Europe. Then there was the CGM acquisition and years passed. Indeed, it's a sector that over about twenty years in maritime transport has consolidated massively. When I started my career, there were probably between 20 and 25 shipping companies, and eventually, all that consolidated over a period from 1995 to around 2016, when the group acquired the Singaporean shipping company APL NOL, which was a huge step for us also in strengthening maritime lines, particularly towards the United States. And so, I lived this transformation in maritime, and now I see it in a similar but quite close way in the logistics world.

Listen, I think we are a bit more. I think we are globally between 7 and 8 global shipping companies. What is true, however, is that the peculiarity of this industry is that the top three are European, and they are all family-owned, which I think also testifies to the particularity of a sector that is capital-intensive. You need to have strong financial resources in this business. You invest over long periods, over 25 years for a ship, and you have a market that evolves with highs and lows. And so indeed, I think it's no accident that this industry has structured itself around actors with family capital and long-term visions. But the CMA group is a good testament to that.

Well, yes and no. I think certainly there are important cultural diversities, but there are also many similarities. I think when you work with teams, the willingness to do well, to work together, what motivates teams globally? There are sometimes cultural codes that are different. Yes, there are cultural codes that can be different, ways of doing things that can be different. But the differences enrich the whole, but I think there are also many similarities when you are part of a company, you try to forge a coherent whole that moves forward, provides vision. But as a leader, you need to be equipped for that. I mean, you need to modestly try to take this diversity into account and draw the richness it contains.

So, listen, I will give you an answer at two levels. First, I think we need to step back. The first real strong incursion that the group made in Africa was during the Delmas acquisition in 2006. It was about 20 years ago, when the Bolloré group decided to divest its maritime branch. It was a very important accelerator for us in our establishment in Africa for two reasons. First, it strengthened our maritime means at a time when we saw quite structured investments in port infrastructure between the early 2000s and 2020. So, we saw access to African ports simplified enormously, which had a significant impact on the means we could deploy to serve African coasts, beneficially affecting transport costs for African importers or exporters. It was an accelerator because it also allowed us to establish physically in African countries, both on coasts and in landlocked countries. So, it was really an important moment for us. We developed a lot, continued to develop. The shift that happened from 2019 with the acquisition of CEVA, very early, I think by conviction that this group has that Africa is one of the strong development zones for the coming years, driven by fundamental trends like urbanization, the slow but emerging middle class, etc. The conviction that it was necessary to be present. Few international logistics players present on the continent. We did it very early with the CEVA acquisition. We made two or three acquisitions that really strengthened us in East Africa.

Listen, in the big markets, I will take the three main zones if we start from the north, so between Egypt, Morocco, which remain two very dynamic markets, and in the middle, Algeria, which is an important market in which the group has a long-standing maritime presence, including port assets, as we operate a terminal in Tangier in partnership, another in Alexandria. We are present throughout North Africa. Then, if I go down to West Africa, well, the major markets starting with Senegal, Côte d'Ivoire, Nigeria, Cameroon, the two Congos, Angola, markets that remain important and are each in their own way gateways to corridors leading to the interior. And sub-Saharan Africa is largely structured around these corridors. It's the big challenge of landlocked countries now. South Africa and then in East Africa, Kenya, Tanzania, and then the Horn of Africa corridor with Djibouti and Ethiopia.

No, no, I think it's really the materialization of what I tried to explain earlier, meaning that when you look at the infrastructure to be able to accommodate such ships, you need port infrastructure capable of accommodating them both in terms of draft, the depth in ports, and capacity with gantries etc. to operate ships of this size. You really need solid infrastructure that is competitive and equivalent to what you can find in Asia, Europe, or elsewhere. And from that point of view, Africa has evolved enormously. When I arrived at Delmas in 2006, I remember for a while, we had 30 days of congestion, we waited with the ship 30 days off Abidjan to be able to enter, because the infrastructure didn't follow the goods. So the time you took, say about thirty days to arrive off Abidjan, you spent another 30 days off Abidjan to unload the goods. So the complexity of port access was enormous. That has fundamentally changed. And when it changes, it brings fluidity, greater capacities, and the greater the capacity, the lower the unit cost. So, I think the arrival of ships of this size and we, similarly with developments we made at the terminal which is a new gateway for Nigeria and Cameroon, it's the same, these are infrastructures that will allow or bring very large ships. We see many ports in Africa adapting to this new configuration.

Well, I will give you an answer at two levels again. First, we do like all African economic actors, we adapt, and I think it's one of the particularities of this market, the incredible resilience and capacity for adaptation and agility of economic actors. And so, we are an economic actor like any other. So, we are in this environment and therefore need agility, resilience, capacity to adapt. Voilà, conditions that can be very changing. That's the first thing. A road that is no longer passable because there is, you need to find an alternative, take a detour. Of course, it happens. You can have geopolitical tensions, you can have moments where roads are cut, you can have infrastructure problems, higher level or rolling infrastructure sometimes not up to standard. So, you need to juggle with that. The progress made in port infrastructure, little by little, the same path must be followed for land infrastructure. And beyond physical infrastructure, intangible infrastructure, meaning computer platforms that will enable single windows, simplify administrative procedures. So all this participates in logistics in the broad sense. We are part of that. After, our job, why people come to work with a service provider like us, is precisely because we help them navigate these difficulties. Daily job to show necessary agility.

Listen, the first thing, the first answer I will give, is that from our perspective, the priority is obviously the safety of our people. So, we do not expose our people to dangers, no one goes to work to put themselves in danger. I think that's valid in Africa as elsewhere. So there are times when indeed, we decide to stop serving such a place because it's too dangerous or conditions are not met. We try as best we can to find accompanying solutions. So it can be escorts. So at certain times, we resorted to this type of means to serve zones that were a bit conflictual. So operational choices based on danger, with priority number one not exposing your people, be it your people or subcontractors, you don't want to end up in that unfortunate situation.

Listen, I may be optimistic but I have seen in 30 years of logistics situations evolve very quickly in one direction or another. Who would have told us two years ago that we would pass through Suez for a moment? Who would have told us four years ago that the world would be at a standstill and that we would all be confined at home? So, we will talk about it again.

Yes. So very clearly, yes. We, our group's history is the history of globalization. We grew with this story, so everything that facilitates the exchange of goods between countries is obviously something we call for because we fundamentally think it's an important development factor and economic actors call for it, and our job is to accompany it, provide means, tools, etc. to implement it.

Listen, first, it was a very voluntary decision, and the strategic vision of the shareholder after this period of strong consolidation in maritime, to diversify our group towards something relatively adjacent, which was logistics, meaning being able to offer clients services beyond I take a box somewhere, bring it to another place, to a port, for really an end-to-end vision to serve a supply chain because when you have a supply chain, you are at Danone or you are a cotton exporter, it's like a pearl necklace. So you have a certain number of moments, you will bring from the field, bring to town, containerize, put in a container. Container will leave. This whole chain is a sequence of services, and the more we can simplify the life of industrialists, the more value we add. So I think it was really the starting vision. That's why we embarked on the CEVA story. Today, the two entities coexist and work together. We try to maximize value for clients. So we have many common operations towards clients to offer end-to-end solutions. We, for you to have an idea, CEVA in its service range, we do obviously maritime transit, which we do partly with CMA CGM for part of our flows, but not only. So we are also a forwarder working with other shipping companies. After, the nature of our activities is relatively different in the sense that maritime transport activity is really a transport activity where you deploy assets on routes and optimize filling and make sure to use them best. We are a service provider without assets. We build solutions for our clients. So the two are very complementary.

Absolutely. Listen, on a personal level, for me, it's a bit the second part of the story, because I had experienced the first one which was the Delmas acquisition where we recovered this very beautiful asset from the Bolloré group, which was structuring for our African development. And in the same way today, the integration of Bolloré teams within CEVA, it's very structuring, especially for Africa but not only because the Bolloré teams had developed a very beautiful asset and a very fine line of commerce with strong expertise in certain sectors, luxury, aeronautics, project logistics, etc., which we combined with CEVA's 20 years. Their knowledge of Africa today, I think, brings us enormously in our development. So it's really an accelerator for us. It reinforces us in the idea that we really have something to offer on this continent. It's an element of differentiation for us as well. We have entered the top 4 of logistics providers today. We are number 4. We have three giants in front of us. I think what distinguishes us from these three giants is precisely our will to develop in Africa unlike others.

So, we have three levels of investment. We have a group level investment which is really an investment in research and development focusing on two major topics. One topic is the decarbonization of transport. It's a real issue. What are the motorizations of tomorrow? How will we power all this? Big issue. And there, we are talking about R&D, meaning we are really in reflection on what will tomorrow drive us.

The second topic is about what will change our logistics environments, particularly labor-intensive environments like warehouses. How will robotization and AI transform these jobs? In terms of what we've already integrated, we have a research layer that's really prospective. Then we have applied innovation. In our current client offerings, we have options ranging from high automation, where up to 70% of warehouse tasks are automated with robots. Not all clients or product types are suited for this. You generally need many references, high turnover. Fashion warehousing, for example, works very well for robotization. So we have highly automated, highly robotized offerings, but also very manual ones. We have to adapt based on needs. We're integrating robotics like everyone else, exploring AI use cases with varying degrees of success, but we have many initiatives underway. We're more in a testing and reflection phase than full deployment.

I'll tell you, yes, I believe in it. Not only do I believe in it, but our shareholder strongly believes in it as well. We've committed to being carbon neutral by 2050. But beyond the commitment, the most important thing is that we were probably the precursors, very early on, when we began thinking about alternatives to heavy fuel oil and launched into LNG about a decade ago. LNG isn't the ultimate solution, but it's an important step that allows us to decarbonize partially. It's crucial for fine particles because it eliminates them completely. We've made investments counted in the billions, with entire fleet conversions to LNG. We did the same with methanol as another potential solution. We continue in R&D thinking about what the future propulsion will be. We believe in it and we're putting resources on the table clearly. This is on the transport side, which produces the most carbon. With new fuels, we're still in an experimental and evaluation phase, though LNG is now becoming industrial. We haven't found the ultimate 100% decarbonized solution yet, but we're partners in an initiative with a company called Neoline, which is one of the first wind-powered propulsion systems. There's a vessel under construction that will be deployed on Atlantic routes, allowing significant decarbonization. Like everyone, we're testing, we're moving forward, but the commitment is clear.

It's like in all areas: you have the precursors, then those who watch, and those who are disinterested for now. But looking at our portfolio overall, five years ago versus today, the issue is clearly more pressing. We're now seeing tenders where if you don't have a low-carbon offering, you're not selected. That's for the precursors. Including here in Africa, though probably a bit less, it's not yet the top priority. But when you have a global tender, maritime routes to Africa are included too. So some players are truly at the forefront.

The big question everyone is circling around is the cost of decarbonization. Maritime transport decarbonization is estimated at 1,500 billion. No single economic actor can bear that alone. So the question is what will be the fair distribution of the effort if we want to succeed. Consumers will certainly have to pay a bit more at some point. Regarding concepts like nearshoring and reshoring, which we can translate as proximity logistics or shortening distances, is that the solution going forward? That leads us to our next theme.

I don't know if it's the solution going forward, but I think it's something unfolding before our eyes. With the reemergence of tariffs and similar measures, we've seen the generalized concept of China Plus One emerge. China remains a major sourcing zone and the leading manufacturing nation, but companies are de-risking by developing second sources. We've seen Southeast Asia emerge significantly, Vietnam in particular, also with Chinese capital. Indonesia, Thailand, which has had Japanese capital in automobiles for some time. Turkey is now an important industrial base near Europe. Morocco. So it will be multipolar. I don't think China will be completely replaced. It will continue to play a major role thanks to its industrial power. As Tim Cook explained in a LinkedIn interview, he doesn't go to China for cheap labor; he goes because they've developed industrial capacity, technical know-how, and human resources, engineer training that he can't find elsewhere. That's the whole package. But to limit distances and delivery times, we may need to make consumers pay more, tax products coming from far away. We see the debate in France about small parcels from Chinese platforms. A fully decarbonized supply chain costs more than a carbonized one as it exists today. But what's true today may not be true tomorrow, because economies of scale, innovation, and new capabilities might bring gains we don't yet suspect. There's a virtuous moment when you shift into a new paradigm and yesterday's economic truths that seemed prohibitive may not be as harsh as we imagine.

It would be a bit premature to say that definitively. Between the 15 to 20 years up to the pandemic, what we might call happy globalization, I put that in heavy quotation marks, we didn't have major disruptions. We had congestion but nothing like what we experienced, which was so significant we hadn't imagined it when the pandemic arrived. Since the pandemic, the observation is that these supply chains are under much greater stress than before, stress linked to geopolitical, operational, and structural reasons. The Suez Canal, the Panama Canal, ships don't like less water. All of this creates disruptions that put supply chains under more stress than they were before.

I don't know if it allowed us to rethink the model, but it forced us to adapt, that's clear. We couldn't expose our crews to real danger at Bab el-Mandeb. So we made the decision, like all operators, to go around the Cape of Good Hope. It lengthened the routes and added cost to the system. It absorbed some market capacity because those extra weeks mean capacity you can't deploy elsewhere. So it had a real impact. Whether it's structural or not, when conditions allow safe passage through Suez again, I think we'll return to Suez, because going around the Cape from Turkey significantly increases the distance.

In any disruption, there are always moments where some benefit more than others. So indeed, but it remains temporary. Whether it will be structural or not, it reshuffles the cards somewhat, but we've seen this before. We've seen ports emerge and others that hadn't invested gradually abandoned. The business of port operation is also about knowing when to invest, attracting clients, being able to deliver a service that makes people want to call at your port. You also need to be geopolitically savvy.

A complicated question. What we've observed, taking the example of Africa, is that what made competitive port infrastructure emerge was a well-thought-out blend of public and private. Concessions are a perfect example, like Abidjan. When you go to private capital, you find it where it is, and indeed international groups emerged as specialists. I think these sovereignty questions, in moments of tension, they do emerge. They emerged around recent operations. But overall, the public-private partnership model, which has become a general framework for port development, has been rather successful.

We could sometimes be collateral victims, but overall, look, it's undeniable today. The port infrastructure of Abidjan, twenty years ago versus today, is night and day. In some countries, it happened differently. There were lawsuits with some actors because the way these PPPs were negotiated may have had an inequitable distribution. But today, I'd say it's improved. Contract renegotiations can happen. Overall, these models have reached maturity, maturity on both sides, private and public. There's a level of maturity in implementing these schemes that has proven itself. Well, there can always be local issues. But in the vast majority of cases today, wherever you go in the world, these models work.

Several things. First, I have the advantage of being part of a group that has carried family values for a long time. We're in that environment, very important. CMA CGM is a family company that has carried these strong values for a long time with a strong culture. The Saadé family has really made its mark, imprinted since always a clear will to culturally instill values of excellence, humility, ambition, and audacity. That all comes to us. When you place that in CEVA's history, which is much more recent, we're relatively new in this perimeter with many employees who are themselves a melting pot, since we grew largely through acquisitions. One of the challenges is to foster a common culture within a strong culture like CMA CGM's. That requires listening, of course, team mobilization, and a capacity to mobilize on cultural topics. You need a vision, otherwise you can't carry people along. And you need an important management culture. I'm personally convinced that people work for people. Why do people go to work? They want to do a good job, obviously, because they want to be paid, but that's not enough. What makes a company work is that people work for other people.

I think it's an obligation in my job. The only asset I have in this business is people. I don't have physical assets. I combine people's skills and expertise, their engagement, and some IT. Together, that makes a solution I sell to a client. If I don't put emphasis on the people in this company, I'm missing the point.

Attracting and retaining. First, there are simple things. People like working for successful companies. Success attracts people, so we try to be that. Second, you need to create a framework that welcomes them and helps them grow. We've built training tools within the group. We launched our Tangram training academy in Marseille just over a year ago, where 2,400 group employees have attended sessions of about 80 people on various topics. That's very strong for integration. And we have a wide range of training tools to help our employees grow.

Yes, it's certain that AI and robotics will transform our trades. My children will live in a world different from the one I grew up in. That's certain.

I discovered Africa for the first time at 22, well before my professional career, during a three-month internship in Dakar. It was an experience that was both very impactful and difficult. It was rich in every way, a real shock for me. A personal shock. And fate had it that years later, in 2006, when I returned and found myself in the Delmas perimeter, I rediscovered Africa. It was a very strong professional experience that resonated with what I had seen. When I was 22, I had read a book by Cheramidou about the Ambiguous Adventure that marked me deeply. I was young, you read that at 20, it marks you. It participated in that moment. There was a sort of tremor at 20, which was personal. It's probably my personal history that led to this first encounter with the African continent being so powerful. Since then, I've had many rich professional experiences. And living and working in Marseille, this city so oriented toward Africa, this uniquely French city. I'm attached to it. I've lived here a long time now, even though I wasn't born here. Life's chance brought me to Marseille, where CMA CGM is based. We've become a major actor in Marseille and we're attached to it. We have a deep attachment to the city, for reasons both tied to our shareholder's own history and because each of us came here and grew attached to it.