CMA CGM said on Friday its profit fell in the third quarter as a COVID-era boom in shipping continued to fade, but its volumes picked up as a destocking trend in the United States was offset by brisk demand in other parts of the world.

The French-based shipping giant was cautious about nextyear’s outlook, with the prospect of a recovery in global trade – as U.S. firms finish destocking – tempered by expectations of modest economic growth and an influx of new vessels.

CMA CGM, privately controlled by the Saade family, reported a third-quarter net profit of $388 million, down from $7.04 billion in the year-earlier period. Core earnings dropped to $2.0 billion from $9.1 billion.

A faltering economy has exacerbated a pullback in shipping prices from record levels in the wake of the COVID-19 pandemic, which had brought unprecedented profits for firms like CMA CGM. Danish rival Maersk MAERSKb.CO said last week it would cut 10,000 jobs as it saw weak market conditions continuing.

Freight rates have been stabilising at around 2019 levels, but it was very difficult to anticipate next year’s trend, Ramon Fernandez, CMA CGM’s chief finance officer, told reporters on a call.

“There are certainly more risks than opportunities on the demand side,” he said.

A potential 9% increase in global vessel capacity next year, on top of an expected 5% expansion in the second half of this year, also raised concerns about excess supply following a wave of ship orders during the boom period, Fernandez said.

The scrapping of older vessels, partly as the sector adapts to new emissions regulations in Europe, would be crucial to balancing supply, he said, adding that CMA CGM has not cancelled any of its ship orders.

The group reduced its operating costs by 15% in the third quarter, Fernandez said, declining to detail the specific measures that were taken.

CMA CGM’s quarterly shipped volumes increased 0.9% on ayear-on-year basis, halting a decline seen in the first half, with strong demand on North-South routes countering a decline on East-West lines affected by U.S. destocking, Fernandez said.

With the fourth quarter benefiting from seasonal demand, the company expects to post a slight increase in full-year volumes, he added.

After a flurry of acquisitions in logistics firms, port terminals and French media, CMA CGM’s priority is on integrating its new businesses, though it retains a strong balance sheet for further investments, Fernandez said.

Source: Reuters reported by Gus Trompiz and edited by Sudip Kar-Gupta and Paul Simao