'LOOK TO COSTS' SAYS HAPAG-LLOYD CEO, AS FREIGHT RATES ARE 'UNSUSTAINABLE'

Hapag-Lloyd saw its second-quarter net profit slump 77% on the previous year, to $1.1bn, despite benefiting from a bottom line boost of $212m from interest and other financial items.

“Weaker demand and lower freight rates are having a noticeable impact on our earnings,” said CEO Rolf Habben Jansen this morning, adding that freight rates on some tradelanes were “unsustainable”.

He explained that freight rates ‘normalising’ to the pre-pandemic levels of 2019 would mean loss-making voyages, given that operating costs on some routes had subsequently increased by 20% to 30%.

Hapag-Lloyd’s revenue for Q2 was down 50% on the previous year, at $4.8bn, and down 20% quarter on quarter, as expiring contracts were replaced by much cheaper deals.

Ebit for the quarter was $888m, compared with $5.1bn the year before, for a net profit of $1.1bn (Q2 22 $4.8bn), giving a half-year ebit result of $2.8bn and net earnings of $3.1bn (H1 22 $9.5bn).

And the carrier has maintained its full-year guidance for an operating profit of between $2.1bn and $4.3bn, as it said it expected trading for the remainder of the year to be “challenging”.

Hapag-Lloyd liftings fell a modest 2%, to 3,024,000 teu, during the quarter, transported at an average rate of $1,533 per teu, versus $2,935 in Q2 22.

Of note was that average rates on the transpacific sank from $4,001 per teu to $1,714 per teu, and from Asia to Europe they fell to $1,321 per teu from an average of $3,242 per teu.

Mr Habben Jansen said: “When we look at the market there is only a slow recovery expected… of course, a lot of new vessels are coming, which partly will be absorbed by increased scrapping and slow-steaming, but certainly not all of that, and I think it is fair to say that supply growth will likely outpace demand growth in the remainder of this year, but also in 2024, which means we actively need to manage costs again, as we were used to in the past.”

Nevertheless, he still thinks there will be some peak season demand, citing some recent full ships from Asia, but adding “the question is how long will it last?”.

Hapag-Lloyd is ranked as the fifth-largest container line, in terms of capacity, with a fleet of 258 vessels for a total capacity of 1.9m teu, and has an orderbook for 290,000 teu. It is ranked just above THE Alliance partner ONE, which has 217 vessels for a capacity of 1.7m teu, however the Japanese carrier has a bigger orderbook, of 470,000 teu.

Hapag-Lloyd recently completed the acquisition of Chilean company SAAM Ports & Logistics, which operates 10 container terminals in Latin America and the US, with an annual throughput of 3m teu. This follows previous investments in the container terminal sector.

“We will continue to build our terminal business,” said Mr Habben Jansen, suggesting there were more acquisitions in the sector on Hapag-Lloyd’s radar.

Source: theloadstar by Mike Wackett


Related News

CHINA PORT CONGESTION FALLS SHARPLY, TRANS-PACIFIC SHIPPING RATES RETREAT
CHINA PORT CONGESTION FALLS SHARPLY, TRANS-PACIFIC SHIPPING RATES RETREAT

2324 Views

Ships at anchor off Shanghai/Ningbo down nearly 50% over the past 18 days

IT IS OFFICIAL – MSC IS THE WORLD’S LARGEST CONTAINER SHIPPING LINE IN TERMS OF CONTAINER CAPACITY
IT IS OFFICIAL – MSC IS THE WORLD’S LARGEST CONTAINER SHIPPING LINE IN TERMS OF CONTAINER CAPACITY

1468 Views

Mediterranean Shipping Company (MSC) a privately-owned organisation driven by the Aponte family was founded in 1970 and has evolved from a one-vessel operation into a globally-respected business. After 51 years in the business of container shipping, MSC has become the world’s largest container shipping line as of the 5th of January 2022.

YANG MING EXECUTIVES HOPING FOR RETAIL RESTOCKING TO BOOST LONG-HAUL DEMAND
YANG MING EXECUTIVES HOPING FOR RETAIL RESTOCKING TO BOOST LONG-HAUL DEMAND

1028 Views

Senior executives at Yang Ming Marine Transport held a media briefing to say that while the upcoming Chinese New Year has boosted fleet utilisation to nearly 100%, the outlook for early 2023 remains uncertain and shippers have sought to reduce contracted rates for long-haul lanes.


Comment
  • Your review
main.add_cart_success