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Hapag-Lloyd CEO Says Container Crunch Could Resolve In Q2/Q3

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February 19, 2021

By Vera Eckert (Reuters) – Container shipping firm Hapag-Lloyd said surging demand for bulky goods like exercise equipment from locked-down consumers may flatten out in the second or early third quarter, helping to ease disrupted shipping logistics.

“Things will normalise somewhere hopefully in the course of the second quarter or towards the beginning of the third quarter,” Chief Executive Rolf Habben Jansen said in an embargoed briefing session with journalists held on Thursday.

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Around the world, port waiting times have lengthened due to labor shortages and traffic snarl-ups during the coronavirus pandemic, leading to delays in returning empty containers.

Container shipping firms re-routed cargoes and reduced stops as availability of boxes and staff tightened, which drove up freight rates and boosted profits in the sector, resulting in a sharp first-quarter earnings hike at Hapag-Lloyd.

The company has just guided for 2021 profits to “clearly surpass” the previous year, when earnings before interest, tax, depreciation and amortisation (EBITDA) are seen at 2.7 billion euros ($3.3 billion), more than a third above 2019 levels.

Habben Jansen said the company would use its cash windfall to repay debts and for modest investments, but overall, it would continue a “conservative” financial course, having launched cost-saving programmes in recent years.

Rising operating costs for shipping fuel and high ship charter rates would continue to pose challenges, it said.

Hapag-Lloyd said it was aware that customers were worried by disruptions and high spot freight rates, and that it would try to ease these concerns with more transparency about the availability of lower contract rates.

“It is in our interest that everybody continues to move as many goods as possible by container at a competitive cost,” he said.

The Chinese New Year festivities between Feb. 11 and Feb. 26 should help ease the “crazy” market conditions, he said.

($1 = 0.8247 euros)

(Reporting by Vera Eckert; Editing by Jan Harvey, Rueters)

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