Shanghai Express port of hamburg hapag lloyd

Hapag-Lloyd Chief Stays Positive in Wake of $100 Million Loss

The Loadstar
Total Views: 6
March 27, 2017

File photo. Credit: Hapag Lloyd

By Mike Wackett

(The Loadstar) – Hapag-Lloyd recorded a profit of $46m in the final three months of 2016– a recovery too little too late to prevent the carrier suffering a full-year net loss of $103m.

At an analyst and investor conference call on Friday, chief executive Rolf Habben Jansen said 2017 had “got off to a good start”, but a sustained recovery was “not going to be a quick fix”.

He said: “We expect some market improvement in 2017, but our success will largely depend on our ability to achieve more sustainable freight rates.”

There was a more optimistic outlook due to “supply and demand starting to come closer together”, he suggested.

Hapag-Lloyd’s average rate per teu carried plunged by 15.4% last year, compared with 2015, to $1,036, dragging down revenue 13% to $7.7bn and negating a 2.7% increase in volumes, which reached 7.7m teu.

The carrier’s Asia-Europe average rates slumped 19% year-on-year to $765 per teu, while transpacific services came under even greater pressure, diving by 24% to an average of $1,222 per 40ft.

Interestingly, in abbreviated nine-month figures released by Hapag-Lloyd for its merger partner, UASC’s average rate per teu was only $610 per teu for the 2.3m teu it carried, resulting in revenue of $1.8bn and an ebit loss for the period of $115m.

Hapag-Lloyd’s liftings jumped 7% year on year in the final quarter to 1.9m teu, including an impressive 16% increase on the transpacific – seen as a refuge in the ‘flight to safety’ by shippers following the collapse of Hanjin Shipping.

Mr Habben Jansen said the full benefit of contract and spot rate hikes would take time to work through into voyage results.

“Due to long-term contracts, we have not yet been able to fully capture the recent positive development in the spot market,” he said.

Notwithstanding outstanding banking issues related to the merger with UASC, Mr Habben Jansen said the deal was “on track to close some time in the next couple of weeks”.

And in a results press conference, in Hamburg this morning, Mr Habben Jansen said that in regard to the merger with UASC it was ” a very complex transaction”, and suggested that there may had been “an underestimation” of the complexity of the deal but said “we are working at full steam and it is simply a matter of time and a number of documents” needed.

Hapag-Lloyd calculates that the merger will see synergy savings of some $435m a year by 2019, but “one-off expenses of around $150m” are expected from the integration process.

Once the merger is complete Hapag-Lloyd will consolidate its fifth-ranked position with a total capacity of 1.5m teu and a market share of 7.3%. This will put the enlarged carrier just behind the merged Cosco, around 1.7m teu, and comfortably ahead of Evergreen’s total capacity of just under 1m teu.

Mr Habben Jansen said he believed carrier consolidation would continue and that in time “only five to seven truly global carriers will exist”.

He added there would be “no investments from us in new vessels in the next couple of years”, and confirmed there were plans to reduce the number of ships, post-merger, but this would come from charter redeliveries rather than vessel sales.

He expected some savings at terminals from extra buying power after the merger, as well as from being part of THE Alliance, but it was too early to be more precise given that negotiations with terminal operators were “ongoing”.

On the subject of the bankruptcy contingency plan incorporated into the THE Alliance agreement, Mr Habben Jansen said the cost for the five members of the fund would be “low double-digit millions” (of dollars).

He said that the contingency plan had been agreed “in response to customer feedback” and believed it would prove “positive” in terms of marketing.

Mr Habben Jansen summed up: “We think we are in a pretty good spot”. But he cautioned that “recovery is still quite bumpy” and “continuous market discipline will be needed”.

The Loadstar is fast becoming known at the highest levels of logistics and supply chain management as one of the best sources of influential analysis and commentary.

Check them out at, or find them on Facebook and Twitter.

Back to Main