Hapag-Lloyd Lifts 2024 Forecast Despite Red Sea Risks

Hapag-Lloyd’s performance in the first nine months of 2024 has dipped compared to last year, driven by lower freight rates and increased transport costs from rerouting ships around the Cape of Good Hope. However, a surge in demand and a boost in freight rates in Q3 drove a significant uptick in earnings over the previous quarters, the company announced Thursday.

The German shipping giant concluded the first three quarters with a Group EBITDA of USD 3.6 billion, while Group EBIT stood at USD 1.9 billion, and Group profit reached USD 1.8 billion. The results, representing a year-on-year decline, reflects lower freight rates and higher costs from rerouting ships around the Cape of Good Hope.

“The first nine months of 2024 were marked by unexpectedly strong demand. Despite the tense security situation in the Red Sea and the associated rerouting of ships, we were able to further increase our transport volume compared to the previous year and can look back on a good result overall,” said Rolf Habben Jansen, CEO of Hapag-Lloyd AG.

In the Liner Shipping segment, Hapag-Lloyd saw a 5% increase in transport volumes, reaching 9.3 million TEU compared to 8.9 million TEU in the same period last year. However, segment revenues experienced a slight 2% decline to USD 15.0 billion, primarily due to a lower average freight rate of USD 1,467/TEU, down from USD 1,604/TEU in the previous year.

The company’s Terminals & Infrastructure segment, a relatively new addition to its portfolio, recorded significant growth. This segment saw its EBITDA rise to USD 114 million and EBIT to USD 56 million. The impressive performance of this segment underscores Hapag-Lloyd’s strategic diversification efforts.

Looking ahead, Hapag-Lloyd has raised its forecast for the current financial year, reflecting the company’s optimism in light of recent higher-than-expected demand and improved freight rates. Group EBITDA is now expected to range between USD 4.6 to 5.0 billion, with Group EBIT projected to be between USD 2.4 to 2.8 billion. This upward revision reflects the company’s optimism in light of recent higher-than-expected demand and improved freight rates.

Hapag-Lloyd and its peer Maersk plan to open bookings in two weeks for their new Gemini Cooperation, set to launch in February 2025, Hapag-Lloyd’s CEO, Rolf Habben Jansen, said on a call with analysts on Thursday.

“We will take bookings in early December and have 10 weeks to go for start of operations,” he said on a presentation for nine-months earnings. “We are confident that we are off to a good start.”

The alliance will implement a hub-and-spoke strategy across seven trade lanes, aiming for a 90% service reliability rate—a significant improvement over the current industry average of 53%. Due to safety concerns in the Red Sea, the companies have opted to continue to reroute ships via the Cape of Good Hope to avoid the volatile Suez Canal route, a move that increases both transit time and costs but ensures greater safety for vessels and crews.

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