Hapag-Lloyd boss considers high freight rates “actually too extreme” | 09/22/21

Hapag-Lloyd boss considers high freight rates “actually too extreme” | 09/22/21
Hapag-Lloyd boss considers high freight rates “actually too extreme” | 09/22/21

“Now it’s actually too extreme,” he told the German press agency. It is true that freight rates were much too low during the shipping crisis of recent years. For example, at times only 50 to 200 dollars were paid for a container from Asia to South America. The fact that thousands of dollars are now being called for the transport of a container is too much. “Such strong fluctuations are bad for business. Nobody really needs them.”

After a ten-year crisis, Hapag-Lloyd – the fifth largest container shipping company in the world – recently posted a half-year result of 2.7 billion euros in the group, and the Danish world market leader Maersk even reported a tenfold increase in half-year profit to a good 5.5 billion euros. The reason for the massive leaps in profits is a significantly increased demand during the corona pandemic with simultaneously scarce transport capacities, which are also lower than usual due to pandemic-related restrictions. If you usually need six ships for a liner service from the Far East to the USA, there are now eight to nine, said Habben Jansen: “The rates go up, that’s the market.”

He is particularly concerned about the delays in loading and unloading the container ships at the terminals. “If you first have to wait eight days in Korea, then a week in China and then a few more days in Singapore – and then you can’t go any further before Rotterdam, yes, of course you never get the ship back in time,” said the head of the shipping company. It is inevitable that you have to skip one or the other port or skip an entire trip.

The Association of German Shipowners (VDR) knows the problem. The liner shipping companies are doing everything in their power, said the managing director of the VDR, Ralf Nagel. “But when ports are clogged and customers’ containers are on the move for much longer, they are ultimately powerless.” The freight rates on the spot market actually appeared to be very high, but the transport of a pair of trainers from the Far East did not cost more than 1.50 euros. “The spot rates only represent around 30 percent of the market, the rest are long-term contracts.”

Habben Jansen hopes that the situation will calm down again after the Chinese New Year celebrations on February 1, 2022. At the same time, the shipping company is preparing for the time after the boom. In the first place come the digitalization. “There is still a lot of manual work in this industry, that doesn’t make it any easier.” The second topic is the renewal of the fleet. The shipping company has ordered twelve new large container ships, each with a capacity of more than 23,500 standard containers. They are to be delivered from the second half of 2023. In total, the traditional Hamburg shipping company with around 13,400 employees has around 250 container ships with a transport volume of 11.8 million standard containers.

“The issues of sustainability and climate protection are of course immensely important for us too,” said Habben Jansen. As before, however, it is still unclear which fuels and drives are ultimately best suited to replace the previously used heavy fuel oil. “For example, we rely on dual-fuel drives for LNG (liquefied natural gas) and marine diesel, as do the French shipping company CMA CGM and the Italian-Swiss shipping company MSC.” Maersk, on the other hand, is expecting a lot from methanol, said Habben Jansen. “We have to wait and see how the technology develops and then try to renew the fleet step by step.” He assumes that most of the renovations will take place between 2025 and 2030.

Habben Jansen does not see the danger of a hostile takeover of the shipping company despite the large amount of money available in the industry. The main owners of Hapag-Lloyd – CSAV, Kühne Maritime and the City of Hamburg – formed a stable alliance that will hopefully be extended beyond 2024. Hapag-Lloyd itself has no takeover plans. On the one hand, there are hardly any shipping companies to buy, on the other hand, the synergy effects are no longer particularly high above a certain level. “In addition, everything is very expensive at the moment,” said Habben Jansen.



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