Hapag-Lloyd to Increasingly Focus on Growth, Service Quality – Update

By Dominic Chopping

Hapag-Lloyd said it will increasingly focus on growth and service quality for the remainder of the year after recording strong demand and increased freight rates in the first half.

The German shipping company last month raised guidance after demand for container transport continued to rise, with strong earnings momentum.

Hostilities in the Middle East have sent container freight rates sharply higher, as attacks on merchant vessels in the Red Sea forced shippers to divert their vessels by thousands of miles to avoid the area, constraining capacity at the same time while demand has remained high.

The longer sailing times as well as a sharp increase in the number of vessels in the water to satisfy demand are having knock-on effects across global shipping networks, causing congestion on shipping routes and at transshipment hubs, and throwing ships off schedule.

Although the timing of any resolution to the hostilities is unclear, AP Moeller-Maersk recently said that it didn’t expect any resolution to the Red Sea supply-chain disruption until at least the end of this year.

“We have added several new ships and containers to our fleet,” Hapag-Lloyd Chief Executive Rolf Habben Jansen said Wednesday. “This has helped us to meet the additional capacity requirements resulting from the security situation in the Red Sea and the rerouting of ships around the Cape of Good Hope, thereby keeping supply chains intact.”

Hapag-Lloyd said the average freight rate fell by about 7.2% in the second quarter, while overall transport volumes in its main shipping unit increased by 3.2%.

The lower average freight rate was mainly the result of fewer disruptions to global supply chains compared to the previous year and the increase in capacity, the company said. There were higher volumes in the Transpacific, Far East and Intra-Asia trades while volumes in the Middle East trade fell, mainly due to the conflict in the Red Sea and associated additional transit times, it said.

The company reported a net profit of 429.7 million euros from 1 billion euros last year, while revenue rose 2.9% to 4.54 billion euros. A FactSet forecast had net profit at 605 million euros on revenue of 4.55 billion euros.

Hapag-Lloyd reported preliminary earnings before interest, tax and amortization last month of around 900 million euros and earnings before tax of around 400 million euros. On Wednesday it said Ebitda came in at 954 million euros, while EBIT was 450 million euros.

The company maintained its recently upgraded full-year guidance, with Ebitda expected at 3.2 billion to 4.2 billion euros and EBIT at 1.2 billion to 2.2 billion euros.

Write to Dominic Chopping at [email protected]

(END) Dow Jones Newswires

August 14, 2024 03:31 ET (07:31 GMT)