Hapag-Lloyd closed its first quarter 2023 with a net revenue of 5.62 billion euros, 29.6% less than the same period last year.
The downturn in their financial performance is mainly attributable to the drop in ocean freight rates, now -27.9% year-on-year. Cargo volumes were also down by 4.9% compared to January-March 2022.
In the transpacific market, freight rates fell by an average of 42.6% year-on-year, to $2,176 per TEU. On services with the Far East, freight rates were down 43%, to $1861 per TEU, while on Latin America routes , rates dropped by 18.6%, to $2,130 per TEU. On intra-Asian routes rates decreased by 51.6%, to $995 per TEU, while on routes to the Middle East freight rates fell by 38.4%.
In statements made after the publication of the company’s first quarter results, the shipping company’s CEO, Rolf Habben Jansen, is said to have expressed considerable concern about the resilience of the shipping company’s accounts.
He said that on some routes spot rates had gone back to pre-Covid levels, but the costs his company was incurring had risen by about 25-30% compared to 2019-2020
In the first quarter of 2023, Hapag-Lloyd’s total operating costs of 3.04 billion euros had increased by 3%.
The carrier’s EBITDA was 2.22 billion euros (-53.1%), its EBIT 1.75 billion (-59.1%) and its net profit 1.89 billion (-54.6%).
According to Lloyd’s List, Jansen is said to have pointed out that the current level of freight rates does not allow shipping companies to adequately cope with rising costs.
As for the future, Jansen hopes that the tariffs will remain well above what happened before the pandemic. He said that ff this did not happen, they would find themselves sending goods below break-even level. As a result they would then have to act in some way to mitigate their costs.
Mr, Jansen expects the economy to recover, thanks in part to retailers gradually reducing their warehouse stocks. The benefits of the possible increase in demand, however, are in danger of going up in smoke due to the excessive number of vessels currently available.
In fact, the ship orderbook is still very substantial. Part of the new supply will be absorbed by the recovery in demand. There will also certainly be a gradual increase in shipbreaking activities, due to the need to meet stringent environmental policies on maritime pollution. However, according to Mr. Jansen, it is very likely that between 2024 and 2025 supply will exceed the growth in demand.
Translation by Giles Foster
