Hapag-Lloyd has revealed how it is reacting to operational challenges caused by the pandemic, and discusses its acquisition of NileDutch
Hapag-Lloyd guided delegates at its annual press conference webcast through its audited business results for the 2020 financial year. In the reporting year, Hapag-Lloyd’s earnings before interest, taxes, depreciation and amortisation (EBITDA) increased to more than US$3Bn. The Group’s net result improved to around US$1.1Bn.
The main drivers were cost savings of more than US$500M, slightly improved freight rates and lower bunker prices.
Hapag-Lloyd chief executive Rolf Habben Jansen said at the webcast, “2020 saw a lot of fluctuations. We had a good start and then the pandemic hit us in Q1/Q2 [last year] with a massive decline in volumes. Things started recovering in Q3 and Q4… as everyone tried to catch up with demand.”
“Because of that, our performance in the second half of last year was much better than originally anticipated.”
He said the pandemic has led to “huge operational challenges in our industry and we have not seen that for many years”.
Strategically, Hapag-Lloyd remains on track, with actions including its customer dashboard. It has invested in new ships that will deploy dual fuel which, Mr Habben Jansen says, “will help bring our sustainability target closer.”
Hapag-Lloyd has announced its acquisition of NileDutch after signing a sale and purchase agreement. Mr Habben Jansen said, “It is a good addition to Hapag-Lloyd as they are very complementary to us and they will strengthen our position.” NileDutch moves 200,000 TEU every year.
Mr Habben Jansen expanded on why the carrier decided on the agreement. “If you look at global trade and look into the future, one of the markets that will grow above average in the next five to 10 years is the African market. If you want to grow with the global market, you need to make sure you are present in markets that are growing above average, certainly if you have a reasonably good starting position.”
Hapag-Lloyd intends to integrate the NileDutch network with the Hapag-Lloyd network.
As the industry recovered from the impact of the pandemic in the second quarter of last year, he said demand was a lot stronger than it was before.
Therefore, “bottlenecks in terminals are also understandable, as they also had to deal with a dramatic surge on volumes.”
On the port situation in the US, he said, “We see a backlog there that will take some time to resolve. We see a slight improvement in the number of ships waiting outside, but dwell times are long and it takes time to get boxes back out, so I don’t think the congestion will go away soon. It will take a couple of months before things settle down. I hope to get back to normal by the end of Q2 or early Q3, as then the peak season will come.”
Container shortages were also a challenge. It took Hapag-Lloyd about 20% longer to get boxes back over last couple of months compared to normal – which means 20% more boxes to move the same amount of cargo.
Furthermore, bunker prices have crept up – Mr Habben Jansen said that while it was US$100/150 a tonne a year ago it is now US$500.
Highlighting what Hapag-Lloyd has done to react to these challenges, he said, “We have done our utmost to provide additional flexibility if and where possible, and a number of initiatives to improve customer services. Bookings have gone up so dramatically at times it is not easy to deal with, and that is why we have a taskforce in place.”
Hapag-Lloyd has also invested significantly in making boxes more available and has deployed extra loaders. “And in terms of our network, we have moved ships around to accommodate demand in those places where it is the strongest and try to avoid congested ports, but that is not easy.”
Singling out the dual-fuel large ships the company is planning to build, Mr Habben Jansen said, “We are under-represented in that large segment... we are looking forward to getting ships from 2023.”
Looking at the container shipping market outlook, he said, “The market fundamentals remain fairly solid, especially for the upcoming couple of years. There is a stable outlook for Q1 and I foresee that for the rest of the year.”
For 2021, Hapag-Lloyd will continue to work on delivering its strategy, focusing on customer needs, and on a seamless integration of NileDutch.
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