DUE to dramatic change in the shipping market conditions, German container shipper Hapag-Lloyd has announced a net profit of EUR3.2 billion (US$3.43 billion) for the first nine months of 2023, down by 77 per cent from a year earlier, and cut its forecasts for full-year earnings, according to media reports.
Net profit was down from EUR13.8 billion in 2022 when the shipping industry, a proxy for global trade, boomed amid post-pandemic recovery and because logistics disruptions drove up prices for consumers.
This year, the global economic slowdown and the clearing of port log jams sent freight rates down sharply, which has also harmed Hapag-Lloyd competitor Maersk,
Freight rates were off 45 per cent in the nine months at $1,604 per TEU, taking revenue down 46 per cent to EUR14.1 billion.
"At the moment, everything is under pressure. Freight rates in some segments are at a level where you cannot operate ships profitably," chief executive Rolf Habben Jansen said in an interview with Reuters.
Mr Habben Jansen said the company expects no short-term recovery of the rates and has responded by cutting several services on key routes.
But the cancellations so far do not exceed 20 per cent of previous voyages schedules.
"In response, we are working hard to reduce our expenses even more, such as by achieving savings on the procurement side and making adjustments to our service network. Nevertheless, if spot rates do not recover, we could face some challenging quarters in this subdued market environment," Mr Habben Jansen added.
This month, Hapag-Lloyd announced that its ocean tariff rates for Freight All Kinds (FAK) between Far East and North Europe as well as the Mediterranean will increase in both directions.
Transport volumes for the first nine months, however, remained almost at par with those in the prior year at 8.9 million TEU. Hapag-Lloyd moved over 3.1 million TEU last quarter, up nearly 5 per cent year on year.
Relief also came from lower shipping fuel prices, which dropped by 19 per cent to an average $611 per tonne in the nine months.
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