Hapag-Lloyd books first half loss of almost €101M

News 14 Aug 2018 by WCN Editorial

The line points to significant increases in bunker prices and the fall in average freight rates

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Hapag-Lloyd has reported EBITDA of €425.2M in H1 2018, €61.4m higher than for H1 2017. EBIT came to € 88.7M (€90.7M in H1 2017) and net result amounted to – €100.9M (- €42.7M.)

These developments, says the line, are mainly driven by intense competition as well as higher operational costs, partly compensated by synergies coming from the business combination with UASC.

“The first half of 2018 was shaped by clearly increasing fuel costs, higher charter rates and a slower than expected recovery of freight rates,” said Rolf Habben Jansen, CEO

Hapag-Lloyd is speeding up its digitalisation initiatives in a bid to reduce costs

“In response, we have implemented additional measures to recover these costs. We are critically reviewing the economic viability of our ship systems and are further optimising our terminal contracts, to gain additional relief on the cost side.”

Revenues climbed to €5.4B in H1 2018 (€4.5B in H1 2017) and transported volume increased by 39% to 5.848M TEU. The average freight rate decreased to US$1,020 per TEU (US$1,065 per TEU in H1 2017).

For H1 2017 comparison purposes, it should be borned in mind that UASC is included only from 24^th May onwards. On a pro forma basis and when compared to the combined business of Hapag-Lloyd and UASC in H1 2017, volumes are up 3.9% and rates have increased 3.0%, said Hapag-Lloyd.

Bunker prices increased significantly to US$385 per tonne HI 2018, compared to US$312 per tonne in H1 2017) and were the main contributor to higher operational costs.

“For the remainder of this year, we see a slow but steadily improving market environment, but we recognise that there are still significant geopolitical uncertainties that could influence the market,” said Habben Jansen. “This only reinforces the necessity to be able to react quickly when needed and we will accelerate some of our digitalisation initiatives and finalise our new strategy by the end of this year.”

In its latest newsletter, Seaintel states that container freight rates are running 14% below the historic correlation with bunker prices. Most leading carriers, including Hapag-Lloyd, recently extended their emergency bunker surcharges and are pressurising terminal operators to lower handling charges.