Ocean Alliance revamps network, adding a seventh Asia-North Europe loop
The Ocean Alliance, the largest of the three east-west trade vessel sharing agreements, has published ...
Hapag-Lloyd spooked investors this morning, issuing a profit warning based on its accounts for the first five months of trading, causing its shares at one stage to drop 21%.
The German carrier has downgraded its ebit guidance from “clearly increasing” the €410m recorded in 2017, to “between €200m and €450m”.
Given that Hapag-Lloyd only managed a net profit of €32m last year, it appears likely the board are now resigned to the carrier posting a loss for 2018.
It said the reason was “an unexpectedly significant and continuing increase in operational costs since the beginning of the year, especially with regard to fuel-related costs and charter rates”.
It added: “These developments cannot be fully offset by cost-saving measures that have already been initiated.”
Reports in the German media suggest that Hapag-Lloyd is to shed around 160 jobs at its Hamburg headquarters as part of its cost reduction strategy.
Hapag-Lloyd recorded a loss of $42m in the first quarter this year, but chief executive Rolf Habben Jansen remained bullish in his outlook of second-half recovery based on strong forward demand and predictions of “a decent peak season”.
However, in past weeks short-term freight rates on the major trades have slipped, despite carrier attempts to impose GRI and FAK increases and PSS (peak season surcharges) ahead of the traditionally most lucrative period for container lines.
In fact, container spot freight indices have failed to react to any of these attempts, with both Drewry’s World Container Index and the Freightos/Baltic Exchange Freightos Global Index recording rates of around $800 a teu from Asia to North Europe and $1,200 a feu from Asia to the US west coast.
Indeed, in its statement today, Hapag-Lloyd referred to “continuing uncertainty regarding the development of freight rates in the upcoming peak season”.
The Loadstar understands that all the carriers are concerned about the possibility of a disappointing peak season this year, which could also be behind Hapag-Lloyd’s decision to announce a profit warning.
A further indication came this week from OOCL, announcing it will cancel an Asia-West Mediterranean Ocean Alliance loop in early July, when volumes are normally at their height “in response to the expected low demand”.
But, despite the problems for carriers in the short-term market, Patrik Berglund, chief executive of Oslo-headquartered freight rate benchmarking platform Xeneta, said the long-term rates agreed by shippers and 3PLs, as shown in its crowd-sourced database, are tracking higher, which will give the container lines some reason for optimism.
“Nobody wants to see another Hanjin,” said Mr Berglund, “we must all hope that carriers are able to come through this current sticky patch.”