Profit more than tenfold: Hapag-Lloyd tills are ringing properly

Profit more than tenfold
Hapag-Lloyd tills are ringing properly

The Hamburg container shipping company Hapag-Lloyd is celebrating a real profit explosion in the first nine months of this year – because transport capacities are scarce, prices are exploding. Despite the positive exceptional situation, the company hopes for normalization.

The Hamburg container shipping company Hapag-Lloyd increased its profit more than tenfold in the first nine months of this year. The bottom line was a consolidated result of 5.56 billion euros in the period from January to September, after 0.54 billion euros a year earlier, according to the published quarterly report. The major fuel for the profit explosion are the enormous increases in prices – in the industry jargon, freight rates – for shipments by sea, which have allowed the profits of all container shipping companies to go through the roof this year.

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The reason is an interplay of several factors: The corona pandemic has so mixed up the timetables of the liner shipping companies that ships and containers are often not where they should be. In addition, the early start to the economy, especially in China and the USA, has increased the demand for sea transport to such an extent that capacities are more than exhausted. Hapag-Lloyd puts the increase in the average freight rate at almost 66 percent, while the transport volume has increased by 3.3 percent compared to the same period in the previous year.

With a fleet of currently 257 ships, Hapag-Lloyd is one of the most important container shipping companies in the world. Sales climbed by 60 percent to 15 billion euros in the first nine months. Because of this development, the Hamburg-based company had already raised its forecasts for the full year 2021 significantly at the end of October. Nevertheless, Hapag-Lloyd hopes that earnings will normalize soon, despite the positive exceptional situation. “Now it is actually too extreme,” said shipping manager Rolf Habben Jansen at the end of September.

No more ship without employment

According to the Hapag-Lloyd interim report, the demand situation in the first nine months can also be seen in the fact that there are practically no ships in the industry that can still be reactivated without employment. While the value of the “laid-up” ships at the end of May 2020 was around 12 percent of the world fleet, it was only 0.7 percent at the end of September.

In addition, according to the report, significantly more new ships have been put into service and significantly fewer old ships have been scrapped. After all, in the months of January to September 2021, orders for the construction of 470 container ships were awarded industry-wide, a very significant increase compared to 35 ships in the same period of the previous year. Hapag-Lloyd itself is waiting for the completion of twelve new container giants of the largest Megamax class, which should go into service from 2023.

The tills of other industry giants are also ringing as loudly as they are at the moment with hamburgers: The industry leader Maersk from Denmark, who recently published its nine-month results, for example made a profit of 11.9 billion US dollars in the period from January to November. That was around seven and a half times as much as a year earlier, with an increase in sales of more than 50 percent to 43.3 billion dollars.

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