Hapag-Lloyd calls for sustainable rates

Hapag-Lloyd enjoyed a near-doubling of ebit to €811m ($875m) in 2019, according to preliminary figures, but saw a softer fourth quarter.

Ebitda for the year was up 74% to €1.9bn for the shipping line, which said the biggest drivers of the change were improved freight rates and “rigorous cost and revenue management”.

Revenues were up 9% to €12.6bn, with the average freight rate over the year up 2.6%.

The company said it had a “stronger focus on more profitable tradelanes”.

Costs also fell: there were lower expenses for the handling and inland transport of containers, as well as a slightly lower average bunker consumption price of $416 per tonne, down from $421 a year earlier.

But while the year’s results showed improvement, they were driven by a strong first nine months, in which ebit rose 115% to €643m. Net results were up by more than 2,000%, from €13m to €297m. The average freight rate was up 4.2% to $1,075/teu.

However, the fourth quarter was softer, with a lower freight rate, at $1062/teu, while revenues fell slightly year on year.

This all meant Hapag-Lloyd marginally missed its volume targets for the year. It had said “Hapag-Lloyd intends to increase the transport volume organically in line with market growth”, which, according to IHS Markit in September 2019, was expected to be 1.9% growth in teu. Hapag-Lloyd saw growth of just 1.3% over the year.

The line’s 2019 strategy included achieving further cost savings, which are expected to reach $350m to $400m a year by 2021, improving revenue quality and developing its partnerships via THE Alliance.

By 2023 it has more significant aims, including a desire to increase its door-to-door business by more than 40%,  to have a global market share of more than 10% in both reefers and general cargo and to be seeing 15% of its bookings, by volume, to be made online.

Hapag-Lloyd will publish its 2019 annual report and an outlook for the current financial year on 20 March. You can see the preliminary figures here.

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