News / Hapag-Lloyd CEO bullish on prospects for a peak season

Hapag-Lloyd’s CEO believes there is a “better than 50%” chance of a normal peak season this year.

During a virtual live information session this morning, Rolf Habben Jansen said that, although there were pockets of inventories remaining elevated, “by and large they are starting to come down”.

And he added that bookings had been “somewhat stronger in the last few weeks”.

“I believe the likelihood that the peak season is going to be fairly normal is over 50%,” he said, adding that he also expected some rebound in spot rates in the second half.

“I do expect spot rates will bounce somewhat, as they are simply at a too-low level,” said Mr Habben Jansen.

“It’s a function of supply and demand. I would say though that, when you look at the past couple of months, after a very steep decline since late summer last year spot rates have definitely stabilised, and you also see some first signals going up again a bit – not illogical when you look at what has happened to costs.”

Indeed, Hapag-Lloyd’s transport expenses increased by $43 per teu in the first quarter, compared with Q1 22, driven by a 5.4% increase in vessel costs, a 7.5% hike in bunker charges and a huge 14.8% jump in equipment and repositioning costs, attributed to inflation.

Moreover, operating cost are significantly higher than before the pandemic, thus spot rates that are “approaching pre-pandemic levels will simply not be sustainable”, said Mr Habben Jansen.

On the subject of annual contract rates, which due to the volatility carriers have been struggling to agree with shippers this year, he believed there would always be a variety of deals available across the liner networks.

“We still have a fair bit of our business on contracts, and I believe the market will always be a mixture – between annual contracts, sometimes multi-year contracts, and you also have 90-day rates and monthly rates, as well as spot rates. I don’t think that will change fundamentally,” said Mr Habben Jansen.

And he said he did not regard the trend of cargo shift from China to South-east Asia and the Indian subcontinent to be “temporary”.  He explained: “One should expect that, over the upcoming three, five or seven years, that growth in South-east Asia and the subcontinent is going to be higher than in China.”

Regarding Hapag-Lloyd’s participation in THE Alliance east-west vessel-sharing agreement – under contract until 2030 – Mr Habben Jansen said the partners had been working together “quite well”, and “we do not expect any changes”.

He also poured cold water on speculation of a merger between Hapag-Lloyd and Japanese THEA partner ONE, saying “there was really no substance whatsoever” to the rumours.