Hapag-Lloyd2

Hapag-Lloyd recorded a net profit of $28m in the fourth quarter of 2017, due in part to a windfall of $21m of netted pool revenue from its vessel sharing agreement within THE Alliance.

This surplus, together with a profit of $56m in Q3, overcame the loss the carrier suffered in the first six months of the year to give a positive full-year result of $35m, compared with a loss of $103m in 2016.

However, Hapag-Lloyd saw its operating result dive by 27% between Q3 and Q4 to $137m as volumes weakened seasonally and freight rates came under pressure.

With the UASC business only included within the accounts since May, it is difficult to compare full-year turnover and volumes for the merged entity, which were up by 32% to $11.3bn and up by 29% to 9.8m teu respectively.

Chief executive, Rolf Habben-Jansen, who it was announced has also taken responsibility for global sales from chief commercial officer Thorsten Haeser, who has resigned, said: “Given the market environment we are satisfied with the financial results.”

He was generally positive about the outlook in an earnings call on the results and added: “We still think that demand growth is quite healthy.” Prudent supply growth and a shrinking idle tonnage fleet were other reasons to be “cautiously optimistic”.

Nevertheless, with spot freight rates on east-west trades continuing to fall, Mr Habben Jansen would not be drawn on the quantum of contract rate increases obtained on Asia-Europe, or whether the increases fully compensated for a 40% or so increase in fuel costs – but he did say that “on average” they were “somewhat better”.

It said it was too early to comment on the Asia to US contract negotiations, but added “I still hope we will secure slightly higher rates on the transpacific”.

As far as the general rate situation was concerned, he said it was the most difficult time of the year to make predictions, and “we will not know for sure until peak season”.

In general, UASC rates were lower than Hapag-Lloyd’s at the time of the merger and Mr Habben Jansen has said previously that the priority was to “hang onto volume” after the deal.

Overall, he expected freight rates to be “roughly flat” this year, though he predicted that bunker prices would rise. He reiterated that Hapag-Lloyd would be able to recover the extra cost of fuel from shippers, although it usually took up to two quarters to pass this on in the form of surcharges.

With the integration of UASC into Hapag-Lloyd now complete, Mr Habben Jansen said it would be possible to deliver “85-90%” of promised $435m annual synergy savings this year. Since the merger, around 70 Hapag-Lloyd and UASC offices have been shut.

Questioned on the impact of the game-changing low-sulphur fuel regulations coming into force in January 2020, Mr Habben Jansen said Hapag-Lloyd had still to decide its strategy, but said “we are not leaning towards scrubbers”.

On the subject of newbuilds, he said: “Do not expect any orders from us anytime soon,” a strategy that would be maintained at least until “after we have dealt with the IMO regulations”.

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