Hapag-Lloyd, one of the largest shipping lines, revealed the extent of challenges in the ocean container market through its annual report for 2023 and financial results for Q4. Released on Thursday, the report highlighted a significant drop in Liner Shipping revenues by 48.5% to 17.7 billion euros ($19.2 billion) from 2022 to 2023. Additionally, earnings before interest, taxes, depreciation, and amortization (EBITDA) fell by 77.1% to 4.4 billion euros over the same period.
Despite a slight increase in volumes from 11.8 million to 11.9 million twenty-foot equivalent units (TEUs), Hapag-Lloyd experienced a collapse in average freight rates, plummeting from $2,863 per TEU to $1,500 per TEU. Consequently, the company’s profitability suffered, with profits reaching 2.9 billion euros in 2023, down 82.6% from 17 billion euros in 2022 when considering both Liner Shipping and Terminal and Infrastructure results.
Nevertheless, it’s noteworthy that Hapag-Lloyd’s 2023 results marked the third-best profitability in the group’s history. The decline in freight rates and revenues was attributed to the bursting of the pandemic-era transportation demand bubble rather than fundamental weaknesses in Hapag-Lloyd’s operations.
CEO Rolf Habben Jansen expressed optimism regarding future prospects during a discussion on CNBC. He noted worldwide depletion of inventories and a promising uptick in volumes post-Lunar New Year. Habben Jansen anticipated an early onset of the peak season, stating, “I would also expect that peak season is going to start a little bit early. I also expect that there’ll be quite a number of people who tried to bring in their goods somewhere between June and August.”
Traditionally, ocean container peak season spans from September to October, culminating with Golden Week each year. This timeline allows importers to manage their supply chain effectively for the retail peak season in November and December. However, 2023 witnessed a strong start in containerized imports, partly influenced by the Lunar New Year occurring on Jan. 22. The historical imports data indicates a weaker March for 2024 due to the holiday starting on Feb. 10 this year.
The challenges faced by Hapag-Lloyd reflect broader dynamics within the ocean container market, signaling a need for adaptability and strategic planning amidst evolving industry conditions.
