August 10 - Subdued economic growth in many parts of the world, persistently tough competition in the liner shipping industry and further declines in freight rates have marked the first half of the 2016 business year for German shipping company Hapag-Lloy
While transport volumes remained stable in the first six months of 2016 at 3.7 million teu (a 0.4 percent decrease compared with the previous year), Hapag-Lloyd explained that the average freight rate fell by USD254 per teu year-on-year, representing almost a 20 percent decrease.
Hapag-Lloyd posted revenues of EUR3.8 billion (USD4.2 billion) in the reporting period, compared with EUR4.7 billion (USD5.2 billion) in 2015. The company managed to reduce its transport expenses by approximately EUR600 million (USD670 million) year-on-year, due to lower bunker prices and consumption.
The shipping line recorded an EBITDA of EUR196.7 million (USD219 million) in the first half of the year, compared with EUR493.3 million (USD551 million) in the same period of 2015.
"The first-half result is disappointing," said Rolf Habben Jansen, ceo of Hapag-Lloyd. "Our cost saving measures and efficiency programs are on track and the synergies from the merger with CSAV are being realised on schedule. But this isn't enough to completely compensate for the significant drop in the average freight rate.
"Even though freight rates have finally gone back up towards the peak season in various trades this rebound is coming later than anticipated and more is needed going forward."
Habben Jansen added that Hapag-Lloyd's focus in the second half of 2016 would be to improve its cost base and do whatever it can to get freight rates back to a more sustainable level.
"In this difficult competitive environment, it is very important to complete the transaction with UASC as quickly as possible and to start the integration of UASC immediately after the completion of all pre-closing conditions."