Hapag-Lloyd CEO Talks About Shipping Industry Outlook For 2024

Rolf Habben Jansen, the CEO of Hapag-Lloyd, the fifth-largest ocean carrier globally, shared an optimistic outlook on trade for the remainder of 2024 with CNBC.

Based on discussions with clients and fellow logistics firms, the shipping CEO is more positive about demand in the latter half of the year compared to previous forecasts.

“We also see that inventories are depleted in many cases, and so far we’ve seen a good recovery after Chinese New Year,” Jansen remarked. “So we’ve been fairly happy with that.”

Despite reporting a significant decline in net profit for 2023 and reducing its dividend, leading to a decline in stock value, Hapag-Lloyd managed to achieve the third-best group profit in its history. However, it was notably lower than the 2022 figures, which were boosted by container congestion and high freight rates.

“The last quarter of 2023 was difficult because rates were at unsustainable levels,” Jansen explained. “We saw them coming up a bit towards the end of the quarter, and then, of course, the Red Sea crisis … which again changed the market.”

While the Red Sea incidents have caused a spike in shipping container rates, Hapag-Lloyd anticipates a decline in earnings this year due to increased costs related to trade diversions from the Red Sea. The disruptions have led to higher container prices, with rates from Asia to various U.S. ports experiencing significant year-to-date increases.

Jansen expressed concern about ongoing attacks by the Houthis on commercial shipping in the Red Sea, highlighting the challenging outlook for the region.

The longer route around the Horn of Africa has led to increased fuel consumption and emissions, presenting additional challenges for Hapag-Lloyd, which aims to achieve net-zero carbon emissions by 2045.

Despite these challenges, Hapag-Lloyd has increased vessel capacity by approximately 5% to offset delays and container usage. Additionally, the company recently announced the Gemini alliance with Maersk, aiming to enhance schedule reliability to over 90%.

This alliance will see both companies jointly allocating around 290 ships, utilizing a spoke and hub system for improved efficiency and resilience.

Looking ahead, Hansen anticipates an early start to the peak shipping season, with U.S. shippers, particularly retailers, preparing for potential strikes at East Coast and Gulf ports.

This proactive approach reflects industry forecasts and discussions at major maritime conferences, signaling a proactive stance in managing potential disruptions.

Josh Alba
Josh Alba
Josh Alba stands at the forefront of contemporary business journalism, his words weaving narratives that illuminate the intricate workings of the corporate world. With a keen eye for detail and a penchant for uncovering the underlying stories behind financial trends, Josh has established himself as a trusted authority in business writing. Drawing from his wealth of experience and relentless pursuit of truth, Josh delivers insights that resonate with readers across industries.
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