Hapag-Lloyd is monitoring costs as the container market normalises Ship’s crew

Hapag-Lloyd, one of the world’s leading container shipping companies, has released its financial results for the first quarter of 2023, highlighting the impact of weak global demand on its performance.

The company reported EBITDA of $2.4 billion (EUR 2.2 billion), EBIT declined to $1.9 billion (EUR 1.7 billion) and net income of $2 billion ( 1.9 billion euros), all below the values ​​of the same quarter of the previous year.

The decline in shipment volume was a major factor contributing to the company’s revenue decline. At 2,842 TTEU, the transport volume was 4.9 percent below the same quarter of the previous year. Weaker global aggregate demand and local destocking were the main reasons for the decline.

Meanwhile, the average freight rate fell to $1,999 per TEU, compared to $2,774 per TEU in the first quarter of 2022.

Hapag-Lloyd CEO Rolf Habben Jansen acknowledged the challenging market conditions and stressed the company’s focus on cost management amid declining results. “We got off to a robust start in the current financial year. The market environment has returned to normal, with corresponding declines in demand and freight rates. “This will no doubt affect our earnings as the year progresses, so we will be keeping a very close eye on our costs,” he said.

In addition to cost management, Hapag-Lloyd is actively developing its long-term strategy “Strategy 2030” with a focus on quality and sustainability.

With a view to 2023 as a whole, Hapag-Lloyd is sticking to its previously published forecast. Company expects EBITDA to be in the range of $4.3 billion to $6.5 billion (EUR 4 billion to EUR 6 billion) and EBIT to be in the range of $2.1 billion to $4.3 billion (EUR 2 billion to EUR 4 billion) . However, the prognosis is not without risks. Ongoing geopolitical uncertainties, including the war in Ukraine, and ongoing inflationary pressures are potential factors that could negatively impact the company’s financial performance.

The challenging market conditions impacted the container shipping industry as a whole. Global container transport volumes in January and February 2023 were 7.5% lower than in the same period last year. The Shanghai Containerized Freight Index (SCFI), which tracks spot freight rates on major trade routes, saw a gradual decline in the first quarter of 2023.

The percentage of decommissioned vessels in the industry has increased significantly, reaching 0.6 million TEU or 2.3% of the world fleet at the end of March 2023, reflecting weaker demand and the overall challenges faced by container shipping companies.

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