Low freight rates for container shipping are unsustainable, says Hapag Lloyd CEO Ship’s crew

Reuters

FRANKFURT, June 6 (Reuters) – Global container shipping freight rates have reached unsustainable levels and need to recover, the chief executive of Germany’s Hapag-Lloyd, the world’s fifth-largest operator by volume, said on Tuesday.

“There are spot rates that are well below the costs,” said CEO Rolf Habben Jansen in a phone call to journalists.

“In the long run, that doesn’t usually hold true. Whenever things go negative, people take the necessary steps to pay interest slightly above cost.”

The Shanghai container freight index SCF-IDX-SSE bottomed early in the second quarter after falling below $1,000 per 20-foot equivalent unit (TEU), but is little bouncing.

Meanwhile, transport costs have risen significantly, Habben Jansen said, citing a mix of inflation and rising fuel and labor costs, among other factors.

The company’s transportation costs rose 3% year over year to $1,324/TEU in the first quarter of 2023, a slide showed.

Habben Jansen said he expects them to settle at $1,250-1,750/TEU in due course, but that would still be 25% above pre-pandemic levels.

In May, the company confirmed its forecast for the full year 2023 with earnings before interest and taxes (EBIT) in the region of 2 to 4 billion euros.

(Reporting by Vera Eckert, Editing by Rachel More and Miranda Murray)

(c) Copyright Thomson Reuters 2023.

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