Despite what it described as the industry’s “irrational behaviour” that was causing freight rates to free-fall, Hapag-Lloyd reported a profit for the second consecutive quarter of the year, primarily due to substantial cost reductions, and announced further rate increases for various trades in November and December.
For the third quarter, the German box liner recorded earnings of EUR16.6 million (US$22.3 million), down from the EUR45.6 million a year earlier, from revenues amounting to EUR1.664 billion.
Revenue for the period was a decline on the prior year’s quarter of EUR1.765 billion, largely due to exchange rate effects.
The group achieved an operating result of EUR66.9 million and EBITDA (earnings before income, taxes, depreciation and amortization) of EUR133.6 million in the third quarter.
While the transport volume increased by 8.6 percent between July and September 2013, from 1.28 million TEUs (20-foot equivalent units) to 1.39 million TEUs year-over-year, average freight rate in the third quarter fell to US$1,476 per TEU from the previous year’s figure of $1,647 per TEU.
“The freight rate developments in the third quarter, the peak season for the liner shipping industry, were very disappointing,” said Michael Behrendt, chairman of the executive board. “But as in the second quarter, we were able to offset the adverse impact that this had on earnings with additional cost reductions. As a result, we can report a group profit for the third quarter, in spite of the difficult market environment.”
Behrendt added: “The irrational behaviour in the industry, which once again caused rates to drop drastically in October, is totally incomprehensible.”
The rate increases announced in the third quarter could not be achieved sufficiently in the market, also making an impact on the average freight rate for the first nine months, said a company statement.
Transport volume between January and September 2013 increased by 3.6 percent year-over-year to 4.11 million TEUs. Revenue totaled EUR5.022 billion, a 2.7 percent year-over-year decline “almost entirely attributable to exchange rate effects, in particular the weakness of the US dollar,” Hapag-Lloyd said.
For the first nine months, the group posted a cumulative net loss of EUR56.1 million, which is EUR38 million higher than in the previous year.
“Hapag-Lloyd continues to strive for a positive operating result for the full year 2013,” the statement said.
Meanwhile, the Hamburg-based shipping line said it will raise its rates for all cargoes and container types from East Asia (excluding Japan) to all North Europe and Mediterranean destinations encompassing West Mediterranean, East Mediterranean, the Black Sea, and North Africa.
The increase in rates of US$750 per TEU takes effect December 16, 2013.
East Asia is comprised of Japan, Korea, Taiwan, Hong Kong, China, Macau, Singapore, Malaysia, Indonesia, Thailand, Philippines, Laos, Cambodia, Vietnam, Brunei, and the Russian Pacific ports of Vladivostok and Vostochny.
There will also be a general rate increase of $650 per TEU on the East Asia/Indian Sub-continent/Middle East-East Coast of South America trade lane from December 1, 2013.