Germany’s box carrier Hapag-Lloyd reported higher transport volumes but lower earnings and revenue in the first quarter, attributing the slide to “persistently aggressive competition,” a challenging market, and high energy costs.
The company posted a net loss of EUR119.1 million ($163.3 million) in the first quarter of the year against a loss of EUR93.6 million year-over-year, according to a Hapag-Lloyd official statement.
This, however, includes one-off costs for the takeover of CSAV’s container business, agreed on April 16.
In the first three months, traditionally the weakest quarter of the year in the liner shipping industry, the shipping line achieved an EBITDA (earnings before interest, taxes, depreciation and amortization) of EUR2.9 million from the prior year’s EUR24 million.
It chalked up an operating loss of EUR63.2 million compared to a loss of EUR53.2 million in the first quarter of the preceding year.
Revenue reached EUR1.55 billion, down from EUR1.65 billion year-over-year despite a growth in the transport volume. Traffic rose 5.5 percent in the first quarter compared to the previous year to reach 1.4 million twenty-foot-equivalent units (TEUs).
The revenue drop came about as a result of the weaker US dollar and considerable pressure on freight rates, the company said. At $1,422 per TEU, average freight rate in the first quarter of 2014 was $124 per TEU down on the previous year.
For 2014, the goal is to improve the overall freight rate compared with the previous year. “Our success in achieving this target will depend largely on the development of freight rates in the second half of the year and, above all, on the peak season,” said Michael Behrendt, group chief executive officer.
Behrendt is optimistic about the year’s prospects, noting the current expansion of the G6 Alliance, of which it is a member, to include all east-west trades, as well as the impending takeover by the carrier of CSAV’s container segment.
“Hapag-Lloyd will again significantly improve its ability to compete,” he added. “This means that we are well positioned for the future and for additional growth.”
