Germany’s largest container liner shipping company Hapag-Lloyd enjoyed earnings growth in the first half of 2021 which was driven by strong demand and higher freight rates.
The carrier concluded the first half of 2021 with earnings before interest, taxes, depreciation, and amortization (EBITDA) of €3.5 billion ($4.2 billion). EBITDA tripled from €1.2 billion reported in H1 2020.
Moreover, Hapag-Lloyd’s operating profit rose to €2.9 billion in H1 2021 from €495.9 million recorded in the corresponding period a year earlier.
The group profit also climbed to €2.7 billion in H1 2021 from €285.5 million seen in the first six months of 2020.
As explained, the first six months of the 2021 financial year were dominated by continuing strong demand for transport from the Far East to the rest of the world and the resulting operational challenges. The sharp rise in transport volumes and the effects of the COVID-19 pandemic led to congestion of port and hinterland infrastructure in North America and, in some cases, in Asia and Europe as well.
Hapag-Lloyd’s transport volume increased in the first half of 2021 by 4.3% to 6,004 TTEU compared with the prior-year period.
The average freight rate grew by 46.1% to $1,612/TEU from $1,104/TEU in H1 2020. The freight rate development was the result of high demand combined with scarce transport capacities and severe infrastructural bottlenecks.
As a result of this, revenues in the first half of 2021 increased by 37.6% to €8.8 billion from €6.4 billion posted in H1 2020.
“In a market with very strong demand for container transports, we have benefitted from significantly improved freight rates and look back on a very good first half year,” Rolf Habben Jansen , CEO of Hapag-Lloyd, commented, adding that the company was able to reduce its net debt by $1.5 billion.
While demand remains high in the current congested market environment, it is leading to a shortage of available weekly transportation capacity. For this reason, Hapag-Lloyd expects earnings to remain strong in the second half of the financial year.
EBITDA for the full year is expected to be in the range of €7.6 to 9.3 billion and EBIT to be in the range of €6.2 to 7.9 billion.
“ We are … pleased by this … financial result. But the bottlenecks in the supply chains continue to cause enormous strains and inefficiencies for all market participants and we have to do our utmost to resolve them jointly as soon as possible,” Jansen continued.
“Looking at the market environment today, we however do not believe that the situation will return to normal any time soon – despite all the efforts made and the additional container box capacity that is being injected. We currently expect the market situation only to ease in the first quarter of 2022 at the earliest.”
Fleet renewal
Hapag-Lloyd is currently in the midst of its fleet renewal program that will help the company reduce its carbon emissions even more.
In June, the liner major ordered six dual-fuel containerships with a capacity of over 23,500 TEU at South Korean shipyard Daewoo Shipbuilding & Marine Engineering (DSME). The deal is worth about $1 billion.
The ships will be outfitted with high-pressure dual-fuel engines that will operate on LNG, but they will also have sufficient tank capacity to operate on conventional fuel as an alternative, according to Hapag-Lloyd.
The deal will bring the liner company’s order tally to a dozen 23,500+ TEU ships in total as the company ordered six identical vessels last year.
Recently, the company also confirmed it is in talks to acquire ten 13,000 TEU boxships, without disclosing further details.
Hapag-Lloyd’s fleet comprised 250 container ships as at 30 June 2021.