giant Hapag-Lloyd CEO Rolf Habben Jansen candidly said “nobody saw this coming”
as “we’ve seen a spending shift from services to goods”, with consumer spending
for household products and goods soaring during the pandemic, as funds usually
targeted to travel, eating out and events has been diverted to home
improvements, medical supplied and fitness equipment, among other, in turn
creating one of the healthiest markets for box ships in years.
at major ports globally created container shortage
The good news for
the container lines – soaring spot freight rates, historically high fleet
utilization, and a bright demand window for the coming year – comes with its
fair share of drawbacks, causing operational disruption, too, as on the landside
COVID-19 has conspired to create significant congestion and backlogs at major
ports globally, which in turn has helped to create a container shortage due to
slower turnaround times and imbalances. With delays in transit, scheduling
reliability and predictability has suffered too, said Habben Jansen, as there
has been a 10% spike (from 26 to 29 days) in the time it takes to get
containers back after the’ve been unloaded.
To reposition thousands of extra container Company deployed 52 extra
sailing that can sail, because time charter rates are going through the roof,”
said Habben Jansen, noting that the company has deployed 52 extra loaders/ships
to help reposition hundreds of thousands of extra container, while in a ‘normal’
year that number of ships dedicated to reposition “is a single digit.”
New build order book compared to the overall fleet size remains low
fleet has always been a challenge premised on the two- to three-year lag
between the time a ship is ordered and delivered. In this regard, there will be
no relief for the fleet anytime soon, as Habben Jansen reports that the
newbuild orderbook compared to the overall fleet size remains low: the current
orderbook is just 10% of the current fleet, whereas a ‘he and backlogs at major
ports globally althy’ orderbook would be in the 14 to 17% range. New ships
ordered today would not enter the fleet until 2023/2024.
The company has
just guided for 2021 profits to "clearly surpass" the previous year,
when earnings before interest, tax, depreciation and amortization (EBITDA) are
seen at 2.7 billion euros ($3.3 billion), more than a third above 2019 levels.
Despite soaring freight rates, profitability mainly by cost savings
Despite the soaring freight
rates, Hapag-Lloyd’s chief officer said that increased profitability in 2020
was driven mainly by cost savings measures enacted at the start of the pandemic
when cash burn was high and confidence in future markets was unsure, and noting that the rapidly rising
rates are being seen in the spot market, which is only about 20% of the cargo.