's fifth-largest liner company, Hapburg-Lloyd, announced strong results for the first half of 2022 on Thursday and predicted the outlook for container shipping: demand is slowing, spot freight rates will continue to fall, and the current very serious congestion will be eased. But demand has not collapsed. Some areas, such as the East Coast of the United States, are more congested than others. From 2023 to 2024, ship capacity supply will exceed freight demand.

Strong first-half results

In the first half of this year, Hapg-Lloyd achieved operating income of US $18.562 billion, a year-on-year increase of 75.9; net profit was US $9.466 billion, a year-on-year increase of 188.2; profit before interest, tax, depreciation and amortization (EBITDA) was US $10.9 billion, a year-on-year increase of 159%; Earnings before tax (EBIT) was US $9.9 billion, a year-on-year increase of 182%. Freight volumes in the first half of 2022 were flat compared to the same period last year, at around 6 million TEU.

Container transport demand

"The American consumer seems to be doing quite well." Hapg-Lloyd CEO Rolf Habben Jansen said in a conference call on Thursday. "If you look at the first half of the year, trans-Pacific freight volume (year-on-year) is growing, which is very significant considering the large increase in 2021 compared to 2020."

Chief Financial Officer Mark Frese said: "At the moment, the market is focusing on weak demand. Despite the bad news, in the reporting period (second quarter), demand remained strong."

Habben Jansen, referring to import demand that was more than half of the third quarter as of Thursday, said: "We see demand in the United States remaining stable, but Europe and some other regions are more nervous and uncertain. We don't see demand anywhere precipitously falling."

, however, he did see "a considerable relief in demand" compared to the peak ". "We will definitely see signs of a cooling of the economy, which will help the market return to normal in the coming months and quarters".

"There used to be several times over-booking on each of our shipping systems, and it's still over-booking, but it's not as intense anymore. That's why spot freight rates are down. That's not to say there aren't any tensions, but there are real signs that the market is easing. We can see that from bookings and offers." Habben Jansen said.

Container Spot Freight Rate

Hapag-Lloyt's average container freight rate in the second quarter of 2022 was US $5,870/FEU, an increase of 71% over the same period last year, reaching the highest quarterly average freight rate level ever.

Compared with the first quarter,'s average freight rate rose 6% month on month, while the Shanghai Container Freight Index (SCFI), which measures spot freight rates, fell 26% over the same period. Frese said the rise in Hapag-Lloth average freight rates was driven by higher annual and multi-year contract freight rates.

According to Habben Jansen, 45-50% of Hapag-Lloth's business is conducted under contract. He expects the remaining 50-55 per cent of spot freight rates to continue to fall in the second half of the year, although he notes that "spot freight rates are still very high by historical standards."

Hapag-Lloth's full-year results forecast means that contracted freight rates will continue to support its average freight rates. Hapag-Lloth expects EBITDA to be $8.6 billion to $10.6 billion in the second half of the year, with the third quarter stronger than the fourth quarter. The upper limit of its second-half expectations is close to the record first-half EBITDA of $10.9 billion, which means that the market continues to strengthen.

Frese said: "the special freight environment is still our performance of the main driver."

Some Port Congestion Eases, But East Coast Not

Port congestion is through ship detention, reducing the freight market in the effective capacity, helping to support freight rates.

Clarkson's (Clarksons) Container Traffic Congestion Index is currently near an all-time high. According to Hapag-Lloth, the congestion index on the U.S. East Coast rose 53% in the second quarter of 2022 from the first quarter, with China up 28%, Northern Europe up 26% and the U.S. West Coast down 14%.

Habben Jansen said: "I don't think this reflects the whole picture."

"We do see some signs of easing. Congestion on the U.S. West Coast has improved significantly. The Mediterranean is running fairly smoothly. Congestion in Asia has improved significantly compared to a few months ago. Container availability is significantly better than a few months ago. So I expect this congestion index to improve in the coming months."

Habben Jansen said: "The real problem now is on the East Coast of the United States and Europe (North). The congestion in the East has not worsened, but it has not improved either. The congestion in European ports is caused by industrial tensions in some large ports. Once this problem is resolved, I expect further relief."

2023-2024, cargo shippers predominate

when congestion finally eases, more ships will enter the market. 2023-2024, a wave of newbuild deliveries will inject more capacity.

Hapg-Lloyd CEO said: "We are seeing a further increase in new ship orders. At present, it accounts for about 28% of the global fleet (the ratio of order capacity to existing capacity), which is quite high. This is a very important order, which means that we will acquire quite a few new ships in the future."

He said: "It remains to be seen how much of this will be absorbed by demand or by new environmental regulations, or offset by increased ship scrapping. New environmental regulations may effectively require reduced sailing speeds, which may reduce capacity by 5%-10% in 2023-2024."

Overall, Hapg-Lloyd expects the future market balance in container shipping to favor freight shippers. After years of import demand outpacing capacity supply, the report estimates that global fleet capacity will grow by 7% by 2023, more than double the 3% growth in demand. "

"We clearly see that capacity supply growth will outpace demand growth over the next 24 months." Habben Jansen said.

Separately, Rolf Habben Jansen said he would make more acquisitions in the container industry if the right opportunities arose. Hapg-Lloyat has also commissioned 12 newbuilding orders for 23,600TEU and is ready to use liquefied natural gas (LNG), as well as five container ships with a capacity of about 13,000TEU. In addition to the two ships that will be delivered this year, the remaining new ships will be delivered in the next two years.

source: search air network