Hapag Lloyd and HMM continue to see bumper results

More good news from the container shipping sector. Both Hapag Lloyd and HMM have reported record profits, even if the latter has some other problems.

Hapag Lloyd saw revenues for the first half of the year rise 51% to US$10.6bn whilst profits trebled to $7.0bn. Unsurprisingly this was due to “a 46 per cent higher average freight rate of 1,612 USD/TEU”, which is up from 1,104 USD/TEU in the first half of 2020. In turn, these higher prices were the result of “high demand combined with scarce transport capacities and severe infrastructural bottlenecks.”

Unlike the experience of some other container lines, overall volumes were up, although only slightly at 6m TEUs, a 4% increase whilst higher bunker-prices were shaken out of this half-year’s numbers, with prices having fallen by 6%.

Rolf Habben Jansen, CEO of Hapag Lloyd said that the company was “naturally pleased by this extraordinary 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”, however “despite all the efforts made and the additional container box capacity that is being injected” he did not expect the market situation only to ease until “the first quarter of 2022 at the earliest.”

Hyundai Merchant Marine (HMM) experienced similar performance, with “the highest quarterly operating income in company history”. This is all the more remarkable as the company has struggled to make a profit over the past few years. Revenue was up 84.9% at $2.179bn (KorW2,428bn), whilst operating income was positive at $915m (KorW1,019bn) in contrast to the slight loss in the first half of 2020. However, it is worth noting that profit before tax remained substantially lower than the operating number at $138m (KorW154bn), possibly depressed by financial costs including derivative trades worth KorW1.4 trillion.

HMM’s container shipping business experienced an increase of 6.7% in the numbers of containers handled compared with the same period last year, with freight rates charged rising by 125%, however, HMM’s tanker business saw falling sales and volumes.

The performance of Hapag Lloyd is not so surprising however HMM represents a recovery notable for its strategic implications, lessening the imperative of further consolidation in the market, at least for the next couple of years.

Source: Transport Intelligence, August 17, 2021

Author: Thomas Cullen