Reporting fairly moderate EBIT and revenue growth in 2024, Hanseatic container line Hapag Lloyd saw much higher rates in its Asia – Europe trade lanes and much lower rates in the Atlantic ones. As a result of these two effectively cancelling each other out, the consolidated revenue was up 3.7% y-o-y to $20,673m and operating profit was up 1.9% to $2,788m.
The Liner segments accounted for 98.1% of 2024 revenue. Across the whole of the division, the freight rate was down 0.5% y-o-y to $1,492 per TEU. Volumes were up 4.7% to 12,467,000 TEUs.
Asia to Europe
According to Hapag Lloyd, in December 2024 the Shanghai Containerised Freight Index was up 39.8% y-o-y to $2,460, reflecting the uptick in demand for Asia to Europe freight. While demand was up, supply of capacity was hampered by much of the industry sending its ships via the Cape of Good Hope to avoid the geopolitical dangers of the Red Sea.
For Hapag Lloyd, this meant that its volume of containers fell 1.6% y-o-y to 3.547m TEU but the rate per trade jumped 26.9% y-o-y to $1,509. Should the crisis be resolved, with fewer ships on such long routes, capacity should normalise but there’s little likelihood of a quick resolution, according to the company’s CEO Rolf Habben Janssen who said, “Some [recent] developments give us cause for hope, but we won’t change our network again until passage through the Red Sea is safe.”
Atlantic trade balances Asia to Europe
The slow growing economies of Europe and the US seem to have counterbalanced the stunning growth experienced on the Asia-Europe trade lanes. The Atlantic rates per trade fell 26.8% y-o-y to $1,468 – almost equally to the amount that the Asia-Europe route grew. Volumes grew 4.5% to 2.733m TEU.
Between these groups of trade lanes, the Pacific routes grew 12.8% in volume to 3.378m TEU and rates per trade were up 5.1% to $1,713. In the eyes of the CEO, all three of these segments will be likely affected in the coming year.
Forecast – zero earnings for 2025?
Habben Jansen pointed out, “One thing is certain: global trade will continue to be of vital importance in the future, even if individual flows of goods are to shift.” Though a large liner company will always be needed, there are uncertainties that led him to say, “The economic and geopolitical environment remains fragile.”
As well as the Red Sea crisis, Habben Jansen pointed to the era of trade wars between the US and other economies. “It isn’t fully foreseeable yet how these will ultimately impact global trade relations.” In worst case scenario, the company forecasts a $0 EBIT in 2025, though the higher end of the range could be $1,500m. A forecast of this wide a band suggests that uncertainty is the big certainty for 2025.
Author – Richard Shrubb
Source: Ti Insight
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