An insight into the short-term future of sea container freight rates was given by Rolf Habben Jansen, CEO of Hapag-Lloyd, during his presentation around Hapag-Lloyd’s first quarter results on Tuesday (14/5). He commented that Hapag Lloyd would continue to “re-route ships through the Cape of Good Hope for the time being and it is difficult to predict when that will change. And we plan that that will take until at least the end of the year. Also important to note that if it becomes safe again, we need to make sure it is safe for a longer period of time because we will gradually bring the network back to a Suez network and we cannot do that from one day to another because otherwise the ports in Europe and to some extent in North America would collapse”.
The Suez Canal authorities have been trying to tempt shipping lines back to using the Canal by reducing fees. This might persuade some smaller container ship operators back, but so far, judging by Mr Habben-Jansen’s comments, it looks as if the dominant network operators are not only cautious about the intentions of the Houthi’s but have expended too much energy in re-constructing their route systems to quickly revert back to using the Suez Canal. What this suggests is that, at least for the short term, the threat of a violent fall in freight rates that a resumption of the Suez Canal route would result in is less likely.
Certainly, Hapag-Lloyd has benefited from higher prices over the first quarter of the year. Even more than its ‘Gemini’ partner, Maersk, Hapag Lloyd saw its results improve year-on-year in Q1 2025. Revenue was up 15% at $5.3bn and EBITDA (Earnings Before Interest, Depreciation and Amortisation) was 17% higher at $1.1bn. All of this was on container volumes up 9% at 3.3 million TEU. That said, reflecting the market, revenue and profits are pointing downwards over the past three quarters, so year-on-year comparisons do flatter somewhat. It still appears that Hapag Lloyd is out-performing the market both in terms of volume growth and freight rates, the latter possibly due to its higher level of contract business.
Hapag-Lloyd’s perception of the prospects for the container shipping market seems to be cautious but not overly pessimistic. The company said that issues such as tariffs and trade policies “continue to be causes for concern”, but seems to think that the underlying state of the market is not overly serious.
Author: Thomas Cullen
Source: Ti Insight
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