Hapag-Lloyd, a German container carrier, reported a net profit for the first nine months of 2023 of 3.2 billion euros ($3.43 billion), a 77% decrease from the same period the previous year. The company also lowered its profitability projections for the entire year.
Net earnings decreased from 13.8 billion euros in 2022, when the shipping sector, a stand-in for international commerce, flourished amid the post-pandemic rebound and consumer prices rose due to logistical difficulties.
This year’s dramatic decline in freight prices was caused by the clearance of port backlogs and the worldwide economic slump, which also hurt competitor Hapag-Lloyd, Maersk (Maersk, CO).
“Everything is under strain right now. CEO Rolf Habben Jansen said, “Ship operations are not profitable in certain segments of the freight rate market.” This was said in a Reuters interview.
The previously indicated range for earnings before interest and taxes (EBIT) was cut to 2.2–3.1 billion euros from 2-4 billion euros.
Compared to a prior range of 4-6 billion euros, EBITDA was predicted to be 4.1–5 billion euros.
According to the corporation, the estimates were still volatile due to geopolitical events, inflationary pressure, and high client inventory levels.
Despite this, transport volumes increased by over 5% annually in the third quarter to 8.9 million twenty-foot equivalent units (TEU), virtually equal to those in the previous year. Lower shipping fuel costs, which fell by 19% to an average of $611 per ton during the nine months, also provided relief. During the nine months, freight prices dropped by 45% to $1,604 per TEU, resulting in a 46% decrease in income to 14.1 billion euros.
According to Habben Jansen, the corporation has responded by discontinuing many flights on important routes and does not anticipate a short-term recovery of the prices.
However, the cancellation rate thus far has not surpassed 20% of the scheduled previous cruises. Staff reductions, amounting to 13,500 globally, were not on the table. Maersk is looking for as many as 10,000 layoffs. Early on Thursday, there was no exchange of Hapag-Lloyd shares in a tiny free float.
