Container line Hapag-Lloyd saw its first half results plunged into the red with a loss of EUR142.1m ($158.4m) as against the profit of EUR157.2m in the previous corresponding period.
Rolf Habben Jansen, CEO of the German line, lamented that the first half result “is disappointing” due to the “significant drop in the average freight rate.”
He observed that even though rates have gone back up towards the peak season in various trades, the rebound is arriving later than anticipated.
Subdued economic growth in many parts of the world, persistently tough competition in the liner shipping industry and further declines in freight rates have marked the first half of the 2016 business year, according to Hapag-Lloyd. The group reported that average freight rate in the first six months fell by $254 year-on-year to $1,042 per teu, or almost down by 20%.
First half revenue for Hapag-Lloyd came up to EUR3.8bn, down from EUR4.7bn in the same period of 2015.
“In the second half of the year, our main focus will be to further improve our cost base and to do whatever we can to get freight rates back to a more sustainable level,” said Habben Jansen.
“In this difficult competitive environment, it is very important to complete the transaction with UASC as quickly as possible and to start the integration of UASC immediately after the completion of all pre-closing conditions. The integration will bring us annual net synergies of at least $400m, some of which should already take effect next year.”
Hapag-Lloyd and UASC have signed the agreement for the latter’s operations to be merged into those of the German shipping giant.
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