Hamburg, Germany-headquartered Hapag-Lloyd, one of the world's leading shipping companies, has released a comparatively optimistic outlook for the sector for the rest of 2024.
This comes after Hapag-Lloyd reported a decline in its net profits in 2023 to USD 3.2 billion (EUR 3 billion), compared to USD 18 billion (EUR 16.6 billion) in 2022.
“The last quarter of 2023 was difficult because rates were at unsustainable levels,” Jansen said. “I think everybody noticed that. We saw them coming up a bit toward the end of the quarter, and then, of course, the Red Sea crisis ... again changed the market.”
Attacks on commercial vessels in the Red Sea have caused halts and reroutes for major shipping companies, resulting in a shipping container rate increase.
To mitigate this issue, the global shipping industry has increased its vessel capacity by 5 percent to offset delays and container use. By sailing faster than normal, Jansen said, this has resulted in an increased global capacity of 8 percent to 10 percent.
Nevertheless, 40-foot container prices spiked in February, ranging from approximately USD 5,000 (EUR 4,600) to USD 7,000 (EUR 6,400), which is up from January 2024, when prices sat from USD 3,000 (EUR 2,700) to USD 3,700 (EUR 3,400). CNBC said that prices have now declined, with U.S. companies paying 155 percent higher rates on Asia to U.S. West Coast port routes. Rates on Asia to U.S. East Coast routes are up 129 percent year-to-date, and Asia to the Gulf Coast are up 71.2 percent year-to-date, according to CNBC.
“It’s a concerning situation, and I think the [Red Sea] outlook is very difficult,” Hapag-Lloyd CEO Rolf Habbel Jansen said. “We hope that it will be over in a couple of months, but I’m very well aware that despite all the efforts that many countries are undertaking, some also believe that it might last quite a bit longer. In the end, we will do whatever we can to keep our people safe, even if that means that transit times are going to be a little bit longer.”
A total of 478 container ships with a combination of 3.1 million 20-foot-equivalent (TEUs) crates are scheduled for delivery in 2024, according to shipping logistics company Container xChange.
