HAMBURG (dpa-AFX) - The weak economy and declining demand for ocean transports have severely eroded sales and profits at Hapag-Lloyd in the first half of 2023. However, despite the widely expected slump compared to the extraordinary record year of 2022, the Hamburg-based container shipping company still posted the second-best half-year result in the company's history. "Weaker demand and lower freight rates are having a very significant impact on our earnings," CEO Rolf Habben Jansen stressed Thursday, but also spoke of a "successful first half" in light of the challenging market environment.

In the period from January to June, Group earnings slumped to just under 2.9 billion euros. Profits in the second quarter slumped even more sharply than in the first quarter. By way of comparison, the figure for the first half of 2022 was 8.65 billion euros, compared with 2.72 billion euros in the first half of 2021, which was also very profitable.

Comparable slumps were also reported last week by the major Danish competitor Maersk. In view of lower demand and now significantly increasing capacities, the international shipping association Bimco also speaks of continuing challenges.

Sales of the world's fifth-largest container shipping company, with 258 ships and a transport capacity of nearly 1.9 million 20-foot standard containers (TEU), plunged nearly 41 percent in the first half of the year to just over 10 billion euros. The slump was mainly due to two factors. Firstly, at 5.81 million TEU, transported volumes were 3.4 percent below the previous year's level because customers are still sitting on high inventories and demand for sea transports is generally weaker. In addition, prices for sea transports, known as freight rates in industry jargon, fell. Hapag-Lloyd puts the average freight rate for the first half of the year at $1761 per TEU, down from $2855 a year earlier.

The supply chains on the world's oceans, which had been in trouble for years, have returned to normal, and the issue of congestion is now largely a thing of the past. According to ongoing calculations by the Kiel Institute for the World Economy (IfW), only less than eight percent of the world's cargo is now sitting on waiting ships away from ports, about the same as in the period before Corona erupted in 2020. The huge dislocations with delays and long traffic jams outside seaports combined with tight capacity had driven freight rates up rapidly and made all container shipping companies winners of the Corona pandemic - after many crisis years with price wars, overcapacity and red figures.

The shipping company is sticking to its forecast for the full year. According to this, earnings before interest and taxes (Ebit) are expected to be between 2 and 4 billion euros. As with many other shipping companies, taxes have a disproportionately low impact at Hapag-Lloyd. This is possible because of the tonnage tax - a method of determining profits that was introduced more than 20 years ago to support Germany as a shipping location. Instead of the actual profit, a fictitious profit is calculated as a lump sum according to the size of the ships. This is usually lower than the actual profit.

Another drastic increase in freight rates is unlikely, and not only because of the economic situation. After all, according to Bimco calculations, container shipping companies have expanded their fleets at a record pace this year. "Deliveries of new container ships in the first seven months of the year reached a new high of 1.2 million 20-foot standard containers (TEU) in 2023, exceeding the previous record by 0.2 million TEU," reported the Bagsværd-based association near Copenhagen. "As ship recycling has remained low, fleet capacity has grown by 4.3 percent since January," said Bimco analyst Niels Rasmussen.

"The increase in fleet capacity comes at a time when current trade growth is declining in many key regions and the growth outlook for the global economy is weakening for the coming years," the association further wrote. For ship owners and operators, supply-side growth will remain a challenge, it adds./kf/DP/jha