German shipper Hapag-Lloyd’s profit collapses after container boom

The sharp drop in freight prices following the pandemic has caused a slump in sales and profits at German container shipping company Hapag-Lloyd.

At the end of the year, the conflict in the Red Sea also had an impact on transport volumes, the company announced on Tuesday. The diversion shipping firms have decided to take around the Cape of Good Hope at the southern tip of Africa has greatly extended travel times.

According to preliminary calculations, the Hamburg-based shipping company achieved earnings before interest and taxes (EBIT) of the equivalent of €2.5 billion ($2.7 billion) last year. A year earlier, the figure was €17.5 billion.

Turnover slumped to €17.9 billion. In the record year of 2022, the shipping company had almost doubled its turnover and achieved the highest profit in its history.

At that time, the average price for freight was $2,863 per standard container, or 20-foot equivalent unit (TEU) based on the volume of a standard 20-foot-long (6.1-metre) container. In 2023, it fell to $1,500. This time, Hapag-Lloyd transported slightly more freight than in the previous year.

Hapag-Lloyd had already warned in November that conditions for container shipping would remain difficult. The industry’s capacity will exceed demand by 2024, making “active cost management” unavoidable.

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