The conflict in the Middle East and port congestion weighed on volume growth and transport costs
By Dominic Chopping
Hapag-Lloyd said its results continue to benefit from elevated freight rates, but vowed to keep a firm grip on costs as Middle East tensions and adverse weather have disrupted operations.
The world's fifth-largest container line by capacity said Thursday that capacity bottlenecks resulting from port congestion in Asia, partly due to weather conditions, and persistently high demand led to a significant rise in freight rates in the third quarter.
At the same time, the conflict in the Middle East and port congestion weighed on volume growth and transport costs, the German shipping company added.
"We delivered a strong third quarter, driven by significantly higher spot rates, robust demand and high capacity utilization," Chief Executive Rolf Habben Jansen said.
"At the same time, unit costs still remain under pressure due to geopolitical tensions and operational disruptions."
Container transport demand has remained robust, despite continuing uncertainties surrounding geopolitical tensions, disruptions to global supply chains and operational challenges at individual ports. In particular, the effects of the conflict in the Middle East led to reroutings and extended transit times, resulting in additional costs, it said.
Volumes in the company's main liner shipping business slipped 0.5% on year in the third quarter, with trade lines out of Asia to Europe and America experiencing a drop while Europe to America trade as well as Africa and intraregional trades experienced higher volumes.
Freight rates on all major routes remain significantly above last year's levels, though, with the total weighted average freight rate in the quarter 28% above the same period a year ago.
Overall, the liner business reported third-quarter earnings before interest and tax that were up nearly five-fold on year despite a jump in fuel and handling costs.
The company raised its full-year guidance Wednesday, citing continued strength in spot freight rates and a better fourth-quarter business performance than previously expected.
It now expects to report earnings before interest, tax, depreciation and amortization of between $4.6 billion and $5 billion. Earnings before interest and tax are forecast at $2 billion to $2.4 billion.
Hapag-Lloyd had already raised guidance twice before, in September and July.
The company's third-quarter revenue rose to 5.97 billion euros from 4.67 billion euros a year earlier, while Ebitda more than doubled to 1.49 billion euros.
A FactSet poll of analysts had expected revenue at 6.13 billion euros, with Ebitda at 1.63 billion euros.