Hapag-Lloyd's operating revenue in 2020 will reach $14.6 billion! Container demand will remain high in the first half of this year

On January 27th, shipping company Hapag-Lloyd announced its 2020 fiscal year results. According to preliminary data, Hapag-Lloyd's earnings before interest, tax, depreciation and amortization (EBITDA) in 2020 increased to more than 3 billion US dollars, earnings before interest and taxes (EBIT) increased to approximately 1.5 billion US dollars.

These two key figures are consistent with their recently released 2020 profit forecasts, which benefited from the increase in freight rates and the decline in fuel prices, as well as the cost savings of about $500 million from the successful implementation of the performance guarantee program. EBIT also includes a one-time expenditure of approximately US$140 million (approximately EUR 120 million) in the fourth quarter of 2020, which is mainly related to fleet optimization.

In 2020, operating income increased by approximately 3% to US$14.6 billion (approximately €12.8 billion). This is due to an increase in the average freight rate of US$1,115/TEU (US$1,072/TEU in 2019), while the volume of transportation was 11.8 million TEU, a 1.6% decrease from the previous year, and 2019 was 12 million TEU.

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In addition, Hapag-Lloyd believes that demand for containers will remain high in the next six months.

According to Uffe Østergaard, President of Hapag-Lloyd America, the container industry in 2020 is busy, surprising and challenging, and he expects the container market to remain strong for another six months.

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Compared with other shipping markets, the container market demand will surge in 2020.

Østergaard explained that this has brought busy time to him and his employees, and everyone has a lot of pressure to deal with this situation, especially in dealing with congestion and delays, and customer inquiries about their containers are also very hot.

"In a sense, this was unexpected. In a sense, when we started the first half of last year, we thought that the entire shipping business would drop significantly. This is true in the short term. But in the summer, everything We are all very busy, we are very busy, trying to keep up with the progress and deliver the goods to wherever we can deliver." He said.
In the United States, especially the West Coast, it has become a hot symbol of the container market. As of this week, Østergaard confirmed that there are still about 30 container ships parked outside Long Beach waiting for berths.

This number is similar to the number reported in the first few weeks of January. On the 12th of this month, congestion in the Port of Long Beach caused 31 ships to anchor at anchorages and 29 berths. There are also 18 ships on their way to the port and are expected to arrive within three days of the 12th.

"For a long time, I have been saying that the market is expected to fall after the Spring Festival, but it does not appear to be the case now, because the demand in many major industries is still high. In addition, congestion still exists, whether it is at the docks or ships. Whether it is container availability or truck availability for terminals that have waited days or weeks to obtain berths, this is a big problem in North America."

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He added that there is still a lot of discussion about other stimulus plans, which means more funds are invested in European and American societies. He believes that this will stimulate more demand because people still cannot travel or go out as they did in the past.

"A lot of money will be used to increase spending. Therefore, I think that the first half of this year will continue to see quite strong demand and continuous supply chain challenges, as well as delays and additional costs, etc.," he said.

"In addition, the 2021 contract seems to start to follow a common route, so the very low contract rates for 2020 are now being adjusted to adapt to the new reality."

In the end, Østergaard stated that the company is expected to achieve "significant profits" in 2020, which he absolutely did not expect when the epidemic broke out last year.