Spending

Hapag-Lloyd spends a lot of money on its fleet, the eyes of the port invest

By Vera Eckert and Jan Schwartz

HAMBURG -German container carrier Hapag-Lloyd is spending billions to expand and renew its fleet and plans to invest in more port infrastructure to extend its edge in the post-covid 19 the global economy, chief executive Rolf Habben Jansen told Reuters.

The Hamburg-based company, the world’s fifth-largest container line, is armed with a huge war chest after reporting record revenues during the coronavirus crisis, which dislodged shipping capacity, clogged ports and drives up freight rates.

“We have currently ordered 22 ships, including twelve with 24,000 KILL (20 foot equivalent units) and ten with 13,000 KILL,” the CEO said in an interview.

The new ships are worth around $3 billion and will add almost a quarter to the fleet in KILL terms, said Habben Jansen.

Just last week, the company also launched a fleet renewal program worth $3 million, covering more than 150 vessels, nearly two-thirds of its fleet, as it considers investments in port terminals over the next year.

“It would make sense to invest in port terminal infrastructure where we are already strong,” said Habben Jansen, suggesting Europe but adding that North or South America were potential locations.

“I would be surprised if there was no investment in the terminal area in the next 12 months,” he said.

Recent stakes in port hubs include Damietta in Egypt, Tangier in northern Morocco and JadeWeserPort in Wilhelmshaven.

The CEO stuck by the company’s lofty forecast for full-year 2022 earnings, saying falling freight rate revenues and rising energy prices would hit earnings six or nine months from now.

“It is true that we are paying a lot more for fuels, but there are also the first signs that the prices of certain basic products are falling again,” said Habben Jansen, referring to inflationary pressures.

Regarding capacity, Habben Jansen said an order book of 28% of total fleet volumes was excessive.

The overcapacity of the past decade, reaching 60% in some cases, is unlikely to return given tougher environmental rules, constraining capacity and reduced journey times, he added.

($1 = 1.0011 euros)