Hapag Lloyd in storms in 2023 and 2024

By Marek Grzybowski

The Hamburg operator Hapag-Lloyd (HLAG) announced its financial results for 2023. The shipowner recorded a drop in sales in the fourth quarter by 48.8% y/y to EUR 3.8 billion. However, operating costs decreased only by 6.9% y/y to approximately EUR 4 billion. Thus, HLAG joined other carriers recording operational losses, recording an EBIT loss of EUR 200 million in 4Q23 – informs the management of Hapag-Lloyd in the latest announcement.
The company said disruption to the Red Sea route late last year resulted in a drop in traffic, with ships sailing around the Cape of Good Hope significantly increasing journey times and operating costs.
Hapag-Lloyd operates a fleet of 260 ships. The operator employs over 13,400 employees in over 400 offices in 135 countries. The line fleet of the Hamburg shipowner has a capacity of 2 million TEU. The operator also manages containers with a capacity of 2.9 million TEU. The shipowner has one of the largest and most modern resources of refrigerated containers.
The shipowner’s fleet provides over 110 liner services between over 600 ports on all continents. Hapag-Lloyd also has assets in the terminal and logistics infrastructure segment. It has interests in 20 terminals in Europe, Latin America, the United States, India and North Africa. In addition to terminal operations, additional logistics services are provided in selected locations.

Liner shipping at a loss
In the liner shipping segment in the fourth quarter of last year, the average HLAG freight rate decreased by 54.7% y/y to USD 1,190 per TEU, while the supply of containers increased by 4.7% y/y to 3 million TEU. The decline in freight was the main reason for weaker results in the subsequent quarters of 2023, noted Aditi Niranjan, Equity Research Analyst, Drewry Shipping Consultants Ltd in her comment.
Sales of liner shipping services decreased by 51% y/y to EUR 3.8 billion. EBITDA decreased by 92% year-on-year to approximately EUR 300 million, and EBIT recorded a loss of EUR 200 million compared to an EBIT profit of EUR 3.3 million in Q4 2022.
Hapag-Lloyd, publishing its annual report for 2023, announced that it was the third best result in the company’s history. Shareholders should be happy because the dividend proposed by the management will be EUR 9.25 per share.

Almost Good 2023
Nevertheless, the year 2023 is not assessed as the best by the shipowner’s management. As expected, a significant decline in profits was recorded. According to the report, the Group’s EBITDA amounted to USD 4.8 billion (EUR 4.5 billion). Group EBIT decreased year-on-year to USD 2.7 billion (EUR 2.5 billion) and Group profit to USD 3.2 billion (EUR 3 billion).
– We achieved the third best Group profit in the history of our company – although it is significantly lower than in the exceptionally strong year 2022, thanks to the normalization of global supply chains – said Rolf Habben Jansen, CEO, Hapag-Lloyd AG.
In 2023, the shipowner managed to significantly increase customer satisfaction and computerization of the container fleet.
– We have significantly expanded our terminal and infrastructure business and increased our liner shipping business in India and Africa. We have reduced our carbon footprint, taking another step towards our goal of achieving net zero carbon dioxide emissions by 2045, emphasizes the CEO of Hapag-Lloyd AG.

Almost 12 million TEUs on board
In the Liner Shipping segment, the transport volume in the entire year 2023 increased by 0.5% to 11.9 million TEU. In 2022 there were 11.8 million TEU. Transport spending fell by 11% to USD 12.9 billion (EUR 11.9 billion). This was achieved primarily as a result of lower expenses for demurrage and container storage fees and a lower bunker price. The operator’s revenues decreased to USD 19.2 billion (EUR 17.8 billion). This is primarily the result of a lower average freight rate of USD 1,500/TEU, while in 2022 USD 2,863/TEU was achieved. As a result, EBITDA for 2023 decreased to USD 4.8 billion (EUR 4.4 billion). EBIT decreased to USD 2.7 billion (EUR 2.5 billion).
In the Terminals & Infrastructure segment, in the 2023 financial year, EBITDA of USD 50 million (EUR 46 million) and EBIT of USD 21 million (EUR 19 million) was achieved. Revenues amounted to USD 202 million (EUR 187 million). – Since the new segment is still under construction, it does not reflect the results of the full financial year – explains Hapag-Lloyd management.
In light of another very good earnings trend, the Management Board and Supervisory Board of Hapag-Lloyd AG have decided to propose to the General Meeting a dividend of EUR 9.25 per share for the financial year 2023. This means a total payment of EUR 1.6 billion and is the third the highest amount ever paid by Hapag-Lloyd.

Cautious forecasts
The Management Board of Hapag-Lloyd AG conservatively forecasts that in fiscal year 2024, Group EBITDA will be in the range of USD 1.1 to 3.3 billion (EUR 1 to 3 billion), and Group EBIT will be in the range of minus USD 1.1 to 1.1 billion (from minus 1 to 1 billion euros). – However, this forecast remains subject to significant uncertainty, taking into account fluctuations in freight rates and geopolitical threats – HHAG management reserves.
– We have started the current financial year satisfactorily, but the economic and political environment remains unstable and challenging, especially in light of the current situation in the Red Sea region. We therefore expect an overall decline in profits in 2024, said Rolf Habben Jansen.
Hapag CEO Lloyd emphasized: “As part of our 2030 Strategy, we will focus even more intensely on quality and sustainability. We will continue to grow our new terminal and infrastructure business, as well as our hinterland transportation share and portfolio. At the same time, we will need to strengthen our top five global companies and make improvements in cost efficiency and productivity.”
Hapag-Lloyd focuses on ocean freight within Latin America and within America and on connecting global markets with European ports.
The owners of Hapag-Lloyd as of December 30, 2023 are CSAV (30.0%), Klaus Michael Kühne (including Kühne Holding AG and Kühne Maritime GmbH (30.0%), HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH (13, 9%), Qatar Investment Authority (12.3%), the Public Investment Fund on behalf of the Kingdom of Saudi Arabia (10.2%). 3.6% of the capital is in free public circulation.