HAPAG-LLOYD: IS THERE LIGHT AT THE END OF THE TUNNEL?

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ABOUTXENETA

At Xeneta we believe there is an untapped potential for everyone in the industry, to systematically learn from our individual and collective efforts. We hold true that "if you cannot measure it, you cannot improve it". That’s why we think actionable metrics is the key to continuously evolve for every business, and ultimately the entire industry. Rethinking global logistics is the vision of Xeneta.

With international experience from the logistics industry, we have first-hand knowledge of the challenges related to high volatility and lack of transparency in the ocean freight market. By combining logistics background and information technology expertise, we found the solution to these challenges.

WE ARE TRANSFORMING GLOBAL LOGISTICS

ARE YOU PAYING THE RIGHT CONTAINER

FREIGHT RATES?

DISCOVER SAVINGS POTENTIAL IN REAL

TIME.

CONTACT US.

THE CONTAINER SHIPPING INDUSTRY IS APPROACHING AN IMPROVED BUSINESS ENVIRONMENT AS A RANGE OF FACTORS

THAT SUPPORT A BETTER SUPPLY AND DEMAND EQUILIBRIUM START TO TAKE

HOLD. THE INDUSTRY IS DEFINITELY TOUGH AT THE MOMENT AND WHILE WE CAN’T SAY THE FUTURE IS BRIGHT WE CAN SAY THERE

IS LIGHT AT THE END OF THE TUNNEL.

- ROLF HABBEN JANSEN, CEO OF HAPAG-LLOYD

INDEED, THE COMPANY’S EARNINGS FOR FIRST HALF OF 2016 INDICATED JUST A SLIGHT DECLINE, 0.4%, BUT

OTHERWISE STABLE VOLUMES COMPARED TO THE SAME PERIOD FOR

2015.

HOWEVER, REVENUE FELL BY OVER 19% AS AVERAGE MARKET FREIGHT RATES DECLINE BY 20%. AS A RESULT, HAPAG-LLOYD’S EBIT NOTED A 39.7 MILLION EURO LOSS FOR THE SIX MONTH PERIOD COMPARED TO A 267.7 MILLION PROFIT IN 2015.

BIGGER TO COMPETE

CONSOLIDATION IS UNDERWAY IN THE

OCEAN FREIGHT MARKET AS

CARRIERS FIND IT INCREASINGLY

DIFFICULT TO COMPETE. EARLIER

THIS YEAR, HAPAG-LLOYD’S CEO

STATED THAT THE COMPANY NEEDED

TO “BECOME BIGGER TO COMPETE”

WITHIN THE MARKET.

IN 2015, EVEN THOUGH HAPAG-LLOYD COMPLETED ITS MERGER WITH CSAV IT QUICKLY LOST SOME OF THE GAINS IT HAD MADE WITH THE ACQUISITION THANKS TO THE CHANGING DYNAMICS OF THE OCEAN FREIGHT MARKET.

AS SUCH, IN 2016, HAPAG-LLOYD AND DUBAI-BASED UASC AGREED

TO MERGE. THE MERGER IS LOOKED UPON FAVORABLY BY MANY INDUSTRY ANALYSTS.

AMONG THE BENEFITS ANALYSTS CITE IS THAT UASC WILL PROVIDE HAPAG LLOYD ACCESS TO LARGER SHIPS AND A YOUNGER FLEET.

UASC WILL CONTRIBUTE SIX 18,000 TEU VESSELS AND ELEVEN 15,000 TEUS TO THE MERGED FLEET. THE MERGED FLEET WILL HAVE AN AVERAGE SIZE OF 6,600 TEUS AND AN AVERAGE AGE OF 6.6 YEARS.

THE MERGED HAPAG-LLOYD/UASC WILL BE A MAJOR PLAYER IN THE ALLIANCE THAT INCLUDES K-LINE, MOL, NYK LINE AND OOCL SCHEDULED TO BE IN OPERATION ON EAST-WEST TRADES IN APRIL 2017.

NEW REVENUE OPPORTUNITIES

IN THIS DIFFICULT COMPETITIVE ENVIRONMENT, IT IS VERY IMPORTANT TO

COMPLETE THE TRANSACTION WITH UASC AS QUICKLY AS POSSIBLE AND TO START THE

INTEGRATION OF UASC IMMEDIATELY AFTER THE COMPLETION OF ALL PRE-CLOSING

CONDITIONS. THE INTEGRATION WILL BRING US ANNUAL NET SYNERGIES OF AT LEAST

USD $400 MILLION, SOME OF WHICH SHOULD ALREADY TAKE EFFECT NEXT YEAR.

- HABBEN JANSEN

HAPAG-LLOYD READY FOR THE FUTURE?

ACCORDING TO THE JOURNAL OF COMMERCE, HAPAG-LLOYD IS CONSIDERING OFFERING PREMIUM SERVICES SUCH AS FIRST-BOX-OFF OR VOYAGE-SPECIFIC-SPACE GUARANTEES TO SHIPPERS.

THESE TYPES OF SERVICES WERE OFFERED A NUMBER OF YEARS AGO BUT NOT WELL-RECEIVED BY SHIPPERS BUT NOW THE THOUGHT IS THAT SHIPPERS MAY BE MORE WILLING TO PAY FOR SUCH A SERVICE THANKS TO LARGER SHIPS AND THE TIME IT TAKES TO UNLOAD THEM.

ACCORDING TO THE COMPANY, IT IS ONE OF THE MARKET LEADERS IN SOUTH AMERICA FOR REEFER SHIPPING. SHIPPERS WITH TEMPERATURE SENSITIVE COMMODITIES SUCH AS FRUITS, VEGETABLES, MEAT AND FISH AND PHARMACEUTICALS WILL BENEFIT.

ITS PRESENCE BY LANE SEEMS FAIRLY BALANCED WITH 56% EXPOSURE ON EAST-WEST AND 44% ON NORTH-SOUTH LANES. IN ADDITION, THE COMBINED HAPAG-LLOYD/UASC WILL RESULT IN THE 5TH LARGEST CARRIER AND WILL BE AMONG THE LARGEST CARRIERS IN THE ALLIANCE.

WHAT DO YOU THINK? HAS HAPAG-LLOYD PREPARED ITSELF

TO COMPETE IN THE OCEAN FREIGHT MARKET FOR THE LONG TERM OR IS MORE NEEDED? LET US KNOW WHAT YOU THINK AND LEAVE YOUR COMMENT BELOW.

LEARN HOW XENETA CAN HELPYOU GET INSIGHT AND

INTELLIGENCE INTO YOUR GLOBAL OCEAN FREIGHT PRICES AND CHANGE YOUR LOGISTICS

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