- Rolf Habben Jansen, CEO of Hapag-Lloyd, states that “inventories have been depleted in many areas, and maritime shipping companies are showing signs of recovery after the Lunar New Year.”
- Freight rates on major routes have increased by 75% to 150% so far due to the Red Sea crisis and drought in the Panama Canal.
- The peak season for maritime logistics this year is expected to start in June, slightly earlier than before, due to the threat of labor strikes at East Coast and Gulf Coast ports in the fall.
Rolf Habben Jansen, CEO of Hapag-Lloyd, the world’s fifth-largest maritime shipping company, predicted in a CNBC interview on the 15th (local time) that the peak season for maritime logistics will come early this year, stating that the outlook for trade has improved for the remainder of 2024.
On the 14th, Hapag-Lloyd announced that its net profit and dividends for 2023 had decreased sharply compared to 2022 due to container congestion and high freight rates, leading to a decline in stock prices. However, this was the third-best group profit in Hapag-Lloyd’s history. This fact demonstrated that the sharp decline in freight rates, sales, and EBITDA was not a fundamental weakness in Hapag-Lloyd’s business but rather a reflection of the bursting of the transportation demand bubble from the pandemic era.
Regarding this, Hapag-Lloyd CEO Rolf Habben Jansen said, “The last quarter of 2023 was difficult because the freight rates were at an unsustainable level,” and added, “Everyone saw a slight increase at the end of the quarter, and the Red Sea crisis changed the market again.”
Increase in Maritime Shipping Costs Due to the Red Sea Crisis
Amid a surge in container freight rates due to the Red Sea issue, Hapag-Lloyd expects its profits to decrease this year due to increased costs from trade diversions in the Red Sea.
According to FreightWaves SONAR data, the price of a 40ft container began to rise from $3,063 to $3,763 in the United States on January 3 and peaked at $5,353 to $7,329 on February 9. Although freight rates have fallen currently, U.S. companies are paying more, with rates increasing by 155% year-over-year from Asia to U.S. West Coast ports, 129% from Asia to the U.S. East Coast, and 71.2% from Asia to the Gulf Coast.
The reason for the persistently high level of freight rates is the ongoing instability.
Houthi rebel attacks on commercial vessels in the Red Sea continue. On Friday, an oil tanker moving north in the Red Sea was attacked by Houthi rebels, and the day before, an oil tanker narrowly escaped being hit 47 miles southeast of Aden, Yemen.
As a result, the number of ships bypassing the Horn of Africa continues to increase, and consequently, the amount of fuel used by these ships is also increasing.
According to Sea-Intelligence, in addition to the extra costs, the Red Sea detour has led to a 260% to 354% increase in carbon dioxide emissions.
As a result, maritime shipping companies with vessels heading to Europe are facing higher emission allowance costs under the EU Emissions Trading System (ETS), which is putting continuous upward pressure on freight rates.
According to calculations by the marine technology company OceanScore, the detour has increased fuel consumption and sailing speeds to 16-20 knots to save time. The ETS imposes a 50% responsibility for voyages departing from or moving to the EU and a 100% responsibility for vessels anchoring in EU ports or transferring between EU block ports.
2024: Peak Shipping Season to Come Earlier
Meanwhile, CEO Rolf Habben Jansen predicted that the peak season (for the 2024 shipping market) would come early this year, stating, “Inventories have been depleted globally, and volumes have increased significantly after the Lunar New Year.” He added, “We expect quite a few people will want to bring in goods between June and August.”
Generally, the late summer to fall period is considered the peak season for shipping. This is because demand surges significantly ahead of global holiday seasons and events such as China’s Singles’ Day and Halloween in the United States, making it the busiest and most profitable time for freight transportation companies.
However, CEO Rolf Habben Jansen anticipated that these companies’ movements would accelerate even earlier than before due to the recent Red Sea crisis, prolonged passage restrictions in the Panama Canal caused by drought, and the growing possibility of a strike by the International Longshore and Warehouse Union, the largest maritime labor union in North America.
TRADLINX Ocean Visibility revolutionizes supply chain operations with its Ocean Visibility features, offering real-time shipment tracking, predictive analytics for lead times, and seamless management tools for freight forwarders and shippers worldwide.
Leave a Reply