Bloomberg today reported that Hapag-Lloyd AG, Europe’s fourth-largest container line, reported a second-quarter loss after soaring fuel costs offset modest improvements in freight rates. The CEO, Michael Behrendt, was quoted as saying, “High bunker prices in particular cause our expenses to increase dramatically – they are by far the biggest cost factor for our business.” The company said the average fuel price jumped 14 percent to $694 per ton during the last year. Freight rates did not keep pace. The weighted average freight rate in the second quarter increased 7.4 percent to $1,594 over the first quarter of 2012, and was 4.1 percent higher than Q2 2011. Behrendt noted succinctly, “The cargo on board our vessels has to cover the cost of transportation.” Sad but true.
Hapag Lloyd operates a fleet of 147 containerships with a total fleet TEU capacity of 667,531 TEU. The company took delivery of the 10,000 TEU Hamburg Express last month, and has another nine 13,200 TEU ships on order.
Hapag-Lloyd is in good company. Bloomberg noted that A.P. Moeller-Maersk and CMA CGM both posted losses last year. The combination of overtonnage on key routes, sluggish growth in world trade volumes, soaring fuel costs and persistent low freight rates will not get better soon, and it is critical for fleet operators to seek out new ways to reduce operating costs.
To that end, I encourage you to attend the 2012 SHIPPINGInsight Fleet Optimization Conference, October 8-10, in Stamford, Connecticut, where industry experts will deliberate on technical solutions and best practices to optimize efficiency of ship operations.
I am especially happy to tell you that Clay Maitlandhas agreed to serve as keynote speaker for the conference. I am certain his unique expertise and insights will enrich the debate. He joins a top-notch roster of more than 30 speakers. You can register online and take advantage of early-bird discounts.
Note: This post originally appeared in the Maritime Professional, one of our media partners.