Hamburg Sud concerned about rising costs
Klaus Meves, chairman of Hamburg Sud, said at the German shipping group’s annual
press conference Thursday in Hamburg that shipping lines are facing rising costs
from more expensive vessel charter rates, fuel, port operations and prices for
new containerships.
Due to the worsening shortage of ships in the charter market,
"charter rates reached all-time highs," the company said. This means that the
cost basis of the shipping companies reliant on charter tonnage "deteriorated
considerably," according to the company, which operates 23 owned boxships and 59
chartered ones.
In addition, the ships’ owners are attempting to stretch
time-charters out over ever longer periods, thus steadily heightening the risk
potential for the liner operator," Hamburg Sud said.
Meves also warned of the impact of rising bunker prices, saying
there has been in recent months a large increase in fuel prices, which currently
stand at more than $200 per ton. The German shipping executive reportedly
predicted that Hamburg-Sud’s fuel bill could rise by as much as $100 million
this year.
On new vessels, Hamburg Sud said newbuilding prices have increased
"by up to 50 percent within the last 12 months."
The shipping line also cited the negative impact of port and inland
congestion delays and higher empty container repositioning costs due to the
widening cargo imbalances.
"In order to counteract rising costs, the shipping group will
continue to pursue its policy of sustainable rate restoration and, in addition,
further optimize its internal and external structures so as to continuously
improve its service to its customers, as well as its cost position," Hamburg Sud
said.
Hamburg Sud traditionally does not disclose its profit results, but
it said its results for 2004 "far exceeded" those of the previous year. The
company’s revenue from container shipping, bulk shipping and other activities
rose 44 percent in 2004 when expressed in dollars, to $3.2 billion. In local
currency, revenue was up 31 percent to 2.6 billion euros, due to the weaker
dollar exchange rate.
The company’s dominant container shipping arm saw its revenue rise
43 percent to $2.5 billion in 2004, with container traffic up 24 percent to 1.4
million TEUs. It reported that freight rates in 2004 "recovered from the low
level of the previous year."
Compared to other ocean carriers, Hamburg Sud gave a more negative
assessment of the container shipping industry’s prospects for 2006, when the
global fleet of containership is expected to expand by more than 12 percent.
Commenting on 2006, the company said: "It is impossible to say at the present
time whether international shipping will experience a ‘dip’ of limited duration
or a deeper slump."
The German company expects for-charter container shipping capacity
to expand about 15 percent in 2006. "In the second half of the year especially,
there will be substantial inflows of new large container ships of over 6,500
TEUs for the Far East trades," the German shipping group said. "From today’s
vantage point, it is uncertain whether the additional capacity entering service
will be absorbed by continuing cargo growth, especially of the Asian economies,
or whether there will be overcapacity, possibly leading to a slump in charter
rates and a decline in newbuilding prices."
This year, though, Hamburg Sud expects similar market conditions to
those of 2004. It cited growth forecasts for the world economy of 4 percent for
this year, below the growth of 5 percent in 2004. But "there are no expectations
of substantial slumps," Hamburg Sud said. "This also holds true in respect of
the national economies of South America and Asia, which are of particular
importance for Hamburg Sud."
Hamburg Sud shares the view that infrastructure congestion will
continue this year in several regions.
"Strong volume growth is causing delays in load and discharge
operations and schedule disruption worldwide, above all in the ports on the U.S.
West Coast, in Brazil and in some European ports," the company said. "The
infrastructure in the hinterland of the USA and Europe (rail, truck, barge),
especially during seasonal peaks, continues to come under extremely heavy
pressure, meaning that additional cargo volumes cannot be handled
trouble-free."
These conditions cause delays in transportation, as well as
additional costs for rerouting and in equipment positioning inland, the shipping
company noted.
Hamburg Sud is the parent company of Alianca and operates in most
of the north/south container trades.