HAPAG-LLOYD SEES HIGHER RATES, PROFITS

HAPAG-LLOYD SEES HIGHER RATES, PROFITS

   Hapag-Lloyd Container Line expects to report higher profits this year, as freight rates recover in major trade lanes and productivity increases.

   The German carrier expects to ship 2.1 million TEUs this year, about 13 percent more than in 2002.

   “If the recoveries in rates apparent so far continue, and the dollar exchange rate against the euro does not continue to deteriorate rapidly, we expect to increase both our sales and profit,” said Gunther Casjens, chief executive officer of Hapag-Lloyd Container Line.

   Commenting on rates for eastbound transpacific service contracts from May 1, Casjens said his company experienced “a substantial increase, from a very low level.” Shipping lines of the Transpacific Stabilization Agreement were asking for increases of $700 per 40-foot box port-to-port.

   Casjens said Hapag-Lloyd Container Line made a small loss on the transpacific trade last year. The carrier moved 470,000 TEUs of transpacific cargoes in 2002, an increase of 17 percent over the previous year. The company expects transpacific volumes to exceed the level of its transatlantic shipments this year. In 2002, Hapag-Lloyd carried 500,000 TEUs of transatlantic cargoes.

   The Grand Alliance of Hapag-Lloyd, NYK Line, P&O Nedlloyd and OOCL could start an additional China/U.S. West Coast service in the next few months, Casjens said.

   Michael Behrendt, chairman of the Hapag-Lloyd group, said world trade should grow “considerably faster” in 2003 than in 2002, when it expanded 2.6 percent.

   “We are currently satisfied with both the volume and the rate trend, as transport prices are picking up slowly in most trades,” Behrendt said.

   “Rates are slightly higher than they were a year ago,” Casjens said. By contrast, Hapag-Lloyd Container Line said it experienced a “dramatic slump in rates” last year.

   Casjens said the company’s policy of yield management has helped reduce imbalance costs and maximize profits. He said the company’s staff understand the need to focus on the profit contribution of each shipment, and to turn down unprofitable business if required.

   In a separate development, Hapag-Lloyd said it is investigating selling its bulk and special logistics activities, a subsidiary VTG-Lehnkering. Bulk and special logistics have an annual revenue of more than 500 million euro (more than $570 million).