In a recent Interview, Rolf Habben Jansen, CEO of Hapag-Lloyd, illustrated his views for the rest of the year on global trading. As we all know the Houthi attacks in the Red Sea and Panama Canal drought have driven up ocean freight with rates on key routes up 75% to 150% year-to-date. Despite these problems the CEO of the fifth largest ocean carrier tells that his views improved for the rest of the year after conversations with clients and logistic companies led him to rethink the forecasted projections on demand. This comes in the same week as the company reported a steep decrease in 2023 profits and a drop in dividends which led to a stock decline. The poor results reported were a consequence of the difficult last quarter of 2023 when rates were at unsustainable levels and later the Red Sea crisis which again affected the market.
While the crisis in the Red Sea has resulted in a shipping container rates spike, the company is forecasting a decrease in earnings as costs have increased with the trade diversions from the Red Sea. The diversion is represented by the route around the Horn of Africa that in addition to added costs also could increase carbon dioxide emissions by 260%-354% with Europe-bound vessels paying higher emissions liabilities under the Eu Trading System
The attacks by Houthis on commercial shipping is continuing in the Red Sea with the latest attack being on Friday when a tanker was attacked. Jansen understands the concerns with this situation and says that the outlook is really difficult and most importantly no one knows when these issues are going to end with different beliefs on its date of end despite the efforts that recently many countries started to put in.
Author: Luca Sesena