Losses mounted to $78.9 million, compared to a $31.6 million in the same period in the previous year. Revenue for the line fell 27.7 percent to $1.56 billion from $2.16 billion.
'This decline was attributable to a 13 percent fall in transport volumes and a 16 percent decline in freight rate levels year-on-year,' TUI said in a statement. 'The development of turnover was also impacted by a weakening of the U.S. dollar against the euro. The earnings impact resulting from the volume and rate effects was partly offset by cost control measures successfully implemented. In addition, rates were again considerably increased and transport volumes rose in the quarter under review.'
TUI divested itself of more than half of Hapag-Lloyd in fall 2008, right before the container shipping industry was plunged into its worst year on record. A majority stake in the line is now held by a consortium of Hamburg-based investors, known as the Albert Ballin group.
The line secured cash infusions from shareholders (including TUI) and loan guarantees of more than $1 billion from the German government to ensure it could keep operating through the most harrowing part of 2009, but reports emerged in early 2010 that a recovery in volumes and rates likely means the line won't have to rely on the government backing. The loan guarantees were a source of controversy within the European Union, with some insisting that the government backing constituted an unfair advantage for troubled lines over those that had managed to stay safe.
In any case, freight rates on the Asia/Europe lane have been recovering steadily in late 2009 and early 2010, though Hapag-Lloyd's average rates per TEU globally fell from $1,619 in its first quarter a year ago to $1,368 this year. Volume fell from 1.3 million TEUs to 1.1 million TEUs.
'Due to the current market situation, the main goal for Hapag-Lloyd was to increase freight rates and margins,' TUI said. 'To this end, selective cargo management was required. Thanks to these measures, freight rate levels were increased substantially in the first quarter of 2009/10 versus the previous quarter (July to September 2009).
