?Weak market environment? sees Hapag-Lloyd post 3rd quarter loss

ôWeak market environmentö sees Hapag-Lloyd post 3rd quarter loss    Germany's TUI AG, under pressure to sell off its shipping unit, said today that lower freight rates and higher costs saw Hapag-Lloyd post a third quarter operating loss of 25 million euros ($32 million), compared to a pre-tax gain of 95 million euros a year ago.
   TUI was faced with a one-off 14 million euros ($17.9 million) expense related to its integration of CP Ship, which it said it has almost completed.
   Third quarter shipping revenue jumped 73.1 percent to 1.51 billion euros ($1.93 billion), from 873.3 million euros in the same quarter 2005. The enlarged Hapag-Lloyd’s container volume was constant at 1.24 million TEUs although its average freight rate declined 4.2 percent to $1,431 per TEU.
   'Freight rates dropped in almost all trade lanes due to intense competition,' TUI said.
   'In the third quarter of 2006, the shipping division operated virtually in the same environment as in the previous quarter. In the period under review, the trend was characterized by a reduction in freight rates and high costs. The oil price-related bunker costs and charter rates remained high in all trade lanes,' TUI said.
   For the year to date, Hapag-Lloyd posted an operating loss of 91 million euros ($116.4 million), from a profit of 218 million euros in the same nine-month period 2005. Revenue soared 106.1 percent to 4.76 billion euros ($6.08 billion), compared to 2.31 billion euros last year.
   Looking ahead, TUI forecast a full-year loss at Hapag-Lloyd.
   'Despite a so far positive development of transport volumes, the shipping division is expected to considerably undercut the high earnings level achieved in 2005,' TUI said. “This is due to the cost of integration, the partly negative development of freight rates, in particular in Asian transports, the oil price-induced increase in bunker costs and land-based transport costs.
   'In the light of the current external framework, it is to be expected that the one-off integration costs will result in negative earnings by the shipping division,' the company said.