HAMBURG SUD HIT BY REVERSAL OF TREND, LOWER RATES

HAMBURG SUD HIT BY REVERSAL OF TREND, LOWER RATES    The German shipping group Hamburg Sud said that its activities were affected by a reversal of trend in the global economy and the shipping market in 2001, and warned of a “substantial worsening” of results from its liner and tramp operations this year.
   Hamburg Sud owns the liner shipping operators Columbus Line, Crowley American Transport and Alianca, and is also active in bulk and reefer shipping.
   “Following a good year for the shipping industry in 2000, buoyed up by a very positive development of the world economy and world trade, the hopes for a continuation of this trend in 2001 were disappointed,” Hamburg Sud said.
   “Although growth forecasts look more friendly today than at the end of 2001, the pressure on freight and charter rates, resulting from the continuing high inflow of newbuildings, will persist,” it said.
   Against this background, Hamburg Sud warned that its revenue will decrease this year, despite an expected slight increase of container volume, to 760,000 TEU, from 750,000 TEUs in 2001.
   Hamburg Sud forecast a decline in cargo volume of approximately 3 per cent in existing services, due to weak southbound cargo. “This will add to the pressure on freight rates, particularly since the expectations of many customers have already been shaped by the sharp fall in rates of the east/west trades,” the German group said.
   In 2001, numerous deliveries of new containerships, “resulting principally from orders for large containerships placed in the boom phase,” have caused “massive overcapacity,” it commented.
   At the end of the first half of 2001, the South American trade routes in which Hamburg Sud is heavily involved were also drawn into the downturn. Hamburg Sud cited the falling import cargo volume of Brazil and, above all, Argentina, and lower ship capacity utilization in southbound traffic, from Europe and North America, to the East Coast of South America.
   “This situation is seen in its most dramatic form in Argentina, which finds itself in a fundamental economic and financial crisis,” Hamburg Sud said.
   The net revenue of the Hamburg Sud group for 2001 was 2 billion euro ($1.8 billion), up slightly from 1.9 billion euro in 2000. Liner activities at Hamburg Sud generated a revenue of 1.5 billion euro ($1.3 billion) last year, up from 1.3 billion euro.
   Hamburg Sud does not disclose its profit results, and only said that “judged as a whole, operational performance in 2001 — as a result of the good first half-year — can be described as satisfactory.”
   The Hamburg Sud group carried 750,000 TEUs in 2001, 3 percent more than in 2000, but below target.
   The German group said that its Panamax and Handymax bulk carriers suffered a decline in rates last year.
   The large number of newbuilding deliveries, combined with the simultaneous cut in OPEC production, also depressed the rates in tanker shipping, it said.
   Hamburg Sud took delivery of five of a total of six new 3,800-TEU containerships built last year, the sixth having been delivered in February of this year. The vessels have been deployed in the group’s inter-American service between the east coasts of North and South America.
   At the end of 2001, Hamburg Sud deployed 100 vessels globally including tramp ships, of which 19 of which were group-owned.
   Last year, Hamburg Sud extended to the Far East its service between the west coasts of South and North America, and launched a weekly Far East/East Coast South America link.
   Since November, Alianca has been cooperating with the Brazilian shipping line Docenave in a Brazilian coastal service.
   Hamburg Sud said that the entry of Maersk Sealand in the U.S./Australia/New Zealand market has led to overcapacity and downward pressure on freight rates.
   Commenting on trading prospects, Hamburg Sud said that it expects a substantial improvement in the world economy this year, but Argentina, Venezuela and the Middle East would continue to be “trouble spots.”
   However, Hamburg Sud cited plans to improve its productivity and cost position.