Hapag-Lloyd benefits from increased freight rates
Hapag-Lloyd's parent company said it continues to expect a significant increase in earnings levels in container shipping for the 2008 financial year.
TUI AG, the tourism company that plans to sell Hapag-Lloyd, said the first quarter saw a considerable improvement in freight rates and that the container shipping unit saw sales increase 1.9 percent to 1.45 billion euros ($2.25 billion) compared to 1.42 billion euros in the same 2007 period.
Operating earnings (underlying earnings less interest, taxes and amortization expenses, or EBITA) was 18 million euros ($27.9 million) in the first quarter compared to a loss of 36 million euros ($55.8 million) the same period the prior year.
“The rise was attributable to a significant improvement in freight rate levels on overall stable volumes. The 14.4 percent decrease in the U.S. dollar against the euro had an opposite effect,” TUI said.
“Risks for the future development are related to a potential adverse effect of the subprime crisis on the development of world trade and the development of shipping bunker costs, which continued to rise in the first quarter,” the company said.
“Despite a slight slowdown in the overall economic environment, TUI AG continues to expect a significant increase in earnings levels in container shipping for the 2008 financial year,” it added.
Overall volumes grew 0.3 percent to 1.31 TEU.
The company said transport volumes were up 8.9 percent in the transpacific and 16.6 percent in the Australasia trades, but down 8.3 percent in the Atlantic trade lane.
It attributed the transatlantic decline to “the appreciation of the euro against the U.S. dollar. In combination with the current tight economic situation resulting from the subprime crisis in the U.S., this adversely impacted demand for European goods by American consumers.”
Average freight rates improved on all trade lanes, an average of 14.3 percent year on year.
“At freight rate growth of 33.3 percent, the Far East trade lane achieved a particularly outstanding performance,' the company said.