Liner shipping revenue up at Hamburg Sud
German liner and bulk shipping group Hamburg Sud, said today that strong volumes and freight rates in the first half of 2005, helped it post a 25 percent increase in liner shipping revenue to 2.5 billion euros ($3.1 billion) for the year, compared to 1.98 billion euros in 2004.
Hamburg Sud doesn’t provide figures on its profit results, but said its liner shipping division contributed 82 percent of the total group revenue of 3.04 billion euros ($3.77 billion), which were up 19 percent over the previous year.
Hamburg Sud and its Brazilian subsidiary Alianca increased their combined container throughput 10 percent to more than 1.5 million TEUs in 2005, from about 1.1 million TEUs in 2004.
“Overall in 2005, Hamburg Sud and Alianca turned in a respectable performance which exceeded that of the previous year,” the group said.
“Liner shipping saw the positive trend in volumes and freight rates from the previous year continue in the first half of 2005. In numerous trades this led to a significant build-up of capacity, placing freight rates in the second half of 2005 under considerable pressure,” he group added.
In contrast, revenue in the group’s bulk division dropped 9.7 percent to 453 million euros ($563 million) from 502 million euros a year before.
“In 2005 bulk shipping, operated under Rudolf A. Oetker, Furness Withy Chartering and Alianca Bulk, initially experienced a continuation of the boom in the freight market, which, with interruptions, had lasted since the end of 2003. Then, in April and May, rates plummeted, primarily as a result of a decline in Chinese iron-ore imports. Earnings subsequently rallied but no longer regained the very high level of the first quarter of 2005. Thanks to good tonnage coverage, all three segments of the bulk shipping division produced very pleasing results,” Hamburg Sud said.
The company said it expects to continue making profits this year but cautioned that new capacity and consolidation in the liner industry make for less certain predictions.
“Similar growth in the world economy to that in 2005 is forecast for the current year, sustained yet again by the powerful economic development in Asia (with growth of 8.2 percent) and especially in China (with growth of 9.5 percent). But the South American economies, which are of particular significance for Hamburg Sud, are also expected to see growth remain unchanged at around 5.4 percent. On this basis, we anticipate further gains in cargo volume for 2006,” Hamburg Sud said in a statement.
“However, the positive development on the demand side is balanced against capacity growth in container ships of 16 percent, so that overcapacity in worldwide liner shipping is a factor to be reckoned with for the first time in a number of years. Almost half of the newbuildings coming on stream in 2006 will be post-Panamax vessels of more than 5,000 TEU to be deployed only on the transpacific and Europe/Far East routes. This may result in smaller ships switching to the north/south trades and leading to an increased availability of tonnage there. The considerable growth in capacity since 2005 has led to falling charter rates for container ships,” Hamburg Sud said.
“It cannot yet be predicted how and at what pace the consolidation process in container liner shipping will continue. Due to the takeover of P&O Nedlloyd by Maersk, and of CP Ships by Hapag-Lloyd, concentration in the shipping industry has intensified. In several of our trades there are radical changes in partnerships and ship systems, which in turn necessitate the reshaping of service and cooperation concepts. In this market development Hamburg Sud sees the chance of greater creative freedom in the optimization of service concepts in line with its own commercial and logistical needs.”