Hapag-Lloyd set to order feeder newbuilds
HAMBURG : A 22-ship order currently under negotiation by German container line Hapag-Lloyd is designed to modernise its ageing feeder and shuttle fleet.
CEO Rolf Habben Jansen said that the company was looking to replace its less efficient and older vessels and was, therefore, preparing orders for 1,800 teu, 3,500 teu and 4,500 teu ships, probably at more than one yard.
“We are finalising the process and the final negotiations are [currently] going on and I expect to communicate a little bit more within the next, say, 30 days or so,” said Jansen late last week, adding that “We have a fair number of ships that are starting to reach 25 years of age, particularly in the smaller vessel classes and that means that we are looking at an investment of up to 22 new ships.”
According to Jansen this year’s container demand growth will not “be all that different” to capacity expansion, though he conceded that at 31% of the fleet, the orderbook remains “very significant”.
Nevertheless, Hapag-Lloyd expects that demand will continue to grow at around the 3% mark, as it has done for some time, then the requirement will be an increase of around 15-20% to meet the increase in demand up to 2030.
It must not be forgotten, argued Jansen, that a significant proportion of the current global fleet are approaching 25 years of age or more, and many of these vessels will be phased out before the end of this decade.
“On the environmental front, even if the net zero framework has been postponed, we still have CII and we have still things like EU ETS that will incentivise us to push forward decarbonisation, and we’ll certainly do that, although, the almost easiest and most cost efficient way to do that is to still sail a little bit slower,” explained Jansen.
Shuttle vessels are critical to the hub and spoke system that the Gemini Cooperation has developed with the companies’ offering a high level of schedule reliability for customers that Jansen says customers are increasingly relying on that reliability, adding that the lines must see the carriers get “a fair price for that reliability”.
Nevertheless, the Gemini carriers are subject to the same supply and demand imperatives that all lines are facing and the current glut of capacity, married with the overall decline in demand has seen freight rates tumble.
That year-on-year collapse in spot rates has taken its toll. On the Pacific to Asia to USWC rates were around $5,200 per feu in November last year, while USEC freight was close to $6,000 per feu, today those rates are $2,459 and $3,042 per feu respectively, down around 50%.
It is a similar story on the headhaul trades from Asia to North Europe and the Mediterranean.
Collapsing spot rates have taken their toll on Hapag-Lloyd’s returns, which will likely signal similar effects on other lines.
In the first nine months of this year Hapag-Lloyd’s group profits declined 48%, to $900 million year-on-year, on revenues that were $16 billion, up 5%, and volumes that increased 9% to 10.2 million teu, in the same period.