Hamburg Süd, which also owns the Brazilian shipping company Aliança, said overall its liner business "was not satisfactory in 2011," despite an increase in revenue of 6 percent to 4.2 billion euros ($5.5 billion).
The German liner company, which is privately owned and doesn't release profit/loss information, said increases
in the cost of fuel and services such as terminal handing and inland transportation "were well in excess of the gain in revenue. As a consequence, the result of the liner sector in 2011 fell significantly below that of the record year of 2010."
The company said it moved 3.1 million TEUs in 2011, 9 percent more than the prior year, but freight rates "held stable compared with 2010." It also said results were affected by the weaker U.S. dollar.
Part of the privately held Oetker conglomerate, Hamburg Süd said "stagnating freight rates in tandem with a sharp rise in operating costs, the Hamburg Süd Group's result in 2011 remained below budget and fell short of the previous year. Significantly higher capital spending, in the form of deposits and final payments on ship newbuildings for the most part, could not be covered entirely from operational cash flow."
Ranked by Alphaliner as operating the 13th largest containership fleet in the world, Hamburg Süd said "exhibiting particular strength yet again were the trade lanes from Asia. Pleasing performance was seen, too, in the Inter-America and Pacific services. Mediterranean operations, by contrast, fell below expectations as much as did Brazil's exports, which were dampened by the strong national currency."
The Oetker conglomerate has interests in food, beer, wine and spirits, banking, hotel, and publishing industries. It is also involved in tramp shipping, operating breakbulk ships and product tankers. It said this resulted in another 408 million euros in revenue last year.
Hamburg Süd said in 2011 "container shipments worldwide rose by approximately 8 percent to around 150 million TEUs. While the major East-West trade lanes, especially from Asia, showed below-average development, shipments on Intra-Asia and a number of North-South routes posted double-digit growth rates."
The company said it "succeeded in holding freight rates overall on a par with the previous year. Nonetheless, revenues in many trades were not sufficient to achieve surpluses against the background of a sharp rise in operational costs."
It noted average bunker price alone, at about $620 per ton in Rotterdam, was 37 percent higher on average than the previous year. It also said there were "significant increases in variable costs, especially for cargo handling in the ports and for pre- and post-carriage transportation on land."
Hamburg Süd said it optimized its liner network, offering customers additional connections between South America and Europe as well as the Middle East through key transhipment hubs in Cartagena, Colombia and Tangiers, Morocco.
It said on routes between Europe to the eastern Mediterranean, a new vessel-sharing agreement with Hapag-Lloyd was implemented and is to be expanded in 2012 with, among other things, the deployment of larger and more efficient vessels. It also said additional capacity is being provided in the burgeoning trade lanes from Europe to India and Pakistan.
Hamburg Süd operated 160 vessels, 43 of them group-owned on Dec. 31. The liner services employed 107 ships and the tramp sector 53. While the number of containerships declined by six units compared with the previous year, the slot capacity deployed in the liner services increased by some 6 percent to about 395,000 TEUs. The company noted with the increasing ship sizes, costs per slot were continuously reduced.
The company took delivery of five "Santa"-class ships last year, which have a capacity of 7,100 TEUs and are capable of taking up to 1,600 refrigerated containers. It said it intends to continue pursuing its strategy of raising the owned share of ships and containers in the years ahead. The final three Santa-class ships, as well as four 3,800-TEU vessels, will be delivered in 2012.
The company said it is also taking advantage of the steep fall in newbuild prices, placing orders for six 9,600-TEU ships in March 2011, which are due for delivery in 2013 and 2014 and will be deployed in the South America services.
On the outlook for the shipping industry, the company said "only very isolated positive signals can be detected for 2012. Whether a sustainable turnaround in the fortunes of container liner shipping will come about in the current year, however, cannot yet be said with any certainty."
On the positive side, it said carriers' global order book amounts to only about 26 percent of the tonnage in operation, compared to 60 percent at the end of 2008. It also said carriers are abandoning unprofitable routes, and laying up ships, with some observers predicting 6-7 percent of the global containership fleet will be laid up towards the end of the year. It also said inefficient ships may be scrapped earlier than expected and more ships may "super-slow" steam, effectively reducing capacity.
Hamburg Süd said "even with a moderately positive development of the world economy and world trade, however, it will still be one or two years before global cargo volume and slot capacity regain equilibrium, a pre-condition being the absence of further sizeable new orders.
"It remains to be seen whether the recovery of freight rates noted in a number of trades since late 2011 will be lasting, or whether drops will recur in the course of 2012, especially with the end of seasonal trade on the Asia routes," the company said.
The company also announced Joachim A Konrad, deputy chairman of its executive board, will retire at the end of April. Peter Frederiksen and Frank Smet will succeed him. — Chris Dupin