The Hamburg-based carrier carried 2,929,000 TEUs in the first quarter of 2019, 68,000 or about 2.3% more than in the first quarter of 2018.
Rolf Habben Jansen, the company’s chief executive officer, said contract rates in the transpacific were up by a “three-digit number per TEU” over last year and that rates on the Asia-Europe trade lane were up between $50 and $100 per TEU.
Bunker fuel cost in the first quarter of 2019 averaged $425 per metric tonne — that’s 14% higher than the average a year earlier.
“Thanks to higher transport volumes, better freight rates and a stronger U.S. dollar, we achieved a good result and got the year off to a very decent start,” said Habben Jansen.
Talking about the general outlook for container shipping, he said despite downgrades in GDP forecasts, container demand is still intact. Growth in container carrying capacity is slowing, which he said should lead to a tightening in the supply-demand balance in the industry.
Hapag-Lloyd plans to deal mostly with that requirement by using low-sulfur fuel, although it is installing scrubbers on 10 ships. It also is planning to convert one ship to run on liquefied natural gas in the first quarter of 2020.
As companies take ships out of service to have scrubbers installed, that should have some effect on tightening ship supply, but Habben Jansen said only a very small percentage of the global fleet is going to have scrubbers.
He said scrubber-equipped ships are likely to be deployed on a variety of services and not concentrated on, for example, the Asia-Europe trade lane.
While the effect of the IMO 2020 mandate will depend on the spread between current high-sulfur bunker fuel and low-sulfur fuel, he said the extra costs will be $80 to $100 per TEU.
Global transport volumes by all carriers in the first quarter have been relatively flat, the company said. Hapag-Lloyd saw growth in the Asia-Europe, transatlantic, South American and African trades, which helped offset declines in the transpacific and intra-Asia trades.
Spot container freight rates in the first quarter, as measured by the Shanghai Containerized Freight Index, have been higher for most of 2019 and in 2018. Though they have dropped since the beginning of the year, Habben Jansen believes it is likely they will begin to increase in the second and third quarters as they did last year, though he added there is “always an element of uncertainty.”
He said the orderbook for new ships represents about 11% of the global container fleet and that scrapping of ships is expected to be higher this year than in 2018, all of which bodes well for an improving supply-demand situation.
Talking about goals for the coming year, Habben Jansen said the company will strive to increase profitability, deleverage the company, continue to prepare for the IMO 2020 low-sulfur fuel mandate, improve the quality of its services and develop more “digitalized solutions.”