Germany-based shipping company Hapag-Lloyd has suffered a US$103m loss last year amid significantly lower freight rates.
The group’s loss compares to a US$126m profit made the previous year.
The company’s revenue went down by 13% year-on-year to US$8.5bn in 2016, mainly due to a 15% fall in the average freight rate to US$1,036/teu last year.
The company’s transport volumes rose by 2.7% year-on-year to 7.6m teu, boosted especially by growth on IntraAsia and Europe–Mediterranean–Africa–Oceania (EMAO) trades.
Its transport expenses were reduced by 12.3% to €6.4bn (US$6.9bn) in 2016, but this did not fully offset the decline in the average freight rate.
Hapag-Lloud’s CEO Rolf Habben Jansen said: “We had a very challenging market environment in the first six months of 2016, but were able to improve revenue and results significantly in the second half of the year.
“Even though we performed relatively well in the industry in 2016, the bottom line is still that this result is not satisfactory.”
Freight rates were at their lowest point at the end of the first half of 2016 but gradually improved since then while still remaining on low levels.
This led to a more positive last quarter, with the group recording a profit of US$46m, compared to a US$52m loss in the same period of 2015, and revenue going down by only 2% year-on-year to US$2.2bn.
Habben Jansen said: “Due to long term contracts we have not yet been able to fully capture the recent positive rate development in the spot market while bunker price has increased significantly.
“We will continue to work hard to make Hapag-Lloyd even more competitive and to build on our strong position. Our efforts will be supported by the expected synergies and the further diversification of our product portfolio due to the merger with UASC.”
According to the company, the merger, which is now in its final stages, is expected to result in annual synergies of US$435m starting from 2019.
This is however offset by one-off expenses of approximately US$150m resulting from the transaction and the integration of UASC into the group.
“The key areas of focus for us in 2017 will be the launch of our new alliance [THE Alliance] as at 1 April and the rapid and seamless integration of UASC into Hapag-Lloyd”, Habben Jansen added.