Driven by a US dollar significantly stronger on the average for the year, sales revenue from Hamburg Süd’s liner operations grew 16% to Euro 4.8 bn (US$6.2bn).
Although Hamburg Süd’s result was marginally in excess of forecast it is still “not possible to speak of a satisfactory earnings level.”
2012 was characterised by the European sovereign debt crisis, the sluggish recovery of the US economy, muted economic development in China, and very low growth in the Brazilian national economy. Global economic output (GDP) increased by around 3.2% and container shipments by 3.3% per cent to around 156m teu.
Global slot capacity rose by some 6% due to newbuildings entering service but scrappings were still far too low. In addition, vessels entered service which were ordered during the 2008/9 crisis with delivery deferred to a later date or which were ordered in light of the 2010/2011market recovery.
Given the widening gap between the supply of vessel capacity and demand for transport services, freight rates were under pressure. Following a period of extremely intense competition in 2011, a more sensible approach gained momentum in the industry at the start of 2012.
Shipping companies increasingly put capacity management before volume and market share ambitions. Freight rates were raised as a result, by up to US$1,000/teu in the Asia-Europe trade, for instance. However, because of the widespread absence of the peak season, freight rates came under renewed pressure from June onwards, but without reverting to the low starting point.
Accompanied by considerable price fluctuations, fuel costs in 2012 were very high at an average for the year of US$641/ton, up 4% up on the previous year.
These factors alone resulted in many shipping companies taking serious losses and industry experts believe that following losses of some US$6bn in 2011, liner shipping companies earned at most only a marginal surplus.
Hamburg Süd/Aliança liner shipping
With the Europe-America and Far East services in particular contributing to the 4% growth in cargo volumes, a pleasing performance was also seen from some of the Inter-America services in contrast to the Mediterranean operations and part the Pacific services which fell below expectations.
Although liner operation sales increased by 16% to Euro 4.8 bn this was largely accounted for by the US dollar exchange rate and the revenue growth was accompanied by substantial cost increases leading to a better 2012 result for the liner division but still unsatisfactory and well below that of the record year 2010.
Ships and containers
During 2012 the final three Hamburg Süd “Santa” series ships entered service. With a capacity of 7,100 teu, they are the Hamburg Süd Group’s largest units to date and are deployed on the routes between Northern Europe and South America East Coast, as well as between Asia and South America’s East Coast.
Six 9,600 teu “Cap San” vessels ordered in early 2011 will be delivered in 2013/2014 for deployment on the trade lanes between Asian and South America the as well as between Europe and South America. Additionally, in the course of this year delivery will be taken of four 3,800 teu newbuildings that are to be deployed in Aliança’s Brazilian cabotage service.
Outlook for 2013
A fundamental change in the shipping industry’s poor earnings is not currently anticipated.
Global economic output is anticipated to grow around 3.3% with container liner volumes up by around 6%. Slot capacity will rise by about 7% despite increased scrappings due to pre-2010 vessels having significantly higher fuel consumption than newer units. The trend to very large tonnage is continuing.
Freight rates are likely to remain under pressure in the current year and an equalisation of capacity and cargo volume cannot be expected until 2015 at the earliest, assuming the absence of any sizeable ship newbuilding activity.
In December 2012 the owners of Hamburg Süd and Hapag-Lloyd AG began investigating the potential benefits of a merger of the two companies. No agreement has been reached on important points to date. Negotiations were broken off in late March and resumption is unforeseeable at this time.