HHLA outlines diversification strategy

HHLA outlines diversification strategy
As ships get bigger in Hamburg, so do peaks in truck visits

As Hamburger Hafen und Logistik AG (HHLA) announced falling throughput in 2015 and predicted no increase in 2016, its chairman announced a three-pronged diversification strategy.

Klaus-Dieter Pieters said that firstly the company will “maintain and build upon [its] market leadership in Hamburg” by preparing its terminals for particularly large ships and by increasing its productivity through automation and optimisation of processes. The company operates the Altenwerder, Bucrchardkai and Tollerort terminals in Hamburg.

Secondly, it will expand its network of intermodal companies by operating new connections and establishing new locations for European port hinterland and continental traffic. In 2015, more than 50% of the group’s investments went into rail, for example a hub terminal in Budapest.

Thirdly, Pieters said: “We are going to intensify our search for attractive port projects in growth markets.” Currently, the company’s only non-Hamburg container terminal is Odessa in Ukraine, a country undergoing an economic crisis.

In a statement announcing the strategy, HHLA also announced that its throughput, revenue and profit before tax all fell in 2015.

Peters blamed a “challenging environment” for a 12.3% decrease in throughput. “The weak global economic, trade and container throughput growth; China’s slowing economic growth; the severe recession in Russia and the economic crisis in Ukraine…was felt particularly in seaborne container handling at our Hamburg terminals.”

“On top of this, there were persistent infrastructure deficits which led to a drop in volumes in light of renewed fierce competition and further increased capacity,” he added. The Port of Hamburg has suffered from the European Court of Justice’s July 2015 decision to stop dredging from taking place on the River Weser due to environmental concerns.

At HHLA’s port logistics subgroup, revenue decreased by 5.1% and operating profit (EBITDA) decreased by 5.5% to €276m (US$314m).

For 2016, the company is predicting similar results, due to “forecast economic developments and the prolonged regional risks, as well as the existing infrastructure deficits”.

It is forecasting that group revenue will remain unchanged from 2015 while the group’s operating result (EBIT) will fall from €157m (US$178m) to between €115m (US$130m) to €145m (US$165m), following one-off consolidation expenses in the logistics segment.