Hapag-Lloyd has unveiled its new mid-term strategy, with the core focus on customer orientation rather than expanding the size of the company.
Under Strategy 2023, the carrier sets out that further consolidation amongst the largest industry players is less attractive due to decreasing incremental scale benefits.
The German line is more than two times larger than it was in 2014 in terms of transport capacity following the acquisition of CSAV and a merger with United Arab Shipping Company (UASC).
In the company’s view, the liner industry has reached a turning point and therefore Hapag-Lloyd will “focus on significantly improving quality for its customers, selective global growth and becoming profitable throughout the cycle.”
Rolf Habben Jansen, CEO of Hapag-Lloyd, stated: “Size is not the name of the game anymore, but customer orientation. It is obvious that customers expect more reliable supply chains, so our industry needs to change and invest more. At the same time, we know that people are prepared to pay for value.
“Going forward, delivering value to get the most attractive cargo on board is at the heart of our new Strategy 2023. To be number one for quality is the ultimate promise to our customers and a strong differentiator from our competitors.”
The carrier’s new strategy features cost initiatives on network optimisation, terminal partnering and further improvements in procurement and container steering.
An optimised revenue management is meant to ensure that the most attractive cargo gets on board.
The aim of the strategy is to differentiate the firm from rival brands through better reliability and service quality and Hapag-Lloyd will attempt to achieve this by making changes to its structures, systems, processes and operations.
More investments in digitalisation and automation will be made in a bid to “exploit digital excellence”. One example is to increase the share of the online business via the web channel to 15% of the shipping line’s overall volume by 2023.
Financial targets by 2023 will focus on generating economic value by delivering a Return on
Invested Capital (ROIC) which is higher than the Weighted Average Cost of Capital (WACC). This implies an EBITDA margin of approximately 12%.
A cost management programme with a savings run-rate target of US$350-400m, has been launched to ensure a competitive cost position is maintained also after launching the strategy initiatives.