The CEO of Germany’s Hapag Lloyd— the world’s fifth-largest container shipping operator— Rolf Habben Jansen, warned on Tuesday that global container shipping freight rates have reached “unsustainable levels” and must rebound.
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“There are spot rates that are clearly below cost,” Jansen said during a conference call with journalists, stressing that these circumstances are not sustainable in the long run.
“Whenever everything becomes cash negative, then people take the measures that need to be taken to settle rates slightly above cost,” he added.
A stagnant situation
The Shanghai containerised freight index reached a low point in the early second quarter of 2023, dipping below $1,000 per twenty-foot equivalent unit (TEU). The index has since shown minimal movement, indicating a stagnant situation.
On the other hand, transport expenses witnessed significant increases, according to Jansen.
These rising costs can be attributed to a combination of inflation, fuel price hikes, and labour expenses, among other factors.
In the first quarter of 2023, the shipping company’s transport expenses rose by 3% compared to the previous year, reaching $1,324 per TEU.
Although the expenses are expected to stabilise at around $1,250-1,750 per TEU in due course, this would still be a considerable 25% above pre-pandemic levels, Jansen remarked.
In May, Hapag Lloyd confirmed its full-year guidance for 2023, anticipating earnings before interest and taxes (EBIT) to fall within the 2-4 billion euros range.
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