Hapag-Lloyd Reports Exceptional Earnings for 2019

German container carrier Hapag-Lloyd announced Wednesday that its earnings for 2019 were unusually good: EBITDA came in at more than $2.1 billion for the year, up by $880 million and 80 percent from the year before. 

About half of the increase was related to the first-time application of the IFRS 16 accounting standard, which had a significant positive effect on the way earnings were calculated. However, the underlying business performance did improve: revenues were up nine percent year-on-year, transport volume was up about one percent and bunker prices were slightly down.  

The outlook for early 2020 may not be as positive. Global container carriers have reported significant disruption due to the coronavirus outbreak in China, which has severely impacted manufacturing activity and port productivity. 

Ocean carriers have blanked a total of about 1.7 million TEU worth of export sailings from China since late January, according to Alphaliner, which corresponds to lost revenue in the range of $1.5 billion. The consultancy's data indicates that 33 sailings have been canceled on the Asia-Europe trade lane alone over the past month, which would represent about 700,000 TEU and nearly half of all expected departures on normal rotations. The volume reduction for transpacific rotations was comparable. 

Cuts during the Chinese lunar new year are expected, but these are far deeper than in years past, Alphaliner said. And for the sailings that are still scheduled, the Wall Street Journal reports that many ships are departing with far fewer boxes than their normal capacity - a recipe for loss-making voyages. 

For Hapag-Lloyd, the blanked sailings include one each for the AN1 and AN2 China-to-South America rotations; one sailing for the EC2 service from China to the U.S. East Coast; one sailing each for the PN3 and PN5 services from China to the U.S. West Coast; and one sailing of the NZX service from China to New Zealand. 

The disruption on the ground may soon come to an end, as Chinese officials have expressed confidence in measures to control the epidemic and restore business operations. On February 19, Hapag-Lloyd reported that all of its terminals and depots are now open. However, some are still operating at limited capacity, the line said, and there is still a shortage in the number of truckers available to carry containers to and from port terminals.