Bad news from Hapag Lloyd: costs up and rates down

In a sign of the times, German shipping line Hapag-Lloyd saw its operating profits fall by more than €150 million euros ($59.4m) due to decreasing freight rates and increasing costs.

A ship of Germany’s Happag Lloyd Shipping Line.

In the first half of 2011, the carrier reported earnings before interest and tax of €42 million, compared with a €218 million operating profit during the same period in 2010, although that was a record year for the German company.

It posted a net loss of €32.7 million for the first half of 2011, compared with a profit of €174.9 million a year earlier, because interest payments reached €55.3 million.

The company blamed its decline in fortunes primarily on freight rates, particularly on the Asia-Europe trade, and significantly higher fuel costs.

Hapag-Lloyd saw its average first-quarter freight rate of $1,563 per teu decline to $1,531 per teu in the second quarter, resulting in an average freight rate of $1546 per teu for the first half of 2011.

The North Atlantic accounted for 582,000teu (up 1.5%), Latin America 559,000teu (+7%), Far East 549,000teu (down 2.6%), transpacific 560,000teu (+8.3%) and Australasia 284,000teu.

Hapag Lloyd’s major shareholder, Tui, said it was no longer prepared to give a time-frame for its planned sale of the carrier.