GERMANY – German shipping giant, Hapag-Lloyd, has revised its 2024 earnings forecast upward, citing robust demand and an increase in freight rates.

The global shipping company expects its earnings before interest, taxes, depreciation, and amortization (EBITDA) to reach between USD 4.6 billion and USD 5 billion for the year, up from an earlier forecast of USD 3.5 billion to USD 4.6 billion.

This adjustment reflects not only the company’s adaptability in managing rising demand but also the challenges it faces from disruptions in shipping routes and fluctuating freight rates.

Hapag-Lloyd, which specializes in container liner shipping, highlighted that increased demand required significant investments in both additional shipping capacity and container stock.

This move has supported the higher forecast despite the company’s rerouting strategies to bypass risky areas in the Red Sea, where attacks on shipping vessels by Yemen-based militants have increased.

The altered route has extended shipping times, adding to operational costs. “The transport times are much longer, which is why we needed significantly more capacity and bought capacity.

Despite this, demand was relatively high and capacity was scarce or is still scarce,” a spokesperson for Hapag-Lloyd told Reuters.

The decision to navigate around the Cape of Good Hope—a lengthy detour that bypasses the Suez Canal—has added pressure on Hapag-Lloyd’s resources. But the rise in rates, particularly on the Far East-to-Europe route, has helped offset these expenses.

“When capacity is relatively tight, rates simply go up,” the spokesperson added, noting the company’s efforts to maintain reliability and availability despite these issues.

First half of 2024 performance

The company’s preliminary earnings report shows that Hapag-Lloyd achieved an EBITDA of approximately USD 3.6 billion over the first nine months of the year, which is a decrease from $4.5 billion in the same period last year.

The slight decline reflects changing market dynamics following the COVID-19 pandemic, though strong demand and spot rate increases in the second quarter of 2024 have lifted performance above initial expectations.

In terms of transport volume, the company recorded a 5% increase, moving a total of 6.1 million TEU (twenty-foot equivalent units) over the first half of the year.

Segment revenue, however, fell by 14% to $9.3 billion, mainly due to a reduced average freight rate compared to last year.

Hapag-Lloyd has also been expanding its presence in terminal and infrastructure segments, benefiting from equity stakes acquired in the previous year.

This sector contributed to the company’s earnings in 2024, with EBITDA reaching USD 71 million and EBIT USD 33 million in the first half.

These results signal Hapag-Lloyd’s commitment to expanding its infrastructure to maintain stable operations in an uncertain environment.

CEO Rolf Habben Jansen emphasized the company’s strategy to meet increasing capacity demands while maintaining service quality and sustainability efforts.

“We delivered a very good first half of 2024 thanks to strong demand and better spot rates,” Jansen stated. He added that the company continues to focus on expanding its fleet, enhancing supply chain security, and advancing its decarbonization goals.

As Hapag-Lloyd navigates ongoing challenges in freight volatility and international security, its updated forecast for the year reflects both cautious optimism and resilience.

Though the company acknowledges the high level of uncertainty due to unpredictable freight rates and geopolitical instability, it remains focused on growth and operational stability for the remainder of 2024.

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