Hapag-Lloyd seizes African specialist DAL amid soaring profits

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Photo 121778824 / Africa © Björn Wylezich | Dreamstime.com

Hapag-Lloyd today announced net profit of $10.75 billion for 2021, which was accompanied by the announcement of the acquisition of the line business of fellow African trade specialist Deutsche Afrika- Linien (DAL).

The acquisition of the DAL brand will strengthen Hapag-Lloyd’s footprint in South Africa and follows its purchase of niche West African trading carrier NileDutch last year.

The iconic 130-year-old DAL employs over 150 people with its own offices in Germany and South Africa, owns a 6,589-teu ship, the 11-year-old Post-Panamax DAL Kalahari (above), and has a fleet of 18,000 containers.

The vessel is currently deployed between Northern Europe and South Africa in joint service with Maersk (SAECS) and ONE.

According to data from eeSea, DAL controls 10% of the VSA’s capacity – nine vessels operate on the loop, which calls at London Gateway, Rotterdam and Bremerhaven in northern Europe and Cape Town and Durban in South Africa.

Speaking at the company’s annual report press conference this morning, CEO Rolf Habben Jansen said the “growth potential” of the African market was the driving force behind the two acquisitions.

“Africa remains an important strategic growth market,” said Mr. Habben Jansen, “DAL is a valuable addition that allows us to offer our customers a better network and additional port coverage in this region.”

Explaining the decision to sell DAL, Hamburg-based family business Essberger said it saw “risks for the future in the container shipping business”.

He said he was “under increasing pressure from mega-carriers dominating the market.

“The significant increase in consolidation within container shipping in recent years has irrevocably changed the industry and economic framework conditions.

“With the growing challenges of container shipping, as well as environmental and climate protection, we are facing dependencies and cost inconveniences that we will no longer be able to compensate for in the long term in South African trade. “, says a press release. .

Meanwhile, Hapag-Lloyd’s 10-fold increase in net profit for 2021, compared to the previous year, was achieved from flat lifts of 11.9 million teu, as revenue soared 80% to reach $26.4 billion.

The last quarter of 2021 saw the carrier’s average rate reach $2,577 per TEU, with that trend continuing into the first and second quarters of this year as higher contract rates go into effect.

However, soaring bunker rental and charter costs are likely to wipe out some of the benefits of increased bottom line rates.

Mr Habben Jansen said most of the carrier’s contracts included a provision for the calculation of fuel surcharges, but he confirmed that Hapag-Lloyd would not seek any form of emergency BAF “because we don’t think that’s fair “.

Despite this, Mr. Habben Jansen said he “expects a normalization of rates in the second half of the year”, the full-year earnings outlook should still be at the same level as in 2021 with an EBIT of 10-12 billion. of dollars.

Refreshingly, Mr. Habben Jansen said that in addition to ordering an additional 300,000 TEUs of equipment and having an order book of vessels with a capacity of 270,000 TEUs, the company will seek to inject more money in the development of its staff, having taken on around 1,000 new recruits. over the past 12 months.

He said the additional staff were mainly employed to bolster his customer services “to help us deal with any queries we receive”.

Mr. Habben Jansen said the company would respond to the letter received last week from the chairmen of two US Congressional oversight committees, which was also sent to Maersk and CMA CGM, expressing concern that it might engaging in “predatory practices” against small and midsize shippers during the pandemic.

Carriers have been given two weeks to respond with details of rate increases implemented since January 2020 for one-time and contract cases.

“That’s perfectly fine and justified,” Mr. Habben Jansen said, “if I were the regulators, I would be asking the same questions.”

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