Hapag-Lloyd blame "Soaring Bunker Prices" for Q1 Losses

Recession and rising fuel costs are causing uncertainty in the shipping industry

German shipping firm Hapag-Lloyd AG (Hapag-Lloyd) have reported losses of €132.4 million ($171.5 million) for Q1 2012 compared with a €22.1 loss ($28.6 million) for the same period in 2011.

Steep hikes in bunker costs were amongst the key reasons blamed for the fall in profits, but the company boosted revenue by 8% to €1.6 billion in Q1, with increased transport volumes of 1.32 million TEU (twenty-foot equivalent units), an 11% rise from 1.19 million TEU in 2011.

According to Hapag-Lloyd's Q1 2012 Interim Group Report, bunker prices shot up to $667 per metric tone (pmt) in 2012, a 31% increase on last year’s figure of $509 pmt which cost the firm an additional $158 million in what is traditionally the slowest quarter of the year for the shipping industry.

Very challenging

Hapag-Lloyd said in their press release that Q1 had been “very challenging,” and that "short-term prospects for the industry remain shrouded in uncertainty due to the risks for global economic developments."

The company report said that, “soaring bunker prices,” the recession in Europe, “slower economic growth in China and the high budget deficit in the USA are the main factors restricting growth.”

Hapag-Lloyd went on to announce they were raising freight charges effective from March 1, with further rises predicted throughout the year, but these will only affect earnings from Q2 going forward and are not expected to offset the “burdening costs” of bunkers and energy related expenses.

Despite ongoing difficulties facing the industry, Hapag-Lloyd said they anticipate global increases in demand for container transport during peak season, and this combined with higher freight charges should enable them to meet targets for 2012.