Hapag-Lloyd issues profit warning, citing hard times

GERMAN shipping giant Hapag-Lloyd has drastically reduced its profit
forecast for 2018 and now predicts EBIT will range between EUR200
million (US$232.785 million) and EUR450 million (US$523.767 million)
and EBITDA to range between EUR900 million and EUR1.15 billion.

When the shipping line released its first quarter results in May it
said EBIT and EBITDA for 2018 would be "increasing clearly" compared
to its 2017 EBIT of EUR410.9 million and EBITDA of EUR1.05 billion,
reported American Shipper.

Hapag-Lloyd said it adjusted its latest outlook due to "an
unexpectedly significant and continuing increase in the operational
costs since the beginning of the year, especially with regard to
fuel-related costs and charter rates combined with a slower than
expected recovery of freight rates".

In the first quarter of this year the average bunker consumption price
for the carrier totalled $372 per tonne, up from $313 in 2017.

The average freight rate for the quarter totalled $1,029 per TEU
compared to $1,056 per TEU in the first quarter of 2017. "Besides the
inclusion of the UASC Group, which had a lower freight rate level
overall, the main reason for the decline was the ongoing difficult
market environment," the company said.

Hapag-Lloyd is a member of THE Alliance, which doesn't appear to have
the upper hand on either the Asia-north Europe or Asia-North America
trades. THE Alliance also includes Yang Ming and the Ocean Network

BlueWater Reporting's Capacity Report shows that of the three main
ocean carrier alliances on major east-west trades, THE Alliance
deploys the least amount of capacity, vessels and services on the
Asia-north Europe trade and comes in second place on the Asia-North
America trade.