German container shipping company Hapag-Lloyd plans to avoid sailing in the Red Sea, which is under attack from Houthi rebels in Yemen, in an expansion of the fallout from Israel’s war on the Gaza Strip, until at least the end of the year, the company’s chief executive, Rolf Habben Jansen, said today.
“At the moment, we plan to sail around the Cape of Good Hope until the end of the year,” Reuters quoted Jansen as saying about the announcement of financial results for the first six months of 2024.
He said the company’s performance in the third quarter will outperform the second quarter, and is likely to outperform the same period last year.
Company profits
Hapag-Lloyd’s profits plunged 75% in the first half of 2024, but it focused on expectations of higher full-year earnings and raised July’s headline figures, citing market strength.
“Although we were unable to achieve the same exceptionally good results as last year, we had a good first half of 2024 thanks to strong demand and better spot market prices,” said CEO Rolf Habben Jansen.
Hapag-Lloyd, the world’s fifth-largest container shipping company, said group net profit was 732 million euros ($804.47 million) in the six months, down from 2.9 billion euros ($3.2 billion) a year earlier.
Hapag-Lloyd has added new vessels and containers this year to meet additional capacity requirements resulting from the security situation in the Red Sea, Haben Jansen said.
Since November, the Houthis in Yemen have been launching attacks on ships heading to Israel in the Red Sea, or belonging to countries targeting areas in Yemen, to dissuade the group from targeting ships heading to Israel.
This disrupted global shipping and trade, forcing companies to avoid the Suez Canal and take the longer route around Africa around the Cape of Good Hope.
Geopolitical challenges
Hapag-Lloyd stressed that in light of the strong volatility in freight rates and geopolitical challenges, the outlook remains subject to a high degree of uncertainty.
Transport costs rose 5% to 6.2 billion euros ($6.8 billion) in the first half of the year, mainly due to higher fuel prices and increased spending on it as the security situation in the Red Sea requires longer journeys around Africa.
