Hapag-Lloyd CEO: Size Is Not the Name of the Game Anymore

Rolf Habben Jansen

Further consolidation in the container shipping sector, especially among the largest industry players is no longer as attractive, as benefits of scale that lured many companies into the venture seem to be fading away.

The past few years were a very busy period for the container shipping sector, with top-tier liners the likes of Maersk, CMA CGM, and Hapag-Lloyd, availing of the market opportunities to increase their size through mergers and acquisitions.

Pressured by an oversupply of vessels, and poor market conditions, some container shipping companies had to pull out of the business, while a number of others decided to combine with their counterparts in order to survive market headwinds. The consolidation wave resulted in the shrinking of the number of global container lines.

However, it appears that the consolidation drive has hit its peak and that heavy-weight liner giants have reached the limit where further consolidation among giant companies would be considered as a competition threat by regulators.

Size no longer matters?

The German container shipping giant Hapag-Lloyd has more than doubled in the size since 2014, having merged with the Chilean Compañía Sud Americana de Vapores (CSAV) in 2014 and United Arab Shipping Company (UASC) in 2017.

Earlier this year the company was approached by French counterpart CMA CGM with a merger proposal, which the company dismissed.

“The industry has come to a turning point. Hapag-Lloyd will therefore focus on significantly improving quality for its customers, selective global growth and becoming profitable throughout the cycle,” the company said, while disclosing details of its new mid-term Strategy 2023.

Rolf Habben Jansen, CEO of Hapag-Lloyd, believes that size is not the name of the game anymore, but customer orientation.

“It is obvious that customers expect more reliable supply chains, so our industry needs to change and invest more. At the same time, we know that people are prepared to pay for value. Going forward, delivering value to get the most attractive cargo on board is at the heart of our new to be number one for quality is the ultimate promise to our customers and a strong differentiator from our competitors,” he pointed out.

Hapag-Lloyd’s Strategy 2023 focuses on continuous cost and revenue management, selective global growth and profitability with further investment in digitalization.

The company explained that it plans to focus its cost initiatives on network optimisation, terminal partnering and improvements in procurement and container steering.  Furthermore, via optimised revenue management the company aims to ensure that the most attractive cargo gets on board.

As part of its digital transformation Hapag-Lloyd wants to increase the share of the online business to 15 percent of Hapag-Lloyd’s overall volume by 2023.

The company has also teamed up with industry counterparts to look into standardization of digital transformation of the industry.

Related- Simha: Our Association Will Be Industry’s Collective Voice on IT Issues

The company’s financial targets by 2023 are focused on delivering a return on invested capital which is higher than the weighted average cost of capital, meaning an EBITDA margin of approximately 12 percent. In addition, the company has set a savings run-rate target of USD 350 to 400 million.

On leverage, the net debt-to-EBITDA ratio is targeted to be less than 3.0x with an equity ratio of more than 45 percent. In conclusion, the German shipping company plans to maintain an adequate liquidity reserve of around USD 1.1 billion.

Image Courtesy: Hapag-Lloyd

Share this article

Follow World Maritime News

In Depth>

Events>

<< Sep 2019 >>
MTWTFSS
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 1 2 3 4 5 6

The 5th CWC China LNG & Gas International Summit

Gain Access to Global LNG & Gas Decision Makers in China

Take a peek inside our 2019 Introductory Brochure and stay on top of this rapidly developing market.

See who is already working with us this year as Speakers, Sponsors and Partners – download your Preview Brochure today and meet them in Beijing on 15-16 October 2019.

As the world’s second largest LNG importer, China will remain the biggest contributor to global LNG demand growth in the foreseeable future. Network with global LNG & gas decision makers, buyers, NOCs and Government Officials at the industry’s leading international event in China.

More info

read more >

Global Sustainable Shipping Forum 2019

The event will provide valuable insights from conference sessions, great networking opportunities and will offer…

read more >

OEE Conference & Exhibition 2019

OEE2019 is organised by Ocean Energy Europe, the industry association representing ocean energy in Europe.

read more >

Defence Safety Conference 2019

The Defence Safety Conference returns to London this October as the only event solely dedicated to enhancing safety across all aspects of defence.

read more >