“We will have to start replacing ships in our fleet from 2022, 2023,” Rolf Habben Jansen, CEO of Hapag-Lloyd was cited as saying by Reuters following a press conference in Hamburg last week.
The investments are likely to target ultra large containerships with the capacity of up to 23,000 TEU, following in the footsteps of its rivals like CMA CGM and MSC, which have already employed some of their colossal newbuilds on the Europe-Asia route.
Following the integration of its business with United Arab Shipping Company (UASC), Hapag-Lloyd became the fifth-largest container shipping company in the world and had no need to order new tonnage as UASC provided it with modern tonnage influx, including ships of 19,000 TEU.
A Hapag-Lloyd spokesperson confirmed to World Maritime News that orders of new ships “are most likely until 2021”.
The company did not provide further details on the targeted size of ships being planned.
Over the past decade, ordering in the containership sector has been dominated by the interest in large ships with over 10,000 TEU in capacity. Based on the data from Alphaliner, the total capacity of the world’s cellular containership fleet passed the 23 million TEU mark following the delivery of two more Pegasus class vessels to MSC last September.
Nevertheless, the ordering spree in the sector since 2017 has considerably widened the gap between the supply and demand, in particular as deliveries of ultra-large container ships continued sending relatively smaller ships onto other routes. As such, the question of overcapacity and filling of these mega-ships with enough cargo to avail of the economies of scale lingers.
Outlook for 2020
The fleet modernization commentary was made as Hapag-Lloyd was announcing its expectations for business performance in 2020.
Jansen believes that this year will be impacted the most by the IMO 2020 sulphur regulation’s entrance into force.
“The costs involved in converting vessels and using the new fuel will be high. Since the lion’s share of our fleet will sail with the new low-sulphur fuel oil, we expect additional costs of around 1 billion US dollars per year,” he said earlier this month in a market review.
The CEO of the German major believes climate action, especially in Europe, would exert further pressure on liners. Namely, shipping is proposed to be included in the European carbon market (known as the ETS) and pay for its CO2 emissions.
Hence, the search for alternative fuels will become even more important as companies rush to cut their carbon footprint and at the same time battle to keep their businesses healthy.
The perfect storm in container shipping is also facilitated by the ongoing trade tensions and geopolitical factors.
“We live in times that continue to be turbulent in political terms. Trade conflicts can have an impact on trade routes, and they can steer global economic growth in one direction, but also in the other. We will have to live with these possible fluctuations and manage them as best we can,” Jansen said.
“A year and a half ago, we adopted our Strategy 2023 and set ourselves the goal of becoming the number one for quality among carriers. We are continuing to pursue this goal. In the near future, we will publish a set of quality promises by which we will be measured going forward. We will continue to invest heavily in digital products and services. And we will continue to concentrate on expanding our business in growth regions, such as Africa, the Middle East and India.”
Investment in new terminals is also being considered, however, for this year Hapag-Lloyd will hold off from any new investments amid the expected impact from the IMO 2020 regulation on its business performance.
Source: World Maritime News