Hapag-Lloyd says consolidation no longer the name of game for container shipping

Hapag-Lloyd says that size is no longer the name of the game in container shipping with consolidation becoming less attractive in the sector as it sets out its strategy to 2023.

The world's fifth largest container line has itself been a part of the wave of consolidation seen in container shipping in recent years taking over United Arab Shipping Co (UASC) and is now twice the size it was in 2014 in terms of capacity.

“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,” said Rolf Habben Jansen, ceo of Hapag-Lloyd.

The company said that consolidation was now less attractive to the leading players due to decreasing incremental benefits of economy of scale. The result is the German company believes the industry is at a turning point and will put its focus on improving its quality of service to customers to a level it claims will be “unrivalled”.

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“Going forward, delivering value to get the most attractive cargo on board is at the heart of our new Strategy 2023. To be number one for quality is the ultimate promise to our customers and a strong differentiator from our competitors,” Habben-Jansen said.

Cost savings are a major part of Hapag Lloyd's strategy with it aiming for a run-rate of $350m to 400m and a EBITDA margin of around 12%. Cost initiatives will focus on network optimisation, terminal partnering and further improvements in procurement and container steering. At the same time it is looking to improve reliability and service quality

There will be more investments in digitalisation and among these is aim to increase online business via its web channel to 15% by 2023.

Posted 22 November 2018

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Marcus Hand

Editor, Seatrade Maritime News

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