After a decade of failing to cover capital costs in container shipping, box lines have enjoyed a period of higher rates and quarterly profits as a consequence of the Covid-19 pandemic. This good fortune may lead owners to place new orders at shipyards, something Hapag-Lloyd ceo Rolf Habben Jansen welcomed in a speech at TPM21.
“I’ve said already many times that in my view the orderbook at the moment is a little bit too small,” said Habben Jansen. With industry growth of a few percentage points per year, and the need to replace tonnage leaving the fleet, the current orderbook of 10-11% is insufficient, said Habben Jansen.
“I welcome the orders that have been put into the book in the last couple of months. I would expect that more orders are going to follow in the upcoming couple of quarters. I’d like to think that we will get back to a level that’s more or less healthy for the industry which is anywhere between 14% and 17%,” he said.
Hapag-Lloyd is among the lines that have been ordering and contracted six, 23,500 teu, dual-fuel LNG powered newbuildings at Daewoo Shipbuilding & Marine Engineering (DSME) in December last year.
Habben Jansen recalled the situation around 2007 when the orderbook reached 60% of the fleet, but believes there’s little reason to fear such overordering again as the circumstances were very different in that time period.
Return to normal
After the disruption and lower reliability caused by the impact of Covid-19 on shipping demand, Habben Jansen said he expects a return to normalcy across the industry within the next one or two quarters.
“If we try to look ahead today, then I do believe that containers will slowly but steadily start flowing more fluidly in the course of the upcoming months, we probably have a difficult 6-8 weeks ahead of us and I do expect it to get better in the course of the second quarter,” said Habben Jansen.
“At that time we will then be entering peak season again, so… we need to work very hard to make sure that over the next couple of months we get back to a normal situation. Our target is to have that done by the latest at the end of the second quarter.”
He said that reliability has simply not been good enough across the industry and that he expects with some hard work from all stakeholders things will improve in the second half of 2021. One bright spot Jansen picked out was the benefits the industry had reaped from digitalisation.
“Going digital is very possible and it has a lot of merit. If this type of pandemic had hit us 10-15 years ago, it would have been a very, very different situation, with a lot more chaos than we’ve seen over the last 12 months.”
The long view
Asked whether the pandemic threated the globalisation that shipping relies on for much of its cargo, Jansen said he expects a change in behaviour but not the death of globalisation. People will want to be less dependent on a single source for supplies and may look for closer origins over distant ones, said Jansen, “I think globalisation is going to change, but I don’t think it’s going to disappear. I don’t think you see a trend that globalisation is going down.”
Habben Jansen noted that Covid-19 still posed a threat to the industry’s recovery, and that improvements will depend on the progress of vaccination programmes and the absence of any more serious variants of the virus. Shorter term plans at Hapag-Lloyd changed quarter by quarter over the past year as the pandemic developed and affected the sector, said Jansen, so the company is aware of the likelihood of plans changing.
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