Hapag-Lloyd was the next major airline in the container shipping industry to report record results, continuing the tone of exceptional results from across the industry both in the fourth quarter and throughout 2021. The world’s fifth-largest container shipping company by volume released preliminary results with a significantly better annual performance, but its shares were still down more than four percent in trading today.
“The main drivers of this positive business development were significantly improved freight rates, which can be attributed to very strong demand for export goods from Asia,” wrote Hapag. However, they warned: “At the same time, the major disruptions in global supply chains have led to a significant increase in transportation costs.”
However, the higher expenses could hardly dampen the result. For the year as a whole, Hapag reported an 80 percent increase in its total revenues, which was carried by an equally strong increase in freight rates. Rates more than doubled in the fourth quarter, generating $8.4 billion in revenue. Almost a third of the airline’s total revenue of $26.4 billion was generated in the last quarter of 2021.
The strength of the markets more than quadrupled Hapag’s earnings for the full year to USD 12.8 billion (EBITDA). Fourth quarter earnings were exceptionally strong, reaching $4.7 billion.
However, the airline, which ended the year with a fleet of 257 container ships and a capacity of 1.8 million TEU, worked at full speed for most of 2021. Full-year transport volume in 2021 was flat from 2020, posting a 6.5 percent year-on-year decline in the fourth quarter, likely due to port congestion.
Hapag promised to release more details as well as its outlook when it releases the final 2021 results on March 10. However, the preliminary report continued the tone being set across the container shipping industry, underscoring once again analysts’ expectations that the industry will report an exceptionally strong performance for 2021 as it moves into a continued strong earnings cycle in 2022.
Maersk set the tone for the industry two weeks ago when it released ahead of expectations preliminary unaudited financial results for the fourth quarter of 2021, prompting the shipping giant to raise its full-year guidance yet again. Maersk was already on track to report its biggest-ever profit for a Danish company. Like Hapag, Maersk reported an 80 percent increase in freight rates in the fourth quarter and a slightly smaller 4 percent decline in ocean freight volumes during the quarter.
In the time between the Maersk and Hapag reports, other major airlines, including several Asian companies, COSCO, OOCL and Ocean Network Express (ONE), also released results. For example, OOCL said it posted record fourth-quarter revenues and strong results despite port congestion. While ONE is working towards a fiscal year, it reported results of more than 400 percent increase in profit to $4.9 billion in the most recent quarter (in FY Q3). They also raised their full-year earnings guidance to $15.4 billion.
The major airlines are all reporting that port congestion is affecting volumes, but at the same time demand and congestion continue to drive rates, making for an exceptional current cycle for the industry.