Hamburg Süd struggles with freight rates

Compared to the previous year, the transport volume in the liner business rose sharply by 21.5% to 4.101 million TEU.

Fleet capacity grew to 625,000 TEU (+16 percent year-on-year), making the Hamburg Süd Group one of the world's ten largest container shipping companies for the first time.

Freight rates fell by around 16% due to global overcapacity.

The liner result fell short of expectations and must be described as rather unsatisfactory. Bulk shipping fell well short of the result planned for the reporting period. Only the product tanker segment achieved a satisfactory result.

Expenditure on investments amounted to 437 million euros and was therefore higher than in the previous year. The number of employees increased to an annual average of 5,960 due to growth.

Economic environmentAt 3.1%, global economic growth in 2015 was slightly below that of the previous year. Containerized sea transport, on the other hand, barely grew at a global level in the past financial year at +1.0% (previous year: +5.2%). It can be assumed that the international division of labour is no longer increasing and that the containerization of general cargo is largely complete. In contrast, global deliveries of new container ships - primarily large container ships - reached an all-time high in the past financial year with a total capacity of 1.7 million TEU (+8.5%). As a result of the further increase in overcapacity, freight rates collapsed in almost all trades. Shipping companies attempted to adjust the capacities in operation to the stagnating or even declining cargo volumes, resulting in a sharp increase in the global fleet, which reached its highest level in the last five years at around 1.4 million TEU at the end of the year. Charter rates for container ships fell to historic lows in some cases and in some cases no longer even covered operating costs.

Hamburg Süd's ships and containersAs at December 31, 2015, Hamburg Süd's fleet comprised a total of 189 ships (previous year: 168), 48 of which were Group-owned. 130 ships were deployed in liner services and 59 in the tramp sector (bulk carriers, product tankers). In the course of 2015, the strengthening and modernization of the Hamburg Süd Group's fleet was largely completed with the acquisition of three additional newbuilds of the "Cap San" class (10,600 TEU). Four ships with a capacity of 3,800 TEU each were ordered for delivery in 2017. The container fleet increased by an annual average of 22% to 562,000 units.

Outlook for 2016Following the significant growth in transport volumes in liner shipping in the past financial year, Hamburg Süd expects a further significant, albeit more moderate, increase in carryings of around 8 percent in 2016 compared to the previous year. The above-average increase compared to market growth is primarily due to the capacities and market shares built up in the past financial year, which are to be maintained throughout 2016 and selectively expanded further. As freight rates are expected to remain under pressure due to persistent overcapacity and weak economic development, the shipping group's revenue is expected to remain roughly the same.