CONTAINER | Hamburg Süd snubs banks for bailing out rivals

By Patrick Hagen | LLOYD’S LIST

GERMANY’S second largest liner operator Hamburg Süd and its parent Oetker group have expressed anger at the bail-out of stricken competitors such as Chilean line CSAV.

According to information obtained by Lloyd’s List, the Oetker group has not just spoken out against the financial assistance given to certain carriers, but has cut some of its business with banks it thinks played a major role in the rescue of rival lines.

“They are needling the banks to show that they do not agree with aid for competitors,” a ship finance source told this newspaper. Certain deals were being done now with banks that were not their usual partners.

Hamburg Süd is part of the family-owned Oetker group, based in Bielefeld. Nearly all banking deals for the shipping line are handled by Oetker rather than the line itself.

Oetker has not terminated existing contracts or stopped its relationships with banks completely, the source said. “But they have made sure that the banks realise what they are doing and why they are doing it,” he added.

Hamburg Süd’s chairman Ottmar Gast refused to comment when asked whether the reports were correct. However, he criticised some bail-outs and the subsequent behaviour of those lines that were saved from possible collapse.

“Competition was distorted,” Mr Gast said. “Some carriers which thought they had been rescued offered price reductions to customers as their next step.”

Hamburg Süd, which presented its figures for 2009 today has to date steered through the crisis largely unscathed, and needed no help from either the government or its parent. However, it made a small loss the last year. As usual, the amount was not revealed but Mr Gast said it was lower than all published figures from other carriers. In addition, the line had a positive cashflow.

Mr Gast expects Hamburg Süd to be in the black again in 2010. Much will depend on the development of freight rates. He forecast that overcapacity in container shipping will continue until 2012 or 2013. In the first quarter of 2010, container volumes were already at pre-crisis levels but rates were still considerably lower, Mr Gast said.

In March 2010, Hamburg Süd earned average freight rates of $1,463 per teu. This compares with $1,503 in 2009 and $1,620 in March 2008. Volumes, however, were above pre-crisis levels with 232,000 teu of carryings in March, compared to 173,000 teu in March 2009 and 222,000 teu in 2008.

This situation is a problem as nosediving freight rates in 2009 had a higher impact on container lines’ earnings than decreasing volumes, Mr Gast said.

His remarks were supported by the carrier’s figures for 2009. Last year, Hamburg Süd’s sales were down from €4.5bn ($6bn) in 2008 to €3.2bn. Of the difference, only €451m were attributable to a smaller number of carryings while €701m resulted from the collapse of freight rates.

Mr Gast criticised those carriers that had at all costs tried to win market share during the crisis. “In the end, market shares remained similar but all lines have less volumes for lower prices,” he said.

Hamburg Süd introduced a cost-cutting programme and saved some €300m last year, including the rationalisation of services or the introduction of extra slow steaming. In addition, it reduced the number of chartered vessels from 82 to 64 during 2009; the number of its own vessels was up by four. The total number of vessels operated by Hamburg Süd in its liner services, excluding tramp business, was thus down from 110 to 96.

The total capacity of the carrier’s fleet, however, increased from 299,017 teu to 304,203 teu marking a shift to larger vessels. The number of vessels above 3,000 teu was up from 32 to 44. “We aim to use the largest vessels possible in each trade,” Mr Gast said.

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