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Hapag-Lloyd CEO cautious despite high demand, rates

Demand for ocean shipping is healthy again and freight rates are high, but Hapag-Lloyd CEO Rolf Habben Jansen doesn’t want to “get carried away,” cautioning during a press briefing last week that there still could be economic hits to come from the continuing coronavirus pandemic.

Volume hit its low mark in March, when much of the world was shut down due to COVID-19 and the number of blanked sailings grew to levels ports hadn’t seen.

If demand is not there, you have to take out the cost Jansen said

“One of the things we’ve certainly learned this year is that if demand is not there, you have to take out the cost,” Jansen said. “In April, we were facing a loss of revenue of about $200 million from one month to the other. You had to do something.”

“There has been fairly strong recovery, particularly on the east-west, from July,” he said. “The industry in general has been able to react very well.”

“A lot of people have faced all sorts of disruptions this year,” Jansen said. “On the whole, shipping has been able to keep goods flowing.”

And flowing they are.

“If you go back a couple of months, nobody would have expected that demand would be as strong today as it is right now,” he said. “I don’t think anyone expected that demand would be so strong,” he said.

An end — or at least a lull — to the COVID-19 crisis has allowed Hapag-Lloyd to concentrate on its mission.

Overall we’re roughly on track

“Our focus will remain on profitability, cost control and making sure we have a healthy balance sheet and continue to reduce and repay debt,” Jansen said. “Overall we’re roughly on track.”

(S&P) upgraded Hapag-Lloyd’s credit rating

Last week Standard & Poor’s (S&P) upgraded Hapag-Lloyd’s credit rating from B+ to BB- with a positive outlook. Hapag-Lloyd said this is its highest rating it has received since S&P initiated its research in 2010.

S&P also raised Hapag-Lloyd’s senior unsecured bond rating from B- to B.

This entire pandemic will have a clear effect on the global economy

“The outlook for the rest of the year has not deteriorated,” said Jansen in last week’s briefing, cautioning, “I don’t get carried away. This entire pandemic will have a clear effect on the global economy.”

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