HAPAG-LLOYD's chief executive yesterday warned of "rough seas ahead" as a combination of tumbling freight rates and a slump in demand pummels major container shipping groups' bottom lines.

Speaking to reporters on a conference call yesterday, Rolf Habben Jansen said it was a"challenging market environment" amid "weak" demand for container transport over the last year.

Freight rates, he said, have come down to a level which is "too low", coinciding with a rise in costs at container shipping lines, while a slew of new ships entering the market eats into the massive piles of cash built up by the sector as global lockdowns were lifted.

Habben Jansen's tepid outlook marks a major downturn from the highs of recent years, when the container shipping sector went through an unprecedented boom, notching in more profit during the three years from 2020 than in the previous six decades combined.

But demand has slumped over the last year and freight rates have tumbled back to pre-pandemic levels, while fears grow over the huge oversupply of vessels ordered during the pandemic boom.

Hapag-Lloyd saw its half year profits fall by more than half last month, while fellow shipping group Maersk warned of a "radically changed business environment" as profits plunged in May.

(c) 2023 City A.M., source Newspaper