Shipping company Hapag-Lloyd concentrates on point-point steaming by deploying medium-sized vessels rather than mammoth ships. These rapid transport services enhance the efficiency, lower capital costs and accelerate the time-to-market process of shipped goods, reasons H-L. Their management states that first client reactions are encouraging.
Hamburg, Germany-based Hapag-Lloyd AG strikes a new path: Instead of calling at half a dozen or more ports in the Far East or on the North American East Coast for obtaining high load factors
before returning to Europe, H-L advocates fast nonstop services wherever possible, deploying medium-sized container vessels. For instance, a fully loaded 7,000 TEU ship needs 9 days for sailing
from Hamburg to Philadelphia. Somewhat longer – exactly 70 days – is a 12,500 TEU vessel’s journey from four Chinese Ports without any intermediate stop back to Antwerp, Rotterdam and Hamburg
calling only at 3 or 4 ports in the Far East before returning to Europe right after. Average utilization rate according to H-L data: 81 percent.
How will the markets react?
In comparison, the journey of a 17,500 TEU ship calling at 8 ports in the Far East and in Tangiers in between needs 84 days before reaching the berth in Rotterdam or Hamburg. Its average load factor stands at 73 percent, which is considerably less than that of its smaller sisters.
Therefore, it’s a market decision which ship will be deployed on which loops. For price sensitive standard commodities the ocean giants should be the better sailing solution in most cases as their unit prices are lower. In contrast, producers of quality goods will opt for faster steaming, despite higher transport costs, in order to get their merchandise to the consumer markets in shorter times.
Time advantages vs. higher tariffs
When speaking of different steaming options it must not be forgotten that the loading and unloading process of an 18,000 TEU ship needs considerably longer compared to an 8,000 TEU vessel. “If you are unlucky and your container is among the last boxes to be discharged from an 18,000 TEU vessel at the port of destination, you need a lot of patience,” states H-L’s Senior Trade Manager, Thilo Trusch.
However, there are no official statistics covering these time critical loading/unloading processes, making comparisons between medium-sized and giant ocean vessels nearly impossible.
First reactions are encouraging
But even without this reference value that would make it easier to compare the running times of containers, the H-L management decided to play the point-to-point card because of growing market demand. “Entering new areas always bears a risk but after receiving many positive reactions we were encouraged to introduce this product,” states Axel Luedecke, Hapag-Lloyd’s Senior Director Network and Alliances.
An increase in tonnage is the first visible sign after the shipping company gave the green light for their point-point lanes, confirms the manager.
The coming weeks and months are crucial for the new service. They will show if customers accept the slightly higher tariff demanded by the shipping company for this kind of premium offering.
Hapag-Lloyd – UASC merger close to completion
“This year’s second quarter will tell where we are going from here,” notes Luedecke.
An open question because the point-point product’s introduction coincides with external factors: the operational start of THE Alliance, a new pact formed by six independent shipping companies. Their members navigate a combined fleet of 620 ocean-going vessels accounting for 3.5 million TEU or 18 percent of the global fleet capacity. Of these 620 ships, exactly 244 will steam under THE Alliance’s label as of April. However, the majority of 376 vessels will be marketed individually by their six owners: Hanjin, Hapag-Lloyd, “K”Line, Mitsui O.S.K., Yusen Kaisha and Yang Ming. Competitors are 2015 formed market leader 2M (Maersk/Hamburg Sued, MSC) and the newly formed Ocean Alliance (CMA CGM, Cosco, Evergreen, OOCL) offering 41 combined services starting on 1 April as does THE Alliance.
Before this month ends, announced a Hapag-Lloyd executive at the meeting, his company’s intended merger with Kuwait-based United Arab Shipping Company (UASC) will be finalized. This would lead to a combine fleet of 237 ships with a capacity of around 1.6 million 20-foot-equivalent units, an annual traffic volume of 10 million TEUs and revenue of approximately €11.2 billion.