Hapag-Lloyd Eager to Broaden its Product Range

The container shipping line H-L wants to expand its business model and individualize its customer services. This was CEO Rolf Habben Jansen’s key message which he presented to 30 media people at a press briefing in the stylish Maritime Museum in Hamburg last week.

Since mid-2014, Rolf Habben Jansen is leading H-L, the world’s fifth largest shipping line  -  photos: hs
Since mid-2014, Rolf Habben Jansen is leading H-L, the world’s fifth largest shipping line - photos: hs

"Our service offerings must include more than simply transporting containers from port to port," the manager emphasized his strategic view.
Recognizing this, H-L is currently increasingly looking at providing dedicated hinterland services for their customers, be it by road, rail or inland waterway, including insurance and customs clearance. Danish competitor A.P. Moeller-Maersk, the world’s number one, has already taken this path through a door-to-door offer to their clients, Habben Jansen confirmed. But “in comparison, our share of this kind of value added services rendered is already higher.”

Broad range of business opportunities
Simultaneously with expanding the service range beyond pure port-port transports, there are further occasions for achieving higher revenues and strengthening customer loyalty, indicated the executive. For example, one such step would be to introduce time-definite maturities contrasting the booking of storage positions for containers on board a given vessel. "The difference is: we guarantee dispatchers a certain time for transporting their shipments; conversely, customers leave it to us to decide whether to load their goods on board our "Chicago Express", "Colombo Express" or "Guayaquil Express," the manager exemplified. This gives his company greater shipping flexibility and options for better utilizing the capacity. 

Boxes traveling “First,” “Biz,” or “Eco”
Another novelty H-L is going after, is the introduction of booking choices for stacking steel boxes on required positions in the ship’s holds. The tool resembles the well-known seating options “Eco,” “Business,” and “First,” in aviation, with their corresponding price differentiation. According to this model, boxes with first-class status would be loaded last, placed in top position on board the vessel and unloaded first after arrival at the port of destination, true to the motto: last on, first off. Conversely, a box booked as “Eco", is stowed at the bottom of a ship’s freight hold.
This different positioning of containers on board the H-L fleet results in running time advantages of up to a full week for containers booked in "First." To introduce such stowing options based on different price levels, "is not really rocket science," Habben Jansen emphasized.

No major merger on the horizon
Currently, in-house professional groups are working on complementary business services that add value to the customer, increase H-L’s revenues, and differentiate the Hamburg, Germany-based shipping line from its competitors. The results produced by these think tanks will be tabled later this year.
Asked about the consolidation process in the shipping industry, Habben Jansen said that he does not expect further mega mergers to happen. The synergies to be achieved nowadays from big mergers are only marginal, he stated. Due to the oligopoly in shipping, with five or six big lines dominating the seven seas, among them H-L, regulators have become increasingly critical, authorizing mergers only under extremely strict conditions.

 

Youngest fleet
Turning to the 2018 outlook for his company, the manager is cautiously optimistic. The demand for sea freight is very satisfactory and rates are on the upswing after a slight slump in Q4, 2017. In contrast, fuel has become more expensive lately, putting margins under pressure. 
The manager does not expect overcapacity to put pressure on fares this year. This is because in 2017 only a few large container ships were put into service, adding to the world fleet. Conversely, older ships have gone out of service or have been scrapped.
That is not an issue bothering Hapag-Lloyd much. Thanks to the 2017 accomplished merger with the United Arab Shipping Company (UASC), H-L operates one of the youngest fleets in all ship classes. Investments in new vessels are not on his company’s 2019 and 2020 agenda, said the Dutch national. Instead, the focal point for the coming years is to reduce the debt of US$7 billion, Rolf Habben Jansen pointed out.
The results of the 2017 financial year are to be announced in March.

Heiner Siegmund

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