Friday Focus: Hapag-Lloyd and UASC Merger ‘Close to Completion’

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Rolf Habben Jansen, Chief Executive of Hapag-Lloyd, has revealed that the merger with United Arab Shipping Company is “very close to completion” and that Q2 and Q3 of 2017 is when the integration will take place.

The news comes after the complexity of the US$7.6 to $8.7 billion deal meant it had to be halted at the end of April this year due to the ocean shipping liner and the banks needing assurances from UASC's top shareholder Qatar. 

Overall, the merger with the Arabian liner shipping company is expected to generate annual savings of US$435 million from 2019 onwards, with a large proportion of this already to be achieved in 2018.

In an interview about this year's Q1 results (below), Jansen said: “After the closing our priority will be to integrate UASC into Hapag-Lloyd quickly and to realise initial synergies from the merger.” 

 

 

Jansen added that he was “cautiously optimistic” about the outlook for the rest of the year due to the gap between supply and demand closing.

However, the German container shipping firm has blamed increasing ship fuel costs and lower freight rates for its net loss increasing by over a third on last year’s Q1 results.

The results, described as a “mixed bag” by Jansen, revealed that net loss for the three months came to US$67.5 million, compared with $46.5 million in the year-earlier period.

He warned in a company video (featured above) that higher bunker costs in Q1 are expected to have an impact on freight rates for the rest of the year.

Jansen said: “We believe that freight rates will recover further which is also not illogical after they have been declining for such a long time.”

Transport volumes increasing by 6.8% helped improve figures but the Hamburg-based group said a recovery in freight rates came too late to benefit its books.

THE Alliance, an ocean freight carrier grouping that Hapag-Lloyd is a part of, has also made a promising start after its launch on April 1, 2017, as its Q1 earnings before interest, tax, depreciation and amortisation (EBITDA) is up 6.4% at $142.7 million.

Technical Paper: The World’s Largest Container Carriers

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