Hapag-Lloyd CEO Rolf Habben Jansen expects the proposed U.S. port fees on Chinese ships to add “considerable” additional costs to U.S. consumers, and “make life a lot more difficult” for American exporters.
However, the CEO is optimistic the proposal will look different once industry and public feedback rolls in.
After the March 24 hearing on the port fees takes place, Habben Jansen expects there will be considerable changes to the current proposal. Under the U.S. Trade Representative’s current recommendation, Chinese ships could be paying as much as $1.5 million to dock at an American port.
“Once something comes out, we will need to decide how to react,” Habben Jansen said, comparing the current scenario to when the Ocean Shipping Reform Act was signed into law in 2022.
That law expanded the powers of the Federal Maritime Commission, enabling the government agency to more heavily scrutinize ocean carriers and terminal operators for perceived unfair practices like imposing detention and demurrage fees, or refusing to honor contracts with shippers.
“Initially, the very first ideas about what should be done were quite difficult and very complex, and not particularly well thought through,” Habben Jansen said. “Then there was this similar consultation process and in the end, the final ruling that came out was actually very workable and also reasonable and in my opinion also suited for purpose. We hope that something similar will happen now.”
Habben Jansen made the comments early Thursday during Hapag-Lloyd’s earnings call, which saw the ocean carrier’s revenue jump 6 percent to $5.3 billion on a net income on profits that dipped 19 percent to $754 million.
Like Gemini Cooperation partner Maersk, the timing of the return of container ships to the Red Sea will do some heavy lifting in shaping how much profit Hapag-Lloyd will generate in 2025.
Group earnings before interest and taxes is projected to be in the range of $0 to $1.5 billion for the year, putting the top end at nearly half of 2024’s EBIT of $2.8 billion.
The earnings expectations assume that the Red Sea passages will be gradually resumed in the second half of 2025. But the recent breaking of the Israel-Hamas ceasefire and new U.S. attacks on Houthi targets in Yemen both make conditions tougher for ocean carriers to consider bringing vessels back through the Suez Canal.
Hapag-Lloyd’s 2025 projections also account for the impact of U.S.-levied tariffs and potential counter measures, although the company’s annual report indicates that the situation “could not be reliably assessed.”
The guidance didn’t impress shareholders, with Hapag-Lloyd stock falling nearly 8 percent in Thursday trading.
According to Habben Jansen, cargo volumes for the new fiscal year are expected to increase more than 10 percent for the Germany-based container shipping giant due to the Gemini Cooperation launch with Maersk, alongside a higher mix of long-term contracts in its larger book of business than compared to last year.
“That has been a conscious choice because we believe that we need that in order to get to that 10 percent growth,” Habben Jansen said. “That gives us some protection against fluctuations in the spot market because a bigger chunk of our volume will not fluctuate with those rates. But in fairness, we are still vulnerable if spot rates go down too much.”
The company acknowledged that geopolitical disputes, especially an escalation of the Middle East conflicts, could negatively influence volume development.
Hapag-Lloyd anticipates a moderate decline in average freight rate compared to last year, which saw extended volatility due to the Red Sea concerns and capacity constraints.
As of Thursday, Drewry’s World Container Index lists average ocean spot freight rates at $2,264 per container, down 4 percent from the week prior and down 42 percent since the start of the year.
Habben Jansen also gave insight into the early stages of the Gemini Cooperation vessel-sharing alliance, which now has 46 of its 57 services up and running. More than half of the ships have been phased into the network, he said.
The CEO said the company’s schedule reliability is hovering around roughly 90 percent, meeting the goal both Hapag-Lloyd and Maersk agreed upon last year.
However, container shipping database EeSea said this week that the reliability metrics have been on a recent downward trend since the beginning of February. Since Feb. 24, Gemini arrivals have had a weekly on-time performance of 87 percent, 84 percent and 83 percent, respectively.
The Germany-based shipping company isn’t sweating the recent slippage.
“There is certainly quite a lot of fine-tuning to do left, right and center, but we also still see many things that we can do better. Of anything, I’m probably more confident now than I was six or eight weeks ago that we will be able to deliver that 90 percent schedule reliability consistently,” Habben Jansen said. “If we fast forward three or six months, then I’m fairly sure that a lot of many of our customers, analysts and others in the market will also be able to determine that there is indeed a material difference based on all the data that is available.”
Beyond adjusting its Maersk partnership, Hapag-Lloyd is building up its terminal portfolio, with aims to expand its current slate from 21 terminals to over 30 by 2030. The planned expansion reflects a wider trend among operators like Mediterranean Shipping Company (MSC)—which scooped up 43 ports as part of the BlackRock-led consortium that also acquired both Panama Canal-adjacent ports—to gain greater control over their supply chains.
