Hapag-Lloyd: West Asia Crisis Shipping Costs

Mumbai, Mar 19 (PTI) Global shipping giant Hapag-Lloyd is in discussions with its partners to cover some of the additional costs, which have shot up by USD 40-50 million per week amid the ongoing situation in the Middle East and disruptions in cargo movement, its CEO Rolf Habben Jensen has said.

He also said around 25,000 shipments have been impacted because of the conflict in the region but said that the company is trying to continue as normal everything which is outside of the Strait of Hormuz.

"Of course, since February 28th, I think we are all in a very different situation and we are all still battling with it. Today, we have extra costs of about USD 40 million to USD 50 million per week. That's, of course, very, very significant," Jensen said at an event hosted to sign the Letter of Intent for maritime cooperation between the company and the Indian government.

"That's also why we do have to have conversations with our partners about how to cover those costs, because we cannot absorb USD 40 million or USD 50 million a week," he added.

He said that the costs were going up owing to increase in bunker fuel prices, insurance and operational adjustments among others.

Jensen said he was hopeful that the situation would normalise, adding, "but we do need to ask for some support to cover some of those costs. In reality, we will already have to absorb some of that, but we cannot do that for an extended period of time."


Stating that the on-going situation in the Gulf has a significant impact on energy supply and on global trade ranging from 1 per cent to 10 per cent, he said.

According to him, about 3- 4 per cent of global trade takes place in the upper Gulf, where more or less 3,000 merchant ships are stuck altogether, which is quite a lot.

Jensen also said that the company's ship will not go to the Strait of Hormuz for now due to security reasons, but added that everything outside of that, it will try to continue as normal.

"I think, until now, we have been able to do a pretty good job on that. In total, we today have around 25,000 shipments that are impacted by this situation," he said.

The Indian market, where the company has already invested over USD 800-million over a period of time, is important for Hapag-Llyod he said, " "We do close to 2-million TEUs. We have an ambition to do more than 3-million TEUs by 2030."

"So we are very optimistic about it," he said.

He said that markets such as Africa, Europe, and the US, where the company is strong, will continue to grow fast.