Hapag-Lloyd shelling out more than half a billion dollars for containers
Hapag-Lloyd has ordered 150,000 twenty-foot equivalent units (TEUs) in an effort to combat slow turn times. The cost — about $550 million — represents one of the German ocean carrier’s largest container orders ever.
Import surges at U.S. ports, labor shortages caused by COVID-19 outbreaks and severe port congestion, particularly on the West Coast, all have contributed to a slow turnaround of containers to be sent empty back to Asia to be refilled.
Hapag-Lloyd said in the announcement it “needs significantly more than the normal number of boxes to carry the same volume because boxes are turning slower.”
CEO Rolf Habben Jansen explained in February, “Normally you would sail 12 days [to LA/Long Beach]. You unload two or three days and then you get the box back one or two weeks later from the customer. Today you sail 12 days, you wait for a week. The dwell time of the container is double what it is normally and then you have another delay on the rail side, so you easily lose a week or two weeks before you get the box back.”
Despite the challenges, Hapag-Lloyd’s 2020 net profit was up a staggering 155.4% to $1.06 billion.
Some of the 150,000 TEUs were delivered in the first quarter and have been integrated into Hapag-Lloyd’s container fleet. But most of the dry boxes and “state-of-the-art” reefer containers will be delivered in the coming months, Hapag-Lloyd said. The shipping line also has ordered 8,000 TEUs of special containers for oversized or dangerous goods.
“The container shipping industry is currently seeing unprecedented demand, which has led to a shortage of containers all over the world,” Habben Jansen said in the announcement. “With its recent container orders, Hapag-Lloyd is contributing to efforts to ease the current situation and will be able to offer its customers a much better service.”