In two recent announcements, Germany-based liner operator Hapag Lloyd has commented on consolidation in the liner sector and revealed its strategy for 2020 compliance.
Announcing its mid-term Strategy 2023, the company said that following a period of consolidation, the liner shipping industry has changed significantly. Hapag-Lloyd is more than two times larger than it was in 2014 in terms of transport capacity. At the same time, further consolidation amongst the largest players in the industry is less attractive due to decreasing incremental scale benefits. As a result, the industry has come to a turning point. Hapag-Lloyd will therefore focus on significantly improving quality for its customers, selective global growth and becoming profitable throughout the cycle.
“Size is not the name of the game anymore, but customer orientation. It is obvious that customers expect more reliable supply chains, so our industry needs to change and invest more. At the same time, we know that people are prepared to pay for value. Going forward, delivering value to get the most attractive cargo on board is at the heart of our new Strategy 2023. To be number one for quality is the ultimate promise to our customers and a strong differentiator from our competitors”, said Rolf Habben Jansen, CEO of Hapag-Lloyd.
Hapag-Lloyd’s Strategy 2023 is based on various elements: Key cost initiatives focus on network optimisation, terminal partnering and further improvements in procurement and container steering. Furthermore, an optimised revenue management will ensure that the most attractive cargo gets on board. At the core of the new Strategy is an enhanced differentiation by offering unrivalled levels of reliability and service quality. Hapag-Lloyd is making changes to its structures, systems, processes and operations and focusing single-mindedly on delivering customers a better and more efficient experience in their supply chains.
At the same time, additional improvements aim to turn Hapag-Lloyd into a more agile, dynamic and analytically driven organisation. More investments in digitalisation and automation will be made to further exploit digital excellence. One example is to increase the share of the online business via the web channel to 15 percent of Hapag-Lloyd’s overall volume by 2023.
With regard to 2020 compliance, despite earlier opposition to scrubbers the company will be retrofitting ten of its 13,000teu Hamburg class vessels with scrubbers. The scrubbers will be of the hybrid ready type meaning they will be open loop versions with the option to modify to hybrid operation later.
The retrofits will start in March 2019 when the first system will be installed on the vessel Hamburg Express at Qingdao Beihai shipyard in China. Hapag-Lloyd is estimating all of the installations to be finished before the end of 2020.
“Using compliant low sulphur fuels is the key solution for Hapag-Lloyd. However, we want to make sure we test and make use of all relevant solutions, which is why we decided to also retrofit our Hamburg Class vessels with EGCS,” said Anthony Firmin, COO of Hapag-Lloyd.
Hapag-Lloyd also has 17 new vessels in its fleet acquired after the UASC takeover, which can be converted to use LNG. The company will retrofit one vessel of 15,000teu during 2019 – and will then test whether LNG is a suitable alternative to low sulphur fuel.