By Dominic Chopping


Hapag-Lloyd lifted the bottom-end of its full-year guidance range as the current situation in the Red Sea has tightened industry capacity, helping stabilize freight rates.

The container-shipping industry entered 2024 in deep overcapacity as cargo volumes failed to keep up with a glut of new vessels, sending freight rates tumbling from their pandemic-fueled highs. Shippers had begun to slash costs and adjust their networks as falling demand and the excess newbuilds prompted gloomy forecasts.

But hostilities in the Middle East have provided an unexpected boost and potentially changed the fortunes of the industry this year. Vessels are diverting by thousands of miles to avoid the Red Sea, keeping them busy for longer and forcing shippers to deploy any available excess capacity elsewhere, creating a sudden tightness in vessel capacity.

Together with better-than-expected volumes, this has prompted a jump in freight rates.

The company now expects to report earnings before interest, tax, depreciation and amortization of between 2 billion euros and 3 billion euros ($2.16 billion and $3.57 billion) in 2024, from between EUR1 billion and EUR3 billion previously, with earnings before interest and tax now seen at between zero and EUR1 billion. It had seen EBIT at between a EUR1 billion loss and EUR1 billion profit.


Write to Dominic Chopping at dominic.chopping@wsj.com


(END) Dow Jones Newswires

05-15-24 0214ET