Oetker Group divesting the shipping division (Hamburg Süd) to Maersk

Press release from Oetker Group, parent of Hamburg Süd 

Dec. 1, 2016

Oetker Group divesting the shipping division Dr. August Oetker KG announces that, after more than 80 years, it is divesting its shipping business and will be selling Hamburg Süd with all activities, subsidiaries and principal assets. Following intensive talks with several interested parties, an agreement has been signed with Maersk Line A/S, Copenhagen, Denmark, which is subject to proper due diligence and the negotiation of a Sale and Purchase Agreement as well as the notification to various regulatory authorities. It is to be assumed that the transaction will be closed in late 2017 at the earliest, once the necessary approvals have been obtained. Global container liner shipping has been generating losses for years in the face of rising overcapacity. Nevertheless, Hamburg Süd has performed well compared with its competitors. It has grown clearly in excess of the market and has financed the expansion of its network as well as the ship and container fleet largely from its own cash flow. The owners and management of Hamburg Süd must, however, recognize that active participation in the consolidation process of the sector currently taking place would entail an even higher capital requirement. This would, in addition, make the balancing of risk within the  Oetker Group business portfolio more cumbersome.
The owners of the Oetker Group have therefore decided to put Hamburg Süd in the hands of new owners. The global market leader Maersk is, in their view, the ideal partner to preserve and further develop the shipping company’s successful business model. With a carrying volume of around 4.1 million TEU (twenty-foot equivalent units) and a slot capacity of approximately 625,000 TEU Hamburg Süd ranks among the world’s ten largest container shipping companies. The tramp, product tanker and other operations make up some 7 percent of the total turnover. The shipping company has roughly 6,000 employees and, with revenues of around 6.1 billion euros, contributes just under 50 percent to the total sales of the Oetker Group (all figures refer to the 2015 financial year). 
 

Hamburg Süd expected to be sold

Hamburg Sud has been owned by The Oetker Group since 1936.    The German government has been very supportive of the shipping industry, offering important tax advantages which has made Hamburg Sud important to The Oetker Group portfolio.

I do not know if these tax advantages have diminished, or if it is the overall sorry state of the outlook for the shipping industry which has finally caused The Oetker Group to decide to sell this business.  I suspect it's that the tax advantages no longer outweigh the poor economic outlook for this industry, and Oetker has decided to not wait out the supposed return to viable profitability.     Also, I believe the Chairman has reached maximum retirement age, so it would be a good time to sell.  No CEO likes to see their job eliminated.

Profitability will only be restored in the shipping industry if there is consolidation, which will be a way to decrease/control capacity.    After the extreme downturn in 2008 (after the massive demand in the years just prior),  all of those folks running shipping companies said "now is the time to buy new ships...the cost is low and the industry will turn around in a few years".   So, they bought and bought, and ordered and ordered, and yet the demand did not nearly match the supply.  

Companies started scrapping ships, only to see their competitors add capacity and cut rates.   The larger companies tried to convince the others to reduce capacity, go into joint ventures sharing ships, and all those things one does in this industry to reduce capacity in the hope they can increase rates.   It didn't work, and finally in the last several months carriers are going bankrupt, (witness Hanjin),  merging (the 3 Japanese lines, Nippon Yusen KK, Mitsui O.S.K. Lines Ltd. and Kawasaki Kisen Kaisha Ltd. agreed in Oct 2016 to merge), or be sold.   

The shipping industry has not taken advantage of the efficiences which could be achieved by adapting new computer technology for booking, pricing, documentation, tracking, etc.   Why isn't there an app for that?

The ocean carriers became wholesalers of their transport services many years ago, turning over way too much of the control to the forwarders, consolidators, NVOCC's, whatever you want to call them.    Sure, it's much easier to accept a fully loaded container called "Freight All Kinds" than it is to do the hard work of loading, pricing, each individual small shipment, but that is where they failed.

I haven't posted for a year because honestly, I got tired of hearing myself always complain about the bad decisions made by those running these companies.   The consolidation which I have been saying for years has begun to occur.

Now let's see if anyone in the industry can get smart and improve their computer systems and regain the profitable cargo.



The comments expressed here are my own.

Hamburg Sued to purchase CCNI container line and agencies

Press Release from Hamburg Sued

Press Release

Compañía Chilena de Navegación Interoceánica S.A. (CCNI) with headquarters in Valparaiso, Chile and Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft KG (HSDG) with headquarters in Hamburg, Germany are pleased to announce that they have signed a preliminary agreement whereby HSDG will acquire the container liner activities of CCNI including the related general agency functions subject to Due Diligence, execution of a Sale & Purchase Agreement and approval by the competent authorities. This acquisition is scheduled to be executed by the latest on December 31, 2014.

HSDG intends to strengthen its liner network to and from South America by integrating the CCNI liner services. Merging the dedicated and experienced workforce of CCNI and HSDG will help to create an even stronger organization that will provide a first class service to the customers of both companies.

Following the transaction CCNI will continue its non-liner shipping activities including the car carrier and ship-owning business.

Valparaiso / Hamburg, July 25, 2014

Contact:

CCNI: Alejandra Graf
Phone: +56-2-2339-1300

Email: alejandra.graf@ccni.cl

HSDG: Eva Graumann
Phone: +49-40-3705-2627
Email: eva.graumann@hamburgsud.com

New Service between South Africa and South America

New direct service between South Africa and Argentina and Brazil.  Only problem is it operates only fortnightly (which is every 2 weeks).

Press Release from Hamburg Sued

Press Release

 

Hamburg Süd launches a new service between South Africa – Argentina/Brazil

 

Hamburg, 12 June 2013. From July 2013, Hamburg Süd will be offering a new service from South Africa to Argentina and Brazil (SABR Service) in cooperation with Nile Dutch. The new fixed-day fortnightly service will provide shippers with a regular and reliable westbound link from South Africa to South America with connections to Europe and North America.

 

The new service rotation will be: Durban – Port Elizabeth – Buenos Aires – Rio Grande – Itajai – Santos – Rio de Janeiro.

 

Further destinations in South America, North America and Europe will be offered in transhipment.

 

The first westbound call at Durban will be with “Buxfavourite” on 21 July 2013.

 

In the opposite direction to the SABR Service Hamburg Süd serves the trade from South America to South Africa with its New Good Hope Express Service offering twice-weekly direct links from Brazil and the River Plate to South Africa.

 

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Hamburg Sud and Hapag-Lloyd

 Here is the official press release- notice it doesn't say much, and also notice the official name of Hamburg Sud.

I wonder what name they will have for the merged company.

Merger talks between Hapag-Lloyd and Hamburg Süd

 

Hamburg, 18 December 2012. The Executive Boards of Hapag-Lloyd AG and of Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft KG (Hamburg Süd), in agreement with their shareholders, are investigating if, and under what conditions, a merger of both companies would be of interest. 

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Dr. Oetker companies doing well

Hamburg Sud is part of the Dr. Oetker group of companies, which is a family owned company.

This from Tradewinds

Dr August Oetker Oetker does not release information about its bottom line result but company chief Dr August Oetker said the year had been “pleasantly” profitable.

Shipping mainly under the Hamburg Sud flag is the biggest activity of the Oetker group and more than twice as big as its high profile food or drinks businesses.

Hamburg Sud increased its cargo volume by 25% to 2.7m teu through 2008.

Oetker said the performance was well above the industry average and described the result as “satisfactory.”

Turnover increased to EUR 4.5bn from EUR 3.6bn with 84% attributable to the liner division and 16% to tramp operations.

Hamburg Sud, which includes the Brazilian shipping company, Alianca, operated an average of 167 vessels through 2008 of which 32 were owned.

The 113 containerships had a combined slot capacity of 292,000-teu up 32% on the previous year. Some 54 vessels were operated on tramp services, focussed on panamax and supramax bulkers, although there are also product carriers in the fleet.

Oetker says the current year has not got off to anywhere near as vigorous a start as 2008 with all group companies trading below their target turnover.

What they don't mention is much of the increase has been due to aquisitions, but I am not sure how much.

Hamburg Süd christens new ship

The vessel Monte Aconcagua was christened in Hong Kong last week.

I find it a bit strange that in this day and age, with hurricanes named using both male and female names, it is still the customary to have women christen ships.

The name of this ship comes from Monte (for mountain) and Aconcagua is from Cerro Aconcagua

Cerro Aconcagua is the highest mountain in the Americas, and the highest mountain outside Asia. It is located in the Andes mountain range, in the Argentine province of Mendoza. The summit is located about 5 kilometres from San Juan Province and 15 kilometres from the international border with Chile.

Here is the press release from Hamburg Sued.

Hamburg Süd: Final "Monte" class ship christened in Hong Kong

Hamburg, 2 June 2009. Friday, 29 May, saw the "Monte Aconcagua", the
last of a series of ten of Hamburg Süd's successful 5,552 TEU "Monte"
class, christened in Hong Kong. The container ship's sponsor was
Luise Klus, daughter of Dr Ingeborg von Schubert, Chairlwoman of the
Advisory Board of the Gundlach Group, Bielefeld.

Following the naming ceremony, the "Monte Aconcagua" was phased into
Hamburg Süd's Asia - South Africa/South America East Coast Service
(New Good Hope Express).

In addition, Hamburg Süd will be adding three further "Rio" class
vessels to its fleet until the end of the year. They have a container
capacity of 5,900 TEU, making them one bay longer than the ships of
the "Monte" class. The "Rio" ships are to be phased into the shipping
group's Europe - South America East Coast Service, gradually
replacing the "Monte" vessels, which will then operate in the Asia -
South Africa/South America East Coast Service.

Technical data of the "Monte Aconcagua":

Capacity 71,270 tdw
Container capacity 5,552 TEU
Length overall 272.00 m
Length between perpendiculars 259.00 m
Breadth 40.00 m
Draught max. 13.20 m
Speed 23.3 kn
Main engine output 45,765 kW

You can download a photo of the christening at www.hamburgsud.com
under Press & Media/Photo Gallery (Ship christenings).

Hamburg Süd to join Grand Alliance

A press release received from Hamburg Süd basically says they are pulling their ships out of the Europe to U.S. trade and will buy slots from other carriers in the Grand Alliance (a group of carriers operating a joint service).

It also gives information regarding a revamping of the service between Europe and South America, which I am quoting, should anyone be interested.

In view of rapidly deteriorating market conditions on the
Transatlantic, Hamburg Süd has decided to indefinitely suspend its
announced standalone service and replace it by participating in the
Atlantic Express Service (ATX) of the Grand Alliance.

Initially chartering slots, Hamburg Süd will be providing a vessel to
the service at a later stage.

The agreement is still subject to FMC approval which is expected to
be received by mid-June at which time the Hamburg Süd stand alone
service will be phased out while the new arrangement will be
implemented.

Hamburg Süd indicated that their decision was triggered by fast
declining volume and revenue levels in the Transatlantic which could
no longer justify adding further tonnage to an already greatly
overtonnaged trade. The shipping group hopes that the capacity
reduction will contribute to improve the balance of supply and demand
in the trade. At the same time, the cooperation with the Grand
Alliance provides Hamburg Süd's customer base with a cost
competitive, proven high quality product.

North Europe - South America East Coast (ECSA)
In the North Europe-ECSA trade, Hapag-Lloyd and Hamburg Süd have
decided to continue their cooperation by operating two complementary
weekly services on a fixed day frequency. Rotations are reconfirmed
to be as follows:

Sling 1: Rotterdam - Tilbury - Hamburg - Antwerp - Le Havre - Santos
- Buenos Aires - Montevideo - Rio Grande - Santos - Sepetiba -
Rotterdam

Sling 2: Rotterdam - Hamburg - Antwerp - Le Havre - Sepetiba -
Paranagua - Navegantes - Santos - Salavador - Rotterdam

The complementation of both slings provides for the most
comprehensive port coverage in the trade.

Hamburg Süd to lay up ships

Hamburg Sud will make efforts to reduce costs by laying up ships, cutting work hours of German staff, and attempting to renegotiate contracts with vendors.

They are realistic enough not to mention increasing rates, as the idiots in the TSA keep harping on. Of course it's true it would be nice if the rates went up enough to cover costs. Talk to the airlines about that problem.

The lowest cost operator will be the winner!

This from American Shipper

Hamburg Süd said in the first quarter "average revenues have fallen around 20 percent since the peaks reached in mid-2008. This is due not only to falling bunker surcharges," the company said in a statement Monday. "In some trade lanes freight rates are being quoted which do not even guarantee full coverage of the variables, not to mention making a contribution to fixed costs. The volume- and rate- related drops in revenue are only partly being offset by lower bunker and charter costs."

Hamburg Süd Group said liner volume in 2008 was up 25 percent in
2008 to 2.7 million TEUs. Results also included those of its Brazilian sister company Aliança Navegaçao é Logistica Ltda., the tramp operations of Rudolf A. Oetker and Furness Withy Chartering

The company noted turnover grew 24 percent from 3.6 billion euros in 2007 to just shy of 4.5 billion euros in 2008, It said about 15 percent of that was due to organic growth and 9 percent to the acquisition of Costa Container Lines in late 2007.

To counter a substantial decline in cargo volumes, Hamburg Süd said it has laid up ships and streamlined services

Hamburg Sued or Hamburg Sud?

Here is a press release from Hamburg Süd. The complete name of this company is Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft, which translates something like Hamburg South American Steamship Company.

As the company is German, it has an umlaut. I don't really know what to do for typing it in English. I always thought it should be spelled Sued to show the phonetic pronunciation, but recently I was corrected and told it should be Sud.

But I have a real problem doing that. I'm not sure we Americans are able to know that Sud should be pronounced as something different that what you get when you use soap, ie: suds.

Hamburg Süd establishes own country organisation in Colombia

Hamburg, 27 November 2008. With effect from 1 January 2009, Hamburg
Süd will establish an own country organisation in Colombia. Hamburg
Süd Colombia Ltda., with head office in Bogota and a branch office in
Cartagena, will be responsible for all the shipping group's container
shipping operations from and to Colombia in the future.

Together with its long-standing partner Messrs Eduardo L. Gerlein
S.A., Hamburg Süd operates further offices in Medellin, Cali,
Baranquilla and Buenaventura.

With the establishment of Hamburg Süd Colombia Ltda., the shipping
group is taking into account the growing importance of the Colombian
market. At the same time it will further improve and strengthen the
relations with Hamburg Süd's Colombian customers.

Hamburg-Sued chairman to retire

Dr. Klaus Meves, Chairman of the Board, Hamburg-Sued, will retire at the end of the year.

The American Shipper reports replacement will be Dr. Ottmar Ghast. Well, the American Shipper doesn't refer to either of these gentlemen as "Dr.", but I happen to know they are.

The article states no reason was given for the retirement. I am quite certain Dr. Meves is 65, which has been the required age of retirement for the Chairman of Hamburg-Sued.

Let's wait and see if there is some more shuffling amongst the ranks of Hamburg-Sued.

"Hamburger Konsortium" Bid to Keep Hapag-Lloyd in Germany

Hapag-Lloyd has been up for sale for some time. A group of investors from Hamburg, called in german "Hamburger Konsortium", look to be the high bidder.

This morning the JOC reported the German group got a few more people to throw in some money and have probably beat the NOL offer.


I am sure the parent company now wishes they decided to sell it last year when the shipping market was in much better shape. They have said they will make a final decision in mid-Oct. The deadline for bids was last week, with 2 groups placing bids. NOL and the Hamburger Konsortium (well, Kuehne & Nagel is based in Switzerland, but I think that's only for tax reasons).


There are a couple of reasons Kuehne & Nagel, as well as the Hamburg investors want to keep Hapag-Lloyd out of the hands of NOL.

First off, NOL is not friendly towards forwarders. Kuehne & Nagel is very big, and has made a lot of money as an intermediary between the steamship line and the shipper and/or receiver. They have had very close dealings with Hapag-Lloyd for many years, some of which caused fines by the FMC. If NOL bought Hapag-Lloyd, this cozy relationship would be no more.

Secondly, if NOL bought Hapag-Lloyd it would be absorbed and loose it's identity, as well as all the headquarter jobs in Germany. Germany has a long tradition as being a leader in shipping. They,as well as Switzerland, have an intern program for shipping, which turns out some of the best trained in the business. If Hapag-Lloyd goes away, the only liner carrier left would be Hamburg-Sued, leaving not too many spots for interns to train in liner shipping.

Apparently the investors of NOL won't be upset if they are outbid.
According to Bloomburg, the shares of NOL hit a 2 year low on concerns of this bid. Of course, I am not so sure that is the only reason the shares dropped. Tough times are ahead in the shipping industry, and people are just figuring that out.