Global container shipping freight rates have reached unsustainable levels and must rebound, the chief executive of Germany's Hapag Lloyd, the world's number five operator by volume, said on Tuesday.
"There are spot rates that are clearly below cost," said CEO Rolf Habben Jansen in a call with journalists.
"In the long run, that typically does not hold. Whenever everything becomes cash negative, then people take the measures that need to be taken to settle rates slightly above cost."
The Shanghai containerized freight index bottomed out early in the second quarter after slipping to below $1,000 per twenty-foot equivalent unit (TEU) but is barely moving.
Transport expenses, meanwhile, have increased significantly, Habben Jansen said, citing a mix of inflation and hikes in fuel and labour costs, among other factors.
The company's transport expenses rose 3% year-on-year in the first quarter of 2023 to $1,324/TEU, a slide showed.
Habben Jansen said he expected them to settle at $1,250-1,750/TEU in due course, but this would still be 25% above pre-pandemic levels.
The company in May upheld its 2023 full-year guidance with earnings before interest and taxes (EBIT) seen in a 2-4 billion euros range.
(Reuters - Reporting by Vera Eckert, Editing by Rachel More and Miranda Murray)