habit and the see of all of that, how big lloyd he'll be talking about guessing how shipping is getting difficult, unreadable, how much it takes to watch. i don't season by the night we are all set of what's in place lead. 7 to ring of the story behind the noun, the, we all evolves unbiased information, feel free mind the one up and say do 2. and then

we say they're never giving up every weekend on d. w. how are shipping firms dealing with the ongoing attacks and the red sea? well, i'm joined by 12 hub in johnson. he c e o of how taught. how about lloyd? that's one of the world's largest carriers based in hamburg. welf, welcome to the show. your company today release its annual report for 2023. we want to get to those details in a moment. but 1st we want to ask about the red sea you've called at a volatile and challenging situation and a threat to your company's earnings. to what extent is this coming financial year for hop on lloyd tied to the development of the situation there. i mean, it's certainly tied. i mean, we come out of a 4th quarter where markets were very weak and rates for it. luckily, unsustainable levels, then rates started to come up,

which is quite normal in the run up to chinese, new year. and then we sort of etsy situation develop, which create a lot of uncertainty that also resulted in a storage of rates. but of course, also in quite a lot of additional costs as we have to sell fossil, which so we burn more fuel. we have to go all the way around the cape. so we need more ships. and because of the ships are on the way for a longer period of time, we also need to, to buy quite a lot of additional books with those rates rising. i'm assuming those are rising fast enough to offset those rising costs. can you sort of take us through that? i think in the short run, those rates are rising probably in line or even if it's a bit quicker than then cost. it depends a little bit how things will develop now over the upcoming months and quarter because you typically see that you didn't get some surcharges in the market. and because as a lot of uncertainty, people are willing to pay more. but in the last couple of weeks, we already see that's full traits are started to come down again. so we can defensively say that right now, extending journeys around the cape of good hope saps profits. i don't think you can

say that necessarily because we also see that because we need to look more ships, we see that or is effectively not enough capacity available. so that typically results in a rise of prices. but because the industry has invested in quite a lot of fits, at least we are able to put ships in, which means that we don't see the spike in prices as we for example. so it during kobus, of course, is not just the red sea, but also the panama canal, where we're seeing those bottlenecks that you mentioned that are pushing freight rate. so can we imagine a scenario in which freight rates rise enough to completely offset the costs of going around the cape to make it actually? so the situation is somewhat beneficial to shippers like hop on lloyd. and i think in the short run, that is definitely a scenario you'd have to unfold how that will turn out in the long run. i think that is more difficult. so normally when supply is tied, we see rates going up. and of course, that then also has an effect on,

on earnings for, for shipping months. what does it mean for customer demand, our customers looking at alternatives that then hit your overall demand? or is it rather difficult for them? it's not so easy to, to find alternatives very quickly. i think in most cases we see just transit times that are probably a week or 10 days longer and most companies can, can deal with that. there are of course, a couple of connections like say between india and cookie. for example. when normally you would go through the red sea and you do it very quick. a. now if you have to go all the way around the cape, that of course, as a lot of time, so i think then it's more difficult. that's also why. in some cases we've offered land purchasing and the other modes of transportation to try and offer at least some alternative. what does that improving situation in the red sea look like to you? what makes it sustainable to sales are again, the 1st priority for us is the safety of our cruise. i mean we, we will not sense it shipped through until the situation is safe again, because the lives of our crews are more important than 7 or 10 days additional

transit time. so we definitely applaud all the initially, instead of being taken by many countries around the globe. but the reality is that, that today the situation is not safe. as we also see from the almost day the effects that are still taking place. would you venture a guess as to when it could actually improve when you might be able to actually sell that route again? very difficult to judge. i think the opinion of them that so very wildly we today count with a, you know, we think that in a couple months a situation might come down. but i know that that role, but also people out there that belief that it can last until the end of the year, or maybe even longer. so they want to touch on your annual report right now if, if i've read this right, despite moving almost the same amount of container units in 2023 as the previous year, you made half the revenue. this is your liner segment. and this was still a very good year and help us understand what change between 2022 and 23. i mean,

in essence we came out of cobit during kobe's. there was enormous congestion in the search. the available capacity to move the cargo was simply not enough. we saw a normalization of the markets a since the 2nd part of 22. and that's certainly continued in 23. in the search you see, which is very normal, that been supply and demand competitive to balance, or when it's some cases, there's also a bit of over supply that the rates then come down. and as i said earlier, they came down to pretty unsustainable levels of towards the end of 2023 and a search. i think in any scenario we would have seen some sort of a recovery, but that was of course now a bit stronger because we had older on risk and disruption to run through, etc. you have a profit target for this year. a range between minus 1000000000 euros and a positive 1000000000 euros. what kinds of cost cutting measures? would you take a look at to make the difference in the situation? is that short term maybe freight rates will go up in a positive way. that's

a positive development, but long term you are looking at the potential for more losses. how to use them that, that current. i mean, we look at older cost categories that we can influence. we try to manage all bunker consumption. we tried to take out surfaces where we are losing a lot of money. we try to, to read, negotiates off with some of our vendors. we try to drive up productivity. i mean, the only way to do that to counter a week in the market is simply to pull in all the costs, leave us. that's something that we have done for many, many years. that was a little different throughout the go with. and now we need to go back to normal. so i feel like we've been describing global shipping and upheaval over the last 4 years. is it so that the risks have truly increased? i mean, we've had a pen demik, we obviously have these ju, political issues like the red sea, but also climate. is this, an environment is changing rapidly, or is this just sort of a bad run? i think it is. i mean, if you look at the last uh, 34 or 5 years, we've seen

a lot of disruption and a lot of unexpected events. and i also believe that because of that, we have to look a little bit different that the industry people always look at, supply and demand should be in balance. and if that's not the case, then think shoot, come a rate to come down tremendously. i think you have to look at a little different to have a little buffer in a supply chain, but also in the capacity that you can make available as shipping line is not a bad thing. if we would have multi order ships, the way we have all done over the last couple of us, then we would have had k o snow with threats the situation. now because there is a little bit of slack in the system, we can buy sailing foster and going around the cape. we can keep those supply chains flowing. and i think that's a very good thing. because that means that yes, rates go up a bit now, but they will not go anymore to goes crazy levels that we have seen seen throughout cove. it, when that was be a big shortage of capacity. you mentioned ordering those ships bringing out more

supply. did that banner year in 2022. did that help that and make that help make that more financially possible sustainable. bring those ships online or re still basically correcting from the pen demik and those harder years. and i think what we saw is that before the pandemic, the order book was too small. then throughout the pandemic, everybody owns a very decent profits. and then people start as investing in renewing the fleets. that is something that is, i think, continue and up to today, even if the order book is now slowly coming down again. and now we need to see what's going to happen if those ships come all into the fleet toby, upcoming couple of years. i think we will see a bit of over capacity here in there, but i also believe that that is actually not a bad thing because that will allow us to absorb some of the shocks, like the ones that we have seen recently. and i think that when you look ahead for the next 34 or 5 years, that is not going to be smooth sailing every single quarter. we talk

a lot here about changes in trade patterns. and this move away from globalization in some sense, more tre, protectionism, for example. how do you see that as a shipping company? what does it, what does it do to your bottom line? i mean, we certainly see some changes in trade bedrooms, but we have always seen those the certainly for some, a little bit of a shift away from china. but if we look back, that is something that's already been going on for, for quite a number of years. we see so more regionalization, but also as the economy becomes, again, more under pressure, people will still try to get the goats in the uh, the where they came by them to cheapest. and sometimes that's a little bit further away. so i don't see those fundamental changes that are sometimes being talked about. i do believe that regional traits will grow faster than the law whole traits. but i don't think that we will go back to a fully regionalized to fully regionalized trait petals. also don't forget that there is still mark instead of going to grow lots over the upcoming couple of

decades. think about an india think about in africa, think about southeast asia and also still need to get many products from other places around the globe. all right, the 12th of anson sea of hop on lloyd. thank you very much. i the

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