Hapag-Lloyd CEO: If we do order ships, it will be smaller classes and alternative propulsion

German liner heavy-weight Hapag-Lloyd is not planning any significant orders this year in the newbuilding space, especially not in the ultra-large containership sector.

Speaking earlier today in a virtual live session, Hapag-Lloyd CEO Rolf Habben Jansen said that if the company does move forward with a decision to order new ships, it would most probably be in the smaller vessel classes.

“I don’t think you should expect a large number of orders from us anytime soon. If we would do something, it will very likely be in the smaller vessel classes, and in that process, we will also be looking at alternative propulsion. But, it could also be that we don’t order anything for the next one or two years,” Jansen said.

Jansen did not disclose what type of alternative propulsion that might be, even though he had disclosed earlier that the company would look into various fuels including ammonia, methanol, and even hydrogen.

For the time being, the company has invested in LNG as fuel, and it has twelve 23,500 TEU LNG dual-fuel ships on order at Daewoo Shipbuilding & Marine Engineering (DSME), which are expected to start delivery in 2023. The company also has ten 13,000 TEU containerships being built at Hyundai Samho Heavy Industries, which started delivery in 2022.

The first vessel from the series, the 23,660 TEU Baltic Express, has already been launched and it is expected for delivery at the end of the second quarter of 2023.

Last month, Hapag-Lloyd revealed that it had scored a deal with Shell Western LNG B.V (Shell) to provide LNG bunkering for its twelve 23,500+ TEU vessels. The service is expected to commence during the second half of 2023 and LNG will be supplied in the Port of Rotterdam.

Hapag-Lloyd said that by using LNG it will be able to cut the CO2 intensity of these vessels by up to 23% compared to conventional fuels and almost completely reduce particle emissions. The company aims to become net zero carbon by 2045.

Overall, the Hapag anticipates a significant capacity influx this year, which will most likely exceed demand growth in the next quarters, which in turn is estimated to remain subdued amid lower consumer spending.

Scrapping, slippage and slow steaming will partly offset newbuild supply, however, as the supply outpaces demand, capacity management will be inevitable, Jansen explained.

Commenting on the market developments, he said that the market was normalizing and approaching pre-pandemic levels, with supply chain congestion easing and capacity being beefed up.

In addition to LNG, biofuels are expected to play a key role in the company’s sustainability journey.

“Today, the number of truly green fuels that are available on the market is unfortunately still limited. Biofuel blends can give a meaningful contribution, even if they will only be one element in that decarbonization journey. In 2022 we used more than 120,000 tons of biofuel on more or less all of our ships. That certainly gives us a possibility to achieve a meaningful reduction in emissions and we intend to do more of that also in 2023,” Jansen said.

In line with that, Hapag-Lloyd plans to launch a ‘green product’ for customers, most likely in the course of April, that will involve emission-free shipping on Hapag-Lloyd’s ships by running on biofuel blends.

The product is expected to be more costly, most probably $350-400 per TEU.

Hapag-Lloyd has started work on its strategy for 2030, and Jansen expects to shape it in the upcoming few months.