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.





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 merger talks halted

Press Release from Hamburg Sud

 

Suspension of project work relating to a merger of Hapag-Lloyd and Hamburg Süd

25-Mar-2013

Press Release

The shareholders of Hapag-Lloyd and Hamburg Süd have jointly arrived at the conclusion to discontinue talks temporarily.
Hamburg Süd does not wish to comment publicly on the subject matter of the points under discussion. It does, however, expressly point out that the owners of Hamburg Süd – unlike the impression conveyed in various press articles – positively favour a flotation of the merged new company if certain conditions are met.
The Advisory Board and Executive Board of Hamburg Süd remain firmly of the view that the merger of Hapag-Lloyd and Hamburg Süd would be of enormous benefit for both companies as well as for Hamburg as a shipping location.

Hum.  It would be interesting be to a "fly on the wall" during these discussions.


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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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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The Fight is On

All containership carriers are losing money.

Maersk stated they would not lose market share, which we can guess only means
they won't be pushing to raise rates.

So the other carriers are getting together and forming joint services (Vessel Sharing Agreements, VSA's), to at least save some money.

The latest one is Hamburg Süd and MSC

Here is the press release from Hamburg Süd

Hamburg Süd and MSC fuse Mediterranean – South America East Coast Services



Hamburg, 22 December 2011. In view of continuous poor trading conditions and replacing its current service set up, effective from mid January 2012 Hamburg Süd and MSC will restructure their services between the Mediterranean and South America East Coast. The two currently separate services will be fused into one common service that will be operated by eight vessels of 5,900 TEU nominal capacity. Of those, Hamburg Süd is to provide initially one vessel and MSC seven vessels.



The new port rotation will be as follows: Valencia – Gioia Tauro – Livorno – Genoa – Fos – Barcelona – Valencia – Suape – Rio de Janeiro – Santos – Buenos Aires – Montevideo –Rio Grande – Navegantes – Itapoá – Santos – Rio de Janeiro – Suape – Tangier – Valencia.



The new service allows for more comprehensive port coverage in South America and connects to the Hamburg Süd network to Eastern Mediterranean and Middle East destinations via the hub port Tangier.

Increased Tonnage Europe/U.S.

I don't really know why carriers would add tonnage at this time, but they are.

This is a press release.

Hamburg Süd and partners to upgrade Transatlantic Service



Hamburg, 19 December. In collaboration with Hamburg Süd and ZIM, Grand Alliance members Hapag-Lloyd, NYK and OOCL have decided to upgrade their tonnage deployed in the Transatlantic Service between Europe and North America East Coast. As from March 2012 instead of four 3,700 TEU vessels, four 5,400 TEU ships are then to come into operation. As hitherto, Hamburg Süd and ZIM will each provide one vessel and Grand Alliance two.



The weekly fixed-day service continues to have the port rotation: Rotterdam – Hamburg – Le Havre – Southampton – New York – Norfolk – Charleston – Rotterdam
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