'Party is over': Hapag Lloyd CEO says freight rates to keep declining

HAMBURG (Reuters) - Container freight rates will keep declining in the current realignment of shipping demand and supply, said the chief executive of Germany's liner Hapag Lloyd, the world's number five by transport capacity.

"The party is over. We are back to a normal shipping business," CEO Rolf Habben Jansen told reporters at a briefing late on Tuesday on the state of the market, in which his company reported sky-high profits for three years running.

"Now we have to fight for every box again to get our ships full," he said.

However, he expects freight rates will not fall below costs, which were being kept high by expensive charter rates, high fuel costs and the need to adjust fleets to running on low carbon fuel.

Vessel owners once again have to fight for business as congestion at ports, which had clogged up with ships during the pandemic, began to ease and capacity was emptying, he said.

He hoped orders for goods and shipping services would pick up again as demand has fallen and customers have restocked

"Whether that will happen in March or in June, I don't know," he said.

Ship docking and scrapping was increasing this year after a period when ship owners kept old vessels running to meet high demand, he said.

At the same time, Hapag Lloyd expects to receive a series of new ships it ordered in recent years, including some giant 23,600 twenty foot equivalent unit (TEU) vessels.

The company on Tuesday reported preliminary earnings for 2022, with earnings before interest and taxes (EBIT) up by 86% year-on-year to 17.5 billion euros ($19 billion).

It will present the full annual report for 2022 on March 2.

($1 = 0.9193 euros)

(Reporting by Jan Schwartz, writing by Vera Eckert, editing by Paul Carrel, Matthias Williams and Louise Heavens)