Hormuz Alternatives Look Operationally Complex, Hapag-Lloyd Says

German shipping giant Hapag-Lloyd has managed to move cargo using alternative methods amid disruption in the Strait of Hormuz, but says these solutions are difficult to operate long term. The world's fifth-largest liner operator reported cost headwinds of around 600 million dollars since the Middle East conflict began, roughly 50 million dollars per week. With most cargo now moved by truck via Khor Fakkan, the company views the land bridge as a temporary measure while pursuing expansion through its ZIM merger and terminal investments.

 

The Cost of Disruption

 

The conflict has imposed significant costs. Hapag-Lloyd reported substantial cost headwinds. These total around 600 million dollars since the conflict began. This translates to roughly 50 million dollars per week. The figures reflect the scale of the disruption.

The outlook remains uncertain. The situation is highly dynamic. The company cannot provide a reliable forecast. This applies to additional costs for the year. This uncertainty complicates the company's planning.

 

The Alternative Routing

 

The company established alternative routes. Its priority was reliable routing while Hormuz stays closed. Most cargo now moves by truck. This is via Khor Fakkan. Some rail transport is used when vessels call at Fujairah.

These alternatives have real drawbacks. The land bridge adds seven to 10 days. This compares with an all-sea routing. It requires significant additional infrastructure. Coordination is also demanding given increased volumes.

 

The Temporary Solution

 

The company views the routing as interim. Cargo flows have stabilised after several months. However, the solution remains operationally complex. It is also resource-intensive to maintain. This limits its long-term viability.

The company sees limited longer-term potential. It views the land bridge as temporary. However, targeted infrastructure investments could help. These could create opportunities for selected products. This offers a possible longer-term dimension.

 

Read More: Renewing an Ageing Icebreaker Fleet Amid Climate Change With Nuclear in the Mix

 

Adapting to Persistent Disruption

 

The crisis reflects a broader pattern. It appears to culminate years of disruption. Geopolitics has been at the forefront. Disruption has become part of normal operations. Adapting quickly is now essential.

The company has adjusted its approach. It plans in shorter cycles now. It builds resilient and flexible networks. It focuses on proactive planning. Ready-to-execute alternatives support this approach.

 

The ZIM Merger

 

The company is pursuing major expansion. It is focused on a merger with ZIM. A binding agreement was signed in February. Shareholders have approved the deal. The company aims to close it by year-end.

The merger would strengthen its position. It would secure its fifth-largest ranking. The combined fleet would exceed 400 vessels. Capacity would surpass 3 million TEU. Annual volume would exceed 18 million TEU.

 

Fleet and Terminal Growth

 

The company is expanding its terminal business. In late August, it agreed a terminal stake. This was a 25 percent stake in a Rotterdam terminal. It aims to reach around 30 terminal stakes by 2030. This reflects broad portfolio ambitions.

Fleet investment is also substantial. The company has an orderbook of 32 container ships. These total 349,000 TEU for delivery through 2029. The investments will modernise the fleet. They support a target of 50 alternative-propulsion vessels by 2030.