Interview with CEO Rolf Habben Jansen: “Things Look A Lot Less Dire Than Feared”
Our CEO, Rolf Habben Jansen, recently spoke with SPIEGEL, Germany’s leading news weekly, about the incident in the Suez Canal and the state of the shipping industry in general.
The Dutchman Rolf Habben Jansen, 55, has been the CEO of Hapag-Lloyd, Germany’s largest container shipping company, since 2014.
SPIEGEL: The “Ever Given” is free again after the incident in the Suez Canal. Will global commercial shipping soon be back to business as usual?
Rolf Habben Jansen: No, not after something like this. The Suez Canal is the worst place in the world for a mishap like this. It will take a while to clear up the congestion, and ships will now be arriving in Europe and Asia one or two weeks behind schedule. And there could be additional congestion, as well, if too many cargo ships arrive at the major ports at the same time. Return voyages will be delayed, and some sailings will have to be cancelled. It will definitely take eight to 10 weeks before we are back to business as usual.
SPIEGEL: Do consumers in Europe need to prepare to see empty store shelves?
Habben Jansen: We don’t always know in detail the contents of the containers on the affected ships. For example, in recent months, we have transported a lot of furniture, home and fitness equipment, and bicycles from Asia to Europe. If retailers don’t have sufficient stocks, customers can expect delays of one to two weeks for these kinds of goods.
SPIEGEL: In some industries, such as the automotive or chemical sectors, many companies manufacture according to the “just-in-time” principle. This means that their entire production depends on the timely delivery of important components or raw materials. Have these supply chains been severely disrupted?
Habben Jansen: There will definitely be some problems. But, overall, things are now looking a lot less dire than was originally feared – as long as the congestion at the entrances to the Suez Canal can be cleared up quickly.
SPIEGEL: Even before the “Ever Given” incident, the container shipping industry has been plagued by repeated delays in recent months. Does it still make sense to have “just-in-time” production under these kinds of circumstances?
Habben Jansen: The most recent delays have a lot to do with the pandemic. Global trade has rapidly recovered, so demand for transports of goods is very high. In many ports, coronavirus restrictions and very large cargo volumes are slowing down the handling of ships. These are special effects. But there will always be unforeseen events: fog in Shanghai, storms on the Atlantic, strikes. Companies should give some thought to slightly increasing their stocks to have a buffer that can last longer than just a few weeks.
SPIEGEL: Have you already noticed any of your customers doing some rethinking and shifting more of their supply chains back to Europe?
Habben Jansen: Even though there has been a lot of speculation about this, we have only seen that to a minimal extent so far.
SPIEGEL: The blockage of the Suez Canal has shown just how vulnerable commercial shipping is to bottlenecks. The canal only has a single lane in places, including where the incident occurred.
Habben Jansen: Of course, it would be good if the Suez Canal were to have two navigation channels at all points. But a second fairway can’t be built overnight. And the safety measures could also use a fresh review. But don’t forget this: Around 19,000 ships pass through the Suez Canal every year, and it’s been a long time since there has been a major problem.
SPIEGEL: More than anything, this shows just how big the backup would have got if the canal had been blocked for longer. What if that were to happen?
Habben Jansen: Then we would send our ships around the Cape of Good Hope. Of course, that takes longer and costs more. But the supply wouldn’t be in danger. We have a saying in shipping: The cargo finds its own way.
SPIEGEL: The prices for container transports had almost returned to their previous record highs before the incident. Will freight rates climb even higher?
Habben Jansen: Hapag-Lloyd has already concluded most of its contracts for the entire year and for the second quarter, so the rates are fixed. But for short-term bookings, market prices could very well go up.
SPIEGEL: Most cargo ships are already full to the brim.
Habben Jansen: That’s correct, and there are hardly any reserve ships available at the moment. In recent years, a lot of shipping companies haven’t invested much in their fleets because they haven’t earned the cost of capital for several years. No one expected that the pandemic would spark high demand for transports. And there won’t be any more ships in the near future.
SPIEGEL: Experts fear that the delays will exacerbate the shortage of empty containers in Asia. Could this inhibit global trade?
Habben Jansen: I don’t expect that to happen. Our industry will implement measures to prevent this, such as by using containers more efficiently. Perhaps we will make the empty boxes available to our customers a little later than we did before – such as five days before the sailing instead of 10 days.
SPIEGEL: Container shipping is regarded as the backbone of globalisation. Some economists think that this status will diminish, such as due to trade conflicts between the United States, China and Europe. Is that something that you are concerned about?
Habben Jansen: If you look at the trend over the past two decades, globalisation has continuously advanced. For 10 years, we have been talking about whether there will be a reversal of globalisation. But the reality is that this hasn’t been the case so far.