Mumbai, March 19 Global shipping giant Hapag-Lloyd is in discussions with its partners to cover some of the additional costs, which have increased by USD 40-50 million per week amid the ongoing situation in the Middle East and disruptions in cargo movement, its CEO Rolf Habben Jensen has said.
He also said that around 25,000 shipments have been affected due to the conflict in the region, but that the company is trying to continue operations as normal for everything outside the Strait of Hormuz.
"Of course, since February 28th, we are all in a very different situation, and we are all still dealing with it. Today, we have additional costs of about USD 40 million to USD 50 million per week. That is, of course, a very significant amount," Jensen said at an event organized to sign the Letter of Intent for maritime cooperation between the company and the Indian government.
"That is also why we need to have conversations with our partners about how to cover those costs, because we cannot absorb USD 40 million or USD 50 million a week," he added.
He said that the costs were increasing due to rising bunker fuel prices, insurance, and operational adjustments, among others.
Jensen said he was hopeful that the situation would normalize, adding, "but we do need to ask for some support to cover some of those costs. In reality, we will already have to absorb some of that, but we cannot do that for an extended period of time."
Stating that the ongoing situation in the Gulf has a significant impact on energy supply and global trade, ranging from 1 per cent to 10 per cent, he said.
According to him, about 3-4 per cent of global trade takes place in the upper Gulf, where around 3,000 merchant ships are currently stuck, which is a significant number.
Jensen also said that the company's ships will not go to the Strait of Hormuz for now due to security reasons, but added that everything outside of that, it will try to continue as normal.
"I think, until now, we have been able to do a pretty good job on that. In total, we have around 25,000 shipments that are affected by this situation," he said.
The Indian market, where the company has already invested over USD 800 million over a period of time, is important for Hapag-Lloyd, he said. "We handle around 2-million TEUs. We aim to achieve more than 3-million TEUs by 2030."
"So, we are very optimistic about it," he said.
He said that markets such as Africa, Europe, and the US, where the company is strong, will continue to grow rapidly.