Hapag Acquires Deutsche Afrika-Linien Using Strong 2021 Profits
Hapag-Lloyd is using its surging profits from 2021 to continue its strategy of expansion and consolidation focusing in part on the company’s services to Africa. The German shipping company announced it has signed a framework agreement to acquire the container business of the 132-year old Deutsche Afrika-Linien.
Explaining the rationale for the acquisition Hapag cited Africa as a strategic growth market. The Rantzai Group, the parent company of DAL, noted that “as a medium-sized family business, DAL is increasingly coming under pressure from market-dominating mega-carriers.” Rantzau said its strategy is focusing on good future prospects for its business in European chemical tankers and that its dry cargo business is ready for expansion.
With a history dating back to the year 1890, DAL is an established liner shipping company for the transportation of containerized cargo and operates with four liner services between Europe, South Africa, and the Indian Ocean. Like Hapag, it is also headquartered in Hamburg, sailing its 81,000 dwt vessel, DAL Kalahari, as part of a joint service with Maersk and ONE between the UK, Rotterdam, Bremerhaven, Cape Town, and Durban. Built in 2010, the 1,000-foot containership is registered in Portugal and has a capacity of 6,589 TEU. DAL also owns and leases a container fleet of around 17,800 boxes, which will be taken over as part of the acquisition.
"The significant increase in consolidation within container shipping in recent years has irrevocably changed the industry and the economic framework conditions. With the increasing challenges in container shipping, as well as in environmental and climate protection, we are facing dependencies and cost disadvantages that we will no longer be able to compensate for in the long term in the South-Africa-Trade," DAL wrote in the announcement of the transaction.
Hapag has been taking steps to increase its African operations. Last year, the line acquired Africa-specialized carrier NileDutch, which significantly strengthened the carrier's presence and service offering to and from West Africa. Recently, in partnership with Pacific International Lines, ONE, and Gold Star Line, HAPAG also expanded service from East Africa with a route between Kenya and Asia and a new service between Asia and Tanzania. Hapag also opened new offices in Kenya, Morocco, and Senegal in 2021 and established a Quality Service Center in Mauritius in 2020.
“Africa remains an important strategic growth market,” said Rolf Habben Jansen, CEO of Hapag-Lloyd. “Particularly for our service offering from and to South Africa, DAL is a valuable addition allowing us to offer our customers a better network and additional port coverage in this region.”
While no financial details were announced on the transaction, HAPAG also reported strong financial results which are helping to fuel the line’s consolidation efforts and fleet expansion.
“We look back on an exceptionally successful year (2021) in which we invested massively in modern vessels and new containers. In addition, we have significantly strengthened our financial and asset position. However, transport expenses have unfortunately also risen significantly, mainly due to the bottlenecks in the global supply chains,” said Jansen detailing the release of the company’s annual report.
Hapag reported a 10-fold increase in profits in 2021 with a net profit of $10.8 billion. Revenues from the operations more than doubled to $26.4 billion. Jansen said the main drivers were significantly improved freight rates resulting from very strong demand for goods exported from Asia. Overall for 2021, freight rates were up 80 percent over the prior year. Hapag also used its strong results to completely pay off its net debt in 2021.
“The 2022 financial year has gotten off to a successful start for us, but the disruptions in the supply chains have not eased materially yet,” noted Jansen. Hapag said that it expects the very strong earnings trend to continue in the first half of 2022 despite current pressures including the increase in fuel costs and the company’s decision standing with the international community and stopping bookings to and from Russia.