Speech by Michael Behrendt at the naming of “Hanover Express”

Dear Mrs Frenzel
Vice President of the Hamburg Parliament,
Senator Uldall, 
Ladies and gentlemen,

On behalf of the Hapag-Lloyd executive board, I’d like to extend a very warm welcome to you here on the Süllberg. I’m delighted that you have accepted our invitation. From here, we can once again gaze over the wonderful Elbe and the busy port, both of which have made a crucial contribution to Hamburg’s growth and prosperity for centuries.

I’d like to extend a very special welcome to our patron, Mrs Gabriele Frenzel. You named our flagship “Europa”, and now we’re delighted that you accepted our invitation to name one of our “workhorses”, which Mr Adrion already presented in his speech at the terminal. I may say that you performed the naming again in a very accomplished and charming way. Many thanks for having given our latest newbuilding such a fitting naming.

I’d also like to extend a warm welcome to the Hamburg economics senator Gunnar Uldall. Dear Mr Uldall, under your leadership, the Hamburg Senate has decided on a comprehensive expansion programme for the Port of Hamburg up to 2015. Hamburg’s role as logistics hub for Northern and Eastern Europe is thus being strengthened and with it the Port of Hamburg as one of the main transhipment centres for European foreign trade.
 

This is a good opportunity to thank you very much for this on behalf of the Port of Hamburg and the shipping lines for your great dedication.

I’d also like to extend a warm welcome to Dr. Krumnow, the supervisory board chairman of TUI AG. We’re delighted that you have taken time for our naming, as this confirms your great interest in the progress in the shipping sector. Many thanks for spending this day with us.

I’m sure that you, Dr. Frenzel, have gladly changed places today and handed over to your wife. But you’re here not only in your function as husband, but also in particular as supervisory board chairman of Hapag-Lloyd AG and CEO of TUI AG. In the ten years since we have been part of TUI, we have realised an investment programme on a scale that would have amazed even the great Albert Ballin. In 1999, when TUI acquired Hapag-Lloyd, we had 21 ships with an overall capacity of 80,000 TEU, while today our fleet comprises 143 vessels with a capacity of almost 500,000 TEU.

As staying still means going backwards, we are forging ahead: up to 2010, we’ll be taking delivery of a further ten sister ships of the “Hanover Express”. The next two units will be integrated into the fleet in the first four months of 2008. We’re thus definitely remaining on a growth course and in this respect have the full backing of our supervisory board. Thank you for the confidence you have shown us, Dr. Frenzel, and I’m delighted you can be here today.

Last but certainly not least, I’d like to welcome our customers, who with their consignments make an expansion of the fleet necessary in the first place. I very much hope that you will stay loyal to us in future, and in return I assure you that we will do everything to remain a little step ahead of your growing requirements in an increasingly complex logistics sector.

Ladies and gentlemen, we Germans are said to have a somewhat pessimistic nature. In Germany, a glass is half empty rather than half full. As regards the development in our industry, container shipping seems to be a typically German business. But there is absolutely no reason for this. Our industry has been growing since the beginning of global container transport 40 years ago and expanding steadily faster than world trade, in some cases with double-digit growth rates. Our equipment, our ships, achieve a capacity utilisation of which other industries can only dream. But we are saddled with a phenomenon one could term the “Loch Ness monster”, the Nessie of container shipping: for us, Nessie is “overcapacities”. No one has seen it, but everyone talks about it.

There is, however, a key difference: the more often Nessie is talked about, the better it is for tourism in Scotland, but in our industry it’s sometimes enough if a ship is not totally full with containers and people already talk about “overcapacities”. Then the pessimism takes on a life of its own, which despite full ships can lead to an erosion in rates. There was an example of this in 2006. I don’t known any other transport industry that with an annual average capacity utilisation of 90 percent and more describes the difference to 100 as overcapacity.

This discussion starts all over again with each new ship ordered. Over 1,300 containerships are currently on order worldwide, including 137 units with a capacity of over 10,000 TEU. Now these are not orders that are placed recklessly. Before any order is made, the shipping line or issuing house intensively analyses the market. As loan capital is needed for financing the vessels, the banks come into play, and they scrutinise every credit application in detail before approving it. Is there any better indication than the ship orders that the capital market is also confident that container transport will continue to grow in the medium to long term?

If we – and by this I mean our entire industry – had really believed quite a few forecasts and the opinions of experts and hadn’t optimistically ordered ships, we would today have a massive transport problem, which could definitely slow the growth of global trade. The world economy, after all, continues to have great growth potential and ship capacities have been fully needed this year as they were in 2006 despite all the warnings about overcapacities.

China is on the best way to becoming the main exporter and thus ousting Germany from its leading position. With its growing production, it influences the raw material markets, on which many developing and emerging economies are dependent. In their economic policy, they are also orienting themselves increasingly to China, which remains the main driving force behind container transport. By 2011, China will have doubled its export volume and boosted its imports by 80%.

This sounds like dependency on one country, but in reality it is only limited. In Asia, Japan, Korea, Vietnam, Indonesia and above all India also have great potential. The forecast institutes expect world trade to expand by over 6 percent annually in the medium term, that is up to about 2012. Growth in container transport has so far always exceeded this, and all the forecasts turned out to be too conservative. Global volume is expected to soar from over 100 million standard containers in 2006 to more than 155 million containers by 2012. That would be growth of 55 percent in only six years!

The globalisation of trade will continue. However, it is conceivable that there will be changes in merchandise flows, as in the past. The production of specific goods is wandering from country to country. These products are as a rule cheap articles, the price of which can be kept low with low wage costs. China still holds a dominant position for these, although in the meantime other countries in Asia and some in Eastern Europe have also become attractive as locations for this production.

For us as shipowners, the shifts in the trade flows are neither ominous nor new. They have always existed. Trade functions only with efficient shipping, offering reliable and regular liner services. Our vessels can be deployed in a versatile way; our liner network is global and thus creates the basis for the expansion of merchandise flows.

And finally, shipping has made globalisation possible in the first place with the marginalising of costs. The share of the cost of transport of the total cost of a product is between one and three percent, depending on the item involved. In 1970, it was still about 10 percent. This improvement has been made possible with the enormous growth in productivity, achieved with modern ships, a flat hierarchy, customer focus and also a constant improvement in IT systems and via attractive rates passed on to the market.

Now without a shipping industry that invests in the future, there would be no world trade as we know it today and also no globalisation. Shipping is the most flexible and most efficient means of transport and the one with the least environmental impact in international trade. With our liner network, which serves all major world ports and is being continuously expanded, we guarantee efficient foreign trade links. However, we have to expect a fair “remuneration” for this service – and I don’t regard this requirement to be presumptuous. 

Ladies and gentlemen, the “Hanover Express” named today by Mrs Frenzel stands for tradition and at the same time innovation. The name “Hannover”, spelt the German way with two “ns”, has already been borne by seven ships of our company over the oceans, which is a token of our appreciation for customers in our neighbouring federal state. This time, however, she is a “Hanover Express” spelt the English way with one “n”, which emphasises the international orientation a little more effectively and is an acknowledgment of globalisation.

Container transport remains a growth market, and there are no signs whatsoever that this will change in the future. The newbuildings coming on to the market are urgently needed to cope with the expected growth. Hapag-Lloyd today belongs to the top five in our industry. We aim to be right up front in terms of customer orientation, service, quality, innovation and not least profitability in our sector. We are orienting our fleet consistently to further growth and would be delighted if you as customers remain loyal to us. The “Hanover Express” will depart from the Port of Hamburg for Rotterdam and from there proceed to Asia. In 63 days she will be back in her home port.

Ladies and gentlemen, I’d now like to ask you to stand and raise your glass with me in a toast to Mrs Frenzel, our patron, Hanover and not least our new ship, the “Hanover Express”.

Mrs Frenzel, I’d now like to present you with the naming gift as a token of our gratitude.