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Hapag-Lloyd eliminates jobs at its headquarters

Hapag-Lloyd has reached an agreement with its staff on a plan to reduce costs at the liner company's Hamburg headquarters. Jobs will be outsourced and a series of positions will be eliminated.

Photo: PR-foto/Hapag-Lloyd

Hapag-Lloyd will eliminate a series of jobs at its headquarters in Hamburg as part of a new efficiency plan aimed at reducing costs, the German liner shipping company confirms to ShippingWatch.

German media report that the company and its staff have reached agreement to reduce its workforce by 159 positions, though a spokesperson for Hapag-Lloyd declines to comment on this number.

The reduction will come in the form of layoffs, as well as outsourcing a series of functions to other companies.

Hapag-Lloyd's executive team has in recent months been negotiating with its Working Council to reach agreement on the plan, which aims to increase the organization's efficiency after completing two mergers within the past four years.

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Photo: PR-foto: Hapag-Lloyd

The company's management says that superfluous functions have emerged following the mergers, each of which saw 200 new employees head from CSAV and UASC to Hamburg.

Mergers to provide gains

The agreement, which was presented at a staff meeting Tuesday afternoon, means, among other things, that there will be no staff reductions before Dec. 31 2019.

Furthermore, the actual number of jobs set to disappear could, according to ShippingWatch's sources, be lower than 159, perhaps down to double-digits, as the company has not been hiring since the third quarter 2017.

One of the conditions Hapag-Lloyd's Working Council got included in the plan is that the jobs being outsourced will be place with companies located within a 15 kilometer radius from Hamburg.

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The reduced costs are the latest move in the efficiency and cost reduction measures spearheaded by Hapag-Lloyd CEO Rolf Habben Jansen in effort to deliver on the gains he has pledged to the carrier's shareholders after the two mergers.

Once the merger with UASC is fully implemented, the goal is for the new synergies to contribute around USD 400 million to the books. Hapag-Lloyd has already completed the first round of efficiencies related to the mergers, but this has so far taken place at the regional offices, with Dubai as the most notable example following the merger with UASC. Dubai used to serve as UASC's headquarters, but today the city is home to a significantly smaller regional office for the German liner company.

Like most of its competitors, Hapag-Lloyd has been strained by a tough market in 2018.

The company's revenue grew to EUR 2.6 billion in the first three months of the year from EUR 2.1 billion in the same period last year, not least due to the merger with UASC. But the bottom line remained negative in the first quarter 2018, with a net deficit of EUR 34.3 million, an improvement from a deficit of EUR 58.1 million in the first quarter last year.

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Photo: Hapag-Lloyd

"We have had a solid start into the current year, but the market environment is challenging. Freight rates have been under pressure, bunker costs and trucking cost in some important markets were up and we faced a weaker US-Dollar, whereas higher transport volumes and synergies supported the result," said CEO Jansen in a comment on Hapag-Lloyd's first quarter results.

Significant increase in productivity

A mere six months have passed since Seaintelligence Consulting CEO Lars Jensen highlighted Hapag-Lloyd in a comment, noting that the liner company had been able to not only maintain a high productivity rate, but also to increase its productivity after the merger.

"Based on the numbers that are available, Hapag-Lloyd was the carrier with the highest employee efficiency before the merger with UASC. In the third quarter 2016, efficiency was 19.3 teu per employee per week. In the third quarter this year, this grew to efficiency of 21.0 teu per employee per week," said Jensen.

This corresponds to an increase in productivity of 8.5 percent.

Hapag-Lloyd has 12,000 employees globally, of which around 10,000 work onshore.

English Edit: Daniel Logan Berg-Munch

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