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Germany's Hamburg Süd has confirmed that the sharp fall in bunker prices last year relieved the pressure on costs as fuel expenditure fell to roughly USD$700 million.

The amount spent on marine fuel was roughly US$400 million less than the previous year.

Hamburg Süd said that approximately three-quarters of the reduction was attributable to lower bunker prices, and one quarter to reduced consumption as a result of slow steaming and the restructuring of the fleet to larger and fewer units.

Commenting on bunker prices in 2009, Hamburg Süd said: "Having dropped to below 200 US dollars per ton at the beginning of the year as a result of the crisis, the price of bunker more than doubled again in the second half of 2009, to reach roughly 450 US dollars per ton at year-end. However an annual average of 350 US dollars per ton, the bunker price was almost 125 US dollars per ton below that of 2008 and consequently produced a significant cost relief. Customers, too, benefited from this development by way of falling fuel surcharges."

To lower shipping costs, liner services were rationalised - largely with partners - and slow steaming programmes instituted, which were said to have considerably lowered bunker consumption and pollutant emissions.

In 2009 slow steaming involved nine ship systems at Hamburg Süd with an estimated reduction in bunker consumption of 200,000 tons a year. The measures tied up capacity of just below 26,000 TEU and reduced Hamburg Süd's usable slot capacity by around 10 percent.

The lower fuel surcharges levied by the haulage contractors and rail companies also had a positive affect on reducing costs for the group.

However, despite efforts to cut expenditure - which amounted to approximately 300 million euros - and a 'comparatively positive performance' of dry tramp shipping, Hamburg Süd was not able to post a positive result in 2009 following a significant decline in earnings.

At 2.3 million TEU, shipment volume in the liner business was 13 per cent down on the previous year and freight rates dropped significantly. Turnover consequently fell 28 per cent to 3.2 billion euros compared with 2008.

In an analysis of the group's results, Hamburg Süd said "Considering the historic crisis in liner shipping, however, the fact that the Group overall recorded a positive operational cash flow sufficient to cover the - albeit reduced - investment budget can be viewed as a success."

Outlook

Commenting on the outlook for this year, Hamburg Süd said "In 2010 a continuation of business at the current level is expected for conventional operations. While bulk shipping continues to perform positively, product tankers will continue to be weak as improvements are not yet in sight."

"The shipping group's activities to economise resources are focused essentially on reducing fuel consumption and ship emissions. Aside from measures to optimise route planning and schedules overall, technical improvements are being tested and implemented on board the ships. In this context it must be stressed that main engine output, and with it speed, consumption and emissions, has been reduced more than was considered technically possible only recently. In the container field, measures aimed at using environmental friendly materials are being implemented, as well as the use of technologies enabling the transport of perishable commodities with a short shelf life.

"Overall, the shipping group is expecting a revival of business activity in 2010 and a significant improvement in performance and cash flow compared with last year. Given the uncertainties outlined, however, the further development is very fragile. Besides continued economic growth, a responsible approach by all market participants is necessary," Hamburg Süd concluded.