German container shipping major Hapag-Lloyd has unveiled a new mid-term strategy which sees big cost cuts coming at the same time as a renewed focus on customer service. Called Strategy 2023, it has been published just at the moment the company maintains liner shipping is at a turning point, where the era of consolidation is coming to a close.
“Size is not the name of the game anymore, but customer orientation. It is obvious that customers expect more reliable supply chains, so our industry needs to change and invest more. At the same time, we know that people are prepared to pay for value. Going forward, delivering value to get the most attractive cargo on board is at the heart of our new Strategy 2023. To be number one for quality is the ultimate promise to our customers and a strong differentiator from our competitors”, said Rolf Habben Jansen, CEO of Hapag-Lloyd.
Hapag-Lloyd’s Strategy 2023 is based on various elements. Key cost initiatives focus on network optimisation, terminal partnering and further improvements in procurement and container steering. Furthermore, an optimised revenue management is aimed at ensuring the most attractive cargo gets onboard.
More investments in digitalisation and automation will be made with a goal of concluding 15% of the company’s overall volumes via its web channel by 2023.
Financial targets by 2023 will focus on generating economic value by delivering a return on invested capital (ROIC) which is higher than the weighted average cost of capital (WACC). This implies an EBITDA margin of approximately 12%. A cost management programme with a savings run-rate target of $350m to $400m has been launched to ensure a competitive cost position is maintained also after launching the strategy initiatives. On leverage, the net debt-to-EBITDA ratio is targeted to be less than 3.0x with an equity ratio of more than 45%. An liquidity reserve of around $1.1 bn will be maintained.