Hapag-Lloyd's Middle East Drag: A $600M Shock, a New Surcharge, and a Terminal-Led Pivot

Q2 recovery hides the cost of disruption as Hapag-Lloyd pushes ahead with ZIM and expands terminals.

HLAG.DE · Earnings Call · 2026-08-13

Hapag-Lloyd's H1 2026 was a tale of two quarters. CEO Rolf Habben Jansen opened the call with a blunt admission: “we reported an unsatisfactory start to the year” — Rolf Jansen, CEO · 2026-08-13. The first quarter was dragged down by weak volumes and rates, but Q2 staged a clear recovery as transport volumes climbed nearly 9% sequentially and average freight rates firmed 11%. Yet the headline numbers mask a persistent drag: the Bab al Mandab disruption cost the company roughly $600 million in cash, about two-thirds of which hit the P&L in Q2. CFO Mark Frese explained that “the conflict in the Middle East caused severe operational disruptions and substantial additional costs” — Mark Frese, CFO · 2026-08-13, adding that unit costs rose 7% year-on-year, driven by higher bunker prices and alternative routings. To combat the energy spike, Hapag-Lloyd introduced an emergency surcharge alongside its regular fuel recovery mechanism. This is a notable new tool in its pricing arsenal, as prior quarters had no such surcharge in place. The company expects that as long as the Red Sea situation persists, these surcharges will help mitigate the cost burden, though the timing of their recovery is lagged.

Port Congestion and the Demand Supercycle

The longer-term narrative is anchored in structurally tight capacity. Rolf emphasized that “the growth on the dominant legs over the last couple of years has been a lot stronger than many people anticipated” — Rolf Jansen, CEO · 2026-08-13, noting roughly 25% cumulative growth since 2023. That has pushed port congestion to the forefront, with delays at major hubs like Shanghai unlikely to resolve quickly. The demand outlook remains robust, with Rolf noting “we still see very robust volume. So very decent peak season” — Rolf Jansen, CEO · 2026-08-13. This aligns with a broader global theme: global keywords for the quarter highlight "Middle East conflict" and "port congestion" as sector-wide concerns, and shipping peers like Maersk are responding similarly. The headhaul growth picture is also notable. Rolf cited dominant-leg growth of about 7% in H1 2026, up from 6% last year, and expects that pace to persist for the next 12-18 months. This has important implications for capacity: even as a wave of newbuilds arrives in 2027, the industry will need them to carry incremental cargo, especially if the return to Suez is delayed. Rolf expects a gradual normalisation

probably from now until the end of the year
Rolf Jansen, CEO · 2026-08-13

, but he also warned that a return would free up capacity, so the timing is carefully managed.

ZIM and Terminal Ambitions

Strategically, Hapag-Lloyd is pushing ahead with two fronts. The ZIM transaction is progressing; shareholders have approved it, and management says it is "working through the regulatory approvals" and still expects to close by year-end. Analysts pressed on a Plan B if the deal fails, but CEO remained non-committal, citing confidence in the current path. The Terminal business is expanding rapidly. Hapag consolidated JM Baxi in India (51% stake), started operations at Damietta, and signed a term sheet to acquire 20% of CTH Hamburg and double its stake in Tanger. This aligns with a broader trend: global keywords show "Terminal business" and "Throughput" as rising themes, and peers like Maersk have also been boosting their port footprint. For Hapag, terminals are becoming a "more and more important pillar" of the business, providing diversification beyond liner shipping.

Outlook and Fuel Surcharge Mechanics

On the cost side, CFO Mark Frese detailed how the bunker and disruption effects distorted unit costs. The average bunker consumption price jumped from $485 per metric ton in Q1 to $700 in Q2, a dramatic swing. Excluding these and the Middle East direct impact, underlying unit costs improved sequentially and year-on-year, reflecting the cost-saving program. The company raised its outlook in July on the back of higher demand and spot rates, though it acknowledges "a certain amount of uncertainty." The BAF (bunker adjustment factor) mechanism is key. Rolf noted that “on all our long-term contracts with very few exceptions are subject to normal MFR or BAF” — Rolf Jansen, CEO · 2026-08-13, meaning the surcharge recovery will lag by a quarter or more. This is crucial for modelling Q3 and Q4 earnings, as the benefit of higher rates and surcharges will be realised with a lag. The market backdrop remains constructive. Rolf highlighted a strong peak season and noted that the U.S. inventory-to-sales ratio is not elevated, suggesting further upside. He also pointed to the fact that average freight rate is up 9% year-on-year in Q2, a solid rebound. Overall, Hapag-Lloyd is navigating a complex environment: a Middle East shock that forced a new surcharge, a demand surge that is testing infrastructure, and a strategic pivot toward terminals and the ZIM deal. The stock's reaction will hinge on whether the surcharge recovery and rate momentum offset the cost pressure into H2.