Risks and opportunities

1. Market environment

Developments in container throughput, transport volumes and logistics services

The pace of growth in those economies whose flows of goods HHLA serves is a key precondition for the future development of container throughput, transport volumes and logistics services. If demand for these services fails to materialise as expected, the high level of fixed costs associated with this business model means that it might not be possible to compensate fully for divergences in earnings caused by underutilised capacity in the short term. An economic trend that falls short of expectations may also require adjustments to the valuation of assets (mainly property, plant and equipment and financial assets). HHLA regularly checks for any impairment of its assets and makes adjustments where necessary. As a result of the stable forecast for volumes and earnings, the risk assessment remains unchanged for the subsequent year.

Research institutes continue to expect moderate global economic growth in the coming years, although the latest forecasts for 2019 have already been downgraded by most research institutes. The current global economic and political developments are thus already beginning to have an impact. In Europe, for example, the main source of uncertainty is the impact of a possible no-deal Brexit and the development of the Italian debt crisis. The direct impact of a possible Brexit are not significant for HHLA as both the proportion of containers handled by our Hamburg coming from or going to the UK and the potential impact on earnings of HHLA’s minority stake in CuxPort are very low. Due to protectionist tendencies already evident from the trade conflicts between the US and the EU and China, the future development of global trade flows is uncertain. Furthermore, the global economic climate will also be burdened by global geopolitical risks, such as the recent withdrawal from the INF Treaty, as well as financial risks resulting from – in some cases significant – interest rate increases. Further factors include additional or extended sanctions against Iran and Russia, as well as currency crises and the volatility of the oil price. Economic growth in China is expected to be slightly slower in 2019, albeit still at an average of around 6 %. More significantly, however, this growth will be primarily driven by domestic demand and will only support global trade to a minor extent.

On the other hand, there are opportunities for a stronger volume trend in connection with the growth potential of Central and Eastern European economies such as Poland, the Czech Republic, Slovakia and Hungary, which use the Port of Hamburg for a not insignificant proportion of their intercontinental trade. Should the economic trend exceed expectations, prompting stronger volume growth, this could present an opportunity to profit from higher earnings by achieving in handling and enhancing volumes in downstream transport systems. A gradual lifting of the economic sanctions imposed on the Russian Federation could also have a positive impact on the volume trend.

The market research institute Drewry estimates that growth in container traffic will slow. Although Drewry anticipates an increase in global container throughput in 2019, it will be below the levels forecast for 2018. Following the marked slump in 2018, the North-West Europe shipping region is set to experience an upturn in throughput in 2019, although the figures are not expected to reach the throughput levels of 2017. Throughput forecasts for the Scandinavian and Baltic ports in 2019 have been dampened and the increase in transhipment volumes is now expected to be slower. The associated volume and capacity risks thus remain relevant for HHLA but are still classed as unlikely.

Throughput and transport volumes in the markets of relevance for HHLA are monitored closely to ensure trends are recognised at an early stage. Where scalable, controllable costs and – e.g. for the further expansion of the container terminals – are adjusted in line with the foreseeable level of demand.

Competitive environment

In the area of container handling, HHLA competes directly with other terminal operators in Northern Europe. Primary competitive factors – apart from pricing – are reliability and quayside productivity as well as the scope and quality of container handling services. Other factors affecting the operators’ competitive position are the ports’ geographical location, the scope and quality of their links and their accessibility from the sea. The price sensitivity of shipping company customers, particularly for transhipment, may increase further, which could lead to a shift in volumes to competing ports.

Due to fierce competition for container transport by rail, HHLA’s subsidiaries also face the risk of volumes being re-routed with a resulting risk for . However, these risks are countered by taking appropriate measures.

HHLA constantly improves its competitiveness by further enhancing its service quality and technological capabilities. Its ship handling activities focus primarily on increasing the efficiency of its handling services and addressing the increasing number of peak loads prompted by the handling of container mega-ships. HHLA is working on innovating its systems and optimising processes to further strengthen its position in handling technology. HHLA’s rail companies also connect the European seaports with the Central and Eastern European hinterland via a growing number of highly frequent shuttle services and direct links. Investments in its own further strengthen the performance of HHLA’s hinterland network.

In addition to this, regulatory measures may increase the competitiveness of rail transportation in the intermodal marketplace.

Customer structure

HHLA’s shipping company customers have operated in a tough competitive environment for container liner shipping for several years now. This is mainly due to structurally related idle capacities and low freight rates. Cost pressure and the resulting consolidation pressure on shipping companies will thus remain high in future.

Even after the restructuring of significant services and key clients on the Asia–Europe trades in 2017, there are still risks and opportunities for HHLA from temporary or structural shifts in services between the ports. As volumes per service and ship call increase with the use of ever-larger vessels, the impact on capacity utilisation at the seaport terminals also grows. However, major changes in the service structure are considered unlikely at present.

In the field of ship handling, HHLA cooperates with many shipping companies on a neutral basis (“multi-user principle”). This enables HHLA to respond flexibly to changes in the container liner shipping sector. In addition, HHLA aims to further enhance for its customers by expanding its mega-ship handling activities, continuing to develop the quality of its services and its technological capabilities, and optimising client-specific processes.

Depending on the customer structure, smaller affiliates may become reliant on individual clients. Various steps are taken to counteract this reliance, such as optimising service quality. At the same time, efforts are made to attract new clients.

Market concentration in procurement

Some of the handling equipment used by HHLA is highly specialised and this may result in a reliance on suppliers for maintenance or the procurement of replacement parts. Under certain circumstances, this may lead to operational restrictions. The corresponding risks are reduced to some extent by involving suppliers at a strategic and collaborative level and optimising the supplier base.

Traction costs

The HHLA companies operating in the Intermodal segment pay track fees to the national railway companies or network operators for their rail network usage and also purchase services.

As the rail infrastructure in Germany is largely publicly owned, various authorities monitor non-discriminatory access and carrier-neutral track fees. These authorities include the Federal Network Agency and the Federal Railway Authority in Germany and corresponding bodies abroad at EU level. Nevertheless, as the national rail network owners and operators have a monopoly, the profitability of rail firms may be impaired by a track pricing policy that does not take a neutral approach to carriers and distorts competition. The subsidy for route prices in freight traffic (TraFöG) introduced in late 2018 by the Federal Ministry of Transport and Digital Infrastructure (BMVI) aims to subsidise rail freight by partly financing track prices. The subsidy applies retroactively from July 2018, with the programme initially set to last for five years. This will also result in opportunities for the HHLA companies in terms of volume and earnings growth.

To reduce the level of dependency on national railway companies for traction services and to enhance production quality, HHLA is expanding its own facilities, rolling stock and locomotives in line with demand. Providing end-to-end transport services using the company’s own operating assets guarantees high quality throughout the process chain. HHLA’s objective is to offer its customers a logistics chain of unparalleled quality and reliability. This will further strengthen Hamburg’s appeal: high-performance seaport terminals promote higher volumes in the , while intelligent transport systems with low-cost structures boost container flows at the port.

2. Financial risks

Currency risks

As the bulk of HHLA’s services are rendered within the eurozone, the majority of its invoices are issued in euros. HHLA therefore remains unaffected by the hyperinflation in Argentina. The and Logistics segments operate internationally, and a container terminal is operated in Ukraine. Invoicing here is based primarily on euros or dollars. Currency or transfer risks therefore result primarily from exchange rate fluctuations affecting Central and Eastern European currencies. As a result, it is impossible to rule out risks such as a further significant devaluation of the Ukrainian currency, the hryvnia, which may exceed the budget estimate. It still remains to be seen whether the political situation in Ukraine will stabilise in the short term.

All HHLA companies that operate with foreign currencies reduce the risk of exchange rate fluctuations by monitoring rates regularly and, where possible, transferring free liquidity in local currency to hard-currency accounts.

Bad debt losses

Despite increased revenues, the liquidity and earnings position of shipping companies became slightly more strained in 2018 in comparison to the previous year. This was partly due to the high volatility of crude oil prices and higher cost pressure. Nevertheless, market research institutes such as Drewry still expect to see a positive result for the industry in 2018. Shipping companies are expected to increase their profitability in 2019. However, due to the ongoing disequilibrium between trading volumes and ship space, the risk of customers filing for insolvency – with the corresponding loss of throughput and receivables – remains relevant, especially in the Container segment. In view of the overwhelmingly positive earnings position of shipping companies, the risk assessment has been reduced as compared with the previous year and is still regarded as unlikely.

HHLA uses credit checks to reduce del credere collection risks. Active receivables management is used to enable the precise monitoring of receivables and payment patterns.

Pension obligations

The reference interest rate for measuring the necessary provisions for company pensions is expected to continue its return to normal levels, but only in the medium to long term. Any further reduction in historically low interest rates would prompt another increase in pension provisions and a resulting decline in the . In view of the anticipated interest rate trend, the risk assessment largely corresponds to that of the previous year. HHLA monitors interest trends so that it can adjust its provisions as necessary.

Further rises in pension provisions may prove necessary if additional vested rights in excess of the current regulations are recognised by the courts. The corresponding court case continues. The risk of litigation is still deemed low at present.

Please see the report on financial instruments in the notes to the consolidated financial statements for further details of downstream default risks, liquidity risks, interest and exchange rate risks, including risk mitigation measures and the management of these risks.  Notes to the consolidated financial statements, no. 47 Management of financial risks

3. Other risk and opportunity factors


As a result of the existing structural situation and the fact that HHLA’s Hamburg port facilities and buildings necessarily operate close to water, there is a fundamental risk of storm surges. However, flood protection work undertaken by HHLA and the Free and Hanseatic City of Hamburg in previous years has reduced this risk considerably.

Should this risk ever materialise, comprehensive emergency programmes have been put in place by public authorities and companies operating in the port to minimise the potential damage. In addition, the risk of damage to property is sufficiently covered by insurance policies.

Investment options

In addition to organic growth, HHLA systematically examines and evaluates acquisition opportunities. Potential equity investments focus on port projects in attractive growth markets. In addition to strategic aspects and synergies with HHLA’s existing activities, key decision-making criteria include growth prospects, the anticipated return on capital employed, and the assessment of commercial opportunities and risks.

The acquisition of Transiidikeskuse AS (TK), Estonia’s biggest container and multi-function terminal, incorporated as HHLA TK Estonia since September 2018, serves the strategic expansion of the HHLA network.

HHLA is in a sound financial position. It therefore has the financial means to make further acquisitions.


HHLA has digital expertise, as exemplified by the introduction of the slot-booking process for trucks in 2017. Based on HHLA’s ambition to drive the port’s digital transformation process, further innovations in the field of digitalisation are to be initiated and implemented with the aim of enhancing the company’s value. These include a Group-wide evaluation to identify digitalisation potential. Structured processes are being established in order to achieve this. are also being made in accelerators such as the Next Logistics Accelerator and Next Commerce Accelerator, and direct equity stakes have been acquired in highly promising start-ups. This may result in opportunities to generate additional value added.

Technological innovations

One of HHLA’s targets is to relieve the pressure on the transport infrastructure in and around the Port of Hamburg by seeking innovative and sustainable solutions and using the capacities of its terminals more efficiently. To this end, HHLA set up a joint venture with the US research and development company Hyperloop Transportation Technologies (HTT). The plan is to construct a transfer station at an HHLA container terminal, which can transport maritime containers – packed in the corresponding transportation pods – at high speed via a tube system (hyperloop). Research and development The initiation of other projects will hopefully result in additional opportunities for boosting efficiency and value added.

4. Strategic environment


HHLA’s competitiveness largely depends on Hamburg’s infrastructure as a port and logistics hub. Hamburg’s offshore, onshore and regional transport networks must be able to cope with the flows of goods and their carriers. As an infrastructure-related operator, HHLA and its subsidiaries depend on prompt provision of the scheduled volume of public investments and services that are frequently necessary to support their own investments. Infrastructural deficits could make it impossible to handle peak workloads in ship handling – arising from the ongoing trend towards a growing number of ever-larger vessels – with the same level of reliability for all carriers. This in turn could cause throughput and transport volumes to bypass HHLA’s sites.

The dredging of the lower and outer stretches of the river Elbe should enable ships with a draught of up to 14.50 m to use the Port of Hamburg, depending on the tide. Ships with a draught of up to 13.50 m should then be able to pass through the lower and outer stretches of the river Elbe regardless of the tide. This will play a major role in maintaining and boosting the competitiveness of the Port of Hamburg. Planning permission was obtained in August 2018, when the third supplementary planning decision was issued. The suit brought against the current planning decision by environmental associations in September 2018 has not delayed the project. The shipping companies may, however, continue to reschedule their mega-ship liner services during the construction phase and traffic could bypass the Port of Hamburg – possibly permanently. This would result in a corresponding loss in earnings. In the meantime, however, this is viewed as unlikely (previous year: possible).

As well as swiftly dredging the navigation channel, the regional road and rail infrastructure must be modernised and expanded if the Port of Hamburg wants to retain and enhance its competitiveness and optimise its processes for the in- and outbound flows of goods in its hinterland. Deficits and delays in the expansion of the rail network, for example, could lead to the weakening of Hamburg’s competitiveness as a rail port. The short-term potential effects of this have been reassessed by the Hamburg container terminals but are still seen as unlikely. In the Intermodal segment, there may be additional costs or delays due to bottlenecks in the rail network. This may result from poor rail infrastructure or delays caused by construction work, for example. The flexibility offered by our own rolling stock helps to ensure that major impacts on our earnings are unlikely. Projects of special significance for HHLA include the future replacement of the Köhlbrand Bridge, whose useful life looks set to end in 2030, the construction of the port crossing (A 26) and the upgrading of the Kiel canal, including its locks.

HHLA cooperates closely with the relevant public institutions on these projects. It also safeguards its interests by participating in relevant committees and through lobbying and active public relations activities.

5. Legal risks

Compliance incidents

Well-trained, motivated employees are the foundation for responsible business activities. The Group’s relationship with its employees is dominated by its sense of social responsibility. Staff representatives are closely and actively involved in Group decision-making and take their responsibilities seriously. This paves the way for a successful working relationship. However, it is impossible to completely rule out the risk of employees committing fraudulent acts or legal and competitive violations in the course of their work.

To reduce these risks, HHLA has introduced guidelines, manuals and double-checking, embedded controls in its processes and established spot checks as part of its compliance management system. Furthermore, the Group has issued a code of conduct that applies to all Group managers and staff. Training sessions are held regularly on the contents of the code of conduct, as well as on other issues such as the prevention of corruption and conduct in the competitive environment, in line with the current risk profile. All of these activities are supported by additional communication measures, for example via the HHLA intranet and the HHLA team app. There are also opportunities for both employees and third parties to report violations (whistle-blower hotline). Should compliance violations occur, specific process adjustments may be undertaken to prevent them in future. For instance, in cases of theft, corresponding security measures are reviewed and possibly introduced to prevent as far as possible any further disappearance of such items. The introduction of a system-based business partner screening is also being prepared in order to facilitate standardised, risk-oriented screening of HHLA’s business partners across the Group.

New regulatory requirements

Changes to legislation, regulatory reforms or amended requirements may necessitate changes to HHLA’s internal processes or existing equipment. By ensuring a steady flow of information and cooperating closely with the relevant authorities, HHLA is able to make timely internal preparations and forward-looking investments aimed at reducing the associated costs.

6. IT risks

In the event of a cyber attack, temporary restrictions or failures in IT applications, e.g. due to the destruction or ransoming of data, cannot be ruled out. However, extensive measures are in place to protect against attacks and/or significantly reduce any negative consequences. These include prevention measures using tools such as specific filter mechanisms, maintaining backup systems (above all for data and information sharing) and communicating closely with business partners.

7. Service provision risks

In the case of equipment-based companies, there is a risk that a failure of central technical equipment may restrict the ability of these companies to render their services. Depending on the length of the downtime, unavailable equipment leads to additional costs for providing services. Preventive maintenance or repair, contingency plans and breakdown services, regular inspections and tests are performed to help identify possible faults before they happen. This significantly lowers the risk.

The strategy of increasingly using our own locomotives and wagons has proven effective for HHLA’s rail subsidiaries. For this reason, the potential losses from performance deficits caused by external service providers reported in the previous year are no longer regarded as significant. The focus of this risk has now been transferred to infrastructural risks (see above).

In contrast to the previous year, therefore, the risks relating to the provision of services are no longer considered as major risks for the HHLA Group but will continue to be tracked and observed.


In maritime logistics, a terminal is a facility where freight transported by various modes of transport is handled.

Economy of Scale

A rule of economics which says that higher production quantities go hand in hand with lower unit costs.


Payments for investments in property, plant and equipment, investment property and intangible assets.


In maritime logistics, a terminal is a facility where freight transported by various modes of transport is handled.


A port’s catchment area.

Intermodal/Intermodal Systems

Transportation via several modes of transport (water, rail, road) combining the specific advantages of the respective carriers.


Revenue from sales or lettings and from services rendered, less sales deductions and VAT.

Hub Terminal (Hinterland)

A terminal which bundles and distributes consignments as a handling hub. HHLA’s rail companies operate hub terminals like this in Ceska Trebova, Budapest, Dunajska Streda, Poznan and Prague.

North Range

The North European coast. In the broadest geographic sense, this is where all the international ports in Northern Europe from Le Havre to Hamburg can be found. The four largest ports are Hamburg, Bremerhaven, Rotterdam and Antwerp.

Value Added

Production value – intermediate inputs (cost of materials, depreciation and amortisation, and other operating expenses); the value added generated is shared between the HHLA Group’s stakeholders, such as employees, shareholders, lenders and the local community.


The action of a locomotive pulling a train.


A port’s catchment area.

Intermodal/Intermodal Systems

Transportation via several modes of transport (water, rail, road) combining the specific advantages of the respective carriers.

Equity ratio

Equity / balance sheet total.


Payments for investments in property, plant and equipment, investment property and intangible assets.