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.

Research institutes continue to forecast moderate growth for the global economy in the years ahead, although the projections for 2020 were repeatedly downgraded during the 2019 financial year and remain below the prior-year figures. This is due to the current protectionist tendencies and geopolitical tensions. In Europe, for example, a continued source of uncertainty is the impact of a no-deal Brexit and the development of the Italian debt crisis. The direct impact of Brexit is not significant for HHLA, as the proportion of containers coming from or going to the UK handled by our Hamburg is very low. Due to protectionist tendencies – as evidenced by the current tariff disputes – the future development of global trade flows remains uncertain, even though the conflict between the USA and China eased towards the end of 2019. Moreover, the global economic climate is burdened by global geopolitical risks, the termination of the INF Treaty on arms control in August 2019 and the crisis in the Middle East. Further factors include additional or extended sanctions against Russia, as well as currency crises and the volatility of the oil price. Economic environment

A slight fall in economic growth is expected for China – the most important shipping region for the Port of Hamburg – in 2020. More significantly, however, this growth will be primarily driven by domestic demand and will only support global trade to a minor extent. It is too early to make a reliable estimate of the expected risks resulting from the coronavirus.

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 boosting 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 has revised its outlook for container traffic due to the further downgrading of forecasts for the global economy. While Drewry does expect growth in global container throughput and the Northern Europe–Asia trade route, which is particularly important to HHLA, in 2020, it believes that this growth will be slower than in previous forecasts. This estimate does not yet include the possible effects of the coronavirus outbreak in China. 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 may increase further, which could lead to a shift in volumes to competitors. The fierce competition for container transport by rail has intensified as a result of various observable market trends, such as plans announced by shipping companies and logistics firms to establish their own transport routes. For HHLA’s subsidiaries, the risk of volumes being re-routed and being lost is therefore higher than in the previous year.

HHLA constantly improves its competitiveness by further enhancing its service quality and operational 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 , rolling stock and locomotives 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 remain high in future.

Due to the ongoing restructuring of alliances and services on the Asia–Europe trades, a process which began 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 current consortium 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 operational 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. Furthermore, unplanned price rises introduced by strategic IT suppliers cannot be ruled out. The corresponding risks are further reduced to some extent by involving suppliers at a strategic and collaborative level and optimising the supplier base.

Traction/track 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 still be impaired by a track pricing policy that does not take a neutral approach to carriers and distorts competition. Due to a shift in the Group’s risk focus, the risks associated with increased traction/track costs are, unlike in the previous year, not currently classed as significant for the HHLA Group but are still recorded and monitored. 3. Other risk and opportunity factors, 4. IT risks

To reduce the level of dependency on national railway companies for traction services and to enhance production quality, HHLA is further 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

If demand for HHLA’s 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 therefore 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. The level of risk is increasing, partly due to the intensification of competition at the Port of Hamburg; the likelihood of the risk materialising is regarded as “possible”.

Currency risks

As the bulk of HHLA’s services are rendered within the eurozone, the majority of its invoices are issued in euros. 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. It is therefore impossible to rule out risks such as a devaluation of the Ukrainian currency, the hryvnia, compared to the budget estimate. However, the Group’s assessment of currency risks has decreased compared to the previous year, due mainly to the rising value of the Ukrainian hryvnia over the past 18 months. It remains to be seen how the political situation in Ukraine will unfold, particularly in respect of the crisis region in eastern Ukraine.

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 the market uncertainty, the liquidity and earnings position of shipping companies improved in 2019 compared to the previous year. This was mainly due to lower bunker costs and better management of utilised ship capacities in line with the prevailing demand situation. However, as a result of the ongoing disequilibrium between trading volumes and ship space, the unpredictability of bunker due to the IMO 2020 regulation and the volatility of freight rates, the risk of customer insolvencies – with the corresponding loss of throughput and receivables – remains relevant, especially in the Container segment. The risk assessment remains largely unchanged from 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 monetary policy decisions of the European Central Bank may lead to a further reduction in the relevant reference interest rate used to calculate the present value of pension obligations. A reduction in the projected level may result in a further increase in the actuarial loss, coupled with a fall in the . In light of the expected interest rate trend, the potential damage amount has increased compared to the prior-year assessment. HHLA monitors interest trends so that it can adjust its provisions as necessary.

The court proceedings concerning the recognition of further entitlements beyond the previous regulations have been concluded in HHLA’s favour.

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, as well as in the Speicherstadt historical warehouse district, to minimise the potential damage. In addition, the risk of damage to property is sufficiently covered by insurance policies.

Real estate development risks

The landmarked buildings of the Speicherstadt historical warehouse district have been, or are being, comprehensively overhauled and refurbished by HHLA. The development of portfolio properties is a highly complex undertaking for planners and contractors alike.

Due to this complexity, defects in the planning and work carried out by contractors cannot be excluded – despite extensive quality assurance measures. HHLA ensures that any defects are rectified swiftly, comprehensively and sustainably, and is prepared to take legal action where necessary. However, it cannot be ruled out that HHLA is left with a portion of the costs. These risks have increased compared to the previous year and are therefore included with the Group’s significant risks for the first time.

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.

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


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. HHLA therefore invests in accelerators such as the Next Logistics Accelerator and Next Commerce Accelerator, and holds direct equity stakes in highly promising start-ups. This may result in opportunities to generate additional value added.

Technological innovations

One of HHLA’s goals 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. It is therefore driving projects such as the testing of a transfer station for a hyperloop tunnel and the use of drones. Research and development The initiation of further projects may result in additional opportunities for boosting efficiency and value added in future.

4. IT risks

In the event of a cyberattack, e.g. in the form of destruction or ransoming of data, temporary restrictions or failures in IT applications and increased costs 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.

5. 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 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. Dredging work has begun and is expected to be completed by the beginning of 2021. Planning permission was obtained in August 2018, when the third supplementary planning decision was issued. The suit brought against the planning decision by environmental associations in September 2018 will be heard again in May 2020 but is not currently expected to delay 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, but is still viewed as unlikely.

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. 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 also 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.

6. 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 specialised 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. Furthermore, the system-based business partner screening tool – which will also facilitate the Group-wide, standardised, risk-oriented screening of HHLA’s business partners in future – also helps identify compliance risks at an early stage and thus minimise risk.

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.

Conversely, new regulations may also lead to opportunities that mainly boost the market potential of technological innovations, e.g. of HHLA Sky by increasing access to airspace.


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 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.