Risks and opportunities
1. Market environment
Developments in container throughput, transport volumes and logistics services
The pace of growth in those economies with flows of goods supplied by HHLA is a key precondition for the future development of container throughput, transport volumes and logistics services.
At the time of reporting, the International Monetary Fund (IMF) expects steady growth of 3.2 % for the global economy in 2024 and 3.3 % for 2025. Owing to increasing global economic and political tensions, this forecast is, however, still subject to uncertainty. Ongoing or potential trade wars, for example, between the US and China, or between the US and Europe, may affect the flows of goods.
The growth forecast for China – the most important shipping region for the Port of Hamburg – is above the global average at 4.8 % for 2024. Economic growth of 4.6 % is forecast for 2025. The weaker outlook expected for 2025 is partly due to the ongoing weakness of the real estate market and a slowdown in the growth of consumer spending. Recent fiscal measures may once again boost economic growth. However, the trade conflict between China and the US may have an opposing effect.
The IMF expects a moderate recession for Germany in 2024, with a decline of 0.2 %. As of 2025, a slight increase of 0.3 % is forecast. However, this trend will continue to be below global economic growth. Economic environment
Compared to its previous estimates, the IMF forecasts weaker economic growth in 2025 for Central and Eastern European economies such as Poland, the Czech Republic, Slovakia and Hungary, which use the Port of Hamburg for a significant proportion of their intercontinental trade. Opportunities resulting from a stronger volume trend in connection with growth potential are no longer expected.
The market research institute Drewry forecasts growth for global container throughput of 6.1 % for 2024, but expects a slower growth rate of 2.8 % for 2025 and beyond. These estimates are also subject to uncertainty due to the ongoing geopolitical tensions.
Although they remain material for HHLA, the associated volume and capacity risks remain possible. Outlook for sector development
The import duties announced with the change of presidency in the US may lead to trade conflicts. Export volumes to the US may shrink as a result. The specific form of any potential import duties, and their consequences, are subject to high levels of uncertainty at the time of reporting.
Throughput and transport volumes in the markets of relevance to HHLA are monitored closely to ensure trends are recognised at an early stage. Where they are scalable, controllable costs and investments – e.g. for the further expansion of the container terminals – are adjusted as required in line with the foreseeable level of demand.
Competitive environment
The competitive environment on Europe’s northern coast is characterised by fragmentation on the one hand and the increasing influence of shipping companies on terminals on the other. Competition remains fierce. Reliability and a high degree of quayside productivity, coupled with attractive container services and competitive prices, are central to the active positioning of Hamburg’s container terminals. Clear targets for increased productivity and improved operating costs have been defined as part of the capital expenditure for modernisations and the gradual transformation processes. Other factors affecting the competitive position of terminal operators are the geographical location of ports, the scope and quality of their hinterland links and their accessibility from the sea.
Price sensitivity of shipping company customers may increase for both overseas traffic and transshipment, which could lead to a shift in volumes to competitors. The strategic investment in HHLA by Mediterranean Shipping Company (MSC) also poses the risk that other shipping company customers may withdraw volume from Hamburg. This is offset by agreed volume commitments and the opportunity for additional volume from MSC, which is largely due to come into effect gradually from 2025.
The fierce competition for container transport by rail remains high 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 Intermodal subsidiaries, the risk of volume being re-routed and revenue being lost is therefore roughly the same as in the previous year, although the strategic investment by MSC means there is still a risk that other customers may withdraw volume. On the other hand, there is an opportunity for increased volume from MSC in container transport by rail.
HHLA constantly improves its competitiveness by 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 strengthen its position in handling technology.
In the Intermodal segment, the reliability and punctuality of train connections, the scalability of the shuttle system, the expansion of the terminal network and a competitive cost base remain key prerequisites for the expected growth of rail transportation. Investments in our own hub terminals and the expansion of the network through the construction or acquisition of further terminals (including in Hungary) will strengthen the performance of HHLA’s hinterland network. Having said this, intermodal traffic is also dependent on the productivity of upstream and downstream carriers. Any restrictions in these areas can directly affect our own services and result in the loss of volume and earnings. Intensive customer communication and high flexibility make it possible to mitigate risks. Moreover, regulatory measures may increase the competitiveness of rail transportation in the intermodal marketplace.
Customer structure
As a result of fierce competition, HHLA remains exposed to risks and opportunities from temporary or structural shifts in services provided by shipping company customers between the North Range ports and in the Port of Hamburg. As volumes per service and ship call increase with the use of ever-larger vessels, the impact on capacity utilisation at seaport terminals also grows. Changes to the syndicate structures of shipping company customers could have a direct impact on throughput volumes at the HHLA container terminals. Due to the expiry on 25 April 2024 of the block exemption regulation as an exception to the EU antitrust laws that apply elsewhere, new partnerships are expected in the short to medium-term. The risks resulting from significant changes to the current service structure therefore still remain possible.
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. This neutrality remains in place even in the case of a strategic investment in HHLA by MSC.
As a result of the non-controlling interest of 24.99 % held by Grand Dragon Investment Enterprise Limited, a subsidiary of COSCO Shipping Ports Limited based in Hong Kong (CSP), CTT will be developed into a preferred handling location for COSCO traffic, where freight flows between Asia and Europe will be concentrated. This non-controlling interest will also result in a proportionate transfer of market risks to CSP.
In addition, HHLA aims to enhance added value for its customers by expanding its mega-ship handling activities, continuing to develop the quality of its services and operational capabilities, and optimising customer-specific processes.
Depending on the customer structure, even smaller affiliates may become reliant on individual customers. Various steps are taken to counteract this reliance, such as optimising service quality. At the same time, efforts are made to attract new customers.
Energy price increases
Fossil fuels are exposed to procurement price risks owing to geopolitical factors and environmental policy targets. These risks can adversely affect the earnings of the energy-intensive Container and Intermodal segments. In view of lower prices and reduced fluctuation on the procurement market, energy price rise risks are decreasing. As a result, the probability of the risks occurring – which seemed possible in the previous year – is now no longer deemed material. Tax benefits for port diesel have been extended, which means no further price risks exist in this area for the time being, as compared with the previous year.
However, HHLA is still taking steps to increase energy efficiency and pursuing a strategically focused procurement policy that favours electricity from climate-neutral production.
Traction/track costs
HHLA companies operating in the Intermodal segment pay track fees to the national railway companies or network operators for their rail network usage and in part also purchase traction services.
As the rail infrastructure in Germany is largely publicly owned, various authorities monitor non-discriminatory access and track fees. These authorities include the Federal Network Agency and the Federal Railway Authority in Germany as well as corresponding bodies abroad at EU level. Announced changes, such as with regard to fee amounts or subsidies for route prices in Germany, are taken into account in our planning wherever possible. However, also short-term political decisions cannot be ruled out. The risk of increased traction/track costs therefore remains relevant for HHLA but is still not categorised as material.
To reduce the level of dependency on national railway companies for traction services and to enhance production quality, HHLA is expanding its own facilities and rolling stock 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 HHLA’s network: high-performance seaport terminals promote higher volumes in the hinterland, while intelligent transport systems with low-cost structures boost container flows at the ports.
2. Operational risks and opportunities
IT risks
HHLA’s business processes rely heavily on the availability and security of IT applications. In the event of a cyberattack, temporary restrictions or failures in IT applications, e.g. due to the destruction of data, cannot be ruled out. Extensive protective mechanisms for incoming data and communication, as well as additional control measures serve to protect against attacks, as well as identify them in good time. The measures required to significantly reduce the impact of any damage are continually developed. In light of the high number of cyberattacks on companies that have led to data theft or IT outages, it remains possible that HHLA could also be affected by such a damaging attack. In the event of such an attack, a medium level of potential impact is estimated.
Strike risks
Disputes relating to collective bargaining or transformation processes may lead to interruptions or delays to operations, with a corresponding impact on earnings, especially in the Container and Intermodal segments. As external strikes are relevant to the Intermodal segment, communication with customers and flexibility with regard to routing are effective measures for reducing the potential scale of damage. In the Container segment, internal industrial action cannot be ruled out. This is counteracted by means of extensive communication regarding transformation processes and the close involvement of the works council. Strike risks remain largely unchanged from last year’s report.
Climate risks
The climate risk and vulnerability assessment conducted for the first time in 2022 in accordance with the requirements of the EU Taxonomy was reviewed in 2024. The results continue to show that the climate risks of floods and landslides as a result of extreme weather events, which have already been identified as material, are not expected to change significantly in the period under consideration until 2050 on the basis of the latest climate data. There are no other material climate risks at present. As a result, no further adaptive solutions or modifications to the existing measures are required at present.
Flooding
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. The residual risk remains largely unchanged from the previous year.
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 the Speicherstadt historical warehouse district, to minimise the potential damage. In addition, the risk of damage to property is sufficiently covered by insurance policies.
Extreme weather events
In the course of climate change, an increase in extreme weather events can also be observed in Europe. Intermodal transport operations in particular may be adversely affected by the weather-related landslips causing the closure of track sections. A high level of flexibility is required with regard to operating equipment and personnel to maintain rail-based container transportation. Operations in the Intermodal segment are systematically geared towards ensuring that customers receive the agreed service level, even in challenging weather conditions. As in the previous year, temporary increases in additional costs caused by specific events cannot be ruled out.
Technological innovations and digitalisation
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. To achieve this, HHLA uses remote-operated container gantry cranes and the automation of rail gantry cranes at CTA, for example, as well as machine learning to optimise the positioning of containers in the yard at CTA and CTB and thus boost productivity.
Furthermore, HHLA has set up new company units and invests in promising start-ups to provide the necessary space for technological and entrepreneurial innovation in logistics to flourish, especially with regard to innovative business activities along the material and digital logistics value chain. One example of this is the heyport platform, which coordinates ship calls.
The innovative development of our core business and the tapping of new growth drivers may produce additional opportunities for boosting efficiency and value added in future. Such opportunities are associated with certain start-up costs and an entrepreneurial risk that must be carefully reviewed and weighed up against the corresponding opportunities. Innovation
3. Financial risks
Impairment of investments and assets
An economic trend that falls short of expectations may require adjustments to the valuation of assets. For example, the high level of fixed costs associated with large parts of HHLA’s business model means that it might not be possible to compensate fully for divergences in earnings caused by underutilised capacity in the short term if demand for HHLA’s services fails to materialise as expected. The terminal in Odessa is at risk due to the war in Ukraine: an impact on our results of operations, net assets and financial position is possible, while material risks (expropriation, destruction, breach of contract) are largely hedged by German government guarantees. Furthermore, impairment losses for software projects also cannot be ruled out. HHLA regularly checks for any impairment of its assets and makes adjustments where necessary. As in the previous year, impairment risks indicate a medium damage amount, with the occurrence of the risk still regarded as possible.
Bad debt losses
For shipping company customers, there are uncertainties regarding a further slump in demand due to the economic situation, while the fleet capacity continues to grow. Added to this is the volatile trend in freight rates and bunker costs as well as unexpected events due to geopolitical developments and their impact on shipping volumes, currently in the form of increased tariffs for traffic to and from the US. As a result, risks of customer insolvency with the ensuing loss of throughput and bad debts in the Container segment remain, although these risks are deemed unlikely as a result of the overwhelmingly positive earnings forecasts. 1. Market environment
For Logistics properties and in the Speicherstadt historical warehouse district, there are still rent default risks and with them the risk of costs for any necessary modification or renovation of rented space. HHLA is in close contact with its tenants in order to quickly adopt any further measures where necessary. As in the previous year, it is deemed unlikely that any such risks will occur.
HHLA uses credit checks to reduce del credere collection risks. Active receivables management is used to monitor compliance with contractually agreed payment deadlines.
Currency risks
As the bulk of HHLA’s services are rendered within the eurozone, the majority of its invoices are issued in euros. The Intermodal and Logistics segments operate internationally, and a container terminal is operated in Ukraine (currently restricted). Invoicing here is primarily in euros or dollars. Currency or transfer risks therefore result primarily from exchange rate fluctuations affecting Central and Eastern European currencies. There are also exchange rate risks related to the measurement of euro loans at companies which pay dividends in local currency. The extent of these risks is influenced by both the development of exchange rates and the development of the loan portfolio. At present, the risks are higher than in the previous year; in the medium term, however, the risks could increase further, particularly given the planned expansion of Intermodal activities. It is also impossible to rule out the risk of a devaluation of the Ukrainian currency, the hryvnia, compared to the budget estimate, especially in view of the war in Ukraine. This means that the relevant exchange rate risks are still subject to high levels of uncertainty.
All HHLA companies operating with foreign currencies reduce the risk of currency fluctuations by monitoring exchange rates regularly and, where possible, transferring free liquidity in local currency to hard-currency accounts. In the Intermodal segment, hedging transactions are regularly completed on the basis of existing currency hedging guidelines.
Pension obligations
The ECB lowered its base rates in the past few months in order to counter weaker economic growth in the eurozone. As the reference interest rate of relevance for pension obligations appears to be stable at the time of reporting, the risk of an increase in the pension provision due to lower interest rates remains unchanged from last year. The probability of occurrence is deemed unlikely. HHLA monitors interest trends so that it can adjust its provisions as necessary. For further details of downstream default risks, liquidity risks, interest and exchange rate risks, including risk mitigation measures and the management of these risks, please see the report on financial instruments in the notes to the consolidated financial statements. Notes to the consolidated financial statements, no. 47 Management of financial risks
4. Strategic environment
Investment options
In addition to organic growth, HHLA systematically examines and evaluates acquisition opportunities as part of its growth and innovation strategy. The focus is on equity investments in potentially attractive growth markets (investments to expand or supplement the portfolio in the core segments of Container and Intermodal), as well as in innovative technology companies and start-ups in the transport and logistics sector. 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.
Strategic projects
Transformation processes and the associated achievement of project targets may be delayed. We aim to prevent any delays by taking extensive communication measures and ensuring the close involvement of all parties. The risks are reassessed regularly and are above the level of the previous year at the time of reporting. In the light of transformation processes that will last several years, such risks will remain relevant over the medium term.
Infrastructure
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 and ensure facilities are not jeopardised. Infrastructural deficits such as the current restrictions on navigability of the river Elbe due to silt could cause throughput and transport volumes to bypass HHLA’s sites. Attempts are currently being made to remove the restrictions on the river Elbe, which means that these risks are deemed unlikely to occur. How these risks will develop over the medium and long term remains to be seen.
The regional road and rail infrastructure must be modernised and expanded if the Port of Hamburg wants to retain and enhance its competitiveness while optimising processes for in- and outbound flows of goods in its hinterland. This may lead to additional costs or delays in the Intermodal segment due to bottlenecks in the rail network as a result of poor rail infrastructure or delays caused by construction work, for example. Rail infrastructure risks are also growing in significance in the Container segment due to the amount of construction work occurring in the rail network to and from Hamburg. The flexibility offered by our own rolling stock and customer loyalty measures help to ensure that any major impacts on our earnings, while material, are unlikely. Projects of special significance to HHLA in the medium term include the replacement of the Köhlbrand Bridge, the construction of the port motorway access A 26 East and the maintenance and 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 and opportunities
Compliance incidents
Well-trained and motivated employees are the foundation of responsible business activities. The Group’s relationship with its employees is informed by its sense of social responsibility. Staff representatives are closely and actively involved in Group decision-making and take their responsibilities seriously. 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. Furthermore, any infringements of specific areas of law (e.g. competition law, data privacy) may lead to fines based on Group key figures and could therefore potentially reach significant proportions.
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 employees. In line with the current risk profile, training sessions are held regularly on the contents of the Code of Conduct as well as other specialised issues such as the prevention of corruption and conduct in the competitive environment. All of these activities are supported by additional communication measures, for example via the HHLA intranet. There are also opportunities for both employees and third parties to report violations via the whistle-blower hotline. All information received is treated confidentially and callers can choose to remain anonymous. The opportunities for reporting breaches of compliance were expanded with a digital whistleblower portal during the reporting year. The portal allows anonymous whistleblowers to communicate via a confidential, encrypted mailbox in order to be able to obtain additional information about a matter if necessary. Should compliance violations occur, specific process adjustments may be undertaken to prevent them in future. In cases of theft, for instance, corresponding security measures are reviewed and possibly introduced to prevent, as far as possible, any more such items going missing. Furthermore, regular analysis of compliance risks and IT-based business partner screening – which enables the risk-oriented screening of HHLA business partners across the Group – help to identify compliance risks at an early stage and thus minimise risk. This also applies to HHLA’s Supplier Code of Conduct, which is used throughout the Group.
Process risks
Due to the multitude of contractual relationships which HHLA enters into, process risks cannot be completely ruled out. Changes in initial assumptions or general conditions may result in the termination of long-term contracts, for example, and potentially result in legal disputes. HHLA adopts preventive measures, including the use of legal expertise, to prevent or resolve such disputes. As in the previous year, there were no material risks in this regard at the time of reporting.
New regulatory requirements
Changes to legislation, regulatory reforms or amended requirements may necessitate changes to HHLA’s internal processes or existing equipment, and could lead to cost increases. Non-compliance with new or more stringent regulatory requirements may lead to fines being imposed. HHLA initiates appropriate adaptation measures as soon as new laws or regulations are announced and remains in close contact with the authorities throughout. As in the previous year, no material risks have been identified in this regard.
Conversely, new regulations may also lead to opportunities that mainly boost the market potential of technological innovations.