TUI, the parent company of Hapag-Lloyd, says its shipping division, comprising container shipping and cruise businesses, recorded a loss of EUR106 million (US$140.58 million) before interest, taxes, depreciation and amortisation (EBITA) for 2006, down drastically from the previous year's earnings of EUR322 million.

Within this total, Hapag-Lloyd reported an operating loss of EUR114 million from container shipping due to a drop in freight rates, which fell 2.7 per cent on average during the year to $1,430 per TEU from $1,469 per TEU a year earlier.

Hapag-Lloyd cruises contributed EUR8 million to the group's profit. The loss came after the group faced one-off expenses of EUR114 million owing to the restructuring and integration of CP Ships, purchased in 2005.

Weaker earnings came despite a 4.2 per cent increase in the volume of containers transported last year to 5.0 million TEU, up from 4.8 million TEU in 2005.

Between Europe and the Far East, Hapag-Lloyd carried over 1.2 million TEU, 948,000 TEU on the transpacific route, more than 1.3 million TEU on the north Atlantic route and the rest of its container volume on Latin American, intra-Asian and other services.

The shipping division also reported a 63.1 per cent year-on-year increase in revenue to EUR6.3 billion in fiscal 2006, up from EUR3.8 billion the previous year, largely due to the integration of CP Ships, TUI reports.

It said sales growth in 2006 was offset by higher bunker and landside logistics costs and high charter rates.

The German group is forecasting that its shipping activities will see a return to the black in the second half of this year, with sales expected to rise to EUR7 billion as freight rates gradually regain ground lost earlier, as well as an eight to nine per cent rise in container volumes.