* Moderate increases in freights to be achieved in 2016
* Takeover of Arab peer UASC weeks away
* New Alliance membership starts on April 1
* To cooperate with U.S. investigators, no details of probe
(Adds details from press conference, share price)
HAMBURG, March 27 German container shipping line
Hapag-Lloyd expects freight rates to be several
percentage points higher this year than in 2016, one of a number
of factors that should help the company improve its
profitability, it said on Monday.
"Freight rates are still unstable in early 2017," Chief
Executive Rolf Habben Jansen told a news conference. "But we
need higher freight rates to be successful."
The company achieved an average freight rate of $1,036 per
twenty foot equivalent unit (TEU) last year, down 15.4 percent
One argument for shipping operators comes from rising bunker
(ship fuel) costs, which mirror a recovery in crude oil.
Hapag-Lloyd estimates average bunker prices of between $275
and $300 per tonne after $210 last year.
Last week, it reported a net loss of 93.1 million euros
($101.2 million) for 2016 after a 2015 profit of 113.9 million,
as positive core earnings were insufficient to offset losses
from low freight rates.
Habben Jansen said the company was unable to take full
advantage of rising spot freight rates - as a capacity overhang
diminishes and demand increases - as it was partly locked into
long-term freight deals.
Hapag-Lloyd is just weeks away from concluding a merger with
Arab peer UASC amid consolidation in shipping, which is now in
its ninth year of a prolonged downturn.
Habben Jansen said delays to a March 31 deadline for the
takeover were due to documentation jobs having to be done on the
UASC side of proceedings.
"We now assume a speedy and unproblematic process and
integration," he said.
One third of anticipated synergies of the takeover of $435
million will be realised this year. However, one-off costs of
the project of around $150 million will also mostly arise in
Separately, a vessel-pooling tie-up between Hapag-Lloyd,
three Japanese competitors and Taiwanese Yang Ming - dubbed "The
Alliance" - will start on April 1 as planned, bringing savings
through better aligned sailing schedules and port calls.
Habben Jansen declined to give details of the direction a
probe launched by the U.S. Justice Department last week might
take, in which his firm is included and must produce
"All we can say is that we will take relevant measures to
answer the questions in a reasonable way and hope for a positive
outcome," he said.
Shares were down 4.6 percent at 1045 GMT.
($1 = 0.9202 euros)
(Reporting by Vera Eckert; Editing by Maria Sheahan)