Hapag-Lloyd on Wednesday said it has seen a 50% increase in bookings from China to the US this week since a preliminary trade deal was agreed to last weekend between the world’s two largest economies.

CEO Rolf Habben Jansen told analysts on a first-quarter earnings call that the carrier was handling “a real surge in bookings” as US importers took advantage of a 90-day cut in tariffs following the agreement between Washington and Beijing.

“We have seen over the last couple of days that bookings have been up more than 50% compared to what we saw over the last four weeks, and they are also up in double-digit percentages compared to the period before the tariffs,” Habben Jansen said.

Under the preliminary trade deal reached in Geneva last weekend, the US will cut its tariffs on China from 145% to 30%, while Chinese tariffs on the US will be reduced from 125% to 10%. Trade talks between the two countries will continue during the 90-day pause, with US importers expected to make good use of the lower tariffs during that period.

“We expect to see a surge in volume in the upcoming 60 or 90 days, but beyond that it is very difficult to predict and will depend on what kind of agreements will be closed between the US and other countries,” Habben Jansen said.

Hapag-Lloyd released its preliminary first-quarter financial results in April and confirmed the numbers with analysts during Wednesday’s earnings call. Revenue for the first quarter was up 15% year over year at $5.3 billion, while earnings before interest, taxes, depreciation and amortization (EBITDA) increased 17% to $1.1 billion. Earnings before interest and taxes (EBIT) rose 24% to $487 million and net profit increased 45% to $469 million.

The solid start to the year came on the back of a 9% increase in average freight rates to $1,480 per TEU that built on a 9% jump in volume to 3.3 million TEUs that was “the highest year-over-year [volume] growth in many quarters,” according to Hapag-Lloyd CFO Mark Frese.

Withdrawn capacity to return ‘fairly quickly’

Despite the overall strong result, analysts on the earnings call were focused predominantly on the trans-Pacific trade lane following the China-US trade deal. In April, Hapag-Lloyd said its US bookings were down as much as 30%, a level confirmed by other carriers, with several trans-Pacific services canceled amid a swathe of blank sailings.

As bookings surge, Habben Jansen was asked whether there would be a delay in the return of capacity that had been withdrawn from the trade lane and whether US ports would cope with a sudden increase in volume over the next few months.

“I do expect the capacity is going to come back fairly quickly,” he said, noting that the Gemini Cooperation with Maersk did not blank sailings but replaced larger ships on the trans-Pacific with smaller vessels as volume dropped.

“Now we will reverse that and from next week we will deploy bigger ships in the positions where over the last couple of weeks we have had smaller ones in,” Habben Jansen added. “I expect that those who put blanks into their schedules will, as the quarter progresses, continue to put ships and services back in.”

The CEO was less confident about the ability of US ports to handle the flood of volume that will likely be heading their way.

“I’d hope that the ports are going to be disciplined in not accepting too many extra ships, because the last thing we need right now is a massive amount of congestion in the US ports, and some of them are definitely strained,” he said.

Hapag-Lloyd’s full-year profitability forecast was left unchanged with EBITDA expected to be between $2.5 billion and $4 billion and EBIT between breakeven and $1.5 billion. However, the carrier added a large caveat, warning that major geopolitical challenges and volatile freight rates left the financial outlook “subject to a very high degree of uncertainty.”

HMM’s Q1 net profit jumps

Meanwhile, another carrier to highlight the volatile nature of container shipping markets was HMM, which also announced a set of solid first-quarter results Wednesday.

The South Korean carrier said revenue in the first quarter was up 23% year over year to just over $2 billion, while operating profit rose 51% to $440 million and net profit increased 52% to $530 million.

Container volumes handled by HMM in the first quarter increased 4.2% compared with the first three months of last year, to 931,000 TEUs, with the average rate of $1,358 per TEU up slightly year over year.