Hapag-Lloyd raised full-year earnings guidance as it continues to ride the wave of strong demand and higher freight rates.

The German shipping company, the world's fifth-largest container line by capacity, said Thursday it now expects profit to land above its previous expectations despite the higher costs from diverting vessels around the Cape of Good Hope to avoid the Red Sea.

The company now expects group earnings before interest, tax, depreciation and amortization of between 4.2 billion and 4.6 billion euros ($4.6 billion-$5.0 billion) this year, up from a previous forecast for 3.2 billion to 4.2 billion euros.

Group earnings before interest and tax is seen at between 2.2 billion and 2.6 billion euros, up from the previously guided 1.2 billion to 2.2 billion euros.

Container shippers have been forced to reroute vessels to avoid the Red Sea since the end of last year following attacks on commercial ships from Yemen's Houthi rebels. The diversions have led to higher costs and fuel consumption but have spurred higher freight rates as vessel capacity tightens.

The news follows a similar upgrade from Danish rival A.P. Moller-Maersk earlier this week.

Write to Dominic Chopping at [email protected]