* Freight rates down 20 pct
* CEO says to focus on costs cuts, merger deal with UASC
* Shares down 0.2 pct after market opening (Adds detail, share price)
FRANKFURT, Aug 10 (Reuters) - German container shipping group Hapag-Lloyd said it dropped to a first-half operating loss as disappointing freight rates hurt its business.
The loss before interest and tax (EBIT) came to 39.7 million euros ($44.26 million), down from a year-earlier profit of 267.7 million, the company said on Wednesday.
Chief Executive Rolf Habben Jansen said the main focus in the second half would be to further improve the cost base and to get freights back to a more sustainable level.
Hapag-Lloyd signed a binding agreement with Arab peer UASC last month to form the world's fifth largest shipping company by the end of 2016 in response to the global industry crisis.
"In this difficult competitive environment, it is very important to complete the transaction with UASC as quickly as possible and to start the integration of UASC immediately after the completion of all pre-closing conditions," Habben Jansen said.
The integration is expected to bring annual net synergies of $400 million, some of which should take effect from next year.
Average freight rates fell by nearly 20 percent year-on-year to $1,042 per twenty foot equivalent unit (TEU) in the first six months of 2016, Hapag-Lloyd said.
Consequently, revenue was down 19 percent at 3.8 billion euros in the first half.
The company cut transport expenses by nearly 16 percent, or 600 million euros, in the period as it reduced the consumption of bunker fuel, where prices had fallen along with lower oil prices but then started going up again in the second quarter.
It also cited synergies from the integration of the container business of Chilean peer CSAV, with which it merged in 2014, and ongoing cost savings and efficiency programs.
Hapag-Lloyd shares were down 0.4 percent at 16.34 euros by 0722 GMT when the SDAX index was off 0.2 percent.
$1 = 0.8969 euros Reporting by Vera Eckert; Editing by Maria Sheahan