The global supply outlook

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1 The global supply outlook Global Liner Shipping Conference 16 th May Hamburg Neil Dekker, Director - Container Research Drewry dekker@drewry.co.uk Agenda Global supply Drewry forecast Scrapping and slippage Alliance networks and implications 2 Drewry Maritime Research Global Supply outlook

2 Future fleet growth When does recovery start? ADJUSTED GLOBAL CONTAINERSHIP ORDERBOOK, ( TEU) Due delivery as of 1 Jan 1,339 1,463 1, ,54 1, Less slippage to following year(s) Less cancellations/conversions Delivery Total (end year) 1,339 1,463 1, ,19 1, Scrapping Total global fleet (end year) 17,129 18,211 19,736 19,97 2,51 21,425 21,942 % of orderbook delivered in year 1.% 1.% 1.% 1.% 77.3% 84.5% 84.5% Fleet growth 5.5% 6.3% 8.4% 1.2% 2.7% 4.5% 2.4% Future additional orders included above ( teu) 5 5 Source: Drewry Container Forecaster, March fleet growth was marginal and below demand growth but the industry still lost an estimated $3.5 billion Slippage will help the 217 developments, scrapping is slowing and will be adjusted downwards in Drewry s next forecast 218 is looking top heavy for overall fleet deliveries 3 Drewry Maritime Research Global Supply outlook Scrapping data What about the future of Panamaxes? 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% 16, 14, 12, 8, 6, (f) 218 (f) Total teu scrapped As % of fleet 7, 6, 5, 4, 3, 2, 1, YTD 217, 245, teu has been scrapped / 71 ships incl 32 of at least Panamax size Until mid-march Panamaxes were being sold in 2 nd hand market barely above scrapping rates of $5-6 million; latest at $8.5-9m 4, Panamax t/c rate $/day No. of units scrapped 4 Drewry Maritime Research Global Supply outlook

3 Delays and slippage A possible way out for the carriers? 2,, 1,8, 1,6, 1,4, 1,2, 1,, 8, 6, 4, 2, Due delivery as of 1 Jan Actual delivery Delivery as a % of total 95% 9% 85% 8% 75% 7% 65% In 216, only 68% of intended tonnage was delivered with 417, teu delayed YTD 217, only 3 teu delivered incl 15 ships over teu Seaspan Corp (2), CMA CGM (3) and Maersk (5) have all delayed big ships into 218 positions 5 Drewry Maritime Research Global Supply outlook The devil is in the detail Splitting the fleet into two 14,, 12,,, 8,, 6,, 4,, 2,, The damage is here < 8 teu fleet 8+ teu fleet Annual growth of < 8, teu fleet Annual growth of 8,+ teu fleet 25% 2% 15% 1% 5% % -5% -1% 16, 14, 12, 8, 6, 4, 2, Ave size vessel per trade lane, 1Q17 8, teu portion of fleet growing 12% p.a. in Ave. vessel size in E-W trades up 13% in two years 6 Drewry Maritime Research Global Supply outlook

4 Where are the big ships deployed? teu ships Asia-Mid East 26 Eur-WCSA 4 Asia-West Africa 8 Asia-WCNA 63 Asia-ECSA 3 7 Drewry Maritime Research Global Supply outlook Forward deliveries, Delivery schedules for new alliance structure 217 and beyond Delivery schedule per alliance, 14,-17,999 teu ships (no. at end year) Delivery schedule per alliance, ships of 18, teu and above End 216 End 217 End 218 End 219 End 22 14,-17,999 teu ships End 216 End 217 End 218 End 219 End 22 18,-2,+ teu ships May orderbook stands at 2.99 million teu 79% is for vessels of at least teu ships Ave. size vessel in orderbook is 7,35 teu 17 x 18-2k teu vsls by mid-22 (1 x Asia-N Europe loops) 8 Drewry Maritime Research Global Supply outlook

5 Forward deliveries, Delivery schedules for new alliance structure 217 and beyond 6 Total delivery schedule per alliance, (teu) 5 Ocean overload 3 ships Drewry Maritime Research Global Supply outlook The new East-West alliances Finally decided 1 April kick-off Asia-N Europe capacity shares Apr 217 Ave ship size teu per alliance Apr % 42% 2, 15, 16,874 14,13 12,764 35% 5, 2M Ocean THE Asia-USWC capacity shares Apr 217 3% 17% 2% 33% 2M Ocean THE Others 12, 8, 6, 4, 2, 1,297 2M Ocean THE Ave ship size teu per alliance Apr 217 8,581 6,985 6,556 2M Ocean THE Others 1 Drewry Maritime Research Global Supply outlook

6 The Asia-N Europe conundrum for carriers Not enough room for the ULCVs and 2, teu ships Asia-N Europe cascading Potential cascade candidates Addntl ships to cascade The current orderbook means a potential 68 ships of around 13,5 teu- 16, teu will need deployment outside of Asia-N Europe 11 Drewry Maritime Research Global Supply outlook Supply side takeaways Is it all fine because of high scrapping and no orderbook? 53 ships of at least teu for delivery in ships of at least teu for delivery in more for 219/2 Where do the lines deploy these without creating major problems? A large number of ships of 14, teu and above will be cascaded to transpacific, Asia-Med and Asia-Mid East trade lanes. These ships are very unlikely to be idled The smaller 8- teu ships in the cascade also remain a threat to trade route stability, but could be idled The new fleet make up of the three alliances now means different pressures in different trade lanes 12 Drewry Maritime Research Global Supply outlook

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