Container Shipping. Outlook and Issues for US East Coast Shippers and Ports. Tina Liu Country Manager, China. October 15, 2015 TPM Shenzhen

Transcription

1 Container Shipping Outlook and Issues for US East Coast Shippers and Ports October 15, 2015 TPM Shenzhen Tina Liu Country Manager, China

2 Agenda Container volume growth Mega-alliances Mega-ships Port diversification Supply-demand on the transpacific route and globally Panama Canal vs Suez Canal for Asian cargoes and ships Effects of enlarged Panama Canal and raised NY bridge Implication of market and infrastructure changes Conclusions 2 Outlook and Issues for US East Coast Ports and Shippers

3 Container volume growth on the transpacific route Slower growth for imports, strong dollar hurts US exports Annual increase or decrease in total transpacific container volumes 17% Asia to North America traffic -2% -14% 9% 9% 7% 5% 5% 5% 5% 4% 2% 3% 2% 1% 1% % -3% N American to Asia traffic Source: Drewry Container Forecaster (June 2015) 3 Outlook and Issues for US East Coast Ports and Shippers

4 Mega-alliances Alliances dominate Asia-US EC trade but rates falling Capacity shares of alliances on Asia-US EC route Capacity shares of alliances on transatlantic route 2M, 16% Nonalliance, 7% CKYHE, 32% Nonalliance, 31% G6, 25% Ocean 3, 16% G6, 29% Source Drewry Maritime Research $6,000 $2,350 CKYHE, 7% Ocean 3, 12% Source Drewry Maritime Research 2M, 24% $5,000 $2,300 $4,000 $3,000 $2,000 $1,000 Shanghai-New York spot rate (US$/40ft) $2,250 $2,200 $2,150 $2,100 $2,050 Rotterdam-New York spot rate (US$/40ft) $0 $2,000 4 Outlook and Issues for US East Coast Ports and Shippers

5 Mega-ships The vessel order-book is biased towards 10,000teu+ ships Global containership orderbook by teu size range (% of teu capacity) >10,000teu 56% <5,000teu 13% 5,000-8,000teu 4% 8,000-10,000teu 27% Current deployment by route Route Asia-North Europe 189 Asia-WC North America 51 Asia-ECSA 3 No of 10,00teu+ ships > 130 ships of 10,000teu are on order Source: Drewry Container Forecaster (June 2015) Asia-EC North America 0 10,000teu ships are coming to the US! 5 Outlook and Issues for US East Coast Ports and Shippers

6 Port diversification Asia cargo growth now benefits East and Gulf coast ports Split of Eastbound transpacific container volumes between West, East and Gulf Coast gateway 0% 0% 0% 0% 1% 1% 1% 1% 2% 2% 1% 2% 2% 2% 2% 3% 16% 17% 20% 20% 21% 22% 22% 24% 26% 27% 27% 27% 26% 26% 27% 32% 84% 83% 80% 79% 78% 76% 76% 74% 72% 71% 72% 72% 73% 72% 71% 66% Q Via USWC Via USEC Via USGV 2002 WC port shutdown 2005 WC port congestion 6 Outlook and Issues for US East Coast Ports and Shippers 2015 WC port shutdown 2015/16 NY bridge raised & expanded Panama Canal

7 Port diversification Shippers look to divert import gateways away from West Coast Prince Rupert Vancouver Seattle Totonto Montreal Halifax Chicago New York Oakland Memphis Atlanta Norfolk Los Angeles/Long Beach Dallas Charleston Savannah Houston Miami Suez Canal Lazaro Cardenas Panama Canal 7 Outlook and Issues for US East Coast Ports and Shippers

8 Supply-demand on the transpacific route Relatively high load factors on imports, but a lot of export empty slots Load factors on the transpacific route N American imports from Asia 88% 82% 83% 96% 92% 85% 82% 93% 94% 48% 52% 50% 54% 43% 44% 43% 49% 42% N American exports to Asia 3Q Q Q Q Q Q2014 1Q Q Q 2015 Source: Drewry Container Forecaster (June 2015) 8 Outlook and Issues for US East Coast Ports and Shippers

9 Supply-demand outlook globally Huge orderbook of new ships means overcapacity and instability of carrier industry New containership capacity (delivers by year in 000 teu) fleet growth +7% Source Drewry Maritime Research 9 Outlook and Issues for US East Coast Ports and Shippers

10 Panama Canal vs Suez Canal for Asian cargoes and ships The trade-off today is distance advantage vs scale economies Routing of Asia-USEC/GC all-water services Via Panama 16 weekly average 4,600teu/ship due to current Panama canal limit Via Suez 9 weekly average 8,000teu/ship Shorter distance to/from China Better ship size economics / lower fuel costs 10 Outlook and Issues for US East Coast Ports and Shippers

11 Panama Canal vs Suez Canal for Asian cargoes and ships Not all US ports are Post-Panamax ready * US port access constraints and upgrading plans Port Current water depth Planned water depth Will port be Post-Panamax ready*? Post-Panamax (ft) (ft) ready when? NY/NJ yes ** end 2015 Norfolk yes Savannah (54 at high tide) partly (with tide access 2020? restrictions) Charleston yes, but timing uncertain 2017?? Port Everglades no Miami yes end summer 2015 Houston no LA/Long Beach yes Oakland yes Seattle yes Tacoma yes Vancouver (Canada) yes Prince Rupert (Canada) yes Note: * "Post-Panamax ready" is defined as having 50ft of water depth at mean low water. ** Post-Panamax ships cannot go under the Bayonne bridge today; the bridge will be raised by the end of this year. 11 Outlook and Issues for US East Coast Ports and Shippers

12 Effects of enlarged Panama Canal + raised NY bridge Panama services will merge, risk of slower port processing time Asia-US East Coast-Gulf Coast services Frequency Number of weekly services Still approx 20 wkly services % Ship costs/rates Lower Port processing time Slower / more delays Average ship size (teu) +40% Long-term maximum 13,000 14,000teu 2000 Full ship utilisation Timing of dredging in Charleston, Savannah and Everglades Source: Drewry Maritime Advisors 12 Outlook and Issues for US East Coast Ports and Shippers

13 Effects of enlarged Panama Canal + raised NY bridge Relative costs and pricing structures by route will change Relative freight rate from Shanghai to Chicago (indexed) Intermodal via Seattle Intermodal via Los Angeles Will the western railroads moderate their rate increases? All-water via Suez All-water via Panama Bigger ships -> downwards trends Source: Drewry single-client advisory project 13 Outlook and Issues for US East Coast Ports and Shippers

14 Implication of market and infrastructure changes Cost, transit time, volume and reliability by route will change Market & infra changes Expanded Panama Canal, higher NY bridge & bigger ships South East Asia growth and shift of production out of China Faster growth of US South East West Coast ports issues Road/port congestion Implications for shippers and ports Lower all-water freight rates, further shift to EC ports, bigger ships on both coasts & longer port processing times Longer time to US West Coast market, need to review routing Need for more port and rail capacity, possible logistics advantage of East Coast all-water routing Diversify ports of entry and routes, Four-corner strategy Need for buffer inventory & extra costs, diversify ports of entry, shift to rail 14 Outlook and Issues for US East Coast Ports and Shippers Source: Drewry Maritime Advisors

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