New maritime transport scenarios Part II: fluctuations in shipping and new scenarios

Transcription

1 Issue No Number 3 / 215 B U L L E T I N FACILITATION OF TRANSPORT AND TRADE IN LATIN AMERICA AND THE CARIBBEAN New mritime trnsport scenrios Prt II: fluctutions in shipping nd new scenrios Bckground The purpose of this document is to nlyse chnges in the supply of, nd demnd for, the interntionl shipping of continers, dry bulk nd liquid crgoes (dirty nd clen). I. Trends in wterborne trnsport supply A. Continer ship supply Tbles 1 to 3 present the number of continer ships in opertion s of 31 December 213 nd 1 October 214, s well s projections to 217, thus llowing for the nlysis of supply ptterns. Tble 1 WORLD: OPERATIONAL FLEET, BY VESSEL SIZE RANGE, 31 DECEMBER 213 (Twenty-foot equivlent units, number of vessels nd percentges) Vessel size rnge Number of vessels Percentge of totl vessels Cpcity Percentge of totl cpcity Totl This FAL Bulletin detils the sitution of the shipping industry nd forms the second nd finl prt of lrger document tht begins with Issue No. 338, which puts the current sttus of mritime trde in context. Both documents fit into series of bulletins bout ports nd mritime trde in the region nd re, therefore, closely linked to Issue No. 337, which sets out the need for new port governnce in the region to ddress the new circumstnces tht hve risen in the mritime mrket. This issue ws produced by Ricrdo J. Sánchez, Officer in Chrge of the ECLAC Nturl Resources nd Infrstructure Division, nd Frncisc Pinto, consultnt with the ECLAC Infrstructure Services Unit. For more informtion, plese contct : ricrdo.snchez@cepl.org The views expressed in this document re those of the uthors nd do not necessrily reflect the views of the Orgniztion. I. Trends in wterborne trnsport supply II. Supply nd demnd in mritime trnsport services III. itime freight rtes IV. The business cycle nd its effects on shipping V. Conclusions Bibliogrphy Resources nd Infrstructure Division, on the bsis of dt from Alphliner, Cellulr Fleet Forecst, vrious issues. Updted October 214. Nturl Resources nd Infrstructure Division, UNECLAC

2 Vessel size rnge Tble 2 WORLD: OPERATIONAL FLEET BY VESSEL SIZE RANGE, 1 OCTOBER 214 (Twenty-foot equivlent units, number of vessels nd percentges) Number of vessels Percentge of totl vessels Cpcity Percentge of totl cpcity Totl Resources nd Infrstructure Division, on the bsis of dt from Alphliner, Cellulr Fleet Forecst, vrious issues. Updted October 214. Vessel size rnge Vessels Tble 3 WORLD: PROJECTED OPERATIONAL FLEET, BY VESSEL SIZE RANGE, (Twenty-foot equivlent units nd number of vessels) 31/12/214 31/12/215 31/12/216 31/12/217 Cpcity Vessels Cpcity Vessels Cpcity Vessels Cpcity Totl Resources nd Infrstructure Division, on the bsis of dt from Alphliner, Cellulr Fleet Forecst, vrious issues. Updted October These tbles illustrte the growth in continer ship cpcity nd number of vessels, s well s the emergence of trend between 213 nd 214 whereby the number of vilble smll ships diminished while the supply of lrger ships incresed. The cpcity of the cellulr fleet rose by 1% nnully between 21 nd 213, while its yer-on-yer vrition remined t 8% on verge during the sme period. See figure 1. Shipbuilding orders suggest tht the continer ship fleet will continue to grow. Despite this stedy expnsion, totl shipbuilding orders in 214 (until October) were t their lowest level since 2, ccording to Alphliner. Figure 1 WORLD: CAPACITY OF THE CONTAINER SHIP FLEET, (Thousnds of twenty-foot equivlent units) Continer cpcity on cellulr vessels Continer cpcity on ll vessel types Resources nd Infrstructure Division, on the bsis of dt from Clrkson Reserch Services, vrious issues. Projected figures Nturl Resources nd Infrstructure Division, UNECLAC

3 In 211, the number of ships projected to be vilble in 213 ws 6% higher thn ws ctully the cse t the end of tht yer. Furthermore, recent projections for 214 nd 215 (Alphliner, 214) 1 re 2.6% lower thn those mde in 211, reflecting the slow growth of the world economy since the recovery of 21. In numericl terms, Pnmx-sized vessels mke up the bulk of the existing fleet but re flling from fvour, with cler trend towrds the emergence nd growth of fleet of vessels cpble of trnsporting between 13,3 nd 19, TEUs. Furthermore, the delivery of 1 neo-pnmx vessels, with 8,5-1, TEU cpcity, is plnned for the next two yers to replce the mid-sized fleet of 4,- 7, TEU vessels. Shipping compnies hve lso displyed renewed interest in smller vessels, with ships in the 1,-1,999 TEU size rnge enjoying grdul upturn in demnd. However, the smllest ctegory, of TEUs sw downwrd trend, shrinking by 6.1% between 213 nd 214, while the number of ships in the TEU brcket dropped by 2.3%. Conversely, the ctegory consisting of the lrgest vessels is expected to increse by 55% between 214 nd The totl fleet of vilble continer ships is expected to mintin sustined growth in the coming yers. However, if this projection were to include the nnul scrpping of ships, the vilble fleet in 217 would be smller thn in 216, nd the growth in the preceding yers would not exceed the highs of 2.3% forecst for 214 nd 215. The cpcity of the continer ship fleet is projected to be 19.1% greter in 217 thn in 213. This growth is expected to be driven by the lrgest ships (between 13,3 nd 19, TEUs) nd mid-sized ships (between 5,1 nd 7,499 TEUs), offsetting grdul shrinking process in the totl cpcity of smller vessel ctegories. 3 The stedy increse in overll cpcity is likely to lose momentum in 216 nd 217, nd will ctully decline once the scrppings re tken into ccount. 4 The projected rise in cpcity in the lrge vessel ctegory reflects the efforts of the mritime mrket to chieve economies of scle through the more efficient use of these vessels, thus rendering mritime trnsport more cost-effective. B. Supply of dry bulk ships Ships built to trnsport dry bulk crgo re mirroring the trend in continer shipping, with constnt increse in the 1 Anlysis bsed on informtion submitted to Alphliner, Cellulr Fleet Forecst, tember Ibid. 3 Ibid. 4 Ibid. supply of the lrgest ships driving up totl vilble cpcity since 26. This corrobortes the bove hypothesis, which describes shipping compnies urgent need for economies of scle tht mke the movements of these ships profitble, lowering trnsport costs in comprison with the current costs of movements using smller vessels Figure 2 DRY BULK TRANSPORT CAPACITY, (Millions of dedweight tons) Hndysize Hndymx Pnmx Cpesize Resources nd Infrstructure Division, on the bsis of dt from Clrkson Reserch Services, Dry Bulk Trde Outlook, vrious issues. Dt for 214 re projections. II. Supply nd demnd in mritime trnsport services Hving exmined two segments of interest relted to the supply of mritime trnsport, this section will look t its interction with demnd, thus completing the overview of the current sitution of shipping s it seeks blnce between these mrket forces. The section will lso exmine the cyclicl behviour of mritime trnsport. A. Supply nd demnd in regulr continer shipping Demnd for continer trnsport depends on the requirements lid out by shipping compnies, with their regulrly scheduled, fixed itinerries. Tble 4 trcks chnges in supply nd demnd for the most importnt mritime trnsport routes over the lst eight yers. Although demnd for trnsport hs been on n upwrd trjectory, it is rising much more slowly thn in the yers preceding the 28 crisis, lbeit with slight upturn in 212 nd 213 nd grdul increse projected over the coming yers. Supply follows similr trend, completing generl picture in which the two curves come so close together tht they lmost converge. Lstly, supply jumped by 34% between 28 nd 213, while demnd grew by only 17.9%, indicting significnt excess of supply. 37 3

4 Tble 4 GLOBAL SUPPLY AND DEMAND IN CONTAINERS, (Twenty-foot equivlent units nd percentges) Trde/Trnsport demnd (Millions of TEUs) Averge nnul vrition, (Percentges) 214 b 215 b Trns-Pcific route Fr Est-Europe Trns-Atlntic route North Americ/Europe/ Fr Est nd Middle Est/ Indin subcontinent North-South routes Other routes Totl Yer-on-yer percentge vrition Cpcity/Trnsport supply (Thousnds of TEUs) Averge nnul vrition, (Percentges) 214 b 215 b Continer ships Multipurpose RO-RO Other Totl Percentge vrition Vrition on the previous yer (Percentges) Volume of trde (demnd for trnsport) b 215 b Fleet cpcity (supply of trnsport) Blnce Resources nd Infrstructure Unit, on the bsis of dt from Clrkson Reserch Services, severl issues, updted October 214. Averge Annul Vrition of the Compound Annul Growth Rte (CAGR). b Dt for 214 nd 215 re projections. Figure 3 shows yer-on-yer percentge chnges in continer shipping supply nd demnd between 2 nd 213, with projections for 214 nd 215. It lso shows cumultive chnges in both vribles since 2. This figure supports the evidence displyed in tble 4: demnd outpced supply during the yers of high growth. By 28, the two curves hd converged, nd throughout the crisis supply exceeded cumultive demnd. Although the curves converged gin in 21, cumultive supply hs gin exceeded cumultive demnd in recent yers, lbeit only slightly. Now the trend is for the curves to diverge owing to n oversupply of vessels, which increses competition nd lowers prices. Nturl Resources nd Infrstructure Division, UNECLAC

5 Yer-on-yer vrition Figure 3 CONTAINERS: SUPPLY AND DEMAND, (Percentges) Demnd vrition Cumultive demnd Supply vrition Cumultive supply Resources nd Infrstructure Unit, on the bsis of dt from Clrkson Reserch Services, severl issues. Dt for 214 nd 215 re projections. Supply nd demnd vritions re cumultive since 2. In yer one, the vlues for cumultive supply nd cumultive demnd re equl. However, this does not men tht there is equilibrium tht yer, but simply tht tht yer ws chosen s the bseline for the index in order to show chnges in the gp between the two vribles. Under no circumstnces does the gp represent bsolute vlues. B. Non-regulr trnsport of dry bulk crgo Dry bulk crgo ccounts for 55% of shipping movements. Agin, in this segment the supply of Cpesize vessels is expnding t the expense of smller vessels. 5 It is interesting to exmine the convergence between supply nd demnd in dry bulk crgo shipping. Figure 4 presents yer-on-yer vritions in supply nd demnd, s well s the cumultive growth in supply nd demnd with 2 s the bse yer. Yer-on-yer vrition Figure 4 SUPPLY AND DEMAND IN DRY BULK TRANSPORT, (Percentges) Demnd vrition Cumultive demnd Supply vrition Cumultive supply Source: The Drewry Monthly nd Clrkson Reserch Services, Dry Bulk Trde Outlook. Cumultive supply nd demnd re clculted bsed on 2 figures. b Dt for 214 re projections. 5 See definition in the next footnote (number 6) Cumultive vrition Cumultive vrition This figure shows tht the cumultive supply of dry bulk trnsport comfortbly outpced cumultive demnd in the pst few yers. At the sme time, vritions in supply were much more pronounced thn vritions in demnd, resulting in much steeper grdient in its curve. As in the continer trnsport sector, demnd outstripped supply in the erly 2s, mintining blnce tht ws upset by the 28 economic crisis. Despite the recovery of subsequent yers, the curves tended to diverge s supply ws incpble of meeting demnd. III. itime freight rtes This section nlyses fluctutions in freight prices for the three min types of crgo: continers, dry bulks nd liquid bulks. A. Regulr continer shipping Figure 5 shows chnges in continer freight rtes from 22 to 214. Prices followed n upwrd trend in the pre-crisis period (prticulrly from 23 onwrd), which went into reverse fter the crisis Figure 5 CONTAINER SHIPPING FREIGHT RATES FOR MAIN ROUTES AND EXPORTS FROM LATIN AMERICA AND THE CARIBBEAN, (Index: 24=1) Globl verge Trnspcific Ltin Americn exports Level t the strt of the cycle Fr Est-Europe Intr-Asi Resources nd Infrstructure Division, on the bsis of dt from Contineristion Interntionl, Continer Trdes Sttistics, Chin Continerized Freight Index (CCFI), Shnghi Continerized Freight Index (SCFI) nd Alphliner, Weekly Newsletter, severl issues. Figures until 29 re bsed on dt from Contineristion Interntionl, with other sources lso used from 29 onwrd. Dt for Trns-Pcific nd Fr Est-Europe routes, from the fourth qurter of 213, refer only to outwrd shipments. Ltin Americn exports includes only dt for the Est Cost, directly collected from the shipping compnies by ECLAC. In generl, mritime continer freights rose stedily between 23 nd 28. However, the crisis brought shrp downturn from which prices hve struggled to recover. Freight rtes hve not seen stble growth since 21 nd hve been highly voltile in recent yers. In the third qurter of 214, verge prices were t level 5

6 similr to tht of mid-23, mid much worse conditions thn in the yers of expnsion. The level of the globl freight index t the beginning of the cycle s upturn is lso included in figure 5, which revels the positive nd negtive periods, with long negtive period during most of 29 nd return to this trend from mid-211. Rising prices in interntionl seborne trnsport were driven by significnt growth in trde, mply ccommodted by fleet with the spre cpcity to bsorb this growth. However, the encourging signs tht mrked the end of the crisis nd the recovery of trde my hve creted overly optimistic expecttions, ultimtely cusing n overshoot. Such outcomes re pprent from 211 onwrd, when mritime trnsport prices fell gin, before recovering in 213 to sit t levels similr to 22. B. Non-regulr dry bulk trnsport Tble 5 presents informtion on chnges in the bulk ship fleet between 25 nd 214, the crgo volumes trnsported nd vritions in the fleet. Tble 5 GLOBAL BULK FLEET, (mdwt nd percentges of supply) Supply (end of period) Fleet mdwt Inctive fleet mdwt Combis mdwt Portfolio mdwt Portfolio Percentge of supply Crgo volumes (totl) Voyge mdwt Trip mdwt Period mdwt Trnsctions (totl) 6 Shipments New orders tdwt Second-hnd sle price tdwt Scrpping tdwt Resources nd Infrstructure Division, on the bsis of dt from The Drewry Monthly, severl issues. Dt for 214 re up to y. Nturl Resources nd Infrstructure Division, UNECLAC

7 Dry bulks re minly trnsported under lese contrcts known s voyge chrter nd time chrter. Four mjor indices produced by The Bltic Exchnge hve been used to trck freight rtes in this mrket. Figure 6 shows chnges in these indices from 21 to tember Figure 6 DRY BULK FREIGHT RATE INDEX, (Monthly) Hndymx-Suprmx Bltic Dry Index Pnmx Cpezise Source: Economic Commission for Ltin Americ nd the Cribben (ECLAC) Nturl Resources nd Infrstructure Division, on the bsis of dt from The Bltic Exchnge vi Bloomberg, n interntionl finncil dt portl ( This nlysis uses the most interntionlly recognized indices: the Bltic Dry Index (BDI), which is constructed with dt from trmp fleet freight rte contrcts for bulk crgo ships clssified s Cpesize, Pnmx nd Hndysize. 6 The process consists in clculting n index for ech of the three types of ships, using weighted verge of freight rtes for ech mjor route; these indices re then combined to determine the BDI. As result, the BDI is regrded s stisfctory representtion of interntionl bulk crgo trnsport prices, especilly in reltion to the mritime trde of non-oil bulk crgo from Ltin Americ. The index of Cpesize freight rtes is clculted with upto-dte informtion from ten different globl routes, using typicl ship size of 172, dedweight tons (DWT). Three of the routes used in the construction of this index originte in Ltin Americ; they mke up 3% of the totl. The Pnmx index is currently bsed on seven interntionl routes for 74, DWT vessels. Hndysize ships verge bout 4, DWT; 37.5% of their routes include Ltin Americ. Figure 6 shows tht the most significnt upswings were in 23, lte 24, pre-crisis 27, mid-29 nd lte Cpesize: these ships, which re used minly for the trnsport of minerls, cnnot pss through the Pnm Cnl or the Suez Cnl due to their size, nd must insted trnsit vi Cpe Horn, the Cpe of Good Hope, or other routes. Some Cpesize ships re used for bulk crgo, but to lesser extent. Pnmx: currently, these re the lrgest ships tht cn pss through the Pnm Cnl. The ships re pproximtely 275 meters long; their displcement exceeds 7, tons. Hndysize: these re the group s smllest ships, with displcements of 25, to 5, tons; they re normlly used for the trnsport of grins nd grin products. Downturns occurred in mid-24, mid-25, 28, 29 nd mid-213; 27 ws the yer with the shrpest fluctution in these indices. Averge rtes begn to decline in 211 nd 212, yet the stndrd devition remined firly high, indicting the strong fluctutions experienced during those yers. After peking in 28, freight rtes entered period of grdul decline, until the lst three yers, when the indices returned to pttern similr to the erly 2s. 7 Figures 7 nd 8 show freight rtes for the mjor globl routes, with ech illustrting distinct phse of world trde; during nd post-mcroeconomic crisis (28 to 212) nd the pst two yers ( ). These figures show tht prices fell shrply nd fluctuted more intensely fter the 28 collpse, indicting instbility Figure 7 INDEX OF REPRESENTATIVE DAILY BULK CHARTER PRICES (Index: ury 27=1) A. During nd post-crisis, ury 28-ember 212 Feb Apr B. Post-crisis, ury 213-August 214 Jun Aug Oct Europe/Trnstlntic rv Hndysize Fr Est/Austrli rv Hndymx Indi/Fr Est Pnmx Fr Est/US North Pcific rv Pnmx Europe/Trnstlntic rv Cpesize Fr Est/Europe Cpesize Europe/USG/SingJp Pnmx SingJp/Austrli rv Cpesize Dec Feb Apr Jun Aug Fr Est/Austrli rv Hndysize US Gulf/Europe Hndymx Europe/Est Cost South Americ rv Pnmx Europe/Fr Est Cpesize Europe/-/Fr Est Hndymx Fr Est/E.Austrli rv Pnmx Fr Est/-/Europe Hndymx Resources nd Infrstructure Division, on the bsis of dt from Drewry, Shipping Insight, vrious issues. 7 Anlysis crried out on the bsis of dt from The Bltic Exchnge vi Bloomberg, n interntionl finncil dt portl (

8 8 Figure 8 shows freight rtes for the trnsport of minerl bulk crgoes (iron nd col) in Ltin Americ from 24 to June Figure 8 COSTS OF MINERAL BULKS TRANSPORT FROM LATIN AMERICA (IRON AND COAL), (Dollrs per thousnd tons per metre) June 214 Tubrão/Jpn Tubrão/Rotterdm Bolivr/Rotterdm Bolivr/ARA Tubrão/Qingdo Source: Economic Commission for Ltin Americ nd the Cribben (ECLAC), on the bsis of dt from Clrkson Reserch Services, severl issues. This figure demonstrtes tht the trend seen in the previous figures is replicted in Ltin Americ. In other words, prices fell fter the 28 crisis nd remin below pre-crisis levels. C. Non-regulr trnsport of liquid crgo The liquid bulk mrket is n importnt sector in mritime trnsport s it includes the shipping of oil nd petroleum products. As with dry bulks, liquid bulk trnsport opertes minly under lese contrcts. Price fluctutions in liquid bulk freight rtes re nlysed below in figure 9, using the Dirty Tnker Index (oil shipments) nd the Clen Tnker Index (shipments of petroleum products) produced by The Bltic Exchnge Figure 9 INDEX OF LIQUID BULK FREIGHT RATES, JANUARY 22-AUGUST Clen Tnker Index Dirty Tnker Index Resources nd Infrstructure Division, on the bsis of dt from The Bltic Exchnge vi Bloomberg, n interntionl finncil dt portl ( Freight rte ptterns in this sector differ from those exmined elsewhere in this study, in tht much higher voltility prevents the identifiction of upswings nd downturns. However, it my be noted tht voltility ws much greter before the 28 crisis. Prices tumbled in 29 before recovering slightly, nd hve remined quite stble since then, lbeit with cler downwrd trend. IV. The business cycle nd its effects on shipping The dt exmined bove led us to nlyse the convergence between the business cycle nd the mritime cycle. Fluctutions in countries economies cuse vritions in their foreign trde, which in turn ffect the demnd for mritime trnsport. The mritime cycle is mjor fctor in the supply of vessels, nd is thus where supply nd demnd interct, determining the functioning of mritime mrkets. A. The business cycle The business cycle is defined by fluctutions tht ffect the different components of the economy, such s price levels, ggregte output, sectorl output, interest rtes, monetry ggregtes, business profit mrgins, nd the interctions between these fctors. Expnsions, slowdowns, contrctions nd recoveries mnifest themselves cycliclly, but not necessrily periodiclly (Sánchez nd Brt Boon, 26). 8 B. The mritime cycle The mritime cycle is understood s the interction between supply nd demnd in the mritime trnsport sector. Supply will lg behind when fced with extremely dynmic exogenous demnd, since, in order for supply to dpt to chnges in demnd the vilble shipping fleets must expnd or contrct. When there is low cumultive demnd, shipbuilding slows nd the number of vessels under detention or mrked for scrp rises; when cumultive demnd increses which cn be cused by mny fctors, relted minly to chnges in the world economy supply is unble to quickly mtch it, freight rtes go up nd shipbuilding resumes, ultimtely cusing n oversupply which then pushes rtes bck down. Fluctutions in the shipping cycle re closely linked to those of the business cycle, where decreses or shrinkge in ggregte demnd will mens lower demnd for trnsport services, forcing shipping compnies to build fewer ships nd scrp some of those tht re not in use. Conversely, when ggregte demnd increses during cycle of economic expnsion, it cnnot be met immeditely 8 For more informtion, see Sánchez, Ricrdo J. nd Brt Boon (26) nd Robert Scrsi (27). Nturl Resources nd Infrstructure Division, UNECLAC

9 becuse the shipping compnies re lredy mnging existing demnd. This phenomenon is reflected in the rise of freight prices, which in turn restrts the shipbuilding process in order to meet demnd. 9 The side effects rising from processes linked to crises nd peks in the business cycle re tightly connected to the decisions mde by economic gents, prticulrly in response to crisis periods. Stkeholders in the mritime sector re ffected by economic recessions, since s ggregte demnd wekens, so too does demnd for goods trnsport, resulting in consequences for compnies profits. Along with this, the decisions mde in the optimistic phse of the cycle cn cuse imblnces in compnies results. Figure 1 shows the qurterly finncil results of mritime trnsport compnies between 29 nd Figure 1 AVERAGE OPERATING MARGINS OF MAIN CONTAINER CARRIERS, BY QUARTER, (Percentges) further concern for shipping compnies nd encourging the introduction of economies of scle to optimize vessel usge nd reduce fuel expenditure. Figure 11 shows the vrition in bunker fuel prices, reflecting the steep rise in the price of crude oil tht strted in 21 nd peked in 212. Despite dropping somewht fter the first qurter of 212, crude oil prices remined high until the steep fll of Figure 11 VARIATIONS IN BUNKER FUEL PRICES, (Dollrs per ton of 38 centistoke fuel) Rotterdm Singpore Resources nd Infrstructure Division, on the bsis dt from The Bunker World vi Bloomberg, n interntionl economic portl ( Source: Alphliner, Weekly Newsletter, Issue 47, 214. Dt refer to the verge of the following compnies: APL, CMA CGM, CCNI, CSAV, CSCL, EMC, Hnjin, HMM, Hpg-Lloyd, K Line, Mersk, MOL, NYK, RCL, Wn Hi, Yng Ming, Zim. Income is not weighted. This figure shows tht fter the economic recovery in 21, shipping compnies operting mrgins declined throughout 211 before rising gin, with smll fluctutions from one qurter to the next, though overll results hve remined poor. Compnies fluctuting finncil performnce correltes exctly to chnges in globl trde in goods nd the wider economy, nd specificlly to the overcpcity described in detil in FAL Bulletin No This sitution is clerly illustrted by low freight rtes (figures 5 nd 6) nd the rise in operting costs, especilly of fuel. Slower nnul growth in trde compred with pre-crisis rtes, combined with crude oil prices tht re constntly incresing (notwithstnding the recent slide), re cusing 9 For more informtion, see Economic Commission for Ltin Americ nd the Cribben (ECLAC), Nturl Resources nd Infrstructure Division, itime Bulletin 51, Ibid. One consequence of poor finncil results only Wn Hi, OOCL, K Line, Hnjin, CMA CGM nd Mersk Line returned positive operting mrgins (Alphliner, 214) long with high fuel prices nd wek demnd for freight cused by the sluggish economy, is tht shipping compnies hve sought new strtegies to tckle the crisis, thereby reducing operting costs. These strtegies fll into three ctegories, s outlined in digrm 1. Digrm 1 STRATEGIES TO REDUCE OPERATING COSTS OF SHIPPING Chnges in effective supply Suspension of new orders Reduction in cpcity offered by routes Scrpping Ships lid up Slow steming Super slow steming Commercil strtegies Opertionl nd commercil reengineering of routes Reconfigurtion of routes nd schedules Business strtegies for cpturing more profitble mrket niches Restructuring of finncil commitment Cncelltion of shipbuilding contrcts, where suitble under termintion cluses Rescheduling of greed delivery dtes Refinncing of libilities Lese contrcts signed in recent yers Resources nd Infrstructure Division, itime Bulletin 51, 212. Lstly, s finl strtegy, shipping compnies hve forged llinces to provide better coverge of the mrket. According to Dynmr (Dynliners Weekly), lrger 9

10 1 opertionl llinces will be greed between crriers in the coming yers thn exist t present, s shipping compnies seek to void the deep losses tht they hve incurred since 29. Figure 12 shows the current distribution of shipping compnies in mjor llinces. Figure 12 SHIPPING COMPANY PARTNERSHIPS IN 214, BY PROJECTED FLEET CAPACITY IN JUNE 216 (Twenty-foot equivlent units) MSC 2M APM-Mersk O3 CMA CGM Group G6 G6 G6 G6 G6 G6 GA GA GA GA GA O3 O3 Evergreen Line Hpg L + CSAV COSCO HSDG + CCNI CSCL Resources nd Infrstructure Division, on the bsis of dt from Alphliner, 214. From this figure it my be observed tht Mersk Line nd MSC together hold the lrgest mrket shre, while the other 17 leding compnies re ligned in three llinces, so tht there re not relly 19 compnies, but four conglomertes negotiting with ports, importers nd exporters to trnsport crgoes. One outcome of this concentrted mrket is tht ports re under pressure to lter prices, increse cpcity nd improve efficiency to be ble to receive clls, which re incresingly concentrted in lrge-cpcity ports. As result, the blnce of power between ports nd shipping compnies is shifting, since the compnies cn exert influence on ports to provide the fcilities tht they require. V. Conclusions The nlysis of mritime trde throughout this document yielded the finding tht the mritime cycle is in period of overcpcity nd, therefore, oversupply of ships s direct consequence of flling demnd nd the sluggish growth in foreign trde (see FAL Bulletin No. 338). These ptterns hve weighed principlly on the finncil results of shipping compnies, which hve decided to enter into greements nd prtnerships. The observtions included in this study im to provide brod overview of the new context nd trends in mritime trde, in which shipping industries re becoming stronger nd more powerful with regrd to docking negotitions Hnjin Shipping MOL Yng Ming UASC NYK Line OOCL APL K Line Hyundi PIL Zim in the region s ports. This FAL Bulletin therefore complements Issue No. 337, which discusses the need to rethink governnce of the region s ports in response to the new scenrio. Bibliogrphy Alphbulk, Monthly Monitor, Alphbulk, vrious issues. Alphliner, Weekly Newsletter, Alphliner, vrious issues. Bloomberg, ECLAC (24), Puertos y trnsporte mrítimo en Améric Ltin, un nálisis de su desempeño reciente, in Recursos nturles e Infrestructur series, No. 82, ECLAC publiction, United Ntions, Sntigo, Chile. ECLAC (25), Recent increses in shipping costs nd their impct on exports from Ltin Americ in FAL Bulletin No. 221, ECLAC publiction, United Ntions, Sntigo, Chile. ECLAC (25b), The itime Cycle nd Industril Trends in Ltin Americ, in FAL Bulletin No. 228, ECLAC publiction, United Ntions, Sntigo, Chile. ECLAC, itime nd Logistic Profile of Ltin Americ nd the Cribben: sp?idiom=in Cipolett Tomssin, Georgin & Ricrdo J. Sánchez (21), L industri del trnsporte mrítimo y ls crisis económics, in Recursos nturles e Infrestructur series, No. 149; ECLAC publiction, United Ntions, Sntigo, Chile. Clrkson Reserch Services Limited, Continer Intelligence Monthly, London, vrious issues. Clrkson Reserch Services Limited, Dry Bulk Trde Outlook, London, vrious issues. Clrkson Reserch Services Limited, World Fleet Monitor, London, vrious issues. Drewry Shipping Consultnts Ltd, The Drewry Monthly, London, vrious issues. Dynmr, DynLiners Weekly, vrious issues. Sánchez, Ricrdo J. & Octvio Doerr (212), L economí mundil y el comercio mrítimo de contenedores en Améric Ltin. Desfíos pr los puertos en l región, Economic Commission for Ltin Americ nd the Cribben, Sntigo, Chile. Sánchez, Ricrdo J. (25), El ciclo mrítimo como condicionnte de ls polítics mrítims ncionles l inicio del nuevo siglo. Un mird sobre Améric Ltin, Mster s thesis, Chrles III University of Mdrid- University of Pris X Nnterre. Sánchez, Ricrdo J. nd Brt Boon (26), itime shipping cycles, evidence nd impct on Ltin Americ, ECLAC Nturl Resources nd Infrstructure Division Working pper, y 26, Sntigo, Chile. Scrsi, Robert (27), The bulk shipping business: mrket cycles nd shipowners bises, in itime Policy & Mngement, Volume 34, Issue 6, December 27, pges Nturl Resources nd Infrstructure Division, UNECLAC