Davy Global Transportation & Logistics Conference

Transcription

1 Davy Global Transportation & Logistics Conference John Manners-Bell FCILT CEO, Transport Intelligence 27 th June 2012, London

2 1. About Ti Established in 2002 to fill a gap in the market for high quality, cost effective market research Ti has now become the leading provider of market research solutions to the global logistics industry Advisors to World Economic Forum, World Bank, UN and European Commission Global research centre based in UK; research offices in Atlanta, USA and Hong Kong Key Pillars: Research reports, Consulting, Knowledge Portal, M&A, Conferences/Training Ti s Global Associate Network provides a multi-country, multidisciplinary and multi-lingual extension to Ti s capabilities

3 1. Trends in global freight container volumes Jan-09 Jan-09 Sep-09 Oct-09 May-10 Jul-10 Jan-11 Apr-11 Sep-11 Jan-12 Hong Kong [TEUs] Singapore [TEUs] Los Angeles [TEUs] Long Beach [TEUs] Despite the economic slowdown, there has been sustained growth in sea freight volumes since 2009 in Asia, North America and Europe. Forecast growth in H2 is 7.5% (H1 4.5%). Emerging trades forecast at 8%. However the past years have seen an inability by shipping lines to manage their businesses rationally in terms of capacity Q Q Q Q Q Q Q Antwerp [mts] Rotterdam [mts] Source: Ti Dashboard

4 Trends in global freight sea freight After a period of decline following the rebound from the 2008/9 recession, rates increased sharply in January Shipping lines endured $5 billion losses in To address this carriers have introduced slow-steaming; organised alliances and increased scrappage levels. Reduction of capacity important, but more so level of co-ordination of rate moves. Source: Ti Dashboard Impact on supply chains unquantified but severe.

5 Trends in global freight air freight Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 Hong Kong-HACTL [Metric Tonnes] Frankfurt- Fraport [Metric Tonnes] Poly. (Hong Kong- HACTL [Metric Tonnes]) Poly. (Frankfurt- Fraport [Metric Tonnes]) Following the rebound in volumes in 2010, the recovery petered out. Situation in Asia particularly severe. Transpacific volumes weaker. Jade Cargo (JV LH, Shenzhen Airlines) liquidated. Highlight, German exports benefiting Lufthansa Cargo. Source: Ti Dashboard There are signs that the market is once again strengthening, at least in Asia.

6 Freight Logistics Profitability Trends EBITDA and operating profit margins fell only slightly during the recession possibly indicating that the industry responded to reduced revenues by reducing costs. Return on assets fell during the recession indicating that as revenues fell assets became underutilised. Source: Global Transport & Logistics Financial Ratio Analysis Report 2012, Transport Intelligence

7 Impact on freight forwarding sector Average operating profit margins have not fallen below 4.4% throughout the period. Even when there were sharp falls in revenue in 2009 operating profit margins held up for three quarters sign of countercyclicality. Despite the flat revenues encountered in 2011, average operating margins have moved above 5%. Source: Global Transport & Logistics Financial Ratio Analysis Report 2012, Transport Intelligence

8 Impact on contract logistics sector Average operating profit margins have remained below 5% for the whole of the past 5 years. The smaller companies have fared better in this respect. In 2010 margins strengthened. This improvement appears to have slowed or stalled in 2011 albeit at a higher level than any time in the past five years. Source: Global Transport & Logistics Financial Ratio Analysis Report 2012, Transport Intelligence

9 Impact on Express sector Revenues of the four integrators grew steadily to just under 80bn up to the final quarter of They then fell sharply throughout Revenues started to recover in the first quarter of 2010 and by the last quarter of 2011 had reached 80bn again. Profits and volumes/revenues directly linked. Utilisation of assets critical to Express companies success. Source: Global Transport & Logistics Financial Ratio Analysis Report 2012, Transport Intelligence

10 Survey: Modal shift in downturn 1 Are you witnessing a shift from air to sea? 28% 72% Yes No Almost three quarters of respondents (72%) stated that they are experiencing a shift from air to sea on one or more trade lanes. The Asia to Europe trade lane was cited as the route seeing the greatest shift from air to sea transport, with 24% of respondents experiencing a shift in this lane. The Asia to US route was a close second, with 23% of respondents witnessing a shift from air to sea on the route. % of respondents 30% 25% 20% 15% 10% 5% 0% Asia to Europe Asia to US Asia to Latin America Intra-Asia Europe to Asia Europe to Latin America US to Asia US to Europe Europe to US US to Latin America Source: Ti/Davy market study

11 Survey: Modal shift in downturn 2 47% Ahigh proportion of shippers (47%) are also seeing a shift from air to road. 44% 9% Air to Road Road to Air No change This trend is driven by the rise in oil costs and the fuel surcharges being passed on to customers, resulting in cheaper alternatives being sought. This is particularly prevalent in Europe, where traffic sent by road can often be delivered in the same time-frame as air express items. Source: Ti/Davy market study

12 Survey: Parcels product re-balancing Survey respondents expected growth across all service levels and products However, highest net growth expectations in cheaper, slower products 35% 30% 25% 20% 15% Net growth prospects 10% 5% 0% Time Definite Day Definite Deferred Source: Ti/Davy market study

13 Survey: Vertical sector demand The survey found that express carriers were receiving highest level of increase in demand from the pharmaceutical industry. High-tech companies also significantly increasing their demands. % of Respondents 35% 30% 25% 20% 15% 10% 5% 0% Pharmaceutical High-tech Fashion / textiles Automotive FMCG Chemical Other Source: Ti/Davy market study

14 Fastest growing trade lanes Intra-Asia market growth expected to be the strongest, as region moves to Sinocentric model of manufacturing and consumption. % of respondents 0% 5% 10% 15% 20% 25% 30% 35% Intra-Asia Asia to US Asia to Latin America Asia to Europe US to Latin America Europe to Asia US to Asia Europe to US Europe to Latin America US to Europe Source: Ti/Davy market study

15 Prospects for market consolidation 90% Do you believe that there will be more mergers and acquisitions in the next year? 10% Source: Ti/Davy market study Yes No There is the over-whelming belief amongst the respondents that there will be consolidation in the industry in the coming year (90%) due to: Certain companies struggling in the harsher economic climate (e.g. TNT) Cash-rich predators with strong balance sheets Aggressive Asian players seeking to expand globally High levels of fragmentation in the market Vertical sector opportunities where companies seek to buy exposure and expertise (e.g. pharmaceutical).

16 Most attractive emerging logistics markets China remains the most attractive market for investment in the 2012 index. India retained 2 nd place, seeing improvements in all of the sub-indices. Brazil (3 rd )scores above average, although its infrastructure remains weak. Russia (7 th ) scores below average in terms of security threats and ease of access to the market. China India Brazil Saudi Arabia UAE Indonesia Russia Malaysia Chile Mexico Turkey Oman Qatar Thailand South Africa Kuwait Bahrain Egypt Uruguay Tunisia Morocco Argentina Peru Ukraine Kazakhstan Jordan Vietnam Philippines Colombia Pakistan Bangladesh Libya Nigeria Algeria Ecuador Ethiopia Venezuela Paraguay Tanzania Kenya Bolivia Source: Ti/Agility Emerging Market Logistics Index

17 Best Connected Emerging Markets United Arab Emirates, China and Oman rank top in terms of connectedness, benefitting from strong infrastructure, liner shipping connections, airport density and efficient customs procedures. At the other end of the scale Nigeria, Tanzania and Bangladesh score poorly in these criteria. UAE China Oman Malaysia Chile Saudi Qatar Bahrain Libya South Thailand Ecuador Uruguay Morocco Jordan Egypt Tunisia Russia Brazil Colombia Turkey Peru Mexico India Kuwait Ukraine Kazakhstan Argentina Indonesia Vietnam Algeria Pakistan Venezuela Paraguay Kenya Philippines Bolivia Ethiopia Nigeria Tanzania Bangladesh Source: Ti/Agility Emerging Market Logistics Index

18 Emerging Markets Quadrant Source: Ti/Agility Emerging Market Logistics Index

19 Source List Global Transport & Logistics Financial Ratio Analysis Report 2012, Transport Intelligence, UK Ti/Agility Emerging Markets Logistics Index 2012, Transport Intelligence, UK. Free whitepaper Ti Dashboard, online industry data portal, Transport Intelligence Global Contract Logistics Report 2012, Transport Intelligence, UK International Express Parcels Report 2012, Transport Intelligence, UK

20 More information For more information about the contents of this presentation or any of Transport Intelligence s services and products visit: Or John Manners-Bell jmannersbell@transportintelligence.com