Container Market Outlook

Transcription

1 Container Market Outlook Alan Murphy CEO and Co-Founder SeaIntel Maritime Analysis October 12 th, 2016 TPM Asia 1

2 SeaIntel Container Shipping Analysts - Founded January 1 st, Fully independent, private company with no interests from brokers, banks or others Analysts, Developers & Consultants in Copenhagen and Brussels. - Management Team with combined 35 years of experience in Container Shipping Core values: - Integrity - Methodology - Assumptions - Data Quality Major Milestones: Research & Analysis articles published since March ,000+ citations in Industry Press (Lloyd s List, JoC, etc.) - Official Knowledge Partner of the Global Institute of Logistics - World s most comprehensive database on Carrier Reliability - Curriculum provider at the World Maritime University - Curriculum provider at the Blue MBA at Copenhagen Business School 2

3 SeaIntel subscription reports SeaIntel Sunday Spotlight (SSS) - Weekly Global Liner Performance (GLP) report - Monthly Tradelane Capacity Outlook (TCO) report - Weekly Weekly report on relevant container market analysis Quantitative insights into important market drivers Regular topics include: Supply/Demand, deployment patterns, freight rate analysis, environmental issues, reliability, and much more World s largest study of carrier on-time performance Report covering 65+ carriers, 300+ distinct carrier services/loops, 300+ ports, across 34 trade lanes 116 pages including global carrier performance Top20 and niche operators, benchmarking alliances and detailed trade performance 12-week future outlook on container space supply Most accurate and updated capacity deployment figures for 23 trade lanes between Asia, Europe, North and South America Based on actual vessel schedules of individual named vessels on all services in the trade lanes 3

4 Points to cover Oversupply, freight rates, oil price and carrier losses Service disruptions, blank sailings and Schedule Reliability New Mega-Alliances (very briefly) Hanjin (very briefly) A tale of a shipping line bankruptcy (not Hanjin) 4

5 Oversupply, freight rates, oil price and carrier losses 5

6 Until 2009, there seemed to be no limits! 20.0% Supply/Demand growth % 10.0% 5.0% 0.0% -5.0% -10.0% Demand Supply 6

7 Gap in Supply/Demand opened in 2009 Index 1000 Supply/Demand growth on Index basis, adjusted for structural factor Demand Supply Supply, Adj. 7

8 Nominal TEU capacity Maintaining status quo is possible 6% 5% Trade (demand) growth Necessary scrapping to maintain status quo 900, ,000 4% 3% 2% 1% 700, , , , , ,000 0% Container volume (CTS) Merchandize trade (WTO) 100,000 - Low growth Average growth High growth 8

9 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Freight rates have been falling in all trades 2,500 2,000 1,500 1, SCFI: Asia-NE and Asia-Med 6000 SCFI: Asia-USWC and Asia-USEC SCFI: Asia-MEA 1800 N.EUR ANZ MED 3000 USWC USEC SCFI: WAF and SAF 3000 SCFI: Asia-ECSA WAF SAF ECSA 9

10 USD/TEU Freight rate volatility is through the roof USD USD +750 USD +400 USD +500 USD +500 USD +600 USD Asia-N.Europe Spot Rates and Announced Increases +400 USD +700 USD +350 USD +350 USD +525 USD +500 USD +575 USD +450 USD +950 USD Rate data based on SCFI from Shanghai Shipping Exchange +750 USD +950 USD +425 USD +525 USD +500 USD +525 USD +500 USD +550 USD +550 USD +475 USD +550 USD +700 USD +850 USD +550 USD +800 USD USD +525USD +575 USD +600USD USD +300 USD +550 USD +800 USD +920 USD +950 USD +920 USD USD +950 USD +900 USD +740 USD +480 USD +750 USD +900 USD +950 USD +420 USD +700 USD USD +500 USD +300 USD 10

11 USD/TEU Carriers P&L per Transported TEU 200 P&L per TEU,

12 Carriers P&L was the worst year since 2009 in terms of over-capacity, tanking freight rates, weak demand, price wars and rate erosions, etc. - How on Earth did these carriers end up with a combined profit of 2.7 bn USD for 2015? - (answer to follow ) 12

13 USWC BAF (USD/FFE) Bunkerfuel USD/ton Impact of oil price and BAF delay Oil price versus fuel surcharge developments Transpacific USWC 40' Fuel surcharge (BAF) Bunkerfuel price - Carriers essentially got a massive cash injection from BAF delay in As bunker cannot continue to decline, no such cash injection forthcoming after 2016-Q2 - The money is merely a loan, once bunker prices rise again, the money has to be paid back 13

14 Billion USD USD/bbl Impact of oil price and BAF delay II Industry cashflow effect Crude oil price forecast (World Bank) Assuming a 3-month BAF-delay, carriers got a 4 bn USD cash injection in Q1 still saw falling oil prices, so an additional 1.1 bn USD injection Q2 cash loss is bn USD, while 2016-Q3 will be bn USD 14

15 Carrier second quarter P&L The impact of higher bunker costs and lower BAF has massively impacted Q2 results - This is in addition to the weak demand and low freight rates Q3 is projected to be just as bad as Q2 from BAF delay perspective 15

16 Service disruptions, blank sailings and Schedule Reliability 16

17 Visualizing service launches and suspensions I 17

18 Visualizing service launches and suspensions I Active services in Asia-North Europe 18

19 Visualizing service launches and suspensions III 19

20 Visualizing service launches and suspensions IV Active services in Asia-USWC 20

21 Blank sailings

22 Visualizing blanks sailings I Active services in Asia-North Europe 22

23 Visualizing blanks sailings II Active services in Asia-USWC 23

24 Global Reliability Developments Global developments In August global schedule reliability continued on its positive trend and improved slightly by 0.5 percentage points from 84.9% in July to 85.4% in August, outperforming the historical levels of August recorded in the last years. The performance of August showed Y/Y increase of 4.0 percentage points compared to 81.4% seen in August last year. In addition, on-time performance was based on 12,687 vessel arrivals in August N.B.: Starting from September 2015, we have introduced a new feature to measure vessel arrival delays. Importantly, the chart below to the right shows the average delay based ONLY on the vessels that are recorded as being late. The global average delay for LATE vessel arrivals showed a slight deterioration for the third consecutive month, increasing slightly by 0.06 days from 3.24 days in July to 3.30 days in August, yet still the average delays were 0.21 days lower compared to the delays recorded in the same period of last year. 90% Global schedule reliability 5.5 Global - Avg. delay for LATE vessel arrivals 85% 80% 75% % 3 65% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Global Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Schedule Reliability Avg. delay of LATE vessels % 71.9% 69.8% 72.5% 78.1% 78.7% 75.6% 81.4% 85.8% 84.2% 85.3% 84.6% % 76.7% 79.9% 83.4% 85.5% 85.9% 84.9% 85.4% Change 11.9% 4.9% 10.1% 10.9% 7.4% 7.2% 9.2% 4.0% Change

25 New Mega-Alliances 25

26 Alliances are not a new thing Source: Wang, Mariner: The Formation of Shipping Conference and Rise of Shipping Alliances International Journal of Business, Vol. 6, issue 5,

27 They just controlled much less capacity Source: Lu, Cheng and Lee (2006): AN EVALUATION OF STRATEGIC ALLIANCES IN LINER SHIPPING - AN EMPIRICAL STUDY OF CKYH, Journal of Marine Science and Technology, Vol. 14, No. 4, pp (2006) 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 MSC Maersk Line Global TEU Fleet UASC CSCL CMA CGM K Line Yang Ming Hanjin Evergreen COSCO HMM NYK APL MOL OOCL Hapag-Lloyd 2M O3 CKYHE G6 On 1/1/2005, Alliance carriers controlled: GA: 1,102,197 TEU 12.2% CKYH: 935,611 TEU 10.3% NWA: 669,478 TEU 7.3% TOTAL: 2,707,286 TEU 29.8% On 1/1/2010, Alliance carriers controlled: GA: TEU 8.9% CKYH: TEU 11.2% NWA: TEU 8.7% TOTAL: 2,707,286 TEU 28.8% In 2014, six carriers became alliance members: Maersk Line (1 st ), MSC (2 nd ), CMA CGM (3 rd ), Evergreen(5 th ), CSCL (7 th ) & UASC (15 th ) On 1/1/2016, Alliance carriers controlled: 2M: TEU 28.1% G6: TEU 17.6% CKYHE: TEU 16.5% O3: TEU 14.2% TOTAL: TEU 76.4% 27

28 So What are the new (2017) alliances? There are currently four alliances: - 2M: Maersk Line and MSC, the two largest carriers. Announced in 2014 following the rejection of P3 alliance by Chinese regulators. Launched 2015-Q1. - CKYHE: An old alliance (Estb as Sino-Japan Alliance). Purely Asian alliance, expanded with Evergreen in February 2014, as response to P3. - G6: The joining of two old alliances: Grand Alliance (1995) and New World Alliance (1996). Formed in response to P3. - Ocean Three: A new alliance, the leftovers without an alliance: CMA CGM, CSCL and UASC With CMA CGM s acquisition of APL and the merger of the Chinese state-owned carriers COSCO and CSCL, the fate of three of the existing alliances was shaky. We now have three alliances to come into effect in 2017: - 2M: HMM may possibly join... - Ocean Alliance: Number OOCL, APL to join - THE Alliance : the remaining five-to-seven carriers. Hapag-Lloyd and UASC have merged. HMM may join if they do not join 2M. 28

29 Estimated Alliance Market Shares in AE/TP Estimated Alliance Market Shares in A-E/TP [BEFORE HANJIN COLLAPSE] 100% Other Other Other 90% 2M 80% 2M 2M 2M 70% 60% 50% 40% THE Allliance THE Alliance THE Alliance THE Alliance 30% 20% 10% Ocean Alliance Ocean Alliance Ocean Alliance Ocean Alliance 0% Asia-N.Eur Asia-MED Asia-USWC Asia-USEC - Based on the deployment of current services, and swapping between existing alliances - A massive amount of assumptions makes the estimates very uncertain - Vessel deliveries until April 2017 will likely shift Market Shares 29

30 We gotta have a talk about Hanjin 30

31 So what happened to Hanjin? 31

32 So what happened to Hanjin? 32

33 What of the Hanjin fleet? Not a lot of interesting vessels in Hanjin s owned fleet: - 5 x 13,000 TEU & 10 x 8,000-10,000 TEU, all reasonably young vessels - Rest are old Panamax vessels, and should in a perfect world head for scrapping The chartered fleet is more interesting, and most vessels should find new charters: - 4 x 13,000 TEU & 14 x 9,000-11,000 TEU and quite young. - The smaller vessels are still quite young and could move to Asia-ISC or Intra-Asia 33

34 The fate of the Hanjin fleet Vessel Age 20 Hanjin Vessels: Size vs. Age vs. Ownership ,000 4,000 6,000 8,000 10,000 12,000 14,000 Chartered Owned TEU Size 34

35 Hanjin: Charter owner exposures - Peter Döhle may have the largest TEU exposure, but they are young 13,000 TEU vessels that should not be difficult to put out on new charter. - Seaspan, CGI and Ciner all have young vessels of average 8,700-10,100 TEU - Danaos have a mix of young 10,100 TEU and 4,000 TEU vessels - Conti have six year old 5,752-7,471 TEU that are going to be challenging 35

36 Exposure to Hanjin vessels Hanjin vessels accounted for 5-8% of capacity on the main East/West trade lanes 29 carriers exposed to services with Hanjin vessels Hanjin vessels deployed on 20 different services 36

37 Capacity (TEU) Capacity (TEU) Capacity (TEU) Hanjin needs to be viewed in a larger context 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Disappearances in top-20 Jan 2015-present day 700, , , , , , ,000 - Disappearances in top-20 Jan Dec , , , ,000 50,000 - Disappearances in top-20 Jan Dec

38 A tale of a shipping line bankruptcy (not Hanjin) 38

39 The Containership Company - TCC Launched a weekly service in 2010 Single TP service: Taicang to LA 3,000 TEU/Weekly Went bankrupt on April 8, 2011 Creditors have sought liquidated damages for nonfulfillment of MQC, and have sued 75 shippers Total claim of 23 Million USD Half of the cases have been settled out of court US Court has ruled that service contracts are indeed contracts If Hanjin creditors file for liquidated damages, potential Million USD Claim just on TP 39

40 Thank you! SeaIntel Sunday Spotlight: Annual subscription (52 issues) Global Liner Performance: Annual subscription (12 issues) Tradelane Capacity Outlook: Annual subscription (52 issues) If you wish to subscribe, please contact: Mr Giulio Gentilezza: gg@seaintel.com Ms Jasmin Slovackova: js@seaintel.com 40