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World Economy vs. Global Port Trade
Port Development Forum, March, 2014, Shanghai
Tina Liu, Country Manager – China liu@drewry.co.uk
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Top trends of global port/terminal industry
Ship size, Cascading
Carrier alliance
Shipping lines financial issues
Active Asia investors
Portfolio management
Emerging market focus
Lack of public money
Healthy industry profitability
Higher productivity required
Terminal valuation on the rise
Terminal automation
Supply demand balance
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Facts and figures of the industry
Total container port throughput worldwide is currently around 640 million teu p.a.
Just over 5,000 gantry cranes worldwide
About 600km of berths
Around 700 specialised container terminals worldwide
Around 600 multi-purpose and RoRo facilities handling containers
Estimated 2013 container terminal industry Revenue: US$ 48 billion.
Estimated 2013 container terminal industry EBITDA: US$ 11 billion (~22%)
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Historical market trends Global container port volume growth (%)
Asian financial crisis
US recession
Global financial crisis
Prior to 2009 the industry’s worst year was +4.6% growth
China outsourcing
New global norm
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Driver of container port traffic
Organic growth: GDP
Imbalance of trade: empty containers
2012 to 2020 world GDP CAGR 3.6% (2000-12CAGR3.4%)
Replacement:Dry cargo containerization
Transshipment: result of vessel upsizing
01,0002,0003,0004,0005,0006,0007,0008,0009,000
10,000
0 20,000 40,000 60,000 80,000 100,000 120,000Gen
eral
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go tr
ade(
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ion
tone
s)
World GDP(billion USD) 0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Con
tain
er p
enet
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)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
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Empt
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ntai
ner(
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0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Tran
ship
men
t(%
)
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Global economy on the path of bumpy recovery…
IMF keeps down grading global economy outlook
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Forecast container port demand growth 2012-2017
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Forecast of global container port capacity to 2017
Demand growth less than capacity expansion
Middle East, North Europe, South Asia, Africa
Demand growth = capacity expansion
Australasia, Eastern Europe
Demand growth more than capacity expansion
Far East, South East Asia, Latin America, North America, South Europe
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Vessel size development
Regina Maersk 7,400 teu Mid 1990s Other carriers followed…
Emma Maersk 15,500 teu Mid 2000s Other carriers followed…
Maersk Triple E 18,000 teu 2013 Other carriers following…
22,000+ teu vessels? 2018? Carriers will follow…
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Largest vessels deployed in Asia-N. Europe trade, Jan 2014
Source: Drewry Maritime Research
…Yang Ming and K Line:14,000 teu ships coming
…China Shipping: 19,000 teu ships coming
…UASC: 14,000 and 18,800 teu ships coming
…MSC: 18,400 teu ships coming
…Zim: 12,600 teu ships ordered but cancelled
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Number of ULCVs per carrier by end of 2016
0 10 20 30 40 50 60 70
NYK
K Line
OOCL
MOL
Evergreen
Hapag-Lloyd
HMM
Zim
APL
Yang Ming
UASC
Hanjin
CSCL
Cosco
CMA CGM
Maersk
MSC
No. of 10,000-13,999 teu
Vessels No. of 14,000+
teu Vessels Totals CKYHE 53 20 73 MSC 38 26 64 G6 44 10 54 UASC/CSCL 17 23 40 Maersk 18 20 38 CMA CGM 26 6 32 Zim 8 0 8
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Global containership size development
Total order book by teu size range (% of teu capacity)
48%
29%
4%
9%
7%
3%
10,000 teu +
8,000 – 9,999 teu
6,000 – 7,999 teu
4,000 – 5,999 teu
2,000 – 3,999 teu
< 1,999 teu
Route No. of ships Asia-North Europe 130
Asia-Mediterranean 36 Asia-USWC 14 Asia-Mid East 9
Trade lane deployment of ULCVs - Jan 2014
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Vessel cascading
“India’s Mundra Port today handled one of the largest and longest container vessels in the world - MSC Valeria, having a capacity of 14,000 teu” Source: Economic Times, 5 June 2013
There are currently 104 vessels of 7,000-10,000 teu deployed on the Asia-N Europe route. All will need to be cascaded elsewhere by 2016
Largest deployed vessels, January 2014:
Asia - North Europe: 18,270 teu
Asia - Mediterranean: 14,000 teu
Asia - US West Coast: 13,800 teu
Asia - East Coast South America: 9,700 teu
Europe - East Coast South America: 8,800 teu
Asia - West Coast South America: 9,200 teu
Asia - Middle East: 14,000 teu
Europe - South Africa - Asia: 12,500 teu
Bigger Asia-North Europe ships = More cascading to other routes = More alliances on other routes (e.g. G6 Asia-USEC, P3 east-west routes) = Port/terminal choice shake ups
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The challenge of ship size growth for ports
Mega vessels = mega cranes
Berth length and depth
Air draft
Outreach
Intermodal capacity
Crane and berth productivity
Bigger ships have less choice of ports
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Port/terminal infrastructure equipment requirements
To be able to accommodate the current largest container ships, a port/terminal must have:
Large enough cranes (i.e. at least 21-22 boxes across outreach)
Sufficient large cranes (at least 3 cranes per vessel and usually 5 or more is desirable)
Long enough berths (i.e. at least 400 metres)
Deep enough water alongside the berth (i.e. at least 14.5 metres and up to 17 metres)
Deep enough water in the approach channel (i.e. up to 17 metres)
And a yard/landside operation capable of coping……
Are shipping lines prepared to pay for these enhanced requirements?
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Traditional ports out of the game?
Hamburg Sud 9,800 teu vessel in draft restricted Buenos Aires
(at terminal using mobile harbour cranes)
CMA CGM 16,000 teu vessel in Hamburg
Maersk Line 18,000 teu vessel
in Antwerp
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Vessel call volumes
Maersk CEO: 6,000 moves in 24 hours
* i.e. 20% of vessel discharged and 20% loaded per port call
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Crane intensity
Ship size (teu)
Length (m) Width (m) Max draft (m)
Boxes wide
12,000 365-380 48-50 15.5 19-20
15,000 400 56 16 22
18,000 400 59 16 23
20-25,000 440-450? 59-61? 16.5? 23-24?
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Crane intensity and berth productivity
Operational factors
Commercial factors
• The way in which the ship is stowed
for the port in question (e.g. are the
containers spread out across the
ship or concentrated in just a few
holds)
• The size of the container exchange
per vessel call
• The speed of turnaround required or
guaranteed. What level of productivity
does the shipping line want (they may
not want the fastest) and are they
prepared to pay for it?
• The flexibility, availability and cost of
dock labour (and their normal hours of
working)
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Recent developments in alliances
CKYH
G6
P3
…terminals have to convince and negotiate with 3 (or 5 or 6) lines to call
• Relentless pursuit of economies of scale has led to ever larger ships
• To fill these ships, carriers have to come together in alliances
• Until 2011 the three large independents (Maersk, MSC and CMA CGM) appeared to have the scale to operate outside the alliance structure
• The other major lines in the east-west trades all needed some form of alliance or VSA partnership to maintain a viable service
• However, since 2011, the pressure for alliance consolidation has intensified: • Maersk, CMA-CGM and MSC in P3 • The Grand and New World Alliances combined into the G6 • Evergreen combining its services with those of CKYH
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P3 port choice
http://ciw.drewry.co.uk/
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Port choice in the age of alliance
What is the effect on schedule reliability?
Where is the cargo
generated?
Is there a terminal operator in the port affiliated with the
shipping line?
Can the ships physically access
the port ?
Is the port already established in at least
one loop?
What are the benefits and
pitfalls of consolidating
port calls?
How can the widest range of direct port calls be delivered?
How can the best frequency of service and transit times be
obtained?
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Port market opportunities – Privatisation and M&A
Shipping line assets
Shipping lines remain under severe financial
pressure e.g. Hanjin and Hyundai.
May therefore need to divest stakes in their
terminal assets
Deals already: MSC – TIL stake sale,
CMA CGM - Terminal Link stake sale
Port privatisation
Main era of port and terminal privatisations has
largely passed
Some remaining significant state owned
facilities though: e.g. South Africa, Iran, Israel, Sri Lanka, Indonesia, Malaysia,
Turkey, Kenya, Egypt, India, Jamaica
Plus some possible further port authority privatisations
e.g. Australia
Global / international terminal operators assets
Global/ international terminal operators are
rebalancing their portfolios increasingly divesting from
mature to emerging economies.
May divest individual assets or portfolio of
assets
Deals already: e.g. DPW Australia, DPW
and PSA – Hong Kong, ACT- CSTD, CPL
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Port market opportunities - Privatisation and M&A
Financial investors portfolios
Infrastructure funds invested 5-7 years back are reaching maturity and may divest their holdings Private equity looking for exit
Financial groups with significant terminal assets include:
RREEF, Macquarie, Highstar Capital, JP Morgan, Morgan
Stanley
Private and family owned assets
Family and privately owned assets may divest due to
succession considerations or desire to “cash in”
Examples of private/family companies include: Eurokai,
Ultramar, Bristol Port Co
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Port market opportunities - Concessions
Forecast increase in port demand 2012-2017
Forecast regional utilisation levels
Asia will generate by far the largest increase in
absolute demand
Asia is also expected to have the highest regional utilisation levels by 2017,
but other regions also high
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Re-cap
Ship size, Cascading
Carrier alliance
Shipping lines financial issues
Active Asia investors
Portfolio management
Emerging market focus
Lack of public money
Healthy industry profitability
Higher productivity required
Terminal valuation on the rise
Terminal automation
Supply demand balance
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Drewry background
Drewry has over 40 years’ experience within the maritime sector, employing over 90 specialists across our offices in London, India and Singapore. Offering research reports and consultancy services, our ability to assess the market and give our clients the knowledge to make critical decisions sets us apart from others. Our brand is renowned for its quality, with analysis that brings clarity to markets and enables us and our clients to stand above the competition. Drewry’s bespoke consultancy service has its foundations in our research, but it is defined by our breath of expertise, sector adaptability and international capabilities. Our services extend from the provision of data and information to large assignments calling for a broad mix of disciplines. Typical commissions encompass strategic planning; market research; forecasting; management consultancy; feasibility studies and project evaluation. Since the founding of the company in 1970, Drewry has evolved into one of the world’s leading international maritime consultancy and publishing organisations. Today, Drewry reports are sold in more than 90 countries and consultancy services commissioned by clients from over 70 countries. Over four decades, Drewry has built an extensive data library on trades, shipping costs, ship prices, fleets and freight rates. Sophisticated forecasting systems project trade flows, ship demand and supply, freight rates, costs and prices. The company ’ s people include experienced market analysts, economists and financial planners who have had high-level exposure to the maritime industry. Drewry is also able to call on the services and expertise of a number of freelance consultants for projects requiring specialist knowledge.
Drewry is a highly experienced, respected and well established sector expert
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Ports: Market intelligence and databases
At Drewry we have a unique on-line, research resource capturing details of over 1,500 container and multi-purpose terminals around the world. The data covers throughput, capacity, equipment, ownership and infrastructure. This allows benchmarking of performance by country, region, operator, type of terminal, size of terminal and represents a significant contribution to increasing the depth of knowledge on the industry.
Complementing our database is Drewry’s ability to analyse global container port investment opportunities including identification of projects at existing facilities and greenfield sites, as well as potential acquisition targets and upcoming privatisations. This enables investors and operators to fast track their processes identifying identifying, sorting and pursuing deals.
Intelligence can be tailored to suit customer needs and can be provided as a one-off or retainer
Drewry maintains a sophisticated and highly detailed market intelligence database on the port and terminals industry that ensures clients stay right up-to-date on key issues.
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Container Terminal Database Investment opportunities, industry performance, utilisation and more…
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Contact
Head Office – UK Drewry Shipping Consultants Ltd 15-17 Christopher Street London EC2A 2BS, United Kingdom t: +44 (0)20 7538 0191 e: enquiries@drewry.co.uk
India Office Drewry Maritime Services Private Limited 209 Vipul Square, Sushant Lok-1 Gurgaon, Haryana-122002, India t: +91 124 497 4979 e: india@drewry.co.uk
Singapore Office Drewry Maritime Services (Asia) Pte, Ltd. 15 Hoe Chiang Road #13-02 Tower fifteen Singapore 089316 t: +65 6220 9890 e: singapore@drewry.co.uk
Shanghai Office 555, 5th floor Standard Chartered Tower, 201 Shi Ji Avenue, Pudong District, Shanghai, China 200120 t: +86 (0)21 6182 6759 e: info@drewry.co.uk
Tina Liu
Country Manager - China liu@drewry.co.uk