Container Shipping 2015 Market Outlook Web: E-mail: [email protected] 2nd China Shipping...

Container Shipping 2015 Market Outlook

Web: www.alphaliner.com E-mail: [email protected]

2nd China Shipping Innovation Conference9 January 2015

Shanghai

ALPHALINER

Containership Market Outlook

© Alphaliner 1999-2015 – Contents not to be reproduced without permission

China Shipping Innovation Conference : Jan 2015

Evolution of container ships – the first 60 years

First generationConverted and semi-container ships

Second generationCellular containerships

Third generationPanamax containerships

Fourth generationPost Panamax containerships

FifthgenerationVery Large containerships

Sixth & seventhgenerationUltra Large containerships& wide-beam eco-ships

ALPHALINER




New vessel deliveries expected to reach new record

• 2015 containership deliveries will be at a record high – 2014 deliveries reached 1.465m TEU - almost a new record (6.3% growth)– But 2015 deliveries expected to exceed 1.80m TEU (7.9% growth net of scrapping)– >10,000 teu vessels make up over half (64%) of planned deliveries– Slippage will be minimal in 2015 (most slippage in < 5,100 teu size or 12% of planned deliveries)

ALPHALINER




Scrapping rate slowing

• Scrapping peaked in 1H 2014 (290,000 teu) but have slowed in 2H 2014 (98,000 teu)– Initial projection of 500,000 teu to be scrapped in 2014 – Final scraps reached only 388,000 teu - lower than the 442,000 teu scrapped in 2013

• 2015 scrapping level expected to be lower than 2014• China’s scrapping subsidies will have limited impact in 2015

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

TEU

cap

acity

del

eted

by

mon

th

Capacity of vessel scrapped > 4,000 teu3,000-4,000 teu2,000-3,000 teu1,000-2,000 teu< 1,000 teu

ALPHALINER




Idle fleet • Idle containership fleet at 3 year

low at 200,000 teu– Lowest idle level since 2011 at 1.1%

of total fleet– Driven by high scrapping rate &

higher demand on E-W/Intra-Asia trades

– Recent port congestion issues have also led to higher demand for ships

• Low idle fleet will reduce scrap rate

• But limited impact on charter rates

0%

2%

4%

6%

8%

10%

12%

14%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2009

Jan

2010

Jan

2011

Jan

2012

Jan

2013

Jan

2014

Jan

2015

Jan

Idle

flee

t as

% o

f tot

al fl

eet

Idle

cap

acity

in T

EU

Total Idle TEUIdle fleet as % of total fleet

0

5,000

10,000

15,000

20,000

25,000

30,000

Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Char

ter R

ate

$/da

y

Alphaliner Charter Rates 2009-2014

5,600 teu4,000 teu2,500 teu1,700 teu1,000 teu

ALPHALINER




Freight market link to charter market broken down

• Pre-2009 : freight rate index closely correlated to charter index • Post-2009 : correlation has broken down due to supply overhang • Freight market recovery will precede charter market recovery

ALPHALINER




Demand & Supply remain imbalanced

• Demand growth recovering– 2014 (f) at 4.9% vs 3.0% in 2013(based on top 30 ports volume)– But recovery is also imbalanced with some sectors very weak (eg South America) and uncertain (eg Eurozone)

• But supply growth continues to trend above demand– 2014 gross supply growth at 6.3%– But active supply growth (adjusted

for idle capacity) was 10.0%– Rates currently sustained partly due

to port congestion issues especially in US West Coast

– Impact of extra slow steaming is low since 2013, could be reversed with low bunker prices

12.1

%

9.4%

6.

6%

-1.7

%

-15.

4%

-13.

5% -9

.2%

-1

.2%

16

.8%

18

.4%

15

.0%

11

.1%

9.

8%

9.0%

8.

2%

8.7%

6.

8%

4.8%

3.

2%

1.3%

2.

4%

2.5%

2.

8%

4.5%

4.

6%

5.5%

4.

7%

4.8%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

F

Top 30 Ports : Throughput Growth by Quarter yoy Growth %

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

F

Adjusted for idled capacity

Supply Growth vs Demand by Quarter

yoy Growth %Active capacity growth %Gross capacity growth %

ALPHALINER




Slow steaming as capacity management tool

• Total capacity absorbed by slow steaming is estimated at 1.3 million TEU or 7% of current fleet • With bunker prices at $300/ton, slow steaming is no longer a cost saving strategy• But reversal of slow steaming will take time

FE-Europe 41%

Transpacific 21%

FE-ISC/ME/ANZ 14%

FE/Eur-S Am 10%

Others 14%

ALPHALINER




Main issues in 2015 – Record supply growth/New Alliances & Impact of lower fuel price

FE-Europe services rationalised

CKYHE Alliance launched

G6 coverage extended

Another round of ULCS vessel

orders

What happens to freight and charter rates?

Service rationalisation options limited

New 18K vessels delivered

Supply overhang worsens

Freight rates crash

G6 formed by GA/NWA carriers

P3 Network announced

Fresh round of ULCS vessel orders

Maersk orders ‘Triple-E’ ships

‘Daily Maersk’ launched

Impact of lower bunker price?

2M & O3 launched

ALPHALINER




No evidence that Alliances lead to market stability

1985 Alliances/Consortiums1985 Alliances/Consortiums

2015 Global Alliances2015 Global Alliances

2MMaersk

MSC

TRIOOCL

Ben LineHapag-Lloyd

MOLNYK

IndependentsMaersk

EvergreenCOSCO

Yang Ming

CKYHECOSCOK Line

Yang MingHanjin

Evergreen

G6APL

Hapag-LloydHMMMOLNYK

OOCL

O3CMA CGM

CSCLUASC

(Hamburg Sud)

ScanDutchNedlloyd

CGMEAC

BrostromMISC

ACEK LineOOCLNOLFBSKSC

Choyang

TRIOOCL

Ben LineHapag-Lloyd

MOLNYK

IndependentsMaersk

EvergreenCOSCO

Yang Ming

ScanDutchNedlloyd

CGMEAC

BrostromMISC

ACEK LineOOCLNOLFBSKSC

ChoyangAcquired by other carriers

Exit liner business

Haven’t we seen these before? Past Alliances proved to be fundamentally unstable. Can the new alliances last?

ALPHALINER




2015 deliveries by carrier

0 100,000 200,000 300,000 400,000

MSCCMA CGM

UASCAPM-Maersk

Yang MingK Line

CSCLHapag-Lloyd

MOLOOCL

EvergreenHanjin Shg

Hamburg SüdPIL

COSCONAPLNYK

Hyundai M.M.Zim

Wan Hai

New Vessel Deliveries 2015F (TEU)

2M 35%

O3 34%

CKYHE 19%

G6 8%

Other 4%

ALPHALINER




End

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