FONASBA ANNUAL FONASBA ANNUAL MEETINGMEETING

The containership marketThe containership market

Centro de Navegación (Argentina)Centro de Navegación (Argentina)Eng. Rodolfo García PiñeiroEng. Rodolfo García Piñeiro

Opatija, Opatija, October 2008October 2008

Executive summaryExecutive summary

• Foreword.Foreword.

• Bunker, consumption, prices, etc.Bunker, consumption, prices, etc.

• Construction.Construction.

• The fleetThe fleet

• The charter marketThe charter market

• The portsThe ports

ForewordForeword

• Carriers launched huge construction programs in 2007, focusing on Carriers launched huge construction programs in 2007, focusing on ships of 12,500 teu, mostly aimed at the Far East – Europe trade.ships of 12,500 teu, mostly aimed at the Far East – Europe trade.

• In a high fuel cost era, the impact of the fuel bill can be spread In a high fuel cost era, the impact of the fuel bill can be spread over a larger number of containers.over a larger number of containers.

• Many carriers are set to compete with ships that are based on the Many carriers are set to compete with ships that are based on the same or similar molds as their competitors.same or similar molds as their competitors.

• Competition will move to other areas, in particular to marketing Competition will move to other areas, in particular to marketing innovations and the management of complex logistics operations.innovations and the management of complex logistics operations.

• On the Europe related trades, conferences will disappear this On the Europe related trades, conferences will disappear this month (october 2008), carriers will all become outsiders to each month (october 2008), carriers will all become outsiders to each other. other.

• New initiatives to attract new or lost customers have been unveiled New initiatives to attract new or lost customers have been unveiled this year: online rating and booking system, online calculator to this year: online rating and booking system, online calculator to handle the BAF, conversion of box rates from dollars to euros handle the BAF, conversion of box rates from dollars to euros (Maersk). (Maersk).

Foreword (cont.)Foreword (cont.)• Carriers controlling terminals, to avoid the disruptions in schedules caused by Carriers controlling terminals, to avoid the disruptions in schedules caused by

the “first come, first served” principle, or fixed berthing windows, with other the “first come, first served” principle, or fixed berthing windows, with other carriers seeking the same windows, we will see in the years to come.carriers seeking the same windows, we will see in the years to come.

• The increase in bulk carriers rate provided an incentive to shift The increase in bulk carriers rate provided an incentive to shift containerizable cargoes (agro, forest and steel products) from bulk to containerizable cargoes (agro, forest and steel products) from bulk to containers. Quantities has been modest. containers. Quantities has been modest.

• The main challenge nowadays and beyond, is to reduce bunker expenses The main challenge nowadays and beyond, is to reduce bunker expenses while at the same time a responding to increased environmental pressure to while at the same time a responding to increased environmental pressure to contain and reduce emissions.contain and reduce emissions.

• Nuclear power on ships raises ecological and safety concerns, e-m propulsion Nuclear power on ships raises ecological and safety concerns, e-m propulsion tunnels are a remote possibility. Wind power and solar cells are not a realistic tunnels are a remote possibility. Wind power and solar cells are not a realistic option.option.

• Kite sails are being experimented, saving a small ammount of fuel on Kite sails are being experimented, saving a small ammount of fuel on favourable wind conditions.favourable wind conditions.

• The most efficient solution to achieve this is to reduce speed. Speed is costly. The most efficient solution to achieve this is to reduce speed. Speed is costly. A 10 % increase in speed demands a 30 % increase in FO consumption.A 10 % increase in speed demands a 30 % increase in FO consumption.

• How deep the US crisis could go and to what extent could it impact in the How deep the US crisis could go and to what extent could it impact in the shipping business, is the question with a not easy answer.shipping business, is the question with a not easy answer.

Bunker consumptionBunker consumption

Average vessel size in teu's DWT

Average age

Average speed in knots

Consumption tonnes per

dayTonnes per

TEU

5262 67336 6.3 25.2 200.6 0.0395636 67939 3.5 25.3 209.9 0.0377052 90314 3.3 25.2 209.4 0.030

Bunker fuel consumption by vessel size

July 11th., 2008July 11th., 2008

Oil barrel u$d 147,27 (historic record)Oil barrel u$d 147,27 (historic record)

Bunkers: IFO 180 u$d 709.- per mt. MDO u$d 1208 per mt. Bunkers: IFO 180 u$d 709.- per mt. MDO u$d 1208 per mt. (Rotterdam)(Rotterdam)

Bunker consumptionBunker consumption

FO CONSUMPTI ON VS SPEED

050

100150200250300350400450

14 kt 16 kt 18 kt 20 kt 22 kt 24 kt 26 kt 28 kt

Service speed (knots)

Fue

l co

nsum

ptio

n in

ton

s pe

r

day

12500 teu

8000 teu

5000 teu

2500 teu

1000 teu

Source: BRSSource: BRS

Vessel loaded up to 90% of its capacityVessel loaded up to 90% of its capacity

Vessel operating costsVessel operating costs

Historical 1990/1999

65%10%

4%

21%

Time Charter/Depreciation Port /Canal costs

Crewing/Insurance Bunker costs

Today (July 2008)

4%29%

2%65%

Port/Canal costs Time Charter/Depreciation

Crewing/Insurance Bunker costs

Source: Hamburg SudSource: Hamburg Sud

Construction, Shipyards, TypeConstruction, Shipyards, Type

Source: BRSSource: BRS

Oil TankerBulkcarrier

Containership

44%55% 61%

0%

20%

40%

60%

80%

Percentage of the active fleet on order by type

Construction costConstruction cost(in million u$d)(in million u$d)

Source: BRS

2002 2003 2004 2005 2006 2007Tankers VLCC 64,0 76,0 107,0 115,0 120,0 135,0

Suezmax 43,5 50,0 70,0 71,0 77,0 85,0Aframax 34,0 42,0 60,0 58,5 65,0 68,0

Bulkers Capesize 36,0 40,0 63,0 59,0 70,0 85,0Panamax 21,5 24,0 35,5 34,0 38,0 53,0Handymax 20,0 21,5 29,0 30,5 34,0 45,0

Tipo de buque

The market shareThe market share• In 2007 the teu capacity on liner trades reached 11,7 million teu.In 2007 the teu capacity on liner trades reached 11,7 million teu.

• The global market share of the three world leading lines, Maersk Line, MSC and The global market share of the three world leading lines, Maersk Line, MSC and CMA CGM, has grown from 32,1 % to 34,1 % in terms of teu capacity during the CMA CGM, has grown from 32,1 % to 34,1 % in terms of teu capacity during the year 2007.year 2007.

• The growth in 2007 has been far from being equally shared by the three leading The growth in 2007 has been far from being equally shared by the three leading lines, as Maersk continued to lose share (from 16,8 % to 16,1 %), reflecting the lines, as Maersk continued to lose share (from 16,8 % to 16,1 %), reflecting the dificulties the company experienced in integrating P&O Nedlloyd. dificulties the company experienced in integrating P&O Nedlloyd.

• MSC and CMA CGM continued to strengthened their positions. MSC has increased MSC and CMA CGM continued to strengthened their positions. MSC has increased its share from 9,6 % to 10,4 % while CMA CGM increased from 6,5 % to 7,6 %.its share from 9,6 % to 10,4 % while CMA CGM increased from 6,5 % to 7,6 %.

• Both lines, family businesses, do not have shareholder pressures. With huge Both lines, family businesses, do not have shareholder pressures. With huge order books (around 600.000 teu each) it is expected an increase in their order books (around 600.000 teu each) it is expected an increase in their respective sharesrespective shares

• The carriers that most raised their market shares in the past eigth years are in The carriers that most raised their market shares in the past eigth years are in order CMA CGM, MSC, CSCL, and Hapag Lloyd (218 %, 140 %, 120 % and 110 order CMA CGM, MSC, CSCL, and Hapag Lloyd (218 %, 140 %, 120 % and 110 %).%).

• Bid on Hapag Lloyd outcome remains open. NOL and Hamburg Alliance are the Bid on Hapag Lloyd outcome remains open. NOL and Hamburg Alliance are the

two potential buyers left in the race.two potential buyers left in the race.

Source: Axs-Source: Axs-AlphalinerAlphaliner

Concentration in Container Liner Shipping:Concentration in Container Liner Shipping:Top 10 CarriersTop 10 Carriers

Source: Axs-AlphalinerSource: Axs-Alphaliner

60,6%

49,3%

Top 20 container shipping linesTop 20 container shipping lines((October 2008)October 2008)

# Operator TEU Ships TEU Ships TEU Ships % Chart TEU Ships% existing

1 APM-Maersk 2.027.435 541 1.095.098 202 932.337 339 46.0% 449.043 92 22.1%2 Mediterranean Shg Co 1.399.345 425 750.176 223 649.169 202 46.4% 692.780 57 49.5%3 CMA CGM Group 958.071 387 293.541 90 664.530 297 69.4% 661.759 79 69.1%4 Evergreen Line 635.542 182 363.425 102 272.117 80 42.8% 4.298 1 0.7%5 Hapag-Lloyd 510.624 140 265.331 62 245.293 78 48.0% 122.500 14 24.0%6 COSCO Container L. 492.770 156 273.470 99 219.300 57 44.5% 495.868 68 100.6%7 APL 472.723 131 146.064 39 326.659 92 69.1% 179.680 24 38.0%8 CSCL 426.621 136 258.250 85 168.371 51 39.5% 252.984 36 59.3%9 NYK 418.794 121 275.900 52 142.894 69 34.1% 191.618 34 45.8%

10 MOL 378.895 114 172.934 38 205.961 76 54.4% 213.717 38 56.4%11 Hanjin / Senator 372.990 91 139.646 27 233.344 64 62.6% 301.786 37 80.9%12 OOCL 361.768 86 209.493 37 152.275 49 42.1% 129.632 20 35.8%13 K Line 304.349 92 169.306 34 135.043 58 44.4% 185.237 38 60.9%14 Zim 303.773 117 124.403 36 179.370 81 59.0% 299.244 43 98.5%15 Hamburg Süd Group 296.258 117 129.609 40 166.649 77 56.3% 171.594 33 57.9%16 Yang Ming Line 295.333 85 189.297 53 106.036 32 35.9% 195.878 32 66.3%17 CSAV Group 282.388 91 21.208 4 261.180 87 92.5% 194.362 27 68.8%18 Hyundai M.M. 254.403 60 83.657 17 170.746 43 67.1% 132.810 14 52.2%19 PIL (Pacific Int. Line) 185.786 112 111.625 72 74.161 40 39.9% 81.135 23 43.7%20 UASC 143.670 45 110.526 31 33.144 14 23.1% 165.816 19 115.4%

Total Owned Chartered Orderbook

Fuente: AXS-Alphaliner

Top 20 leagueTop 20 league(October 2008)(October 2008)

Fuente: AXS-Alphaliner

•The percentage shown on the left of each bar represents the operator's share of the The percentage shown on the left of each bar represents the operator's share of the world liner fleet in TEU termsworld liner fleet in TEU terms

Rnk Operator TEU Share1 APM-Maersk 2.026.047 15.9%2 Mediterranean Shg Co 1.399.345 11.0%3 CMA CGM Group 958.071   7.5%4 Evergreen Line 635.542   5.0%5 Hapag-Lloyd 513.130   4.0%6 COSCO Container L. 492.770   3.9%7 APL 472.723   3.7%8 CSCL 426.621   3.3%9 NYK 418.794   3.3%10 MOL 378.895   3.0%11 Hanjin / Senator 372.990   2.9%12 OOCL 361.768   2.8%13 K Line 304.349   2.4%14 Zim 303.773   2.4%15 Hamburg Süd Group 296.258   2.3%16 Yang Ming Line 295.333   2.3%17 CSAV Group 282.388   2.2%18 Hyundai M.M. 254.403   2.0%19 PIL (Pacific Int. Line) 185.786   1.5%20 UASC 143.670   1.1%

0,0% 5,0% 10,0% 15,0% 20,0%

UASC

PIL (Pacific Int. Line)

Hyundai M.M.

CSAV Group

Yang Ming Line

Hamburg Süd Group

Zim

K Line

OOCL

Hanjin / Senator

MOL

NYK

CSCL

APL

COSCO Container L.

Hapag-Lloyd

Evergreen Line

CMA CGM Group

Mediterranean Shg Co

APM-Maersk

The charter marketThe charter market

• We can see in the following graph, the charter market development since january 2000 up to We can see in the following graph, the charter market development since january 2000 up to

now.now.

• Owners opt for lower rates than risk having their vessels unemployed. Carriers are taking vessels Owners opt for lower rates than risk having their vessels unemployed. Carriers are taking vessels

on much shorter charters.on much shorter charters.

• It is however not posible to make any concrete statement about the charter market trend, as the It is however not posible to make any concrete statement about the charter market trend, as the

effects of the financial market crisis on various sectors of the economy are still not foreseeable.effects of the financial market crisis on various sectors of the economy are still not foreseeable.

• Many ports have now reached the limit of their handling capacity, an waiting times may become Many ports have now reached the limit of their handling capacity, an waiting times may become

longer.longer.

• Aditional ships may be needed due to the speed reduction.Aditional ships may be needed due to the speed reduction.

• ??

Evolution of charter rates for Evolution of charter rates for containershipscontainerships

Source: Axs-AlphalinerSource: Axs-Alphaliner

The cellular fleetThe cellular fleet

• 400 cellular ships were delivered in 2007 for 1.36 million teu, 400 cellular ships were delivered in 2007 for 1.36 million teu, adding 13.9 % to the existing fleet.adding 13.9 % to the existing fleet.

• The cellular fleet on 1st of April 2008 comprises 4.375 ships for The cellular fleet on 1st of April 2008 comprises 4.375 ships for 11.13 million teu.11.13 million teu.

• During 2007, 606 cellular ships for 3.64 million teu were ordered, During 2007, 606 cellular ships for 3.64 million teu were ordered, at a global value of $ 53.2 billion.at a global value of $ 53.2 billion.

• On the 1st January 2008, the cellular ship orderbook reached 1462 On the 1st January 2008, the cellular ship orderbook reached 1462 ships for 6.96 million teu, representing 63.7 % of the existing ships for 6.96 million teu, representing 63.7 % of the existing fleet. fleet.

• Half of the capacity on order concerned 328 VLCS of over 8.000 Half of the capacity on order concerned 328 VLCS of over 8.000 teu.teu.

• 114 ships over 12.000 teu have been contracted, all in Korea.114 ships over 12.000 teu have been contracted, all in Korea.

• 23 cellular ships (26.134 teu) have been deleted in 2007. Of these, 23 cellular ships (26.134 teu) have been deleted in 2007. Of these, 22 were scrapped and one was lost.22 were scrapped and one was lost.

Liner vessels OrderbookLiner vessels Orderbook(October 2008)(October 2008)

Source: BRSSource: BRS

2008 (deliv) 2008 2009 2010 2011 2012 2013+ Total on order

Container -341 201 478 380 259 100 5 1423RoRo -56 49 109 99 89 31 1 378Ferry -20 19 25 17 14 4 79Reefer -4 1 4 5 2 1 4 17Multipurpose -122 181 285 256 134 27 3 886

Total -543 451 901 757 498 163 13 2783

The container marketThe container market

• More than 95 % of intercontinental trade moves by sea.More than 95 % of intercontinental trade moves by sea.

• Tankers and bulk carriers account for the largest shares of the Tankers and bulk carriers account for the largest shares of the world merchant fleet.world merchant fleet.

• The annual growth rate of container traffic in the past 20 years The annual growth rate of container traffic in the past 20 years averaged approx. 10 %. (Clarkson research).averaged approx. 10 %. (Clarkson research).

• This of course led to a further increase in container handling This of course led to a further increase in container handling figures in the world’s ports.figures in the world’s ports.

• In 2007 the number of containers handled rose 45 million teu, to In 2007 the number of containers handled rose 45 million teu, to reach the overall number of 465 million teu.reach the overall number of 465 million teu.

• Half of global container turnover takes place in the top 20 Half of global container turnover takes place in the top 20 container ports.container ports.

• Analysts expect to see this volume double by the year 2015.Analysts expect to see this volume double by the year 2015.

• Twelve of the top 20 ports lie in Asia region (seven in China).Twelve of the top 20 ports lie in Asia region (seven in China).

Top 20 container portsTop 20 container ports(x mil teu)(x mil teu)

Source: ISL Port DatabaseSource: ISL Port Database

# Port 2007 2006 % inc/dec

1 Singapore 27.935 24.764 12,8%2 Shanghai 26.109 21.864 19,4%3 Hong Kong 23.995 23.405 2,5%4 Shenzhen 20.889 18.468 13,1%5 Busan 13.259 12.021 10,3%6 Rotterdam 10.791 9.638 12,0%7 Dubai 10.697 8.783 21,8%8 Kaohsiung 10.257 9.764 5,0%9 Hamburg 9.890 8.863 11,6%

10 Qingdao 9.469 7.732 22,5%11 Ningbo 9.336 7.143 30,7%12 Guangzhou 9.177 6.553 40,0%13 Los Angeles 8.355 8.462 -1,3%14 Antwerp 8.269 7.035 17,5%15 Long Beach 7.313 7.332 -0,3%16 Tianjin 7.072 5.847 21,0%17 Port Kelang 6.960 6.326 10,0%18 Pt Pelepas 5.340 4.770 11,9%19 New York - NJ 5.520 5.128 7,6%20 Bremenhaven 4.932 4.450 10,8%

Total top 20 235.565 208.348 13,96%

¡ Thanks ! ¡ Hvala !¡ Thanks ! ¡ Hvala !