Roads to Recovery: Comparing and Contrasting the Outlook ... · 18th Annual Marine Money Greek Ship...

Roads to Recovery: Comparing and Contrasting the Outlook for Distressed Sectors

Niklas Carlén – Maritime Strategies International (MSI)

18th Annual Marine Money Greek Ship Finance Forum – 11th October 2016

Introduction

Peak to Trough Comparision:Peak 2006-08 Levels Vs Q2 2016

© Maritime Strategies International www.msiltd.com3

-100%

-90%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

Bu

lke

r

Gen

Carg

o

Oil T

an

ker

Ch

em

Ta

nk

er

LN

G

LP

G

Co

nta

ine

r

Ca

r C

arr

ier

Ro

Ro

T/C Rate 5-Yr Old Price

Demand

Iron Ore:Chinese Imports Growing Despite Stagnant Steel


Chinese Steel Production Chinese Iron Ore Imports

0

200

400

600

800

1000

1200

1400

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

MnT

Rest of World IndiaS Africa BrazilAustralia

Forecast

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

-100

0

100

200

300

400

500

600

700

800

900

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

MnT Steel Production Yoy% Ch

Forecast

Coal:Indian Outlook Shrouded in Uncertainty


Chinese and Indian Coal Imports Coal Seaborne Trade

0

50

100

150

200

250

300

350

20

00

20

02

20

04

20

06

2008

20

10

20

12

20

14

20

16

20

18

20

20

MnT China India

Forecast

0

200

400

600

800

1000

1200

1400

2000

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

20

20

MnT Coking Coal Steam Coal

Forecast

Other Bulks:Short-Term Plateau, Medium-Term Growth


Grains+Soya Seaborne Trade Minor Bulks Seaborne Trade

0

100

200

300

400

500

600

20

00

2002

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

20

20

MnT Soyabean+Meal Grains

Forecast

-15%

-10%

-5%

0%

5%

10%

15%

20%

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

YoY % Ch

TEU Trade and TEU Miles


Asia-Europe isn’t dominant in volume terms, but is in terms of capacity required

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0

10

20

30

40

50

60

70

As

ia-E

uro

pe

Tra

ns

pa

cif

ic

FE

-ME

/IS

C

FE

-La

t. A

m.

intr

a-A

sia

Mn TEU of shipping capacity

Th

ou

sa

nd

s

Mn TEU of trade

Th

ou

sa

nd

s

Trade volume

Shipping capacity required (RH Axis)

Container Demand:2016 Volume Weakness


North-South trades have been the worst affected, but trade disappointing across the board

-8%

-6%

-4%

-2%

0%

2%

4%

6%

As

ia-E

uro

pe

Tra

ns

pa

cif

ic

Tra

ns

atl

an

tic

intr

a-A

sia

intr

a-E

uro

pe

As

ia-L

ati

n A

me

ric

a

As

ia-M

idd

le E

as

t/IS

C

Eu

rop

e-L

ati

n A

me

ric

a

Oth

er

2016 growth

Trade Growth is Key to Cascading


• The cascade has currently brokendown – four reasons:

Low fuel price

Slow trade growth

Service fragmentation

Alliance reshuffle

• In our view, trade growth is the mostimportant of these; lines upsized inanticipation of trade growth, whenthat disappointed then swiftlydownsized.

• Huge supply of spot ships puts linesunder no pressure to securetonnage – can keep flexibility (2-12month fixtures).

Non-Mainlane East/West Trade

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

100

200

300

400

500

600

700

800

900

Dec-13 Dec 14 Dec 15 Aug 16

Headhaul E/W Trade YoY % Ch

Vessel Deployment, k TEU

Th

ou

sa

nd

s

0.1-2.9k TEU 2.9-5.2k TEU

5.2-7.6k TEU 7.6-12k TEU

12k TEU+ Demand (RH Axis)

Container Cascade


Evolution of Asia-Europe Deployment Intra-Asian Deployment

0

1

2

3

4

5

6

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Mn TEU

12k + TEU 7.6-12k TEU 5.2-7.6k TEU

3.9-5.2k TEU 2.9-3.9k TEU 1.3-2.9k TEU

0.0

0.5

1.0

1.5

2.0

2.5

End2011

End2012

End2013

End2014

End2015

Aug2016

Mn TEU

7.6-12k TEU 5.2-7.6k TEU 3.9-5.2k TEU

2.9-3.9k TEU 1.3-2.9k TEU 0.1-1.3k TEU

Seaborne Growth Prospects Compared:Dry Bulk Vs Container Trade


0%

2%

4%

6%

8%

10%

12%

1991-95 1996-00 2001-05 2006-10 2011-15 2016-20

YoY % Ch Container Dry Bulk

Average Annual Trade Growth

Over 5-Year Periods (CAGR)

Supply

Current Orderbook:Sectors Over-Exposed


Required Ships* Vs Orderbook YTD Capacity Adjustment

0

100

200

300

400

500

600

Bulker Container

# of Vessels

Ships Required

Ships on order

*Required ships to meet incremental demand, irrespective of current over-capacity

-15

-10

-5

0

5

10

Bulker Container

Mn GT

Contracting Scrapping

Old Tonnage versus Orderbook


Bulk Carriers Containerships

0.0

0.5

1.0

1.5

2.0

2.5

0.1-2.9kTEU

2.9-5.2kTEU

5.2-7.6kTEU

7.6-12kTEU

12k+TEU

Mn TEU

Over 15 Years Orderbook

0

5

10

15

20

25

30

35

40

45

50

10-40k Dwt 40-65k Dwt 65-120k Dwt 120k+ Dwt

Mn Dwt

Over 15 Years Orderbook

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Help from Unusual Places?

Imminent Significant (3rd+) Special Surveys


Bulk Carriers Containerships

0%

1%

2%

3%

4%

5%

6%

0

10

20

30

40

50

60

2017 2018 2019

Mn Dwt

6th+5th4th3rd% of current fleet (RH Axis)

0%

1%

2%

3%

4%

5%

6%

7%

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2017 2018 2019

Mn TEU

6th+5th4th3rd% of current fleet (RH Axis)

0%

2%

4%

6%

8%

10%

12%

14%

1991-95 1996-00 2001-05 2006-10 2011-15 2016-20

YoY % Ch Container Dry Bulk

Fleet Growth Compared:Dry Bulk Vs Container Trade


Average Annual Fleet Growth

Over 5-Year Periods (CAGR)

Roads to Recovery

Roads to Recovery:Weighted Average Timecharter Indices Compared


0

20

40

60

80

100

120

140

160

18020

15

20

16

20

17

20

18

20

19

20

20

T/C Index (2015=100)

Bulker Container

MSI - FMV


• MSI Forecast Marine eValuator (FMV) is the first web-based tool to provide forecast and

historical price data covering virtually all of the deepsea shipping fleet.

• Data includes forecasts of newbuilding, second-hand prices, 1 year timecharter rates and

operating costs for specific vessels.

• MSI FMV draws on MSI’s proven, proprietary models and a consistent cross-sectional view

across all principal shipping sectors. It puts asset values in the context of the near term

market to enable reliable benchmarking with outputs based on annual averages.

• Coverage:

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Product Oil Tanker

Dry Bulk Carrier

Chemical Tanker

LPG Carrier

LNG Carrier

Multi Purpose

Containership

PCC/PCTC

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FMV Output


Quarterly Fair Market Value &1 Year Time Charter Rate (1Qhistory, current Q, 2Q forecast

Annual average:• Newbuilding contract price• Fair Market Value• 1 Year Time Charter Rate• Operating Cost5 years history and 15 yearsforecast

Price Development Chartdetailing forecast pricedevelopment in relation tohistorical metrics

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Roads to Recovery: Comparing and Contrasting the Outlook ... · 18th Annual Marine Money Greek Ship...

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