2017 Container Shipping Outlook - A tragedy in three acts 4 Alan Murphy - ESPO Conference v7.… ·...
Transcript of 2017 Container Shipping Outlook - A tragedy in three acts 4 Alan Murphy - ESPO Conference v7.… ·...
ESPO Conference – June 2017© SeaIntel Maritime Analysis
2017 Container Shipping Outlook- A tragedy in three acts
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Alan MurphyCEO and Co-FounderSeaIntel Maritime Analysis
June 1st, 2017ESPO Barcelona 2017
ESPO Conference – June 2017© SeaIntel Maritime Analysis
SeaIntel
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Container Shipping Analysts
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- 900+ Research & Analysis articles published since March 2011
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Prologue: 8 Years of over-supply
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Gap in Supply/Demand opened in 2009
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0
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1000Index Supply/Demand growth on Index basis, adjusted for structural factor
Demand Supply Supply, Adj.
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Freight rates were down, starting to come up
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Freight rate volatility is through the roof
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US
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Asia-N.Europe Spot Rates and Announced Increases
+225 USD
+750 USD
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+525 USD
+575 USD
+950 USD
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+850 USD
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+575 USD
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+920 USD
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+920 USD
+1000 USD
+1000 USD
+1000 USD
+550 USD
+750 USD
+950 USD+950 USD
+900 USD
+950 USD
+1100 USD
+900 USD
+500 USDRate data based on SCFI from Shanghai Shipping Exchange
+700 USD
+480 USD
+420 USD
+300 USD
+740 USD
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Carriers’ P&L 2009-2016
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- 2015-2016 were the worst years since 2009 in terms of over-capacity, tanking freight rates, weak demand, price wars and rate erosions, etc.
- Why did they end up with a profit of 2.7 bn USD for 2015? And why a 1.1bn loss in 2016?
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Carriers’ P&L per Transported TEU
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200USD/TEU P&L per TEU, 2009-2016
2009 2010 2011 2012 2013 2014 2015 2016
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Carriers’ Q2 P&L 2010-2017
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- 2017-Q1 was better than the period in 2016, but that is really the only positive spin- “It is not as bad as last year” does not mean that everything is going great.- The larger carriers seem to be handling it better, ML still expecting a positive FY 2017.
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Prologue II:Impact of BAF-delay
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Impact of oil price and BAF delay
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- Bunker oil prices lead BAF charges by approximately 3 months- When oil prices fall, carrier get a cash injection as their BAF only drops 1-2 quarters later- When oil prices rise, carriers have a cash drain, as costs go up but the BAF is delayed
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USD/FFEUSD/MT
Source: Bunkerworld, TSA Carriers
TSA Bunker Price (USD/MT) vs. TSA BAF (USD/FFE) - Asia-USWC
TSA Bunker price - Asia-USWC TSA BAF, Asia-USWC, USD/FFE
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Impact of oil price and BAF delay II
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- Using crude oil forecasts from the World Bank, we can create a forecast of Bunker Oil prices- The two variables are very strongly correlated
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Source: Bunkerworld, TSA Carriers, World Bank
TSA Bunker Price (USD/MT) vs. TSA BAF (USD/FFE) - Asia-USWC
TSA Bunker Bunker Est. WB Crude Crude Est.
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Impact of oil price and BAF delay III
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- 2015 saw a net cash injection of 4.13 bn USD to the industry - 2016 saw a cash drain of -2.64 bn USD in Q2-Q4- 2017-Q1 will be challenging with a cash drain of 570M USD- FY 2018 will see 350M USD cash drain, while FY 2019-2025 is projected at 160-180M USD
-0,01
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-0,09-0,35
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Industry Cash Flow effect from BAF delay
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Act 1: Service disruptions, blank sailings
and Schedule Reliability
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Visualizing service launches and suspensions I
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Blank sailings 2012-2016
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Visualizing blanks sailings I
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Active services in Asia-North Europe
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Global Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2016 79.2% 76.7% 79.9% 83.4% 85.5% 85.9% 84.8% 85.4% 85.5% 84.6% 83.4% 78.9%
2017 69.3% 72.2% 75.4% 71.4%
Change -9.9% -4.5% -4.5% -12.0%
2016 3.19 3.00 3.02 2.94 2.92 3.09 3.23 3.28 3.98 3.23 3.13 3.27
2017 3.52 3.89 3.67 3.45
Change 0.33 0.89 0.65 0.51
Schedule
Reliability
Avg. delay
of LATE
vessels
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Global Reliability DevelopmentsGlobal developmentsIn April 2017, global schedule reliability reversed its upward trend and declined by 4.0 percentage points to 71.4%. On a Y/Ylevel, the Arpil 2017 global average was down 12.0 percentage points compared to April 2016. Schedule reliability in April 2017was based on 13,031 vessel arrivals.
N.B.: Starting from September 2015, we have introduced a new feature to measure vessel arrival delays. Importantly, the chartbelow 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 continued its positive trend and decreased further by 0.22 days over March2017 to reach 3.45 days in April 2017. However, the average delays showed a Y/Y increase of 0.51 days compared to the delaysof 2.94 days that were recorded in April last year.
65%
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Global schedule reliability
2012 2013 2014 2015 2016 2017
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Global - Avg. delay for LATE vessel arrivals
2012 2013 2014 2015 2016 2017
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2016 75.3% 65.5% 64.3% 79.5% 85.9% 84.4% 84.6% 84.3% 84.2% 85.7% 82.6% 78.1%
2017 72.5% 63.3% 65.1% 72.4%
Change -2.8% -2.2% 0.8% -7.1%
2016 3.08 3.28 3.33 3.23 2.87 2.84 2.91 2.87 3.41 3.83 3.28 3.03
2017 3.12 3.53 3.93 4.06
Change 0.04 0.25 0.60 0.83
Schedule
Reliability
Avg. delay
of LATE
vessels
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Asia-North Europe – Trade DevelopmentsAsia – North Europe developmentsApril schedule reliability in the Asia-North Europe trade lane continued the upward trendand increased by 7.3 percentage points to 72.4%. On a Y/Y level the on-timeperformance decreased by 7.1 percentage points, from when reliability was equal to79.5%.
The average delay for LATE vessel arrivals increased by 0.13 days from 3.93 days inMarch to 4.06 days in April. Nonetheless, the average delay for ALL vessel arrivalsdropped by 0.32 days M/M, reaching 1.23 days in April.
The best performing carriers were Evergreen and COSCO with a reliability score of82.5%, while UASC followed with 81.5%.
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Average delay for ALL vessel arrivals
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Asia - North Europe schedule reliability
2012 2013 2014 2015 2016 2017
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Asia - North Europe - Avg. delay for LATE vessel arrivals
2012 2013 2014 2015 2016 2017
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2016 86.7% 82.7% 80.8% 81.6% 84.1% 87.7% 84.9% 81.3% 87.9% 88.6% 82.7% 76.4%
2017 68.7% 58.7% 60.2% 68.4%
Change -18.0% -24.0% -20.6% -13.2%
2016 2.97 2.97 2.92 2.92 2.98 2.89 2.70 2.85 4.01 4.12 3.08 3.03
2017 3.71 4.41 4.26 3.51
Change 0.74 1.44 1.34 0.59
Schedule
Reliability
Avg. delay
of LATE
vessels
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Asia-Mediterranean – Trade DevelopmentsAsia - Mediterranean developmentsIn April, schedule reliability in the Asia-Mediterranean trade lane increased significantlyby 8.2 percentage points to 68.4%. Nonetheless, the April score corresponds to adecrease of 13.2 percentage points compared to 81.6% recorded in April last year.
The average delay for LATE vessel arrivals decreased by 0.75 days to 3.51 days M/M androse by 0.59 days on a Y/Y level. The average delay for ALL vessel arrivals decreased by0.53 days from March to 1.23 days in April.
In the trade COSCO was the top performing carrier with a reliability score of 76.4%,followed by Evergreen at 75.7%, UASC at 75.0%, and Yang Ming at 74.9%.
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Asia - Mediterranean schedule reliability
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Asia - Mediterranean - Avg. delay for LATE vessel arrivals
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Act 2: New Mega-Alliances
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Alliances are not a new thing…
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Source: Wang, Mariner: “The Formation of Shipping Conference and Rise of Shipping Alliances“International Journal of Business, Vol. 6, issue 5, 2015.
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… They just controlled much less capacity
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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. 202-212 (2006)
Maersk Line
CMA CGM COSCOHapag-Lloyd
MSC
CSCL Evergreen
OOCL
UASC Hanjin
MOL
Yang Ming
APL
K Line
NYKHMM
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1.000.000
2.000.000
3.000.000
4.000.000
5.000.000
6.000.000
2M O3 CKYHE G6
Global TEU Fleet
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: 1.260.410 TEU 8.9%
CKYH: 1.580.713 TEU 11.2%
NWA: 1.231.738 TEU 8.7%
TOTAL: 2,707,286 TEU 28.8%
On 1/1/2016, Alliance carriers controlled:2M: 5.727.298 TEU 28.1%
G6: 3.596.654 TEU 17.6%
CKYHE: 3.359.328 TEU 16.5%
O3: 2.891.174 TEU 14.2%
TOTAL: 15.574.454 TEU 76.4%
In 2015, six carriers entered alliance : Maersk Line (1st), MSC (2nd), CMA CGM (3rd), Evergreen(5th), CSCL (7th) & UASC (15th)
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What are the new (April 2017) alliances?
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2M Alliance
Ocean Alliance
THE Alliance
April 2017 (reality)
1st
2nd
7th
8th
3rd
11th
4th
5th
9th
6th
4.25M
3.19M
1.31M0.71M
2.37M
0.47M
2.22M
1.74M
0.68M
1.53M
F+O TEU
14th
17th
2M Alliance
Ocean Three
CKYHE
G6 Alliance
April 2016
1st
2nd
3rd
4th
5th
6th
9th
7th
12th
10th
11th
13th
15th
16th
THE Alliance
2M Alliance
Ocean Alliance
May 2016 (announced)
1st
3rd
14th
8th6th
13th
11th
9th
4th
5th
10th
16th
12th
15th
2nd
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Alliance Capacity Market Shares
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Asia-N. Europe Asia-MED Asia-USEC Asia-USWC
No. of weekly services in TP & AE
The Alliance 2M Ocean Alliance
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Weighted average vessel size per trade lane
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The Alliance 2M Ocean Alliance
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Alliance Capacity Maket Shares in TP & AE
2M The Alliance Ocean Alliance
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Act 3: Consolidation
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- 100.000 200.000 300.000 400.000 500.000 600.000
Cap
acit
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EU)
Disappearances in top-20 Jan 2000 - Dec 2014
The level of consolidation is unprecedented
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-
100.000
200.000
300.000
Cap
acit
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EU)
Disappearances in top-20 Jan 1997 - Dec 1999
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Cap
acit
y (T
EU)
Disappearances in top-20 Jan 2015 - present day
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The level of consolidation is unprecedented
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Maersk Line
CMA CGM
COSCO
MOL
Hapag-Lloyd
HS
APL
CSCL
NYK
UASC
K
1.000.000 2.000.000 3.000.000 4.000.000 5.000.000
ML/HS
MSC
CMA CGM
COSCON
J3
HL/UASC
Evergreen
OOCL
Yang Ming
PIL
HMM
Zim
Wan Hai
FleetOrder
1.000.000 2.000.000 3.000.000 4.000.000
Maersk
MSC
CMA CGM
Evergreen
Hapag-Lloyd
COSCO
CSCL
Hamburg Süd
Hanjin
OOCL
MOL
UASC
APL
Yang Ming
NYK
HMM
K Line
Zim
PIL
Wan Hai
Fleet
Order
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Epilogue:Forecast for 2017-2020
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Rate erosion better on all trades, except Asia-USWC
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Asia-USEC12-week Average rate erosion
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2016/17 TP Contracts were set “too low”
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SCFI
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Fig.1: SCFI versus CCFI on US West Coast
SCFI-USWC CCFI-USWC
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Fig.3: USWC vs model
CCFI-USWC Predicted USWC
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FI In
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Fig.4: USEC vs model
CCFI-USEC Predicted USEC
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Weeks in advance (SCFI vs CCFI)
Fig.2: SCFI-CCFI Correlation
USWC USEC
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2016/17 TP Contracts were set “too low”
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Fig.5: Deviation from SCFI model indication
USWC deviation 12 week average USEC deviation 12 week average
-30%-25%-20%-15%-10%
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10%
Fig.7: USWC deviation from model
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Weeks into the contract
Fig.6: USWC contract rate deviation from model
May'09-Apr'10 May'10-Apr'11 May'11-Apr'12 May'12-Apr'13
May'13-Apr'14 May'14-Apr'15 May'15-Apr'16 May'16-Apr'17
-25%-20%-15%-10%
-5%0%5%
10%15%
Fig.8: USEC deviation from model
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Shorter sailing distances has weakened demand
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0,0%
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3,0%
4,0%
5,0%
6,0%
2012 2013 2014 2015 2016
Annual demand growth
TEU TEU Miles
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Global demand development
TEU demand TEU Miles demand
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5.500
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Nau
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l mile
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Average sailing distance per TEU
2016 2017 2018
World GDP 3.1% 3.4% 3.6%
AE 1.6% 1.9% 2.0%
EMDE 4.1% 4.5% 4.8%
AE = Advanced economies. EMDE = Emerging market and developing economies
2016 2017 2018
World Trade 1.9% 3.8% 4.1%
AE 2.0% 3.6% 3.8%
EMDE 1.9% 4.0% 4.7%
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Capacity Outlook 2017-2020
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-5%
0%
5%
10%
18 19 20 21 22 23
2015 2016 2017 2018 2019 2020
An
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row
th
Tota
l Fle
et (
Mio
TEU
)
Confirmed orderbook less scrappings
Global Fleet Capacity Annual Fleet Growth
0%
10%
20%
30%
2015 2016 2017 2018 2019 2020
Large vessels as share of total fleet
>18000 TEU 10.000-17.999 TEU
0%
2%
4%
6%
2012 2013 2014 2015 2016 2017
Trade (demand) growth
Container volume (CTS) Merchandize trade (WTO) -
200.000
400.000
600.000
800.000
1.000.000
Low growth Average growth High growthN
om
inal
TEU
cap
acit
y
Necessary scrapping to maintain status quo2016 2017 2018
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