COLUMBUS FREIGHT CHECK - Serving Logistics
Transcript of COLUMBUS FREIGHT CHECK - Serving Logistics
COLUMBUS FREIGHT CHECKOCTOBER 2, 2019
OCEAN MARKET PANEL DISCUSSION
Trends, Challenges and Opportunities
Bob Fredman, Big Lots (Moderator)
Joseph Voakes, CMA
James Setzke, Hapag Lloyd
Dan Sutton, Zim Linesle
Panel Discussion Topics
IMO2020 LOW SULPHUR FUEL
WINTER BLANK SAILING PROGRAM
CARRIER STRATEGIES FOR SOURCING SHIFTS
New Sulphur Cap – The IMO 2020 Regulations Update
September 2019
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What are the IMO 2020 Fuel Regulations?
The new fuel regulations, known as “theSulphur Cap”, require all marine carriersto use low sulfur fuel (up to 0.5% sulfurcontent) by January 1st, 2020*
The new regulations, introduced by theInternational Maritime Organization (IMO) areaimed to reduce marine pollution andemissions
All shipping companies will be obliged tocomply and to significantly reduce emissionson the high seas and in coastal areas
* There are indications that a grace period for the implementation of the IMO 2020regulations will be given till end of Q1/20
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How will the Regulations Impact the Shipping Industry?
The new regulations will impact all the stakeholders in the industry. Compliance withthe new regulations is expected to create a significant cost impact
There are three ways for carriers to comply:1. Buying compliant fuel at higher prices2. Investing in and Installing new cleaning systems on board vessels (Scrubbers)3. Deploying new type of vessels using Liquid Natural Gas (LNG)
All alternatives are expected to carry significant costs for the carriers
External sources estimate additional cost to the container shipping industry, which can reach to a level of 20-30 Billion USD
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Using compliant fuels will be the dominant initial approach to IMO2020
Source: Alphaliner Weekly Newsletter 28.05.2019
16% of vessels36% of capacity
0.7% of vessels1.9% of capacity
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ZIM is well prepared for the IMO 2020 Regulations
Low Sulphur IMO 2020 RegulationCaring for the future today
August 2019
Low Sulphur IMO 2020 Regulation
Low Sulphur IMO 2020 Regulation
For the benefit of:
APPLIES TO ALL SEA-GOING VESSELS WORLDWIDE:
~100,000
Objective on January 1st, 2020
Reducing average
sulphur emissions
worldwide by
85%
Public Health:
improved air quality,
reduction of
respiratory diseases
Environment:
reduction of acid rain,
soil erosion,
acidification of oceans
MARPOL ANNEX VI sets limits on SOx and NOx
emissions from ship exhaust
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Low Sulphur IMO 2020 Regulation
VLSFO will constitute approximately 90% of our fuel supply in 2020.
The cost of VLSFO 0.5O % is expected to be significantly higher than the present HSFO 3.50 %.
What does this mean for our customers?
Low Sulphur fuels
90%VLSFO 0.50%
HSFO 3.50%
?
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Low Sulphur IMO 2020 Regulation
For long-term contracts, BAF will be updated as of January 1st, 2020.
Fuel reference HSFO 3.50% will be replaced by VLSFO 0.50%
BAF Q1 2020 will be based on average price of VLSFO 0.50% of September/October/November 2019:
BAF amounts per trade will be then updated on a quarterly basis as follows :
Tiers of USD 25 have been set-up in order to avoid revision of BAF in case of minor variation of VLSFO 0.50% price.
Long-term contracts (more than 3 months validity)
BAF = VLSFO 0.50% PRICE PER TON x TRADE COEFFICIENT
Sept 19 Oct 19 Nov 19Dec 1st,
2019
Publication
BAF = $$
average VLSFO price
Feb 20 Mar 20
Application
BAF = $$
Jan 1st,
2020
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Low Sulphur IMO 2020 Regulation
Long-term contracts (more than 3 months validity)BAF simulation (for a selection of trades)*
HSFO or VLSFO price (usd/ton) 375,01 400,01 425,01 450,01 475,01 500,01 525,01 550,01 575,01 600,01 625,01 …, for each
400,00 425,00 450,00 475,00 500,00 525,00 550,00 575,00 600,00 625,00 650,00 25 usd
Far East to North Europe usd per teu 240 255 270 285 300 315 330 345 360 375 390 15,00
Far East to West Med usd per teu 240 255 270 285 300 315 330 345 360 375 390 15,00
Far East to WCNA usd per feu 405 432 459 486 513 540 567 594 621 648 675 27,00
Far East to ECNA usd per feu 660 704 748 792 836 880 924 968 1012 1056 1100 44,00
Far East to WCSA usd per teu 260 276 292 308 325 341 357 373 390 406 422 16,25
Far East to ECSA usd per teu 260 276 292 308 325 341 357 373 390 406 422 16,25
Far East to West Africa usd per teu 285 307 330 352 375 397 420 442 465 487 510 22,50
Far East to East Africa usd per teu 205 222 240 257 275 292 310 327 345 362 380 17,50
North Europe to Far East usd per teu 20 27 35 42 50 57 65 72 80 87 95 7,50
West Med to Far East usd per teu 20 27 35 42 50 57 65 72 80 87 95 7,50
WCNA to Far East usd per teu not applicable 2 5 7 10 12 15 17 2,50
ECNA to Far East usd per teu not applicable 5 10 15 20 25 30 35 5,00
WCSA to Far East usd per teu 80 85 90 95 100 105 110 115 120 125 130 5,00
ECSA to Far East usd per teu 80 85 90 95 100 105 110 115 120 125 130 5,00
West Africa to Far East usd per teu 165 177 190 202 215 227 240 252 265 277 290 12,50
East Africa to Far East usd per teu 10 18 27 36 45 53 62 71 80 88 97 8,75
*Above amounts are only given as an example of BAF quantum. Actual BAF tariffs will be communicated later on as per relevant regulations.
HSFO 2019 prices range.
Assumed VLSFO 2020 prices range - based on the factors available at the date of the publication of this document.11
Low Sulphur IMO 2020 Regulation
CMA CGM: fully compliant as of January 1st, 2020
Install Advanced Air Quality Systems*
onboard our vessels
Use LNG-powered vessels
will be
compliant
January 1st, 2020
Use Low Sulphur Fuel Oil
with 0.50% Sulphur
* Exhaust Gas Cleaning Systems
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Alphaliner Price Spreads between IFO380 and 0.5% VLSFO
For greener shipping
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Complying with the new low sulphur regulation will make the industry significantly greener, but compliance will have a significant cost impact on the industry To comply with the regulation, the industry will have to either start using low sulphur fuels or invest in new technologies that have yet to be thoroughly tested in
practice
In either case the costs will go up, because compliant fuels as well as investments to new technologies will be expensive
Experts are estimating an additional initial fuel cost of USD 60bn for the entire industry annually in the first years
Hapag-Lloyd is estimating its additional initial costs to amount up to USD 1bn for the company annually in the first years, based on the assumption that the spread between HSFO and LSFO 0.5% will be USD 250
To recover fuel related costs caused by the IMO2020, Hapag-Lloyd is introducing a transparent and fair Marine Fuel Recovery (MFR) mechanism
Financial Impact of IMO2020 for the Shipping Industry
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Marine Fuel Recovery Mechanism will be gradually implemented from 1 January 2019
Transparent and easy-to-understand
It helps our customers predict and plan the price increases for their trade routes
The MFR aiming at recovering costs arising from stricter regulation
The calculation is based on average market data
Hapag-Lloyd Marine Fuel Recovery
Simplify rate structure and will replace all existingfuel charges with a new Marine Fuel Recovery (MFR)mechanism
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Transparent and easy-to-understand: The MFR mechanism is based on a set of variables and average market data
Fuel price (per ton) Based on market prices for different fuel types (source: Platts) Fuel types included: HSFO or LSFO 0.5% and LSFO 0.1%
Carried TEU Estimation of the carried TEUs per round voyage consists of
the nominal size of a market class vessel (eeSea) andutilization based on Clean Cargo Working Group data(CCWG)
Example: East Asia – North Europe trade 19 different services per week considered For each service its average vessel is determined
and considered in the calculation A market class vessel for this trade is ~14,300 TEU
based on vessel size data from eeSea 14,000 – 22,000 TEU: 10 services 10,000 – 14,000 TEU: 5 services 8,000 – 10,000 TEU: 2 services 4,000 – 6,000 TEU: 2 services
70% utilization based on the global average utilizationoutlined by CCWG 14,300 x 0.7 = 10, 010 TEU
Fuel consumption (per ton) Based on Market Class Vessels, representing a typical service in the market on a
specific trade Considered per round voyage at average speed Differentiation between days spent at sea and at port (eeSea data)
The MFR is based on market data and derived out of averages for Market Class Vessels
B l a n k S a i l i n g s – F r o m W e e k 4 0 t o 4 4
127 September 2019
Copyright © 2017 Yusen Logistics. All rights reserved
Sum of Vessel Capacity in TEU's WeekAlliance Service Vessel Name 40 41 42 44OCEAN AASP/Soth China 2 COSCO VENICE 4,365
East Coast Express (ECX1)/China AW Loop2 (AW2) OOCL Chongqing 13,200East Coast Express (ECX2)/China AW Loop1 (AW1) CMA CGM Adams 14,414Gulf Coast China 1(GCC1)/ Pacific Gulf 6(PG6) APL California 6,350Gulf Coast China 2(GCC2) COSCO Auckland 4,249Pacific China Central 2(PCC2) /HRX/Yangste KOTA PURI 11,923Pacific China Central1 (PCC1)/Hibiscus Express OOCL LUXEMBURG 8,063Pacific China North1(PCN1)/bohai COSCO Italy 13,386Pacific China South 2(PCS2) EVER Ursula 5,652Pacific North West 1(PNW1)/Dhalia/ Pacific Northwest Loop 4(NP4) OOCL Vancouver 5,888Pacific Northwest Pendulum (PNW2) APL Southampton 10,800
CMA CGM Aquila 11,356Pacific Northwest Pendulum (PNW4) CSCL Bohai Sea 10,036
PRX/AAS2/Pacific China South 1(PCS1)/South China Loop1(SC1)CMA CGM Bougainville 18,000
THE East Coast Loop2(EC2) Seaspand Hudson 10,000East Coast Loop3(EC3) Houston Bridge 9,600
YM Uniform 8,626Pacific North Loop1(PN1) MOL Creation 8,110
ONE Contribution 8,560Pacific North Loop3(PN3) YM Ultimate 8,204Pacific South Loop4(PS4) YM Milestone 6,589Pacific South Loop5(PS5) ONE Commitment 8,560
YM Utmost 8,200Pacific South Loop6(PS6) NYK Adonis 9,592Pacific South Loop7(PS7) Aristomenis 9,954
2M PEARL TBA 0Yulan/TP3 TBA 0
2M + Zim AMBERJACK/ZCP/TP10 TBA 0ORIENT/ZP8/TP8 GUNVOUR Maersk 6,600PELICAN/ZGX/TP88 TBA 0
Others PN2 TBA 0PNS AS MORGANA 4,255
SCHUBERT 4,255Grand Total 81,129 99,363 54,443 13,852