DHL GLOBAL FORWARDING - Global | English · 3 Topic of the month – DGF moves three million TEUs...

DHL GLOBAL FORWARDING Ocean Freight Market Update April 2017

2

Topic Of The Month

Summary: Ocean Freight Market

High Level Market Development

Market Outlook: Capacity And Rate Development

General Market Information: Did You Know?

Backup: Carrier Alliances overview

Global Container Trade 2016

Acronyms and Explanations

Content

DHL Global Forwarding | OFR Market Update | April 2017

3

Topic of the month – DGF moves three million TEUs in 2016!

Source: DHL


Over the years, DGF has been able to leverage its volumes to provide

customers with extremely competitive rates.

With the largest LCL network of all its forwarding peers, DGF moves

over 2 million cubic meters of freight annually. Customers have access

to some 2,580 weekly direct and bilateral consolidation services,

and some 45,000 point pair combinations.

DGF has also added innovative products like DHL Ocean Secure, DHL

Ocean Thermonet and Ocean View, which are all particularly attractive

for customers looking to optimize their supply chains and obtain a

degree of transparency previously not available with Ocean Freight.

Above all else, the secret to DGF’s 3 million milestone is its employees.

With over 4,000 ocean freight specialists around the world, DGF

serves customers from over 330 locations worldwide.

2000 2005 2010

500

1’240

2’700

2016

3’000

TEU in mio.

Last year, for the first time in its history, DHL Global Forwarding handled three million TEU’s of freight across its

international network. This outstanding achievement is the result of many years of steady growth, the hard work

of employees around the world, and DGF’s innovative products and solutions.

4

Ocean Freight market in a nutshell (1/4)

Source: IHS, IHS Markit, Alphaliner, DGF team

Ocean Freight Rates Outlook

ASPA – EURO uncertainty about phase-in/phase-out of vessel into the new alliance, thus expect utilization to remain at high 90%. Carriers are

pushing for a GRI in April 2017.

EURO – ASPA extremely tight space situation continues. Capacity reductions heavily impacting the already tight space situation. Further rate

increases are expected.

ASPA – AMLA several carriers have started blank sailings already and as of April 1st, 2017 space will be reduced by 12-15%. As a result an

increase of rates is expected.

TP EB : Strong utilization particularly into USEC. Next GRI announced for Apr 1st, 2017.

WB : March GRI was mostly implemented. Vessels continue to be overbooked 3-4 weeks ahead. Pre-booking is

strongly recommended. Service/Vessel/Terminal changes are already taking place in view of new carrier alliance agreements.

TA drastic capacity reductions from USEC to EURO NC will be initiated by carriers in April and will continue until May (forecasted

total reduction 7’000 TEU on average). Rate increases are expected on trades ex USEC and Gulf. Rates ex USWC are

expected to remain stable.

ASPA-MENAT expect a volume increase starting mid April due to pre-Ramadan rush. GRI announced as of Apr 1st, 2017.

ASPA-ASPA space continues to be extremely tight for all IPBC destination lanes. Rates increases, particularly for Pakistan and India are

expected. Surcharges (in view of operational delays/issues) are being maintained and further implemented on IPBC inbound

sectors. Pure Intra Asia Services are affected by the service reorganizations due to the new carrier alliances. Space/equipment

levels are tightening on various Intra Asia lanes and carriers have already started to push for rate increases – particularly for ex

TH export lanes.


Many regions are facing capacity reduction and tight space situations.

5



Economic Outlook


EU political risks elevated, with elections due in NL, FR, DE & possibly IT. With

1.6%, EU growth expected to stay on moderate path during this year

Increased capital spending, improved housing market & strong momentum in

employment growth, US economy is enjoying multiple tailwinds as long as

there are no big policy mistakes, bringing AMNO GDP growth to 2.3% in 2017

With 1.4% AMLA regional GDP is expected to come out of recession in 2017,

but MX’s perspectives became uncertain after the new US administration took

office

GDP growth for AP as a whole remains unchanged at 4.6% in 2017. Negative

ramifications of the US presidential election on Asia mostly relate to the

potential of rising trade tensions

GDP forecast for MEA was set up to 2.5 for 2016 in the end of last year. More

stable oil & commodities prices in 2017 will lead to pickup around 3.1%

Demand Development

EU PMI signaled manufacturing activity improvement for a

6th month running, reaching a 70-month high in Feb

US Manufacturing PMI signals rapid expansion since Oct

’16

BR Manufacturing PMI still within contracting zone,

although with highest reading within past 13 months. MX

PMI remained inside positive territory for 41st successive

month, but latest reading signals subdued business

conditions

Both CN PMIs (Caixin and CN Government Manufacturing

PMI) signal expansion. IN’s Manufacturing PMI expanding

again, after a dip in Dec16. JP Manufacturing PMI signaled

continuous expansion.

Regulations

India: Charging of fees for late collection of Delivery Order are being introduced with effect from 1 Apr ’17

i) mandatory to file the import entry before the end of the next day, following the day (excluding holidays) on which the vessel or aircraft arrives in

India, failing which there would be imposition of charges for late presentation of the entry

ii) Importers to pay the import duty on the date of presentation of the bill of entry and if he fails to pay the duty within the time so specified, he shall

pay interest on the duty.

Given above changes, a late collection fee would be charged by DHL IN in respect of OFR shipments when DOs are collected beyond the fifth

day of arrival of the vessel.

Conflict in the Spanish stowage remains unsolved. No agreement has been reached between the ANESCO employers and stevedores’

unions.

EU, AM, MEA had a moderate, AP had the strongest growth. PMI improvement in EU, US, IN and JP.

6




New alliance networks show capacity additions across the board on the main Asia-Europe & Asia-North America routes from April. Most

hotly contested route will be the Asia-West Coast North America trade where 6 independent carriers will be competing against the 3 rival

alliances. On the Asia-Europe route capacity increases by 9.6% as the new alliances will provide one more weekly string than currently offered

by the existing alliances. The Asia-Med route will also see an increase in weekly capacity of 6.9% as the Ocean Alliance launches 5 and THE

Alliance 3 new services, with Zim also operating a single Asia-East Med loop on its own.

CMA CGM to hire 350 TEU per weekly sailing from THE Alliance on North Europe-USWC trade.

HMM will continue to offer TA services after the dissolution of the G6 partnership through slots on two 2M North Atlantic services offered within

the ‘2M+HMM’ agreement, effective from April

ZIM to add in April a second Asia-Pacific North West string through slots on the ‘PNW’ Service that HMM is to launch.

CMA CGM and APL are to launch a new intra-Asia service connecting directly Japan with Singapore and Port Kelang, without any wayport

call.

COSCO will launch a new North Europe-Turkey service branded ‘North Europe Turkey Express’ (NET) in April 2017. The ‘NET’ will turn in 4

weeks with 4 ships of around 1,700 teu, calling at Felixtowe, Hamburg, Antwerp, Piraeus, Istanbul-Ambarli (Kumport) Gebze (Yilport), Izmir,

Salerno, Felixtowe. The new service will cater for Europe-Turkey volumes that are so far covered with the current Europe–Far East service

wayporting in the Med, where containers are transshipped to/from Turkey.

MSC has taken in charge the MSC LEANNE (19,462 teu), the last unit on its 20-strong newbuilding program of Korean-built 19,000+ teu

ULCS. MSC LEANNE follows the MSC RIFAYA, delivered in February. After a bunkering trip from Korea to Russia it is to join the Maersk-MSC

Far East-Europe ‘AE-1/Shogun’loop, offered within the context of the 2M agreement.

MOL TRIUMPH (20,150 TEU), first of four 20,150 teu containerships ordered by MOL, will be delivered to MOL on 27th March 2017. The MOL

TRIUMPH is the first containership to pass the 20,000 mark and is the world’s largest containership by nominal container intake. It is

scheduled to join the Asia-North Europe ‘FE2’ loop as of April 2017, one of five THE Alliance loops focusing on the Fare East-North Europe

trade.

Capacity Development

New services are expected to be launched by carriers in the coming month.

7

On 15 Mar 2017, the 2M partners (Maersk and MSC) and HMM signed an agreement that officially launches their strategic cooperation on

East-West trades. The agreement covers a series of slot exchanges and slot purchases on the main East-West routes that will be implemented from

01 Apr 2017 and is valid for an initial period of 3 years until 01 Apr 2020.

Hapag Lloyd has reported a net loss of EUR 97M for 2016. The positive earnings led by rate gains mainly on its key Latin American routes during

the 2nd half of the year were insufficient to reverse the losses incurred in the 1st half. Hapag Lloyd is pushing ahead with its planned merger with

UASC, however had to defer the completion of the merger from the end of March 2017 to May 2017 due to delays in securing creditors’ consent.

According to pro-forma financial statements released by Hapag Lloyd in Jan 2017, UASC recorded a net loss of EUR 216 M YTD Sep 2016 (FY 2016

figures not released yet). However this will not have any impact on the launch of THE Alliance which will start operations on 1 Apr 2017.

THE Alliance members set up a contingency plan in case of a partner insolvency to act as a safeguard against risks of cargo remaining

blocked at sea. The 5 members of THE Alliance will establish an independent trustee to mange funds to be used in case of insolvency of one of the

partners.

SM Line is making a bold entry into the container shipping trades, with an initial suite of six services covering the North East Asia – South East

Asia, Far East – India and TP routes, which will be launched over the months of Mar and Apr 2017. The Total capacity operated by SM Line will

exceed 40,000 TEU by the end of Apr – making it the fastest growing new carrier in container shipping history. This will place SM Line as the 37th

largest container carrier in the World. The company aims to gain a competitive advantage and attract customers through its competitive cost

structure, while developing a niche market strategy that concentrates on : East Asia and Far East-US West Coast routes.

CMA CGM reversed its loss making streak in the 4th Q of 2016, posting a net profit of $45 M after 4 consecutive quarters of negative results. The

improved performance is attributed to higher freight rates and its global cost reduction plan. However the 4th Q improvement was insufficient to

prevent a FY net loss of $452 M in 2016. posts $452 M net loss in 2016.

OOCL reported a net loss of $274 M in 2016, first negative year since 2009. The results in the 2nd half of 2016 deteriorated compared to the 1st half

despite higher freight rates and revenue gains, with the company citing higher fuel costs for the weak earnings performance.

All of the 97 containerships operated by Hanjin on 31 Aug ’16 haven been sold or returned to their owners. 44 ships with a total capacity of 202’700

TEU have secured new employment since then. 5 ships have been sold for scrap, including the vessel Hanjin Rome, that was sold in a sheriff’s sale

in Singapore on 1 Mar. 48 ships with a total capacity of 389’300 TEU, are currently unemployed. However, a significant number of these idle ships

will be re-activated over the next 2 months & the count is expected to drop to <20 units by mid May.

U.S investigation into possible price-fixing by the world’s largest container carriers, including Hapag-Lloyd, Maersk, OOCL.

Carriers


Source: Alphaliner, carriers, Handelsblatt DHL Global Forwarding | OFR Market Update | April 2017

Carriers have been facing considerable changes with strategic alliances, fast growth and also losses.

8

High level market development

GDP Growth by Region1)

Economic Outlook

World Container Index (WCI)2)

Ocean Freight Spot Rate Index

Source: 1)real GDP, Global Insight, Copyright © IHS, Q4 2016 . All rights reserved; 2)Drewry, in USD/40ft container, including BAF & THC both ends, 42 individual routes, excluding

intra-Asia routes; 3) Shanghai Shipping Exchange, in USD/20ft container and USD/40ft container for US routes, 15 routes from Shanghai, 4) Global Insight, Drewry: 5) Bunker Index, in

USD/metric ton, Bunker Index MGO (BIX MGO) is the Average Global Bunker Price for all marine gasoil (MGO) port prices published on the Bunker Index website, Bunker Index 380

CST (BIX 380) is the Average Global Bunker Price for all 380 centistoke (cSt) port prices published on the Bunker Index website

Supply vs. Demand Growth4)

Shanghai Containerized Freight Index (SCFI)3)


Bunker Price Index5)

0

500

1'000

1'500

Q1

17

Q4 Q3 Q2 Q1

16

Q4 Q3 Q2 Q1

15

2015 2016 F 2017 F 2018 F 2019 F 2020 F

Europe 1.6% 1.6% 1.4% 1.6% 1.7% 1.8%

MEA 3.8% 2.7% 3.4% 3.7% 3.9% 3.9%

AMERICAS 1.9% 1.1% 2.1% 2.2% 2.4% 2.3%

ASPA 4.7% 4.6% 4.6% 4.7% 4.8% 4.7%

Total DGF World 2.8% 2.5% 2.8% 3.0% 3.1% 3.1%

0

1'000

2'000

3'000

Q1

17

Q4 Q3 Q2 Q1

16

Q4 Q3 Q2 Q1

15

0

200

400

600

800

Q1

17

Q4 Q3 Q2 Q2 Q4 Q3 Q1

16

Q1

15

BIX MGO

BIX 380

-2

0

2

4

6

8

10

Q3 Q1'15

Q3 Q1'16

Q2 Q1'17

Q2

Demand

Supply

9

Market Outlook: Ocean Freight, Trade Lanes

Ocean Freight Development, Major Regions1

North America

- Europe

North

America–

Latin

America Europe –

Latin America

Asia –

Latin

America

0% Growth 2016

1% Growth 2017

-2% Growth 2016

3% Growth 2017

Europe - Asia

Growth 2016

Growth 2017

0% Growth 2016

2% Growth 2017

3%

1%

5% Growth 2016

1 % Growth 2017

Growth 2016

Growth 2017

0%

1%

-7% Growth 2016

3% Growth 2017

8% Growth 2016

0% Growth 2017

Exports from North America

to Asia grew strongly by 5%

in 2016, whereas North

American imports from Asia

were flat

Imports into Latin America

have declined on all lanes,

although exports from Latin

America are growing fast,

especially into Europe and

Asia

1 Mio. TEU

5 Mio. TEU

10 Mio. TEU

Intra Asia

Growth 2016

Growth 2017

4%

2%

Only modest 1.3% growth is expected for 2016 in Ocean Freight market (prev. 1.7%), as HY1 has shown less growth

than expected and the demand in HY2 is unlikely to fully compensate for a low start

8% Growth %016

1% Growth 2017

-7% Growth 2016

4% Growth 2017

Asia –

North America

IN %, BASED ON TEU

Source: Seabury; 1) Regional split according to back-up

2% Growth 2016

3% Growth 2017

-3% Growth 2016

2% Growth 2017


10

Moderate Increase

Moderate Decline

No Change

Strong Decline

Strong Increase

++ -- - + =

Source: DGF internal analysis 2017

Market Outlook April 2017 – Major Trades

Export Region Import Region Capacity Rate

EURO AMNO - +

AMLA =/- =/+

ASPA -- ++

MENAT -- ++

SSA = =

AMNO AMLA = +

ASPA = +

EURO -- +

MENAT = +

SSA = =

Export Region Import Region Capacity Rate

AMLA AMNO - +

ASPA = +

EURO = =

MENAT = =

SSA = +

ASPA ASPA = +/=

AMNO + +

AMLA - +

EURO - =

MENAT = +

OCEANIA = =/-

Space situation from Europe to Asia still very tight with a important backlog. Situation is not expected to ease

before May/June 2017.


11

Did You Know?

Source: Alphaline Volume 2017 Issue 12, *) preliminary estimate

Global container volumes recovered in 2nd half of 2016

Global container volumes grew by an estimated 1.8% in 2016, up from 1.4% in the year 2015

Preliminary throughput data for the Top 100 container ports is in line with global growth estimates

Several ports reported double digit gains, among the top 30 these are Port Kelang and Colombo

Port Mteu

2016

Mteu

2015

Growth

%

Port Mteu

2016

Mteu

2015

Growth

%

1 Shanghai 37.1 36.5 1.6% 16 Xiamen 9.6 9.2 4.7%

2 Singapore 30.9 30.9 -0.1% 17 Dalian 9.6 9.4 1.5%

3 Shenzhen 24.0 24.2 -0.9% 18 Hamburg 8.9 8.9 0.9%

4 Ningbo 21.6 20.6 4.6% 19 Tanjung Pelepas 8.3 9.1 -9.2%

5 Hong Kong 19.8 20.1 -1.3% 20 Laem Chabang 7.2 6.8 6.0%

6 Busan 19.4 19.5 -0.2% 21 New York/Newark 6.3 6.4 -1.9%

7 Guangzhou 18.8 17.6 6.8% 22 Yingkou 6.0 5.9 1.6%

8 Qingdao 18. 17.4 3.3% 23 Colombo 5.7 5.2 10.6%

9 Los Angeles/Long Beach 15.6 15.4 1.8% 24 Ho Chi Minh City 5.6 5.4 3.2%

10 Dubai 14.8 15.6 -5.2% 25 Bremerhaven 5.5 5.5 -1.0%

11 Tianjin 14.5 14.1 2.9% 26 Jakarta 5.5 5.8 -6.1%

12 Port Kelang 13.2 11.9 10.8% 27 Suzhou 5.4 5.2 3.1%

13 Rotterdam 12.4 12.2 1.2% 28 Algeciras 4.8 4.5 5.4%

14 Kaohsiung 10.5 10.3 2.0% 29 Valencia 4.7 4.6 2.3%

15 Antwerp 10.0 9.7 4.0% 30 Tokyo* 4.7 4.6 1.6%


12

BACKUP


13

Carrier Alliances

With the latest mergers & acquisitions amongst container lines the G6, O3 and CHKYE alliances will terminate by Mar 2017 and the new

“Ocean Alliance” and “THE Alliance” be formed

Source: DHL, * strategic cooperation between HMM & 2M, ** as of Apr18

New

Maersk Line (incl. Hamburg Sud) 2M

MSC

Hyundai Merchant Marine*

Hapag-Lloyd/UASC

THE

Alliance

NYK & MOL & K Line**

Yang Ming

Hanjin Shipping

OOCL

Ocean

Alliance

CMA CGM (incl. APL)

China Cosco Shipping

Evergreen

Old

2M Maersk Line

MSC

G6

Hapag-Lloyd

MOL

NYK

Hyundai Merchant Marine

OOCL

APL

Ocean 3

CMA CGM

China Shipping

United Arab Shipping

CKYHE

Cosco

Evergreen

Hanjin Shipping

K Line

Yang Ming Status 1 Dec 2016

Hamburg Sud


14

Mid-Term Growth is mainly driven by Asian Tradelanes

Fa

r E

ast

Fa

r E

ast

North America (incl Mexico)

Latin America

Europe (incl Med)

Far East

Intra Asia (excl Oceania)

40.0mTEU (+2.7%)

Global Container Trade 2016

135.8mTEU (+2.3%)

Source: Seabury Dec16 update

Volume Development of main Tradelanes (mTEU 2017e; in brackets Ø CAGR 2017e–2020e)

12.0mTEU (+1.7%)

6.8mTEU (+2.4%)

1.7mTEU (+3.3%)

2.1mTEU (+2.3%)

2.6mTEU (+1.8%) 2.1mTEU (+2.1%)

7.0mTEU (-0.4%)

1.8mTEU (+3.4%)

1.7mTEU (+4.3%)

3.5mTEU (-0.2%)

15.6mTEU (+1.2%)

4.4mTEU (+1.3%)


15

Acronyms and Explanations


2M - Carrier Alliance: Maersk / MSC

AMLA - Latin America

AMNO - North America

AR - Argentina

ASPA - AsiaPacific

ATL4/NEUATL4- Transatlantic service between North Europe and North America

AX4 - Atlantic Express 4 (AX4). Service between North Europe and USEC

BKK - Bangkok

bn - Billions

BNSF - Burlington Northern Santa Fe Railway

BR - Brazil

CAGR - Compound Annual Growth Rate

CKYHE - Carrier Alliance: Cosco, K-Line, YangMing, Hanjin and Evergreen

CNC - CNC Line (Cheng Lie Navigation Co. Ltd.)

CSX - Changsha

DG - Dangerous Goods

DWT - Dead Weight Tonnage

EB - Eastbound

ECSA - East Coast South America

EURO - Europe

FAN - Fangcheng

FOC - Foshan

G6 - Carrier Alliance: APL, Hapag Lloyd, Hyundai, MOL, NYK and OOCL

HJS - Hanjin Shipping

HMM - Hyundai

HSUD - Hamburg Süd

HWS - Heavy Weight Surcharge

IA - Intra Asia

IPBC - India Pakistan Bangladesh Colombo

IPI - Inland Point Intermodal

ISC - Indian Sub Continent

JIU - Jiujiang

KHN - Nanchang

MENAT - Middle East and North Africa

mn - Millions

MoM - Month-on-Month

Ocean 3 - Carrier Alliance: CMA, UASC, China Shipping

OCRS - OCRSOperational Cost Recovery surcharge

PH - Philippines

PNW - Pacific North West

Ppt. - Percentage points

PSW - Pacific South West

RR - Rate Restoration

SOLAS - Safety of Life at Sea

SPRC - South People’s Republic of China – South China

SSA - Sub-Saharan Africa

T - Thousands

TEU - Twenty foot equivalent unit (20‘ container)

TP - Trans Pacific

TSA - Trans Pacific Stabilation Agreement

ULCS - Ultra Large Container Ship

US FMC - US Federal Maritime Commission

USEC - US East Coast

USWC - US West Coast

VGM - Verified Gross Mass

VLCS - Very Large Container Ship

VSA - Vessel Sharing Agreement

WB - Westbound

WCSA - West Coast South America

WUH - Wuhan

XMN - Xiamen

YML - Yang Ming Line

YoY - Year-on-Year

YTD - Year-to-Date

DHL GLOBAL FORWARDING - Global | English · 3 Topic of the month – DGF moves three million TEUs...

Documents

Transcript of DHL GLOBAL FORWARDING - Global | English · 3 Topic of the month – DGF moves three million TEUs...