Notice on Forward Looking Statements

Transcription

1 Investor Presentation November

2 Notice on Forward Looking Statements This presentation contains forward-looking statements (as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act) concerning operations, cash flows, and financial position of Seaspan Corporation ( Seaspan ), including, in particular, the likelihood of its success in developing and expanding its business. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as continue, expects, anticipates, intends, plans, believes, estimates, projects, forecasts, will, may, potential, should, guidance, and similar expressions are forward-looking statements. These forward-looking statements represent Seaspan s estimates and assumptions only as of the date of this presentation and are not intended to give any assurance as to future results. As a result, you are cautioned not to rely on any forward-looking statements. Forward-looking statements appear in a number of places in this presentation. Although these statements are based upon assumptions Seaspan believes to be reasonable based upon available information, they are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to: future growth prospects and ability to expand Seaspan s business; Seaspan s expectations as to impairments of its vessels, including the timing and amount of currently anticipated impairments; the future valuation of Seaspan s vessels and goodwill; potential acquisitions, vessel financing arrangements and other investments, and Seaspan s expected benefits from such transactions; future time charters and vessel deliveries, including future long-term charters for certain existing vessels; estimated future capital expenditures needed to preserve the operating capacity of Seaspan s fleet including, its capital base, and comply with regulatory standards, its expectations regarding future dry-docking and operating expenses, including ship operating expense and general and administrative expenses; Seaspan s expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, the delivery dates of new vessels, the commencement of service of new vessels under long-term time charter contracts and the useful lives of its vessels; availability of crew, number of off-hire days and dry-docking requirements; general market conditions and shipping market trends, including charter rates, increased technological innovation in competing vessels and other factors affecting supply and demand; Seaspan s financial condition and liquidity, including its ability to borrow and repay funds under its credit facilities, to refinance its existing facilities and to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities; Seaspan s continued ability to meet its current liabilities as they become due; Seaspan s ability to remediate any existing material weakness in its internal controls over financial reporting; Seaspan s continued ability to maintain, enter into or renew primarily long-term, fixed-rate time charters with its existing customers or new customers; the potential for early termination of long-term contracts and Seaspan s potential inability to enter into, renew or replace long-term contracts; the introduction of new accounting rules for leasing and exposure to currency exchange rates and interest rate fluctuations; conditions inherent in the operation of ocean-going vessels, including acts of piracy; acts of terrorism or government requisition of Seaspan s containership during periods of war or emergency; adequacy of Seaspan s insurance to cover losses that result from the inherent operational risks of the shipping industry; lack of diversity in Seaspan s operations and in the type of vessels in its fleet; conditions in the public equity market and the price of Seaspan s shares; Seaspan s ability to leverage to its advantage its relationships and reputation in the containership industry; compliance with and changes in governmental rules and regulations or actions taken by regulatory authorities, and the effect of governmental regulations on Seaspan s business; the financial condition of Seaspan s customers, lenders, refund guarantors and other counterparties and their ability to perform their obligations under their agreements with us; Seaspan s continued ability to meet specified restrictive covenants and other conditions in its financing and lease arrangements, its debt instruments and its preferred shares; any economic downturn in the global financial markets and export trade and increase in trade protectionism and potential negative effects of any recurrence of such disruptions on Seaspan s customers ability to charter Seaspan s vessels and pay for Seaspan s services; some of Seaspan s directors and investors may have separate interest which may conflict with those of its shareholders and they may be difficult to replace given the anti-takeover provisions in Seaspan s organizational documents; taxation of Seaspan s company and of distributions to its shareholders; Seaspan s exemption from tax on U.S. source international transportation income; the ability to bring claims in China and the Marshall Islands, where the legal systems are not well-developed; potential liability from future litigation; and other factors detailed from time to time in Seaspan s periodic reports. Forward-looking statements in this presentation are estimates and assumptions reflecting the judgment of senior management and involve known and unknown risks and uncertainties. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond Seaspan s control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Accordingly, these forwardlooking statements should be considered in light of various important factors listed above and including, but not limited to, those set forth in Item 3. Key Information D. Risk Factors in Seaspan s Annual Report for the year ended December 31, 2017 on Form 20-F filed on March 6, 2018, and the Risk Factors in Report on Form 6-K that are filed with the Securities and Exchange Commission, or the SEC, from time to time relating to our quarterly financial results. Seaspan does not intend to revise any forward-looking statements in order to reflect any change in Seaspan s expectations or events or circumstances that may subsequently arise. Seaspan expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in Seaspan s views or expectations, or otherwise. You should carefully review and consider the various disclosures included in this Annual Report and in Seaspan s other filings made with the SEC, that attempt to advise interested parties of the risks and factors that may affect Seaspan s business, prospects and results of operations. 2 2

3 Container Shipping Is An Essential Part of Global Commerce China Shoe Store Liners load and unload goods across ocean routes just as couriers operate routes through land and air 3 3

4 Container Shipping Industry Value Chain Manufactured goods for distribution Land transport to distribution centers Loading of cargo at port terminals Shipping voyage via container ships Unloading of cargo at port terminals Land transport to destination warehouse Delivery to customer Seller End buyer of shipments (importers / exporters) Buyer Shipper Origin Warehouse Origin Port Destination Port Destination Warehouse Consignee Shipping Line Freight-Forwarder 4 4

5 Containerization & Global Trade (TEU, millions 1 ) 1978: China Economic Reforms : Social Market Economy of China : China joins WTO Container Shipping s first downturn since : China becomes 2nd largest global economy '73 '83 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18F E Global TEU Trade CAGR: 9.9% 1.6% 4.4% Global GDP 2 CAGR: 3.4% 1.2% 2.9% TEU to GDP Multiple: 2.9x 1.3x 1.5x Container shipping accounts for 17% of global shipping by weight but 60% by value (over $12 trillion of goods in 2017) 3 1. Clarkson s Research October GDP Source: World Bank 3. Statista Container Shipping Statistics & Facts 5 5

6 Seaspan at a Glance Integrated with Global Trade Modern Fleet Strong Financial Profile #1 Independent Containership Owner / Operator $1.0bn Revenue (TTM) 1 $414mn Cash Flow from Operations (TTM) 1 Relationships with 7 of 8 Leading Liners 112 Vessels $5.1bn Contracted Future Revenue 2 4,500 employees 4,300 Seafarers 200 Corporate 5 years Average Remaining Charter Period 6 years Average Age 98% Average Utilization Since IPO 3 1. Based on trailing 12 months as of September 30, Minimum future revenues to be received on committed time charter party agreements and interest income from direct financing leases as of September 30, Minimum future revenues are based on 100% utilization, relate to committed time charter party agreements currently in effect, and assume no renewals or extensions 3. Average fleet utilization from 4Q05 to 3Q18 6 6

7 Seaspan Has Led the Industry Since Its Infancy > 10,000 TEU 906 8,500-9,600 TEU 4,250-5,100 TEU < 3,500 TEU IPO Q18 # Vessels Utilization 100% 99% 99% 99% 100% 99% 99% 99% 98% 99% 99% 96% 96% 98% $600mn SSW IPO (largest ship leasing) Washington Family invested $180mn Acquired Seaspan Management Services Secured $1.0bn investment from Fairfax SCLL, predecessor of Seaspan Corp, founded by Kyle Washington and two others Issued $250mn Series C Preferred Equity (1st U.S. listed preferred by containership lessor) Containership JV with The Carlyle Group Issued $345mn unsecured listed bond Completed $1.6bn GCI acquisition 7 7

8 Key Recent Developments New Leadership Team Fairfax Investments Acquisition of GCI David Sokol appointed as Chairman Bing Chen appointed as President and CEO Ryan Courson appointed as CFO Tina Lai appointed as CHRO Torsten Pedersen appointed as EVP Ship Management Ted Chang appointed as General Counsel Secured a $1.0bn investment from Fairfax Financial Holdings (leading Canadian insurance company) $250mn debt investment funded in February 2018 and $250mn equity investment funded in July 2018 Committed to fund an additional $250mn equity investment and an additional $250mn of debt in January 2019 Completed accretive $1.6bn acquisition of remainder of Greater China Intermodal Investments LLC (GCI) in March 2018 Considerations to selling shareholders was ~$330mn in cash and a ~$50mn issuance of Seaspan Series D preferred shares Transaction expanded Seaspan s platform, diversified our customer base, and enhanced our fleet composition GCI was quickly and flawlessly integrated David Sokol Bing Chen Ryan Courson Tina Lai Torsten Pedersen Ted Chang 8 8

9 Controlling Shareholders Current Shareholder Base 1 Others 45% 37% 2 Washington Family 34% 28% 2 Fairfax (TSX:FFH) is an insurance and investment management company with $65bn in assets 1 Strategic partner with long-term investment horizon Initial investment of $500mn ($250mn debt/$250mn equity) Additional 25mn warrants issued with strike price of $8.05 Second investment of $500mn expected to fund in January 2019 ($250mn debt/$250mn equity) Fairfax 22% 36% 2 WashCo owns an investment portfolio of industrial companies in rail transport, mining, and aviation Seaspan s founding, and largest current shareholder (34% of shares outstanding) 1 Actively involved with Seaspan since its founding Dennis Washington made a $160mn Series A Preferred Equity investment in 2009 during the recession New Chairman, CEO, and CFO have accessed new capital sources and strengthened commercial position with the acquisition of GCI 1. As of September 30, Pro forma committed exercise of Fairfax s 38.5mn warrants in January

10 Diversified and Flexible Financial Profile Diversified Sources of Capital 1 ($ millions) Common Equity $1,994 27% Corporate Revolver $150 2% 42% Secured Debt $3,056 Diversified across multiple pools of capital Track record of capital markets access and execution Over 40 global lenders, including North American, European, and Asian financial institutions Supportive investor base Perpetual Preferred Stock $825 11% Unsecured Debt $668 9% 9% Capital Leases $660 Selected Global Lenders 24 unencumbered assets 2 with expectation to increase over time as secured credit facilities mature Unencumbered Asset Pool TEU Class Vessel Count 2 2, , , , , ,000 2 Total Market value of Common Equity and Perpetual Preferred Stock as of November 11, 2018; Common Equity based on shares outstanding as of September 30, 2018, plus 38.5mn shares expected to be issued to Fairfax in January 2019 in exchange for an agreed exercise of 38.5mn of warrants; Secured Debt, Capital Leases, Unsecured Debt, and Corporate Revolver as of September 30, Corporate Revolver is undrawn and committed in the amount of $150mn 2. Includes 6 vessels securing debt which has been repaid in November

11 What Containership Lessors Offer Liner Companies Operating Lessor Charter Rate Fleet of 112 Containerships Liner Responsibilities: Sourcing & Aggregating Cargo Managing Logistics Fuel Costs Cargo Operating Expenses Pays Daily Charter Rate Vessel & Crew + Services Lessor Responsibilities: Vessel Crew Technical Operations Design, Maintenance, Insurance Variety of Contract Structures Fixed-Rate Charter Contract Charter Rate + Term 11 11

12 Large, Modern Fleet Portfolio Aligned to Key Trade Routes Workhorses of Global Fleet Operating Scale and Efficiency For Long- Haul Trades 13,000 14,000 TEU 23 Vessels 10,000 11,000TEU 30 Vessels 2,500 TEU 12 Vessels 3,500 4,250 TEU 26 Vessels 4,500 5,100 TEU 9 Vessels 8,500 9,600 TEU 12 Vessels Regional Trades 68% of fleet is >10,000 TEU in size with an average age of approximately three years 1 1. Weighted by TEU 12 12

13 Global Trade Now Requires a Diversified Fleet Seaspan s Vessel Trading Activity Feeder Class Mid-Sized VLCS / ULCS TEU 2,500 3,500 4,250 5,100 8,500 9,600 10,000 13,100 14,000 Intra Asia Africa Australia NZ Latin America Europe NA Far East ME Far East NA Far East Europe The ideal ship size varies by route, port capacity, and charter needs 13 13

14 Shoei Kisen Costamare Zodiac Maritime BoCom Leasing Eastern Pacific Shg (EPS) Offen, Claus Peter Peter Döhle/Hammonia Danaos Shg Minsheng Financial Leasing Ship Finance International Norddeutsche R.H. Schuldt SinOceanic MPC Group Schulte Group China Merchants Bank Global Ship Lease (Pro Forma) Navios E.R. Schiffahrt Technomar Shg World s Largest Independent Containership Owner & Operator TEU (000s) Primarily a financial lessor (i.e. limited/no vessel management services) Top 20 Containership Lessors Barriers to Entry Customer Relationships Operational Track Record and Experience Scale of Service Increasing Regulation Access to Financing Scale creates meaningful barriers to entry 1. Alphaliner Monthly Monitor October Chart of top 20 containership lessors includes current vessels and vessels under construction 2. Shipowning arm of Imabari Shipbuilding 3. Based on company filings 4. Pro Forma for merger with Poseidon Containers 14 14

15 Fully Integrated Operating Platform VESSEL DESIGN VESSEL MANAGEMENT VESSEL OPERATIONS VESSEL UPGRADES In-House Design & Engineering Teams In-house design and engineering teams with strong relationships with leading shipyards Deep experience in overseeing new vessel construction, conversions and marine engineering Bulbous Bow modifications to improve hull hydrodynamics Enhanced cargo care practices to safely carry more containers Trim optimization to optimize cargo loading and fuel efficiency Fleet Management Provide crewing and insurance Responsible for both ordinary and scheduled maintenance Disciplined cost control 200 >7, Port Calls 4,500 People Employed Globally 4,300 Seafarers Corporate & Operations Commercial Services Strong commercial management and long-term charter profile drives high utilization rates Recognized for operational excellence with several recent awards Fleet Utilization Rates Impact of Hanjin bankruptcy and drydock of 4 Panamax vessels acquired in 4Q16 99% 100% 99% 99% 99% 98% 99% 99% 96% 96% 98% 1 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 YTD 1. Fleet utilization rates for the nine months ended September 30,

16 Contracted Revenues Provide Reliable, Recurring Cash Flows Percentage of Contracted Revenue by Year 1 Majority of charter expirations post 2022 are modern 10,000+ TEU vessels 92% 83% 72% 58% Cash flow stability from future contracted charter payments of ~$5.1 billion 1 with an average remaining contract duration of ~5 Years 1. Minimum future revenues to be received on committed time charter party agreements and interest income from direct financing leases as of September 30, Minimum future revenues are based on 100% utilization, relate to committed time charter party agreements currently in effect, and assume no renewals or extensions. Illustrated as a percentage of annualized revenue for the last three months ended September 30,

17 Strong Counterparties Composed of Top Liners (by % of total TEU) Charterer World Ranking 1 No. of Vessels² Total TEU² Major Shareholders Credit Rating Other 5% 4% COSCO ,250 Government chaaa / Lianhe Yang Ming ,000 Government twbbb / Taiwan CR 7% 28% ONE ,900 Widely-held (Ba1 / NR) / (BBB / NR) 8% MSC ,750 Family-owned (N/A) 8% CMA CGM ,250 Family-owned B1 / B+ 16% 24% Hapag Lloyd ,500 Widely-held B2 / B+ Maersk ,250 Widely-held Baa2 / BBB Other ,000 Total ,900 Seaspan works with a select group of leading liner companies with a focus on long-term charters 1. Rank based on market share per Alphaliner as of October 2018, adjusted for COSCO s planned acquisition of OOCL, and combined world ranking of ONE joint venture (MOL, K Line and NYK Line) 2. Number of Seaspan s vessels and TEU of vessels chartered to each liner as of September 30, Credit ratings represent MOL and K-Line, respectively 17 17

18 Seaspan s Business Model Challenges to Containership Industry Fragmentation Commoditization Size & Scale Fully Integrated Operating Platform Seaspan s Model World s largest containership lessor Leverage scale to secure major transactions and cost savings Comprehensive operating leasing platform Design and acquire large, modern, fuel-efficient vessels In-house full vessel life cycle management expertise Short-Term Focus Long-Term, Fixed- Rate Charters Long-term charters between 3 and 17 years provide stable, predictable cash flows Average remaining life of long-term charters of ~5 years Weak Credit Profiles Creditworthy Customers Lease vessels to the world s leading liners Operate customers flagship assets Largest customers are partially government owned Seaspan s differentiated business model allows it to capitalize on challenges currently facing the containership leasing industry and provide best-in-class service 18 18

19 Concentration of Liner Market Share Market Share 2013 Market Share October 2018 Others, 11% Hyundai M.M., 2% K Line, 2% Yang Ming, 2% NYK, 3% Hamburg Süd, 3% OOCL, 3% MOL, 4% APM Maersk, 18% MSC, 15% Evergreen, 6% ONE, 7% Others, 12% PIL, 2% Yang Ming, 3% Maersk+H.Sud, 19% MSC, 16% CSCL, 4% Hanjin Shg, 4% CMA CGM, APL, 4% 10% Hapag Lloyd, COSCON, 5% Evergreen, 5% 4% Hapag+UAS C, 8% CMA CGM, 13% COSCO + OOCL, 14% Top 8 Liners Grew Market Share from 55% to ~85% in 5 Years 1 1. Alphaliner Monthly Monitor October

20 Opportunity for Lessor Consolidation Containership Lessor Market Share 1 Opportunity for Consolidation Other, 55%, 8% Shoei Kisen, 7% Costamare, 5% Zodiac Maritime, 4% BoCom Leasing, 4% Eastern Pacific Shg (EPS), 4% Offen, Claus Peter, 3% Peter Döhle/Hammonia, 3% Danaos Shg, 3% Minsheng Financial Leasing, Norddeutsche 3% R.H. Schuldt, 2% Consolidation provides greater economies of scale and barriers to entry Access to financing Customer relationships Scale of service Larger, more diverse fleets provide significant benefits Size and scale allows for improved credit profiles and reduced cost of capital The fragmented landscape leaves significant room and benefit for consolidation 1. Alphaliner Monthly Monitor October

21 US$ Millions, Index = 100 Rate per day, Index = 100 Demand Growth and Supply Constraint Driving Rate Improvement Charter Rate Improvement 1 Improving fundamentals driving charter rate improvement across asset classes Support from limited number of deliveries scheduled for 2018 and 2019, and continuing restraint on newbuild ordering 350% 300% 250% 200% 150% 100% 50% 2500 TEU 3500 TEU 4400 TEU 9000 TEU 0% Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Historical Containership Asset Value Improvement 1 Asset values are on an upward trajectory Momentum in sale and purchase markets has continued into 2018, with significant deal flow worldwide 200% 180% 160% 140% 120% 100% 80% 60% Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 2,600-2,900 TEU 3,200-3,600 TEU 8,500-9,100 TEU 1. Clarksons Research October

22 Indian subcont. South Europe SE Asia Africa Oceania Latin America North America China+HK North Europe Middle East Other North Asia TEU (mllions) TEU (mllions) Broad Based Global Seaborne Trade Growth Annual Capacity and Throughput Growth 1 Demand growth has outperformed supply over the last two years Improving supply / demand balance supporting charter rates Trade growth is expected to exceed fleet growth in Fleet Capacity (TEU) 25 Capacity Growth Throughput Fleet Capacity Growth (TEU) Capacity Growth 20% 15% 10% 5% (5%) (10%) (15%) Thr 2017 growth was broad based, in both primary and secondary trade lanes 2018 growth has remained robust despite trade uncertainty Growth outlook supported by strong economic fundamentals in emerging and developed markets Good utilization on main trades: Eur/Asia ~90%, Asia/US ~95% 8.8% Broad Based Growth Across Regions 1 6.0% 5.5% 5.0% 5.0% 4.5% 4.3% 4.1% 3.5% 3.2% 2.8% 2017 Growth Rates by Region 12% 7% 6% 4% 8% 7% 8% 8% 5% 2% 5% 1. Alphaliner Monthly Monitor October 2018; Global port throughput includes empty container and transshipment cargo 22 22

23 TEU (000's) Improvement in Industry s Ability to Manage Supply Idle Fleet Continues to Decline (% TEU) 1,2 Industry supply rationalization and demand improvement driving idle fleet reduction and supporting time charter rate improvement Idle containership fleet of vessels over 500 TEU less than 180, or 2.3% of the global fleet 2 1,800 Total Idle TEU Idle Fleet as % of Total Fleet 1, % 8.0% 4.0% 2.3% 0.0% Orderbook at Historically Low Levels 1,2 Fewer operators and increased discipline tempering supply growth 75% 50% Orderbook-to-fleet ratio currently at 13.0% 2 Orderbook delivery schedule continues to get pushed out 25% 0% 13.0% Historical Demolition Volumes demolition reached an all-time high and remained elevated in scrapping down to ~44k 1 TEU YTD as market recovery continues YTD Average Age (yrs) TEU Scrapped Other Deletions Average Age (Scrapped Units) 1. Clarksons Research October Alphaliner Monthly Monitor October

24 Strong Tailwinds For Those Well-Positioned Improving Industry Dynamics Robust demand and improving supply fundamentals will continue to support charter rate improvement Seaspan Well-Positioned for the Future We are strengthening our balance sheet and cash flows to become a platform for growth and consolidation in the containership industry Focus on Capital Allocation We are focused on allocating capital selectively into opportunities that improve the long-term value of the business, and have strong risk-adjusted returns on capital Other Capital Allocation Opportunities Synergistic opportunities in adjacent businesses (both horizontal and vertical) We will assess opportunities as they arise based on a prudent approach to capital allocation and riskadjusted returns 24 24

25 Our Five Key Priorities Operational Excellence Set standard for best-in-class service Optimize cost structure through scale advantage Customer Partnerships Provide value-added services Best-in-class solution provider to customer needs Financial Strength and Stability Maintain financial discipline and enhance company credit quality Maximize cash flows via full life-cycle management Pursuit of Growth Opportunities Newbuilds, second-hand vessels, and assets/portfolios Asset and business acquisitions in the shipping industry and beyond Capital Allocation Strengthen balance sheet and liquidity Reinvest capital into opportunities with strong risk-adjusted returns 25 25

26 APPENDIX 26 26

27 Financial Performance Revenue 1 Cash Flow From Operations 1 ($ millions) ($ millions) $1,016 $878 $343 $336 $819 $831 $311 $323 $717 $ TTM TTM 99% 99% Utilization 1 Impact of Hanjin bankruptcy and drydock of 4 Panamax vessels acquired in 4Q16 96% 96% 98% ($ millions) $330 $351 Operating Earnings 1 $303 $416 $285mn impairment charge 2 $ TTM TTM 1. TTM based on trailing 12 months as of September 30, $285mn vessel impairment charge incurred in

28 Senior Leadership Team David Sokol Chairman Appointed Director of Seaspan in April 2017 and Chairman in July 2017 Currently serves as a director of The Washington Companies Over 38-year business career, founded three companies, took three companies public and sold MidAmerican Energy Holdings Co. to Berkshire Hathaway in 2000 Bing Chen President and Chief Executive Officer Appointed CEO of Seaspan in January years of executive experience in building multiple businesses across industries, including finance and asset leasing businesses, in US, Europe and Asia Previously CEO of BNP Paribas (China) Ltd. Ryan Courson Chief Financial Officer Appointed CFO of Seaspan in May 2018 Former Senior Vice President of Corporate Development Previous experience at Falcon Edge Capital, Teton Capital and Berkshire Hathaway Peter Curtis Executive VP and Chief Commercial & Technical Officer Appointed Executive Vice President in July 2017 and Chief Commercial and Technical Officer in March years of experience in shipbuilding, fleet management, engineering, naval design, and operations 28 28

29 Key Industry Terms Defined Industry Players Vessels Measurements Liners Feeder Class TEU Companies that transport goods through regular transit routes on fixed schedules. Container shipping liners use large containerships to transport goods from one location to another. Small ships that often distribute cargo between large hub ports and smaller regional ones. Acronym for twenty-foot-equivalent unit. This is the unit used to measure the capacity of containerships and terminals. The average long cargo box you see measures 2 TEU. Charter Providers / Owners Ship owners who lease their assets to liners, providing the latter with an attractive alternative to full ownership of their operating fleet. Mid-Sized These ships were the standard in container shipping for many years, until more recent advances in shipbuilding provided the means to maximize economies of scale. Charter Rates Price lessors charge to lease their ships. Freight Forwarders A third party that sources and consolidates cargoes from various beneficial cargo owners and negotiates with liners to arrange the shipment. Freight forwarders can also arrange the crucial connection services and formalities on behalf of a shipper. Beneficial Cargo Owners (BCO) Owner of the goods, who takes full control of their cargo at point of entry in the country of importation. VLCS Acronym for very large container ships. A segment which entered the market in 2006, and have a capacity of 8-14K TEU. ULCS Acronym for ultra large container ships. The most recent player to enter the market, with a capacity of more than 14K TEU. These ships can only call the largest and deepest ports in the world. Freight Rates The actual box rates Liners charge the end customer of the goods. CO 2 Emissions The carbon dioxide emissions produced when using fuel to drive an engine. The more fuel-efficient or green a ship is, the lower its CO 2 emissions will be