OCEAN FREIGHT MARKET UPDATE

Transcription

1 DHL Global Forwarding, Freight OCEAN FREIGHT MARKET UPDATE December

2 Contents TOPIC OF THE MONTH IMO 2020 regulation effective 1st January 2020 HIGH LEVEL DEVELOPMENT MARKET OUTLOOK Freight Rates and Volume Development ECONOMIC OUTLOOK & DEMAND DEVELOPM ENT CAPACITY DEVELOPMENT CARRIERS REGULATIONS? DID YOU KNOW? Top 10 Carriers Capacity Share November

3 Topic of the Month IMO 2020 regulation effective 1st January 2020 International Convention for the Prevention of Pollution from Ships (MARPOL) IMO2020 is the first regulation in a series of steps by the International Maritime Organization (IMO) to reduce emissions in response to climate change. It introduces a new marine fuel regulation, w hich limits the sulphur emissions caused by marine fuels. Sulphur, a natural element of crude oil from w hich shipping fuel is derived, is a key cause of air-polluting particulates (soot) emitted by ships. The new sulphur level regulation is intended to reduce the amount of air pollution generated by the shipping industry and improve air quality. To date, ships have been able to use high sulphur fuel oil (HSFO) w ith a sulphur content of up to 3.5%. IMO2020 requires using fuel w ith a sulphur content of 0.5 % or low er and w ill come into effect as of 1 st January Ocean carriers are currently evaluating and testing three options to be compliant w ith the new regulation: 1. converting to more expensive low -sulphur fuel oil (LSFO 0.5%) 2. using Exhaust Gas Cleaning Systems (EGCSs) also called scrubbers 3. deploying ships pow ered by liquefied natural gas (LNG) The spread betw een HSFO 3.5% and LSFO 0.5% is estimated approximately at USD 250 per ton, w hile the installation of scrubbers is estimated at about USD 6 10 million per vessel. In regards to LNG, shipping lines seem reluctant to use it because of the safety risks. It is clear that this change w ill affect the entire shipping industry and the cost of compliance w ith the new regulation w ill be significant. The ocean carriers, as w ell as the forw arders will not be able to absorb these additional costs. At this stage it is not possible to define the exact cost impact. We are in constant dialogue and negotiation w ith our partner carriers and w e w ill do our outmost to mitigate the impact for our customers. Source: DHL 3

4 High Level Market Development Supply and Demand ECONOMIC OUTLOOK GDP GROWTH BY REGION 1) 2018F 2019F 2020F 2021F 2022F CAGR ( ) EURO 2.2% 2.0% 1.9% 1.8% 1.8% 1.8% MEA 3.5% 3.8% 3.9% 3.6% 3.5% 3.7% AMER 2.7% 2.8% 2.2% 1.9% 1.9% 2.0% ASPA 5.0% 4.9% 4.7% 4.8% 4.8% 4.7% DGF World 3.4% 3.3% 3.1% 3.0% 3.0% 3.0% DHL TRADE BAROMETER 6) Q1 16 Q2 Q3 Q4 Q1 17 Q2 Q3 Q4 Q1 18 Q2 Ocean Global Q3 Q4 SUPPLY/DEMAND GROWTH (ANNUALIZED), IN % 2) 7% 6% 5% Demand Growth 4% % 3% 2% 1% Supply Growth % 0% F 2019F 2020F 2021F 2022F WORLD CONTAINER INDEX (WCI) 3) SHANGHAI CONTAINERIZED FREIGHT INDEX (SCFI) 4) 3,000 1,200 BUNKER PRICE INDEX 5) 1,000 2,500 2,000 1,500 1, Q1 17 Q2 Q3 Q4 Q1 18 Q2 Q3 Q4 1, Q1 17 Q2 Q3 Q4 1) real GDP, Global Insight, Copyright IHS, Q All rights reserved 2) Demand growth = Port-to-Port Container Traffic growth. Supply growth = Fleet Growth. Source: Drewry Maritime Research. 3) Shanghai Shipping Exchange, in USD/20ft container & USD/40ft ctnr for US routes, 15 routes from Shanghai. 4) Global Insight, Drewry, 5) Bunker Index, in USD/metric ton, Bunker Index MGO (BIX MGO) = avg. Global Bunker Price for marine gasoil (MGO) port prices; (BIX 380= avg. Global Bunker Price for all 380 centistoke (cst) port prices; both index published on the Bunker Index website., 6) DHL Global Trade Barometer Mar18, index value represents weighted average of current growth and upcoming two months of trade, a value at 50 is considered neutral, expanding above 50, and shrinking below 50. Q1 18 Q2 Q3 Q Q1 17 Q2 Q3 Q4 Q1 18 Q2 Q3 BIX 380 BIX MGO 4

5 Market Outlook Volume Outlook in Main Trade Lanes, 2018 Estimate & 2019/22 Growth Forecast in % 2018e, in mteu 2019e-2022e CAGR, in % N O R T H A M E R I C A I n c l. M E X I C O 4.0 mteu +2.4% F A R E A S T 8.5 mteu +4.7% N O R T H A M E R I C A I n c l. M E X I C O 2.2 mteu +3.1% 12.8 mteu +2.4% 18.7 mteu +3.1% 2.0 mteu +4.5% 1.6 mteu +4.3% L A T I N A M E R I C A 1.6 mteu +4.3% 1.7 mteu +2.5% E U R O P E I n c l. M E D 7.3 mteu +3.4% I N T R A A S I A excl. Oceania 1.7 mteu +2.2% 4.2 mteu +4.6% L A T I N A M E R I C A 41.6 mteu +4.8% G L O B A L C O N T A I N E R T R A D E e m T E U % C A G R 2 019e- 2022e Mid-term growth is mainly driven by Asian tradelanes. Source: Seabury Nov18 update 5

6 Market Outlook December 2018 Major Trades Capacity constraints from Asia to North & South America as well as Oceania remain EXPORT REGION IMPORT REGION CAPACITY RATE EURO AMNO = + AMLA = = ASPA = = MENAT = = SSA = = EXPORT REGION IMPORT REGION CAPACITY RATE AMLA AMNO = ++ ASPA + + EURO + + MENAT = = SSA AMNO AMLA = + ASPA = + ASPA ASPA = = AMNO - = EURO = = AMLA - - MENAT = = EURO + + SSA = = MENAT = = KEY Strong Increase ++ Moderate Increase + No Change = Moderate Decline - Strong Decline - - OCEANIA - + Source: DGF 6

7 Market Outlook December 2018 Ocean Freight Rates Major Trades Market outlook on smaller trades available in the back-up O C E A N F R E I G H T R A T E S O U T L O O K ASPA EURO EURO ASPA & MEA After the extensive blank sailing program in November, the capacity w ill be back in December w here 2M is redeploying their AE2/Sw an service, w hich is expected to support the volume increase pre Christmas/New Year/Chinese New Year. Flat to no development, overall stable. LSF increase due to SHA eco zone. Last GRI approach for MENAT in Nov failed. ASPA AMLA ASPA AMNO EURO AMNO ASPA MENAT ASPA ASPA AMNO EURO Entering into the traditional slack period, rates are dropping, and carriers w ill be doing frequent blank sailing to maintain the rates. MSC and Maersk already announced blank sailing in Nov/Dec Do not expect capacity injection to Mexico in Dec outlook expected to slow dow n especially the 2nd half of Dec given the festive season as w ell as the cut off for freight arriving in US prior to the tariff increase effective Jan Ocean rates are strong and still increasing; inland carriages in US remain problematic Carriers have started to increase their EBAF w.e.f 01 Dec. For all new business, CN LSF needs to be negotiated. Rates remain constant, w ith no big surprise and/or huge increase. The release and delivery of containers at Manila Port has been impacted by the trucker s strike due to the congestion faced in recent months. The Far East to India Subcontinent trade service re-shuffling is now in place. Some decline in market rates is expected as the carriers try to fill up their vessels. Rates in the market are stable. Space continued to be an issue especially from US Gulf Coast and USEC but not as bad as earlier this year so bookings are now out about 2 w eeks. Source: DGF 7

8 Economic Outlook & Demand Development Except for the US, every key economy will see weak growth during the next 2 years EURO AMNO ASPA EMERGING MARKETS Real GDP grow th slow ed to its w eakest pace since Q2 14. Grow th fell in DE, stalled in IT, picked up in FR & held steady in ES. EURO zone faces multiple headw inds: slow ing export growth, rising political uncertainty, incl. budget standoff betw een the EU Union & IT, and w obbly governing coalition in DE. EURO zone real GDP grow th is projected to slow from 2.5% in 2017 to 1.9% this year, 1.5% in 2019, & 1.2% in Tariffs are boosting near term inflation forecast but should have only a modest negative impact on real grow th. Fiscal stimulus from recent tax cuts & spending increases w ill fuel grow th in the next several quarters. Real GDP grow th is projected to rise from 2.2% in 2017 to 2.9% this year, before slow ing to 2.7% in 2019, 2.1% in 2020, & 1.6% in Contraction in Q3 in JP w as mostly due to natural disasters (floods & landslides in Western JP, Typhoon Jebi & Hokkaido earthquake). Private consumer speeding fell because of a contraction in spending for services such as travel & recreational activities, suppressed by natural disasters. Sustained uncertainties over global trade tensions could w eight on JP s external order & capital spending going forw ard. CN s government has responded to w eaker Q3 grow th & US tariffs by relaunching fiscal & monetary stimulus. IHS s is low ering the forecast for CN s 2018 real GDP grow th by 0.1 ppt to 6.6%, but leaves outlook for grow th of 6.1% in 2019 and 6.0% in 2020 unchanged. Since the US, UK, & CA have started to raise interest rates, this has resulted in intense dow nw ard pressure on emerging-market currencies. At the same time global grow th has peaked & oil prices are significantly higher than a year ago, hurting oil importers. Some w oes are also homemade, including poor governance, lack of structural reforms, increased political uncertainty, & a piling-up of debt, both in foreign & domestic currencies. These problems w ill get in the w ay of strong, autonomous rebounds in emerging markets & developing countries (w hich account for about 40% of global GDP). DEMAND DEVELOPM ENT JPMorgan Global PMI edged up from 52.8 in Sep to 53.0 in Oct, indicative of sustained global grow th. How ever, the improvement in part reflected w eather related rebounds in the US & JP. Even w ith these rebounds, the increase w as the 2 nd w eakest in 2 years. The global Manufacturing PMI registered the low est reading since Jun 16. The slow dow n is related to the 2 nd successive month of declines in w orldw ide export orders. Source: IHS Markit Global Executive Summary, IHS Purchasing Manager Index Manufacturing, a PMI at 50 is considered neutral, expanding above 50, and business shrinking below 50. 8

9 Capacity Development 1/2 C A P A C I T Y D E V E L O P M E N T New vessel deliveries for the Oct18 YTD reaches 1.21 mteu. An additional TEU is expected to be delivered in Nov & Dec, bringing the full year deliveries to ~1.35 mteu, against 1.19 mteu in The tendency remain tow ards large ships, w ith ships > TEU representing 83% of this year s delivered capacity. Container vessel capacity scrapped by end of Oct on the other hand has reached just TEU. The pace of scrapping still expected to be the low est on record since Based on these expected developments Alphaliner expects the overall container ship fleet to reach mteu by end of the year, corresponding to an annual grow th rate of 5.8%, w hich w ould surpass the 3.7% grow th registered last year and the 1.9% in The idle fleet has increased to TEU as at end of Oct, reaching a new 19 month high. Containership idling typically peaks in the aftermath of the 2 Golden Week holidays in CN in Oct. Resumption of regular sailings afterw ards and additional spot charters for lengthened services as w ell as ad hoc trips let the idle feet fall again by some to reach TEU as at 12 Nov 18. Maersk has temporarily shifted TEU sister ships ELEONORA MAERSK & EUGEN MAERSK to the Far East-USWC service, replacing the TEU MAERSK ENSENA DA & TEU MAERSK ESSEN for the duration of one round voyage. The tw o vessels can be shifted to the Transpacific as 2M has temporarily reduced capacity on the Asia-North Europe trade by suspending the AE-2/Sw an service. Both vessels are to return to the Asia-North Europe trade for the planned restart of the service in December. MSC, CMA CGM, APL, COSCO Shipping and Hapag-Lloyd have revised their services connecting the Med, Red Sea, Middle East and Indian subcontinent w ith the set up of 3 new joint serviced to be operated w ithin 3 separate agreements, w ith the partners varying w ith each agreement, thus replacing 4 existing services. THE Alliance (Hapag-Lloyd, ONE & Yang Ming) w ill add an additional vessel to their Transatlantic loops in December-January. Stretching the service by one w eek w ill improve schedule reliability during the w inter season. THE Alliance upgrades its South East Asia-North Europe Service FE5 to TEU scale w ith ONE s latest TEU new building, the ONE COLUMBA, replacing the TEU Hapag Lloyd charter vessel SEASOPN ZAMBEZI. The ONE COLUMBA w ill become the biggest container vessel to call at Leam Chabang. Source: Alphaliner, carriers 9

10 Capacity Development 2/2 C A P A C I T Y D E V E L O P M E N T Cooperation of the OCEAN and THE Alliance on the Med-USEC route w ill start end of Nov. The new joint service w ill employ 6 ships of TEU, of w hich 3 w ill be operated by Hapag-Lloyd, 2 by CMA CGM and 1 by OOCL. It w ill replace 2 existing services operated separately by THE Alliance (AL6) and OCEAN Alliance (TAT1) that w ill be suspended. Evergreen, w ho is an OCEAN Alliance member, is not involved this Vessel Sharing Agreement (VSA). Maersk s forced w ithdrawal from its current Far East-East Coast South America partnership triggers a major reshuffle on that trade as from the 2 nd half of Dec. Chinese competition authorities had prohibited Hamburg Süd to continue its Vessel Sharing Agreement (VSA) w ith Hapag-Loyd, HMM, NYK and Zim, also involving CMA CGM, COSCO, Evergreen & PIL on that trade. Hapag-Lloyd, MSC and ONE are now to team up in a new VSA offering one w eekly loop. MSC is currently covering the trade w ith a separate VSA w ith Maersk Line and ONE that w ill also be terminated at the same time. ONE is involved in 2 VSAs, one inherited from MOL and in the other inherited from NYK. Maersk and Hamburg Süd w ill launch their ow n loop w ith Zim and HMM expected to participate to this service. COCO, CMA CGM, Evergreen and Yang Ming, w hich are currently involved in the 2 multi-carrier VSAs that Hamburg Süd, Hapag-Lloyd and ONE are leaving, w ill continue to operate one string. PIL w ill retain for the time being its independent service offering w ith 2 w eekly loops. A further revamp of the trade is expected early next year. OCEAN Alliance and THE Alliance are to rationalize their services on the overcrow ded Far East-Middle East trade in Dec by replacing 2 services run w ith a total of 13 vessels of TEU by 1 new joint service that w ill employ 8 vessels of the same size. Source: Alphaliner, carriers 10

11 Carriers Q3 18 Results (1/2) C A R R I E R S OOCL volumes grow amidst stagnating freight rates. Total liftings increased by 6.9% to reach a record of 1.71 mteu but freight rates remained flat at USD910/TEU. Transpacific trade show ed the best grow th w ith 7.3% volume increase w hile average rates increased by 7.6%. Asia-Europe on the other hand saw volume growth of 10.4% but average freight rates fell by -9.5%. The intra-asia & Australasia volumes also grew by 6.6% but rates fell by -4%. The Transatlantic trade registered a -1.5% volume decline but rates increased by 5.5%. Would COSCO not have received mrmb (162 musd) in subsidies form the CN Government for scrapping 8 vessels in 2016 & 2017, their Q3 earnings w ould have been negative. The carrier could now post a net profit of 822 mrmb for Q3 w hile liftings increased by 7.3% to 5.02mTEU. The additional OOCL liftings of 1.71 mteu w ould bring the group s consolidated liftings to 6.7 mteu. In line w ith their profit w arning from 16 Oct, ONE reports -192 musd net loss in Q3 (fiscal Q2), bringing its total losses for the first 6 months of its operations to 311 musd. ONE blames low er liftings, higher empty repositioning costs and a shortfall in expected cost savings for the result. Although liftings on the Asia-North America & Asia-Europe route have recovered and utilization has reached 90% on the headhaul, the backhaul has remained w eak at only 33% from North America & 47% from Europe. ONE has also adjusted its projected synergy cost savings target of 240 m to only 160 musd due to higher fuel consumption caused by unexpected w eather delays. Hapag-Lloyd posts 112 meur net profit in Q3, its best quarter since The improved results came from record liftings of 3.05 mteu, an increase of 8.7% over the same quarter last year. It also benefitted from increasing freight rates, even though the average rate of USD/TEU w as 1% low er than in the same quarter last year. Rate declines on the Middle East trade w ere offset by increases on the Transpacific, Transatlantic and Latin America trades. Yang Ming has reported a net loss of -910 mntd (30 musd) in Q3, extending its cumulative net loss YTD to 6.67 bnntd (220 musd). An increase in total liftings to a record of 1.41 mteu during the quarter w as not enough to lift the carrier out of the red. Total revenue increased by 8.2%. Yang Ming blamed the continued supply-demand imbalance for the w eak freight rates and the higher bunker fuel costs for the negative performance. The company w ill introduce four TEU chartered new buildings next year, w hile returning 7 higher-cost chartered vessels. Source: Alphaliner, Dynaliners, carriers 11

12 Carriers Q3 18 Results (2/2) C A R R I E R S Maersk Ocean has posted an increase in top line revenue & EBITDA in Q3, mainly due to the addition of Hamburg Süd. Total revenue reached musd (+32%), EBITDA 925 musd (+16%). How ever, EBITDA margins dropped from 14.4% to 12.6% due to higher bunker costs and low er than expected liftings. Liftings w ere 26.7% higher in YoY but fell -1.9% compared to Q2 due to low er volumes in Europe & LATAM. Maersk also failed to capitalize on the Transpacific volume strength due to its relative under-w eight position on that trade. With an operating loss of -110 bnkrw (-98 musd) in Q3 HMM is now loss making for 16 consecutive quarters. Its operating margin of -8.6% leaves the carrier at the bottom of the main carriers. HMM failed to capitalize on rising liftings and freight rates during the quarter and continues to suffer from high operating costs w hile capacity utilization w as reported to have dropped from 79.3% in Q2 to 79.0% in Q3. CMA CGM posts net profits of 103 musd in Q3, reversing the negative results of the 1 st half of the year. Operating profits (core EBIT) reached musd for a positive operating margin of 4.0%. Total liftings reached 5.26 mteu (+5.5% YoY) w hile average freight rates increased by +0.8% YoY and +4.9% QoQ to USD/TEU mainly due to gains on the transpacific. Fuel costs increase to 922 musd (+49%) YoY resulting in reduced margins. Zim s revenue rose 2.4 bnusd (+8%) in Q3, w hile liftings increased by +13% to 2.2 mteu. Revenue per TEU dropped by -4% to USD 1 089, EBITDA by - 60% and net results turned from a positive 31 musd to -74 musd. Source: Alphaliner, Dynaliners, carriers 12

13 Carriers C A R R I E R S CMA CGM has received regulatory approval from the EU Commission to take over the shortsea carrier Containerships on 31 Oct 18. The transaction w as announced on 20 June. All container logistics operations are to be integrated in CMA CGM s intra-regional market offering in North Europe and the Mediterranean. Costamar Shipping agreed to install scrubbers and increase the charter rates for 5 vessels that are currently on 10-year charters to MSC. The ships involved are the 2014-built TEU container vessels MSC AZOV, MSC AJACIO & MSC AMALFI and the 2013-built TEU MSC ATHENS & MSC ATHOS. Capital Product Partners have agreed w ith HMM to equip w ith scrubbers five TEU w idebeam container vessels currently on long term charters to HMM. The 5 ships involved all delivered in 2013 w ith 12-year charters from Capital. Effective 1 Jan 20 or from the installation date of the scrubbers, HMM w ill pay USD per day more for the charter hire of each ship. As the charters run until 2025 HMM w ould pay an extra of 9 musd per ship. Yang Ming opts for scrubbers on 8 new buildings of TEU ordered in Aug 18. The price has been revised in Nov by 4 musd per ship due to new installation of marine equipment, that is believed to be related to the installation of scrubber on the ships. Maersk has committed 80 musd for the installation of scrubbers and retrofitting for a selected part of its fleet. Alphaliner estimates that vessels will be fitted based at a reported cost of betw een 4 musd and 8 musd each. Hapag-Lloyd has ordered 10 scrubbers to be retrofitted on its HAMBURG EXPRESS TEU class vessels. Earlier the carrier had already disclosed a pilot project to convert one of its vessels to LNG propulsion. Moller-Maersk, CMA CGM, Hapag-Lloyd, MSC and ONE are discussing the creation of common IT standards w hich shall be openly available and free of charge for all stakeholder in the container shipping industry to pave the w ay for digitalization and standardization. The founding carriers control 58% of the global capacity but does not include some of the largest Asian carriers. Source: Alphaliner, Dynaliners, carriers 13

14 Regulations R E G U L A T I O N S South Africa: High Cube Container Notification - UPDATE The ministry of transport has agreed in a meeting w ith representative of the Freight Association to extend the current leniency of Regulation 224 of the Road Traffic Act w hich means that 40 foot high cube containers can continue to be transported on standard trailers. This extension w ill be effective from 01 January 2019 until 01 January Source: DHL 14

15 Did you know? Top 10 Carriers Capacity Share November 2018 Maersk s container shipping capacity share has shrunk by 1.5% in the last 12 months. The carrier s main competitors have gained since the acquisition of Hamburg Süd in Dec 17 w hich raised Maersk s share from 16.6% to 19.4%. Total capacity operated by Maersk Line and its sisters companies declined by 2.6% to 4.02 mteu. During the same period, global capacity increased by 6.0% to mteu. Maersk is expected to continue to retreat as its CEO has confirmed that it w ill not pursue further acquisitions or order large new vessels next year. The largest gainer has been COSCO w ith its cumulative capacity share including OOCL grow ing from 11.6% to 12.4%. Source: Alphaliner. 15

16 B A C K - UP 16

17 Market Outlook December 2018 Ocean Freight Rates Additional Trades (1/2) O C E A N F R E I G H T R A T E S O U T L O O K EURO AMLA EURO MENAT EURO SSA AMNO MENAT AMNO SSA AMNO AMLA AMLA Exports AMNO ASPA Capacity remains unchanged. Rates are stable w ith a slight tendency to decreasing until end of the year to SAEC. ME region show s same trend as ASPA; low space but stable rates Rates remain stable and space is available. Congestion surcharge has been announced for PODs in Nigeria by all carriers. Rates in the market are stable. Space continues to be an issue especially from US Gulf Coast and USEC but not as bad as earlier this year. Bookings are now out about 2 w eeks. Rates to South Africa and West Africa are stable, except the new ly implemented congestion surcharges in Nigeria caused overal cost increase. There are no changes in capacity and space is available. The trade continues to be full, to WCSA continued forecast of strong loadings. US to ECSA a sluggish grow th hampered by economic pressure in BR and AR. US to CENAC consistent. Fuel and EFA rising over all lanes for upw ard move on transport cost. Expect cost to rise slow ly in The announced GRI for USA-AU/NZ trade impacted the market w ith approximately $100/TEU increase for USEC/GULF. Market remains healthy till end of year. USWC service re-structure in effect since November. Congestion constraints at South East Asia destinations as customers have begun diverting volumes to these markets w hich do not yet have expanded capacity. Rate increases announced for both TPWB and Oceania trade for November w ith expectations that w ill be successfully implemented. Source: DGF 17

18 Market Outlook December 2018 Ocean Freight Rates Additional Trades (2/2) O C E A N F R E I G H T R A T E S O U T L O O K EURO MED - AMNO EURO MED AMLA USEC s services are being reshuffled, The Alliance and Ocean Alliance cooperating on one of them. The allotment of the various carriers on the services is still under fine tuning. Nothing to be highlighted EURO MED ASPA EURO MED MENAT EURO MED SSA ASPA-SPAC Nothing to be highlighted Nothing to be highlighted Nothing to be highlighted During this traditional peak season, volume is expected to be strong. How ever, nearing Christmas season, carriers plan blank sailings that arrival dates coincides w ith the festive season. Source: DGF 18

19 Drewry s Altman Z-Score as of 1 Oct 2018 Company Period Period Ended Units Net Sales EBIT Assets Book Value Liabilities Total Current of Equity Total Current The Z-Score is a statistical analysis to predict a company s probability of failure in the next tw o years, using data from the c ompany s financial statement. Retained Earnings Z-Score AP Moller-Maersk 6 months 30. Jun 18 million US$ 18' '200 22'174 33'588 27'612 10'490 29' OOIL 1) 6 months 30. Jun 18 million US$ 3' '939 3'136 4'637 5'302 1'580 4' CMA CGM 6 months 30. Jun 18 million US$ 11' '501 6'188 5'550 14'951 6'345 5' Wan Hai 6 months 30. Jun 18 million NT$ 30' '878 25'851 33'956 40'921 19'351 11' NYK group 3 months 30. Jun 18 billion Yen ' ' Hapag-Lloyd Holding 6 months 30. Jun 18 million euro 5' '998 2'268 6'146 8'851 3'115 3' K Line group 3 months 30. Jun 18 billion Yen ' Evergreen Marine Corp 6 months 30. Jun 18 million NT$ 75'128-2' '029 60'790 64' '155 50'185 8' MOL group 3 months 30. Jun 18 billion Yen ' ' China Cosco 2) 6 months 30. Jun 18 million RMB 45'041 1' '212 45'246 44' '995 55'262 10' Pacific International Lines 6 months 30. Jun 18 million US$ 2' '666 1'714 1'728 4'938 2' Yang Ming 6 months 30. Jun 18 million NT$ 64'634-5' '950 32'780 21' '838 45'936-6' Zim 6 months 30. Jun 18 million US$ 1' ' ' ' Hyundai Merchant Marine 6 months 30. Jun 18 billion Won 2' '542 1' '024 1'046-3' Z-Score 2.99 = company is safe ; Z-Score betw een 1.8 and 2.99 = exercise caution ( grey zone ); Z-Score 1.8 = Higher risk of the company going bankrupt ( distress zone ) Source: Drewry Sea & Air Shipper Insight Aug 2018, 1) parent of OOCL, 2) parent of Cosco Container Lines; Z-score is calculated as follows: T1 = (Current Assets - Current Liabilities) / Total Assets, T2 = Retained Earnings / Total Assets, T3 = Annualized EBIT / Total Assets, T4 = Book Value of Equity / Total Liabilities, T5 = Annualized Sales / Total Assets, Z-score bankruptcy rating = 1.2*T *T *T *T *T5 19

20 Carrier Mergers, Acquisitions and Alliances China Shipping Cosco OOCL Evergreen APL M E R G E R S A N D A Q U I S I T I O N S CMA CGM Hapag Lloyd United Arab Shipping Hyundai Merchant Marine Hamburg Süd Maersk Line MSC K Line MOL NYK CHINA COSCO SHIPPING EVER GREEN CMA CGM HAPAG-LLOYD/UASC HYUNDAI MERCHANT MARINE MAERSK LINE MSC OCEAN NETWORK EXPRESS (ONE) Yang Ming YANG MING Hanjin Shipping Bankrupt A L L I A N C E S F O R M E R A L L I A N C E S P R E S E N T A L L I A N C E S 2M MAERSK LINE MSC OCEAN 3 CMA CGM CHINA SHIPPING UNITED ARAB SHIPPING COMPANY 2M MAERSK LINE MSC HMM (strategic cooperation) OCEAN ALLIANCE OOCL CMA CGM CHINA COSCO SHIPPING EVERGREEN G6 HAPAG-LLOYD MOL NYK APL HYUNDAI MERCHANT MARINE OOCL CKYHE COSCO EVERGREEN HANJIN SHPPING K-LINE YANG MING THE ALLIANCE HAPAG-LLOYD/UASC ONE YANG MING Source: Carriers 20

21 Topic of the Month Top 12 Carriers by Operated Capacity (in Mil. TEU), December After triggering regulatory approval processes in 23 jurisdictions, Maersk finally aquired Hamburg Süd. Over the next five months, Maerk will terminate some of Hamburg Süd s overlapping services on certain trades APM- Maersk, Hamburg Süd MSC COSCO, OOCL CMA CGM, Mercosul Hapag-Lloyd ONE (NYK, MOL, K Line) Evergreen Yang Ming PIL Zim HMM Wan Hai Source: Alphaliner, incl. pending mergers 21

22 Acronyms and Explanations 2M - Carrier Alliance: Maersk / MSC AMLA - Latin America AMNO - North America AR - Argentina ASPA - AsiaPacific BR - Brazil CAGR - Compound Annual Growth Rate CENAC - Central Amercia and Caribbean CKYHE - Carrier Alliance: Cosco, K-Line, YangMing, Hanjin and Evergreen CNC - CNC Line (Cheng Lie Navigation Co. Ltd.) DG - Dangerous Goods DWT - Dead Weight Tonnage EB - Eastbound ECSA - East Coast South America EGLV - Ev ergreen Marine Corp EURO - Europe FMC - US Federal Marine Commission G6 - Carrier Alliance: APL, Hapag Lloyd, Hyundai, MOL, NYK and OOCL GRI - General Rate Increase HJS - Hanjin Shipping HMM - Hy undai HL - Hapag -Lloy d HSUD - Hamburg Süd HWS - Heav y Weight Surcharge IA - Intra Asia IPBC - India Pakistan Bangladesh Colombo IPI - Inland Point Intermodal ISC - Indian Sub Continent MENAT - Middle East and North Africa ML - Maersk Line mn - Millions MoM - Month-on-Month NOO - Non-operating (vessel) owners Ocean 3 - Carrier Alliance: CMA, UASC, China Shipping OCRS - Operational Cost Recovery surcharge OOCL - Orient Ov erseas Container Line OWS - Ov erweight Surcharge PH - Philippines PNW - Pacif ic North West Ppt. - Percentage points PSW - Pacif ic South West RR(I) - Rate Restoration SAEC - South America East Coast SAWC - South America West Coast SOLAS - Saf ety of Life at Sea SPRC - South People s Republic of China South China SSA - Sub-Saharan Af rica SSL - Steam Ship Line T - Thousands TEU - Twenty f oot equivalent unit (20 container) TP - Trans Pacif ic TSA - Trans Pacif ic Stabilization Agreement ULCS - Ultra Large Container Ship USGC - US Gulf Coast US FMC - US Federal Maritime Commission USEC - US East Coast USWC - US West Coast VGM - Verif ied Gross Mass VLCS - Very Large Container Ship VSA - Vessel Sharing Agreement WB - Westbound WCSA - West Coast South America WHL - Wan Hai YML - Yang Ming Line YoY - Year-on-Year YTD - Year-to-Date 22