OCEAN FREIGHT MARKET UPDATE

Transcription

1 DHL Global Forwarding, Freight OCEAN FREIGHT MARKET UPDATE November

2 Contents TOPIC OF THE MONTH Global GDP Growth vs. Container Throughput Growth: F HIGH LEVEL DEVELOPMENT MARKET OUTLOOK Freight Rates and Volume Development ECONOMIC OUTLOOK & DEMAND DEVELOPMENT CAPACITY DEVELOPMENT CARRIERS REGULATIONS? DID YOU KNOW? Evolution of CMA CGM Capacity,

3 Topic of the Month Global GDP Growth vs. Container Throughput Growth: F C O N T A I N E R T R A D E G R O W T H R E B O U N D S The global container volumes growth to GDP growth ratio was only 1.4 times on average in the last six years. This ratio is significantly lower than the 2.6 times multiplier recorded in the last decade prior to 2009 and the 3.4 times multiplier in the 1990s. The growing rate of containerization helped to push up the multiplier in the earlier decades, as cargo shifted from break bulk ships to containers but as the industry matures, there are reduced opportunities for containers to penetrate other transport modes. Trade protectionism, near-shoring, the miniaturization of consumer goods and the shift of the Chinese economy toward domestic consumption have all been blamed for the lower container growth to GDP ratio in recent years. Source: Alphaliner However, the downward trend seen since 2011 has been reversed in 2017, with the ratio expected to rebound to 1.7 times this year. Predictions that the container trade had reached a mature phase of its development, with volume growth expected to grow only on par with GDP, proved to be overly pessimistic, even though container volume growth is unlikely to see a return to the 2 to 3 times GDP ratio that it had enjoyed prior to

4 High Level Market Development Supply and Demand ECONOMIC OUTLOOK 1) GDP GROWTH BY REGION 2017F 2018F 2019F 2020F 2021F CAGR ( ) EURO 2.1% 1.9% 1.8% 1.8% 1.8% 1.8% MEA 3.0% 3.4% 3.7% 3.9% 4.0% 3.7% AMER 2.0% 2.6% 2.5% 2.3% 2.4% 2.5% ASPA 5.0% 4.8% 4.6% 4.5% 4.7% 4.7% WORLD CONTAINER INDEX (WCI) 2) Q1 15 Q2 Q3 Q1 16 Q2 Q3 Q1 17 Q2 Q3 SUPPLY VS DEMAND GROWTH 4) % Growth DGF World 3.1% 3.2% 3.1% 3.1% 3.2% 3.2% Demand Growth Supply Growth F 2018F 2019F Source: 1)real GDP, Global Insight, Copyright IHS, Q All rights reserved; 2) Drewry Container Forecaster Forecast global supply-demand balance; 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 SHANGHAI CONTAINERIZED FREIGHT INDEX (SCFI) 3) BUNKER PRICE INDEX 5) BIX 380 BIX MGO Q1 15 Q1 15 Q2 Q2 Q3 Q1 16 Q3 Q1 16 Q2 Q3 Q2 Q3 Q1 17 Q1 17 Q2 Q2 Q3 Q3 4

5 Market Outlook November 2017 Major Trades Market slightly picking up again after Chinese Golden Week 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 5

6 Market Outlook August 2017 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 ASPA AMLA ASPA AMNO EURO AMNO ASPA MENAT ASPA ASPA AMNO EURO Source: DGF High vessel utilization after the Golden week holiday due to the extensive blank sailing program and addition port omissions. GRI announced for 1 st November & additional blank sailings in wk46 rates are dropping for high volume spot cargo; no influence on tender pricing, which is still kept stable MX & WCSA rates expected to increase on 1st Nov, to capitalize on final shipments to arrive AMLA destination in time for Christmas. For ECSA, expecting 2 extra loaders in early Nov, proposed GRI may not be successful. Still, bookings must be placed 15 days before vessel arrive at origin. Overall space continue to be tight due to blank sailings in October. Space situation expected to continue in Nov with THE alliance already announcing their blank sailings in wk 46 & 47. Rates are stable to USEC & GU, small increase to USWC. Vessels are well utilized and space can be a concern depending on Carrier, Week and Loop. Early bookings is advised. Rates have been reduced slightly and/or extended till End October except for Middle East. Tight vessel utilization after Golden Week, (mainly due to blank sailing that Carriers have implemented). Carriers are trying to go for another round of GRI w.e.f 01 Nov. Severe thunder storm has worsened the situation in Durban. This bad ailment has caused some damages at the terminal, vessels and affecting ships operations. All vessels calling Durban are affected. At this moment, cargos are expected to suffer at least a week delay. Space is tight with the blank sailings during the China Golden Week period, especially to IPBC and expected to remain in the month of November. Several carriers have announced a NOV GRI for IPBC. Unchanged and stable 6

7 Economic Outlook & Demand Development F O R 1 ST T I M E S I N C E , G D P G R O W I S I N L I N E W I T H P R E V I O U S Y E A R S F O R E C A S T EURO 2017 GDP growth has been upgraded by 0.3% to 2.1% as EURO economy has further strengthened, and its upside potential over the short term has improved. Markedly improved labor markets, decent global demand, accommodative monetary policy, and elevated business and consumer confidence support growth. AMER 2017 AMNO GDP forecast was slightly down due to expected volatility of US economic activity over the next few quarters, induced by Hurricane Harvey. Weaker doller, combined with stronger growth abroad, accounted for unexpected turnaround in export growth in US. ASPA EMERGING MARKETS DEMAND DEVELOPMENT Robust start into 2017 for most major AP economies with support from strong demand for electronics industry, recovering agricultural production, higher commodity prices, and stronger-than-expected conumption activity led a slight forecast upgrade. Export forecasts strongly revised down for KR & IN, leading to decline of the regional forecast. Growth of BR economy was unbalanced in the beginning of 2017, as exports grew, but private consumption, investment, and government spending declined. MX exports outlook was revised upwards. Global Manufacturing PMI was at 75-month high in Aug. EURO PMI continuously pointed to strengthening industrial activity within the disclosed period. In US the Manufacturing PMI signaled strong expansion and both Asian manufacturing PMI s (Caixin and Nikkei) signaled expansion in Aug. BR manufacturing PMI dipped in June but returned into expansion zone in Jul. Also MX PMI signaled improvement in Aug. Source: Global Executive Summary, IHS Markit, Sep The Purchase Manager Index is an IHS proprietary metric that polls purchasing managers to understand if they are to order more or less in the future, hence giving a representative estimation of the global business sentiment. Assessed monthly, a PMI at 50 is considered neutral, expanding above 50, and shows business shrinking below 50. 7

8 Capacity Development C A P A C I T Y D E V E L O P M E N T Zim will continue to offer its med-ecas service through a slot arrangement on the new joint loop that Hapag-Lloyd and MSC are setting up in Oct. COSCO pursues Europe-ECSA link through slots on new joint service of Maersk, Hamburg Süd and CMA CGM. The changes on this trade lane were triggered by the absorption of Hamburg Süd by Maersk Line. Weekly capacity on the Far East-West Africa route has increased by more than 35% since Jul, with the launch of 3 new services (Maersk FEW7, Maersk/CMA CGM FEW5/WAX2, COSCO/GSL WAX5/FA3 ) and the upgrade of MSC s African Express service. Idle fleet edged upwards due to a lack of demand in the larger sizes from the effects of China s Golden Week holidays. Unlike in previous years when carriers would have announced capacity withdrawals for the slack season starting in Oct, there have not been any announcements yet, regarding the main carrier s winter deployment plans while carriers keep battling for market share. Chinese port volumes surged in Sep just ahead of Chinese National Golden Week holidays, reflecting a strong peak season, although there were no reports of space shortages as carriers deployed multiple extra loaders to cater for the additional demand. Source: Alphaliner, carriers 8

9 Carriers C A R R I E R S Hapag-Lloyd has completed on 17 Oct its capital increase that was agreed upon as part of the merger of Hapag-Lloyd and UASC. The proceeds from a rights issue offered to all shareholders on 28 Sep amounted to EUR 352m. The capital increase was backstopped by the four primary shareholders CSAV Germany Container Holding GmbH, Kuehne Martime GmbH, Qatar Holding Germany GmbH and The Public Investment Fund of the Kingdom of Saudi Arabia who acquired all the remaining unsubscribed shares. Yang Ming to raise USD 197m from the issue of 500m new shares. 80% of the new shares that are to be issued are reserved for existing shareholders while 10% is reserved for employees, leaving 10% of the shares open to the public. The new capital increase follows its first round of capital increase in Feb 17 which raised USD 55. The carrier had earlier planned to complete the 2 nd stage of its recapitalization program in Jun 17 but the plan was delayed due to weak market conditions. The Taiwan government is expected to contribute the main portion of the cash to be raised. The share price fell by 28% from its recent peak. The two state-owned shipping groups China COSCO Shipping and China Merchant Shipping intend to dispose of their equity shares in Shanghai Jin Jiang Shippings (SJJ), a Chinese regional carrier offering short sea container services in East Asia. The current majority shareholder of SJJ is Shanghai International Port Group (SIPG), which holds a 79.2% equity share. APL has announced the launch of its enhanced Eagle Guaranteed program to cater for priority shipments on the eastbound transpacific from 1 Nov 17. The program consists of 3 separate products: Eagle GO (EGO), where the EGO surcharge paid by the shipper will be refunded if shipment not loaded on specified vessel Eagle GET (EGT) guarantees the discharge of containers within 12 hrs of vessel cargo operation for a flat EGT surcharge Eagle REACH (ERC) provides a day definite rail delivery to reach 6 inland destinations in the US HMM has announced on 13 Oct a rights issue to raise KRW 693.6bn (USD 614m) from its existing shareholders. The company will issue 120m new shares and plans to use KRW 293.6bn from the expected proceeds for working capital and KRW 400bn to invest in new ships & terminals. Korea Development Bank (KDB), which currently holds a 13.1% in HMM, is expected to fund most of the capital increase. The share price has tumbled by 15% since the announcement. Source: Alphaliner, carriers 9

10 Regulations R E G U L A T I O N S The newly introduced Thailand customs ACT B.E.2560 will replace the Customs ACT B.E.2469 on cargoes with departure and arrival from 13 Nov 17 onwards. Section: 211: all cases of packages containing goods shall bear marks and numbers and such marks and numbers shall be shown on all documents and the cargoes. If an importer or exporter refuses or neglects to comply with the aforesaid requirements, such person/company shall be liable to a fine not exceeding baht. The shipping marks must be shown on all documents related to the shipment. This includes: HBL Commercial Packing list The cargo itself. Note: Blank or no mark is no longer acceptable by the customs. According to a survey from ExxonMobil, shipping lines are unprepared for the 2020 deadline for ships to burn low-sulphur fuel. In 2016 the International Maritime Organization (IMO) promised to have greenhouse gas emissions regulations in place from 2020 onwards when a 0.5% sulphur cap on marine fuel consumption will come into effect. Source: DHL, Ti 10

11 Did You Know? Evolution of CMA CGM Capacity, A C Q U I S I T I O N S A N D S P E C T A C U L A R G R O W T H CMA CGM s appetite for growth continues with the recent announcement of its acquisition of Mercosul Line and SOFRANA Unilines. The moves follow the successful consolidation of APL since June 2016 and the turnaround of APL s financial performance within the first year of its integration into the CMA CGM Group. Since 1997, CMA CGM has grown by a remarkable 2,800%, with 13 acquisitions made along the way. CMA CGM has also been linked to a potential bid for PIL - although the Singapore-based ocean carrier has repeatedly denied that the company was up for sale. Source: Alphaliner 11

12 B A C K - UP 12

13 Market Outlook November 2017 Ocean Freight Rates Additional Trades (1/2) Ocean Freight Rates Outlook EURO AMLA EURO SSA AMNO MENAT AMNO SSA AMNO AMLA AMLA Exports next step of rate increases to SAEC materialized for November. It s a more slight increase as expected, as carriers are still cautious and are still monitoring capacity and utilization carefully. unchanged stable, well utilized vessels. Space to South Africa will become tight during the next weeks due to upcoming Christmas / Summer Holidays in South Africa. No change in the current market situation. Space is still tight from USEC & USGC Ports. 1 or 2 weeks out from USEC and 2-3 weeks from USGC.. It appears that current rates will stay the same until end of this year or might even drop few dollars from USEC to main ports in MEA such as Jebel Ali/Jeddah in November Space is available to all destinations in South & West Africa. E. Africa is tighter due to routing via congested transshipment ports. APL & CMA applied GRIs to most African destinations Rate trending upward all US to WCSA and selected ECSA destinations. Rate trending upward Gulf to all AMLA Capacity reduced slightly w/cma cancelling Gulf to CL on Brasex Rates from SAEC continue to rise as fruit season begins and capacity is cut to EURO Bookings are being made 4-6 weeks out(saec) Space issues continue on WCSA Numerous GRI s being announced Source: DGF 13

14 Market Outlook November 2017 Ocean Freight Rates Additional Trades (2/2) Freight Rates Outlook EURO MED - AMNO EUR MED AMLA EURO MED ASPA EURO MED MENAT EURO MED SSA ASPA-SPAC Unchanged/Stable Unchanged/Stable Stable/some slight reductions can occur depending on the provider Stable/some slight reductions can occur depending on the provider Unchanged/Stable Space is very tight, SEA especially tight. Mid November GRI likely to succeed. Space issue escalations will continue to exist until possibly mid December. Source: DGF 14

15 Carriers Drewry s Altman Z-Score as at August 17 Company Period Period End Unit Net Sales EBIT Asset Total Asset Current Book Value of Equity Liabilities Total Liabilities Current Retainted Earnings AP Moller-Maersk 6 months 30-Jun-17 mn US$ OOIL (parent of OOCL) 6 months 30-Jun-17 mn US$ CMA CGM 3 months 31-Mar-17 mn US$ ,812 5,940 5, Wan Hai 6 months 30-Jun-17 mn NT$ K Line Group 3 months 30-Jun-17 bn Yen NYK Group 3 months 30-Jun-17 bn Yen Hapag-Lloyd Holding 3 months 31-Mar-17 mn EUR Pacific International Lines Annual 30-Dec-15 mn US$ Evergreen Marine Corp 6 months 30-Jun-17 mn NT$ MOL Group 3 months 30-Jun-17 bn Yen , , China Cosco 1) 3 months 31-Mar-17 mn RMB Yang Ming 6 months 30-Jun-17 million NT$ Hyundai Merchant Marine 6 months 30-Jun-17 bn Won Zim 3 months 31-Mar-17 mn US$ Slight improvement in all carrier results, as most of them are now stretched over a shorter period of time. HMM now scores a positive 0.35, whilst OOIL went back to the grey zone (scoring above 2.00). Hapag-Lloyd is marginally down vs. their annual results published in March. Again, none of the carriers manage to reach the > 2.99 safe zone. The Z-score is a statistical analysis to predict a company s probability of failure in the next 2 years, using data from the company s financial statement. A Z-score 2.99 company is safe. A Z-score between 1.8 and 2.99 exercise caution ( grey zone ). A Z-score 1.8 higher risk of the company going bankrupt ( distress zone ). All indications based on these financial figures only. Source: Drewry Sea & Air Shipper Insight, June 2017; 1) 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 Z-Score 15

16 Market Outlook Volume Outlook in Main Trade Lanes, 2017 Estimate & Growth Forecast 2017/20 in % 2017e, in mteu 2017e-2021e CAGR, in % N O R T H A M E R I C A I n c l. M E X I C O 3.5 mteu +1.2% F A R E A S T N O R T H A M E R I C A 7.6 mteu +0.7% I n c l. M E X I C O 1.7 mteu +0.9% 11.9 mteu +1.6% 15.8 mteu +0.9% 3.5 mteu +1.3% 2.0 mteu +0.7% L A T I N A M E R I C A 1.7 mteu +1.3% 0.2 mteu +3.0% E U R O P E I n c l. M E D 7.0 mteu +0.9% I N T R A A S I A excl. Oceania 7.0 mteu +0.9% 4.5 mteu +2.8% L A T I N A M E R I C A 35.1 mteu +3.1% 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 2017e- 2020e Mid-term growth is mainly driven by Asian tradelanes. Source: Drewry 16

17 Global Capacity Development all Trades Highest scrapping level ever [TTEU] Average age % Idling remains high [TTEU] 1, % ,359 1,324 Returning capacity well absorbed by demand 602 (May 2017) Net capacity growth remains low Net capacity growth 2017E 7.7% -1.8% 2.7% -3.3% Apr 17 YTD Scheduled Post-ponements capacity growth Scrapping Net capacity growth Very few deliveries expected post Orders placed by year [TEU m] Vessel deliveries by year [TEU m] ,300 TEU % Source: Alphaliner (May 2017), carrier views Apr17 YTD E 17

18 Carrier Mergers, Acquisitions and Alliances China Shipping Cosco OOCL TBC Evergreen M E R G E R S A N D A Q U I S I T I O N S APL 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 18

19 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 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 - Hyundai HSUD - Hamburg Süd HWS - Heavy Weight Surcharge IA - Intra Asia IPBC - India Pakistan Bangladesh Colombo IPI - Inland Point Intermodal ISC - Indian Sub Continent MENAT - Middle East and North Africa mn - Millions MoM - Month-on-Month NOO - Non-operating (vessel) owners Ocean 3 - Carrier Alliance: CMA, UASC, China Shipping OCRS - Operational Cost Recovery surcharge OWS - Overweight Surcharge PH - Philippines PNW - Pacific North West Ppt. - Percentage points PSW - Pacific South West RR(I) - Rate Restoration SAEC - South America East Coast SAWC - South America West Coast SOLAS - Safety of Life at Sea SPRC - South People s Republic of China South China SSA - Sub-Saharan Africa SSL - Steam Ship Line T - Thousands TEU - Twenty foot equivalent unit (20 container) TP - Trans Pacific TSA - Trans Pacific 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 - Verified Gross Mass VLCS - Very Large Container Ship VSA - Vessel Sharing Agreement WB - Westbound WCSA - West Coast South America YML - Yang Ming Line YoY - Year-on-Year YTD - Year-to-Date 19