OCEAN FREIGHT MARKET UPDATE

Transcription

1 DHL Global Forwarding, Freight OCEAN FREIGHT MARKET UPDATE January

2 Contents TOPIC OF THE MONTH Top 12 Carriers by Operated Capacity (in Mil. TEU), December 2017 HIGH LEVEL DEVELOPMENT MARKET OUTLOOK Freight Rates and Volume Development ECONOMIC OUTLOOK & DEMAND DEVELOPMENT Top 10 Economic Predictions for 2018 CAPACITY DEVELOPMENT CARRIERS? DID YOU KNOW? The Transpacific Stabilization Agreement (TSA) BACK-UP 2

3 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 Source: Alphaliner, incl. pending mergers COSCO, OOCL CMA CGM, Mercosul Hapag-Lloyd ONE (NYK, MOL, K Line) Evergreen Yang Ming PIL Zim HMM Wan Hai 3

4 High Level Market Development Supply and Demand ECONOMIC OUTLOOK 1) GDP GROWTH BY REGION 2017F 2018F 2019F 2020F 2021F CAGR ( ) EURO 2.3% 2.1% 1.8% 1.8% 1.8% 1.9% MEA 3.1% 3.3% 3.6% 3.8% 4.7% 3.6% AMER 2.2% 2.4% 2.4% 2.3% 2.2% 2.3% ASPA 5.0% 4.9% 4.7% 4.6% 4.8% 4.8% 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 3.2% 3.2% 3.1% 3.1% 3.1% 3.1% F Demand Growth Supply Growth 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 Q3 Q1 16 Q1 16 Q2 Q2 Q3 Q3 Q1 17 Q1 17 Q2 Q2 Q3 Q3 4

5 Market Outlook January 2018 Major Trades In contrast to the East-West routes, rates on North-South routes are rising. 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 Janline - Strong Janline - - OCEANIA = ++ Source: DGF 5

6 Market Outlook January 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 ASPA AMLA ASPA AMNO EURO AMNO ASPA MENAT ASPA ASPA AMNO EURO Bookings are on a rising trend leading into the CNY period mid of FEB. Carriers grasping the opportunity and starting to announce two GRI s for JAN: 1st Jan and 8th Jan. Rates remain between stable and slightly decreasing. Asia to WCSA/WCCA/MX is at 90% full, space available. Asia to ECSA is at 95% full with some space constraints due to reduction on capacity, because of smaller vessels on week 52.There will no capacity injection or reduction from Asia to Mexico and WCSA. Currently services are grouped into three existing Asia-ECSA strings and nine Asia-WCSA string, which involving some 14 separate carriers. As a result of the Maersk-Hamburg Sud reconfigurations, upcoming change on the Asia-ECSA and Asia-WCSA routes are expected to radically alter the existing service structures. Bookings expected to be strong leading into Feb prior to CNY holidays. Jan & Feb GRI will have moderate success especially into USEC. Rates are stable and vessels are well utilized. MSK introduce a new service 12/12 Colombia Express calling Newark, Charleston, Rotterdam & Felixstowe. Market into EMED/Middle East still remain slow in December. Carriers have still dropping rates in order to get more cargo onboard. Pre CNY rush will be expected in Jan/Feb IPBC rates have remained low in Dec but is forecasted to pick-up in January with the pre-cny rush. The January GRI and blank sailings have been announced. The various service reshuffling on the Intra-Asia trade is expected to increase the overall capacity in the market. In USEC to Europe market, capacity decreases drastically in week 1 & 3 due to blank sailings Source: DGF 6

7 Economic Outlook & Demand Development: Top 10 IHS Economic Predictions for The US economy will sustain above-trend growth. Europe s expansion will slow a little, but remain solid. Japan s growth spurt will fade. China s momentum will weaken. The improved performance of the emerging world will be sustained With the rally over, commodity prices will be range-bound and volatile. Source: Global Executive Summary, IHS, Dec Upward pressures on inflation will remain muted. The Fed will keep raising interest rates some other central banks may follow The US dollar will be pushed up a little more. With global growth momentum strengthening, and assuming no policy mistakes or black swans, the risks of a recession remain low. 7

8 Capacity Development C A P A C I T Y D E V E L O P M E N T ( 1 / 2 ) With a 23% increase in liftings Cosco took title as biggest container line from Maersk in Q3 17 whereas Maersk carried 2.4% fewer, its booking systems temporarily affected by the cyber attack in summer that caused a 12-day IT shutdown. A lack of capacity discipline let utilization drop across all key tradelanes, prompting carriers to resort to rate slashing. Transpacific routes are currently under the most severe pressure, and numerous attempts to implement General Rate Increase (GRI) have already failed and Maersk s decision to withdraw from the TSA (Transpacific Stabilization Agreement) in December could further de-stabilise the trade. The TSA has already been weakened by the resignation/exit of several members (K Line, NYK, Zim, Hanjin, CSCL). MSC and CMA CGM plan to jumboize up to 21 neo-overpanamax vessels of around TEU and increase the vessel s capacities to ca TEU. Planned upgrades comprise lengthening of the ships by two 40 container bays, raising the deckhouses and funnels, as well as raising and strengthening container lashing bridges. Such conversion can yield a 20% boost in nominal container intake at relatively low cost and with relatively short downtimes. The jumboization will lead to a slight speed loss due to the increased fiction linked to the large wet area. On the other hand the increase will allow to substantially decrease per-slot bunker consumption, resulting in an overall decrease in loop costs, while also lowering emissions on a perslot basis. Yang Ming plans to renew its fleet with up to 20 new ships of and TEU, that will replace the same number of chartered units in the size range from to TEU over the next 3 years. The ships to be replaced were mostly fixed prior to 2009 at high charter rates. According to Yang Ming, savings of 20-60% on its fleet costs are expected from the renewal program. The new ships are aimed at the intra-asia, as well as the Transpacific trade. Source: Alphaliner, The Loadster, carriers 8

9 Capacity Development C A P A C I T Y D E V E L O P M E N T ( 2 / 2 ) THE Alliance has announced on 18 Dec 17 the details of its revised East-West network effective Apr 18. The revised network presents no new loops, only the rotations of some services are revised. These changes will coincide with the merger of the liner activities of NYK, MOL and K Line to the new Ocean Network Express (ONE). Total capacity provision of the THE Alliance carriers is limited and THE Alliance is therefore expected to lose market share compared to OCEAN and 2M, as well as independent carriers. OCEAN Alliance unveiled their 2018 service network on 21 Dec 17 to become effective from Apr 18. The provisional schedule for 2018 will offer 42 East-West services, compared to 41 currently, using a fleet of 340 vessels (currently 331) with a total capacity of 3.6 mteu, representing a capacity increase of about TEU (+7.5%). Overall the capacity increase is expected to be even larger once all ships on the orderbooks are added to the active fleet in the course of According to SeaIntel s fleet data, 108 vessels of over TEU will be delivered. Source: Alphaliner, The Loadster, carriers 9

10 Carriers C A R R I E R S Hapag-Lloyd has completed the integration of UASC into the group in just six months by bringing together the operating business, the IT systems, the different fleets, and the corresponding departments and country organizations. Beginning in 2019, Hapag-Lloyd expects annual synergies of USD 435m as a result of the merger. Yang Ming completed its 2 nd round of capital raising on 8 Dec 17 amounting to NTD 6bn (USD 200m). Together with the 1 st private share placement carried out in Feb, the carrier has raised a total of TW bn (USD 342m) in fresh funds this year that are used to repay the company s outstanding debt. As a result, the Taiwan government holds 45% of Yang Ming shares. Nevertheless, the recent recapitalization measures failed to lift the stock price. On 8 Dec 17 CMA CGM announced that it completed the acquisition of Mercosul Line from Maersk. The sale of Mercosul was contingent on the successful completion of the Hamburg Süd transaction by Maersk. The acquisition allows CMA CGM to strengthen its service offering in Brazil and South America cabotage and door-to-door services. Hamburg Süd will retain its brand under Maersk ownership and remain a commercially independent company with its own Sales & Marketing, Customer Service, and auxiliary departments such as IT, HR, and Finance and Accounting. HMM has completed its rights issue on 14 Dec 17, raising KRW 600bn (USD 554m). KRW 200bn (USD 185m) will be set aside for new vessel investments. A further KRW 200bn are earmarked for investments in container terminals in KR, US, VN & SG. The remaining proceeds will repay HMM s existing debt. SM Line has issued a press statement on 18 Dec 17 confirming its intention to launch 2 new TP services in the 1 st half of It also revealed that it is seeking various partnership arrangements, including a potential cooperation with HMM. HMM has not made any corresponding announcements of it own, and is believed to be reluctant to help its Korean rival to enter new markets on the TP trade despite their shared nationality. CMA CGM offers a new solution, branded Serenity that commits to compensate customers for any kind of unforeseen events. The first product reveled is Cargo Value Serenity that provides a refund of up to 100% of the value of the cargo in less than 30 days for goods that are damaged or lost during transport for any reason, including natural disasters Source: Alphaliner, Drewry, carriers 10

11 Did You Know? The Transpacific Stabilization Agreement (TSA) The Transpacific Stabilization Agreement (TSA) is a research and discussion forum used by main container shipping lines which carry cargo between Asia and the United States. Rate activities is limited to recommendations. Source: Alphaliner, TSA Maersk announced its departure from the TSA in Dec 17. According to Maersk the carrier regularily assesses its involvement in VDAs from a regulatory and commercial viewpoint. In view of the recent changes in the regulatory landscape in HK ad NZ the carrier has decided to exit all VDAs. This decision is leaving the TSA carrier s share of the transpacific trade at only 65%, compared to a peak of over 80% in the past. Current members of the TSA are: APL, CMA CGM, COSCO, Evergreen, HMM, Hapag-Lloyd, MSC, OOCL, Yamg Ming Former members of the TSA: Haning Shipping (bankrupt in 2016), Maersk, K Line, MOL, NYK, Zim (all resigned), NOL, NLS, Sea-Land, Nedlloyd, P&O, CSCL (all acquired by or merged with other carriers) Other existing VDAs (Voluntary Discussion Agreements): AADA (Asia Australia Discussion Agreement), ANZDA (Asia New Zealand Discussion Agreement), AWATA (Asia West Africa Trade Agreement), IADA (Intra-Asia Discussion Agreement) 11

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13 Market Outlook January 2018 Ocean Freight Rates Additional Trades (1/2) Ocean Freight Rates Outlook EURO AMLA EURO SSA AMNO MENAT AMNO SSA AMNO AMLA AMLA Exports Rates will be extended and stable in January. Utilization is good up to full. unchanged stable, well utilized vessels. Problems in POD Durban due to less capacity (cranes damaged after storm) and therefore heavy delays in berthings shall improve, but are expected to continue for some more time. Alternatively carriers are using POD Cape Town and Port Elizabeth / Coega for oncarriages into South African hinterland. No major changes this month. Space to M.East is still tight from USEC & USGC Ports. Current rates will stay the same No Space issues or service changes on USA to South & West Africa services Rates are stable with no increase/decrease expected until new year or in the first quarter of 2018 Capacity remains stable but full forcing upward pressure on rates. US-WCSA under most stress w/full capacity. Vessels booked 2-3 weeks out. Rates from SAEC continue to rise as fruit season begins. Space issues continue in Brazil, WCSA and Mexico Equipment deficits affecting conditions in Colombia Source: DGF 13

14 Market Outlook January 2018 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 Strong booking forecast in the market in preparation for CNY. Vessels are full. Carriers are preparing for GRI in January. 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-Jan-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 2018; 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 % 2018e, in mteu 2018e-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 2018) 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 2018), 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