MARITIME Market Update Time to redesign our models? INCENTRA Council Meeting - Haugesund Jakub Walenkiewicz 1 SAFER, SMARTER, GREENER
JM Keynes AGGREGATED DEMAND Boost the economy Increase spending CREATE additional demand! (called aggregated demand) USE public sector if the private one is insufficient John Maynard Keynes British economist 1883-1946 2
Contracting vs earnings 3
Demand vs Supply Seaborne trade growth has been satisfactory, with annual growth 3-4% Sizable drop in world trade in 2009 is casually neglected Yet the fleet growth is notoriously faster then demand There seems to always be a reason to contract a new ship 4
Reasons for contracting Reasonable Speculative/political Insane Renewal Purpose built (for complex projects) Trading areas ECA Cargo demand (very specific segments only) Counter cyclical orders Capital availability (PE) Increased efficiency and/or competitiveness Incentive schemes (i.e. China) Limited capacity in yards? Last one in the queue syndrome Stakeholders pressure my ship will be ready by the time the market has recovered currency exchange killer offers from yards (and financiers) 5
Contracting 2015 1H Continued slow-down in the NB market Substantially lower volume of contracts 1H 2015 over 50% below 1H 2014 South Korea - 38% share (GT) : crude, container, products, gas China 27% share (GT): crude, bulk, containers, gas Japanese - 25% share (GT): bulk, containers, crude, products, gas 6
INSANITY doing the same thing over and over again, each time expecting different results 7
New contracts activity Obvious slow down y-o-y Biggest correction in bulk and offshore segments Despite fewer vessels ordered, the tanker segment remains strong Container market stronger! Still positive sentiment in the gas sector despite large orderbook So far 1050 contracts (41.9 mill. GT) 8
World Seaborne Trade Seaborne trade in 2014 reached 10.537 billion tonnes Expected growth in 2015 10.959 billion tonnes (UP 4.1%) Iron Ore + 6.4% Coal + 2.3% Crude Oil + 1.4% Oil Products + 3.4% Containers + 7.1% Gas & Chem + 5.1% 9
Orderbook composition Orderbook Orderbook acc. by country acc. by of ship domicile type as operator builder of 2015.06.01 as of 2015.06.01 Operator Builder Ship Country Type Number of vessels Share (%) DWT Share (%) Bulker China Greece 1624 2576 397 24,7 39,2% 6,0% % 124 41 133963997 570 309 167 879 46,0 42,8% 14,2% % Tanker Korea Singapore (South) 1027 870 599 15,6 13,2% 9,1% % 85 278851704 666 991 353 740 27,1 29,4% 9,6% % Container Japan China 445 954 456 14,5% 6,8 6,9% % 53 2340511835 959 742 996 634 13,9 18,5% 8,2% % LNG Philippines JapanCarrier 159 102 366 2,4 1,6% 5,6% % 188 12354974 742 504 906 4,2 3,0% 6,4% % Offshore Brazil Norway 1317 161 254 20,0 2,4% 3,9% % 12 510806838 607 968 710 913 3,7 1,9% 4,5% % LPG Romania Hong Carrier Kong 220 209 74 3,3 1,1% 3,2% % 10 36934009 263 948 884 166 2,4 1,1% 3,8% % Dry Vietnam Bermuda Cargo 337 212 133 5,1 3,2% 2,0% % 10 24445869 220 848 439 428 1,5 0,8% 3,7% % Roro Chinese GermanyTaipei (Taiwan) 128 202 36 1,9 0,5% 3,1% % 10 11513708 531 765 281 474 0,5% 3,7% % Miscellaneous United Chinese States Taipei of (Taiwan) America 1134 131 84 17,2 2,0% 1,3% % 19 1136413 291 783 256 895 0,4% 3,4% % Pass./Ferry Croatia Korea (South) 175 116 33 2,7 0,5% 1,8% % 9 552 637 484395 867 972 0,2% 3,3% % Reefer Singapore Monaco 128 849 0,1 1,3% 1,9% % 9 414 460 68060 318 264 0,0 0,1% 3,3% % Others 1342 3631 20,4% 55,2% 0,0 % 105 3 251 116 027 531 36,1% 0,0 1,1% % Grand Total 6575 100,0% % 291071802 100,0% % 10
2009 vs 2015? 11
2015 World Economy 4 drivers 1. Uneven global growth World 3.5% 3.3% advanced world - 2.4% 2.1% developing world - 4.3% 4.2% 2. Weak banks and high debt public, household, corporate, bank debt interest rates low relaxed fiscal policy Developed economies World average Emerging economies 3. Low oil prices always good news for oil importers oil exporters will survive 4. Strengthening of the US dollar substantial help for importing countries stimulates exporters outside US dollar 12
Commodities $ 40-ish $ 55-ish $ 60-ish 13
Drivers 14
Drivers 15
Weather chart CRUDE OIL PRODUCTS LNG LPG BULKERS CONTAINERS OFFSHORE 16
Contracting Forecast 17
Conclusions Our models gradually stop working Read between the lines as supply/demand changes directions and forms Excess of capacity! Reduction in the NB activity, shipyards squeezed, orderbook on a downhill trend but there are many reasons to order new ships, particularly is there is money to be spent Don t expect the supply/demand calculations to provide you with the accurate number of new contracts 18
Thank You Jakub Walenkiewicz Jakub.Walenkiewicz@dnvgl.com www.dnvgl.com SAFER, SMARTER, GREENER 19