container shipping market 2020 outlook · 2020-02-03 · maersk 2018 sustainabilityreport...
TRANSCRIPT
Container Shipping Market 2020 Outlook
Georgia Foreign Trade Conference (GFTC 2020)February 2-4, 2020
The Cloister, Sea Island, Georgia
E-mail: [email protected]
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
To lead or not to lead
Page 1
Summary excerpt taken from Thinking Strategically: TheCompetitive Edge in Business, Politics, and Everyday Lifeby Avinash K. Dixit and Barry J. Nalebuff (1991)
After the first four races in the 1983 America’s Cupfinals, (the American sailboat) Liberty led 3-1 in thebest-of-seven series. Liberty got off to a 37-secondlead when (the Australian challenger) Australia IIjumped the gun and had to recross the starting line.
The Australian skipper tried to catch up by sailing wayover to the left of the course in the hopes of catching awind shift. Liberty’s skipper chose to keep to the right-hand side of the course.
Australia II’s gamble paid off as the wind shifted 5° inher favor and she won the race by one minute and 47seconds. She went on to win the next two races andwon the cup.
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
‘Follow the challenger’ strategy
Page 2
• Reversal of the ‘follow the leader’ strategy• The leader should imitate the strategy of the challenger
- even when the challenger is pursuing a poor strategy• When leading, the way to stay ahead is to play “monkey see, monkey do”
(under certain circumstances)
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
Lemmings effect in container shipping
Page 3
• The lemmings phenomenon is not new in shipping
• How have these manifested in carrier behaviour in terms of: Strategy on new ships orders IMO 2020/Scrubber strategy Digitalisation strategy Consolidation strategy Logistics integration strategy
a phenomenon wherein crowds exhibit a certain kind of behaviour for no reason other than the fact that a majority of their peers do so
Excerpt from Shipping Economics: Collected PapersBy S.G. Sturmey(1975)
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
How the landscape has changed – 1975 to 2020
Page 4
Sea-Land ServiceOverseas Containers Ltd
Hapag-LloydAmerican President Lines
United States LinesNippon Yusen Kaisha
Orient Overseas Container LineSeatrain Lines
American Export LinesAssociated Container Transportation
Mitsui OSK LinesKawasaki Kisen
MatsonEast Asiatic Co.
ZimYamashita Shinnihon Kisen
Ben LineNedlloyd
Maersk LineWilh. Wilhelmsen
Top 20 Carriers in 1975 0 10,000 20,000 30,000 40,000 50,000
Capacity Operated in TEU
• In 1975 – 6 out of Top 20 were American carriers inc. 3 in Top 5
• The only Asian carriers in Top 20 were Japanese (4 at that time) and 1 from Hong Kong (still part of UK)
• 3 carriers from UK• The largest carrier from Denmark is
not Maersk
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
Only 4 of the Top 20 remain as independent entities
Page 5
Sea-Land ServiceOverseas Containers Ltd
Hapag-LloydAmerican President Lines
United States LinesNippon Yusen Kaisha
Orient Overseas Container LineSeatrain Lines
American Export LinesAssociated Container Transportation
Mitsui OSK LinesKawasaki Kisen
MatsonEast Asiatic Co.
ZimYamashita Shinnihon Kisen
Ben LineNedlloyd
Maersk LineWilh. Wilhelmsen
Top 20 Carriers in 1975 0 10,000 20,000 30,000 40,000 50,000
Capacity Operated in TEU
1999 - acquired by Maersk
1997 - acquired by NOL1986 – filed for bankruptcy
1981 – filed for bankruptcy1977 – filed for bankruptcy
1986 - acquired by P&O. 2005 - acquired by Maersk
2018 – merged into ONE
2018 – merged into ONE2018 – merged into ONE
1988 – merged with Japan Line. 1991 - acquired by NYK
1991 – split between P&O and Blue Star
2018 – acquired by COSCO
1993 – acquired by Maersk
1991 – acquired by EAC1996 – merged with P&O. 2005 – acquired by Maersk
1993 – exit from liner trades
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
Repeating the same mistakes – last 50 years
Page 6
Recurring themes in this industry
• Overcapacity
• Shipping companies struggle to stay afloat
• Governments continue to prop up struggling lines
• Changing regulatory regimes– IMO 2020 Sulphur Cap– Ballast Water Management
Excerpt from Containerisation International Yearbook 1984
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
IMO 2020 – Scrubber take-up has surged
Page 7
• Significant increase in scrubber take-up rate : Up to 42% of total containership capacity will be scrubber-fitted
Scrubbers ordered (est.) 1,086 ships 10.04 MteuDelivered/Ongoing 390 ships 3.42 MteuNewbuildings due 191 ships 1.59 MteuRetrofits planned 505 ships 5.03 Mteu
Total Fleet (Jan 2020) 5,350 ships 23.63 MteuOrderbook 327 ships 2.17Mteu
LNG fuelled ordered 38 ships 0.42 MteuDelivered/Converted 9 ships 0.02 MteuNewbuildings due 33 ships 0.51 MteuConversions planned 5 ships 0.03 Mteu
% of current fleet with scrubber/LNG engines (as at Feb 2020)
•Scrubbers (estimated)• 20.3% of total units• 42.5% of total TEU capacity
• LNG fuel• 0.9% of total units• 2.4% of total TEU capacity
(Data as at 1 Feb 2020)
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
IMO 2020 – Breakdown by Main Carriers
Page 8
Maersk 2017 Sustainability Report
“Position established on the use of low-sulphur fuels and NOT scrubber technology.”
Maersk 2018 Sustainability Report
“Invested in scrubbers on a share of our vessels. Scrubber technology is a lessextensive element of our sulphur cap fuel sourcing strategy, the vast majority of our container vessels will comply using low sulphur fuels. In 2017, we publicly stated that we would not rely on this technology, but for the time being we need to secure that we are not overly reliant on a single means of compliance.”
44% 73%
13% 45%
14% 0%
76% 36%
60% 89%
0% 13%
0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000
MaerskMSC
COSCOCMA CGM
Hapag-LloydONE
EvergreenYang Ming
PILHMM
ZimWan Hai
TEU Expected Fleet end 2021
Scrubber fitted
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
IMO 2020 – High LSFO price spread
Page 9
• Current LSFO price spread $200-$250 per ton – down fron a peak of $300-$370 in early Jan
• Spread is expected to narrow but significant uncertainty remains
-
100
200
300
400
500
600
700
800
Jul-1
9
Aug-
19
Sep-
19
Oct
-19
Nov
-19
Dec-
19
Jan-
20
Rotterdam Bunker Price : MGO, IFO380 and VLSFO $/ton
VLSFO spread Rotterdam0.5% VLSFO RotterdamIFO380 RotterdamMGO Rotterdam
-
100
200
300
400
500
600
700
800
Jul-1
9
Aug-
19
Sep-
19
Oct
-19
Nov
-19
Dec-
19
Jan-
20
Singapore Bunker Price : MGO, IFO380 and VLSFO $/ton
VLSFO spread Singapore0.5% VLSFO SingaporeIFO380 SingaporeMGO Singapore
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
IMO 2020 – Scrubber retrofits surged
Page 10
• Number of ships being retrofitted has surged since July 2019• Up to 110 ships (1 million TEU) on average have been taken out of circulation• Average retrofit time ~60 days (vs expected 45 days)
0102030405060708090
100110120
Jan
2018
Feb
2018
Mar
201
8Ap
r 201
8M
ay 2
018
Jun
2018
Jul 2
018
Aug
2018
Sep
2018
Oct
201
8N
ov 2
018
Dec
2018
Jan
2019
Feb
2019
Mar
201
9Ap
r 201
9M
ay 2
019
Jun
2019
Jul 2
019
Aug
2019
Sep
2019
Oct
201
9N
ov 2
019
Dec
2019
Jan
2020
Feb
2020
No.
of s
hips
und
ergo
ing
retr
ofit
Breakdown by size range >15,000 TEU10,000-15,000 TEU5,100-10,000 TEU<5,100 TEU
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
Increase in inactive capacity – scrubber bonus
Page 11
• Rise in inactive capacity has brought down the effective capacity growth rate • But return of scrubber fitted ships in 2H 2020 will push up the effective supply growth
-5%
0%
5%
10%
15%
18
19
20
21
22
23
24
25
2015
2016
2017
2018
2019
2020
2021
% C
hang
e (Y
ear-
on-y
ear)
Tota
l Cap
acity
in T
EU M
illio
ns
Forecasts
Total fleet growth vs Effective fleet growth : 2015-2020(F) Projected active fleet
Inactive capacity Active (employed) capacityYoY % Change in total capacity YoY % Change in active capacity
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
Demand still growing – but at a slower pace
Page 12
• 2019 global demand growth est. at 2.5% (vs 5.2% in 2018) - pace has continued to slow• 2020 demand growth expected to remain slow at 2.2%
-15%
-10%
-5%
0%
5%
10%
15%
20%
(F)4
Q19
3Q19
2Q19
1Q19
4Q18
3Q18
2Q18
1Q18
4Q17
3Q17
2Q17
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
Alphaliner Global Ports Survey - Growth by Quarter : 2008-2019
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
-15%
-10%
-5%
0%
5%
10%
15%
20%
(F)4
Q19
3Q19
2Q19
1Q19
4Q18
3Q18
2Q18
1Q18
4Q17
3Q17
2Q17
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
Alphaliner Global Ports Survey - Growth by Quarter : 2008-2019
Effective supply growth has also slowed
Page 13
Vs Growth in Effective Supply
Note : Effective capacity excludes idle containership capacity
• Effective capacity growth has slowed in 4Q 2019 – mainly due to scrubber bonus• Capacity management by carriers – mainly using blank sailings
-15%
-10%
-5%
0%
5%
10%
15%
20%
Chan
ge in
act
ive
capa
city
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
Supply/Demand still main driver for freight rates
Page 14
• Rate weakness in 2019 only mitigated through capacity management• But mixed success in securing IMO 2020 bunker surcharge
-15%
-10%
-5%
0%
5%
10%
15%
20%
(F)4
Q19
3Q19
2Q19
1Q19
4Q18
3Q18
2Q18
1Q18
4Q17
3Q17
2Q17
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
Alphaliner Global Ports Survey - Growth by Quarter : 2008-2019 Vs Growth in Effective Supply
-15%
-10%
-5%
0%
5%
10%
15%
20%
Chan
ge in
act
ive
capa
city
Vs Freight Rate Index
CCFI
Inde
x (J
an 1
998=
1,00
0)
SCFI
Inde
x (O
ct 2
009=
1,00
0)
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
Getting past the supply hurdle
Page 15
0
50,000
100,000
150,000
200,000
250,000
300,000
2010
Jan Jul
2011
Jan Jul
2012
Jan Jul
2013
Jan Jul
2014
Jan Jul
2015
Jan Jul
2016
Jan Jul
2017
Jan Jul
2018
Jan Jul
2019
Jan Jul
2020
Jan Jul
2021
Jan Jul
TEU
Containership Deliveries by Month 2010-2021
TEU Delivered To be delivered (Forecasts)
• 1.06 m TEU in 2019• 1.11 m TEU in 2020• 0.86 m TEU in 2021
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
Top 12 Carriers – Managing capacity growth is key
Page 16
0 100,000 200,000 300,000 400,000 500,000 600,000
APM-MaerskMSC
COSCOCMA CGM
Hapag-LloydONE
EvergreenYang Ming
PILHMM
ZimWan Hai
Total capacity in TEU
Newbuildings to be delivered in 2020Retrofits ongoing/waiting (Jan 2020)
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
Getting past the supply hurdle
Page 17
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
New vessel orders – A new wave is expected
Page 18
• A new wave of new ship orders are expected – focus remains on large size 24,000 teu• Hapag-Lloyd/ONE – will have to order new ships soon
0 5 10 15 20 25 30 35 40
Maersk
MSC
CMA CGM
COSCO/OOCL
Evergreen
Hapag-Lloyd
ONE
Yang Ming
HMM
2MO
CEAN
Alli
ance
THE
Allia
nce
No. of >18,000 teu ships by year of delivery
Year of delivery
Pre-2018 2018 2019 2020 2021 2022
Containership Market Outlook Contents not to be reproduced without permission : [email protected]
GFTC 2020
End Please send any queries to [email protected]
© Alphaliner Page 19
Alphaliner clients include the following:
- Shipping lines - Investment Banks - Ports