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  • 1

    OCEAN FREIGHT MARKET UPDATE

    DHL Global Forwarding, Freight

    September 2017

  • 2 2

    Contents

    DHL Global Forwarding | OFR Market Update | Sep 2017

    TOPIC OF THE MONTH

    1H 2017 results Carriers OOCL, Hyundai Merchant Marine, Yang Ming, Maersk, & Hapag-Lloyd

    HIGH LEVEL DEVELOPMENT

    MARKET OUTLOOK

    Freight Rates and Volume Development

    ECONOMIC OUTLOOK & DEMAND DEVELOPMENT

    CAPACITY DEVELOPMENT

    CARRIERS

    ? DID YOU KNOW ?

    Global container volumes growth in H1

  • 3 3

    Topic of the Month H1 2017 Results

    Carriers OOCL, Hyundai Merchant Marine, Yang Ming, Maersk, & Hapag-Lloyd

    P R O G R E S S A N D N E T L O S S E S

    Source: Alphaliner, Drewry, Investopedia

    O O C L M A E R S K

    OOCL posts $21m net losses on its container shipping and logistics business.

    However, operating profits are a positive $22m (up at $31m when adding

    JVs and other affilitated companies) this marks a significant improvement

    over 2016s $203m operating loss.

    Volumes are up +6.8%, whilst the average revenue per box grew by 7.8%.

    The first half of the year marks a strong recovery for the carrier. Operating

    profits are at a firm $364m, whilst net profits top at $339m, after five

    consecutive negative quarters.

    This improvement is driven by a 22% increase in freight rates, whille

    volumes only went up 2% at 5.4mTEUs Maersk favors profitability over

    market share.

    The cyber attack is expected to have a $200 to 300m impact on the carriers

    financials, mainly in Q3, due to the extra operating costs of July (shutdown +

    rebuilt of the IT infrastructure).

    H Y U N D A I M E R C H A N T M A R I N E

    It is yet a ninth consecutive negative quarter for the South Korean carrier,

    and this despite a 46% growth in volume (ca. 1mTEU vs. 0.7mTEU in 2016).

    Revenue only grew by 33% due to downtrading routes.

    As a consequence, HMM records $83m operating loss, with a negative

    -8.6% operating margin.

    H A P A G - L L O Y D

    The results for Q2 mark significant improvements over that of Q1. Revenue

    progressed by 12% at 2.4m (also a 28% year on year increase over

    2Q2016).

    Net profit skyrocketed to 14m, when the carrier scored a 63m net loss in

    1Q2017.

    Volumes are up 21% compared to 2Q16s, at 1.8mTEUs. Freight rates only

    grew 4%. All the data mentionned here does include the contribution of UASC,

    as the merger completed on 24th May.

    Y A N G M I N G

    The carrier performs below the results of its other Taiwanese counterparts, as

    it records $15m in net loss. That being said, it is a large improvement over

    2016s $148m net loss.

    Yet, it pales in comparison with both Evergreens and Wan Hais positive

    results for this half year.

    DHL Global Forwarding | OFR Market Update | Sep 2017

  • 4 4

    High Level Market Development Supply and Demand

    2017F 2018F 2019F 2020F 2021FCAGR

    (2017-2021)

    EURO 1.8% 1.8% 1.7% 1.7% 1.8% 1.7%

    MEA 2.6% 3.4% 3.7% 4.1% 4.0% 3.8%

    AMER 2.1% 2.6% 2.5% 2.4% 2.4% 2.5%

    ASPA 4.8% 4.6% 4.6% 4.5% 4.7% 4.6%

    DGF World 3.0% 3.1% 3.1% 3.1% 3.2% 3.1%1200

    1000

    800

    600

    400

    200

    0

    Q2 Q1

    16

    Q4 Q3 Q2 Q1

    15

    Q3 Q1

    17

    Q4 Q3 Q2

    0

    500

    2500

    2000

    1500

    1000

    Q2 Q3 Q2 Q1

    16

    Q2 Q1

    15

    Q4 Q3 Q1

    17

    Q4 Q3

    0

    200

    400

    600

    800

    Q4 Q4 Q3 Q2 Q1

    16

    Q1

    17

    Q2 Q3

    Q3 Q2 Q1

    15

    BIX 380

    BIX MGO

    SHANGHAI

    CONTAINERIZED

    FREIGHT INDEX

    (SCFI)3)

    WORLD

    CONTAINER

    INDEX (WCI)2)

    BUNKER

    PRICE

    INDEX 5)

    ECONOMIC

    OUTLOOK 1)

    GDP GROWTH

    BY REGION

    SUPPLY VS

    DEMAND

    GROWTH 4)

    Source: 1)real GDP, Global Insight, Copyright IHS, Q2 2017 . 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

    0.0

    2.0

    4.0

    6.0

    8.0

    10.0

    % Growth

    2019F 2018F 2015 2014 2017F 2016 2013 2012 2011

    Demand Growth

    Supply Growth

    DHL Global Forwarding | OFR Market Update | Sep 2017

  • 5 5

    Market Outlook September 2017 Major Trades

    Rates are stabilizing at a high level

    KEY Strong

    Increase ++

    Moderate

    Increase +

    No

    Change =

    Moderate

    Decline -

    Strong

    Decline - -

    EXPORT REGION IMPORT REGION CAPACITY RATE

    EURO AMNO = +

    AMLA - ++

    ASPA = -

    MENAT = -

    SSA = =

    AMNO AMLA = +

    ASPA = =

    EURO = =

    MENAT = =

    SSA = =

    EXPORT REGION IMPORT REGION CAPACITY RATE

    AMLA AMNO = +

    ASPA - =

    EURO = +

    MENAT = =

    SSA = +

    ASPA ASPA = +

    AMNO = +

    AMLA + -

    EURO = +

    MENAT = =

    OCEANIA = +

    DHL Global Forwarding | OFR Market Update | Sep 2017

    Source: DGF

  • 6 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 Pre Golden week rush expected where carriers are looking into a mid SEP rate increase. Some carriers have deployed extra loaders.

    EURO ASPA &

    MEA

    FAK level with slight decrease to gain spot shipments; long term pricing not impacted

    ASPA AMLA Space to AMLA continues to be tight. There will be 6 extra loaders to Brazil and Argentina in Sept to cater to rollover cargo and also the

    rush for Golden Week. Rates have tapered down but still at considerable high level. Pre-booking of up to 21 days in advance is crucial.

    ASPA AMNO Space continue to be tight especially ex SPRC to PSW. Some carriers have deployed extra loaders to clear backlog for direct customers.

    2 scheduled GRIs on Sep 1st & Sep 15th 2017.

    EURO AMNO Well utilized vessels and lifting still strong in Aug. Short term rates will remain unchanged the rest of the quarter, trend is stable but

    increasing.

    ASPA MENAT Space and Rates have been stabilized in August into EMED and Middle East, but Carriers are still limiting our low paying cargo on board on

    a certain volume on weekly basis.

    Port congestion in Kuwait has extended to Shuaiba port. The congestion situation will not be improved in a short period of time.

    South Africa rates have increased drastically over the months, and Carriers are now trying to go for another increase of USD500/TEU in

    September.

    ASPA ASPA GRI to be implemented on 1st Sep for ASPA to IPBC has been announced. Please continue to place bookings at least 2-3 weeks in

    advance as space is still tight. Chittagong continues to be congested.

    DHL Global Forwarding | OFR Market Update | Sep 2017

    Source: DGF

  • 7 7

    Economic Outlook & Demand Development

    Q 2 G D P G R O W T H : S L O W A N D S T E A D Y

    EURO

    Stronger Q2 GDP growth v. Q1at 2.1%. Solid results from ES, AT, FR, and BE. Soft slowdown in DE (0.7 to 0.6% GDP growth Q1 vs. Q2)

    UK GDP increased 0.3% in Q2 projected to reach a total 1.4% growth in 2016, and 1.0% in 2018.

    UKs PMI increases (+2 in August), both in services and manufacturing industries.

    AM

    US: stronger Q2 GDP growth v. Q1 (2.6% annualized), driven by personal consumption

    US PMI (+2.1) also show an improved hiring trend.

    AP

    JP GDP grew 1.0% quarter on quarter / 4.0% annualized in Q2. Growth is supported by consumer spending, while net exports fell for the first

    time since 2015.

    CN: strong y/y GDP growth in Q2 at 6.9%. However, industrial production, retail sales and construction deceleration tend to weaken.

    CN is threatening to end scrap and waste import

    JPs PMI shows signs that there is a risk for softened or even negative growth in Q3

    EMERGING

    MARKETS

    IN: Government introduced the goods and services tax (GST), creating short-term disruptions in the economy for the coming months. The

    planned long-term benefits of the tax include reduced logistics costs, more transparency

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