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1

OCEAN FREIGHT MARKET UPDATE

DHL Global Forwarding, Freight

February 2018

PUBLIC

2 2

Contents

DHL Global Forwarding | OFR Market Update | Feb 2018

TOPIC OF THE MONTH

U.S. Truck Power Shortages

HIGH LEVEL DEVELOPMENT

MARKET OUTLOOK

Freight Rates and Volume Development

ECONOMIC OUTLOOK & DEMAND DEVELOPMENT

CAPACITY DEVELOPMENT

CARRIERS

REGULATIONS

? DID YOU KNOW?

Containership Deliveries, Deletions and Orders

Top 15 Carriers' Operated Capacity Growth

BACK-UP

PUBLIC

3 3

Topic of the Month

U.S. Truck Power Shortages

U.S. Truck Power Capacity/Shortages (major factors impacting truck capacity)

• Driver shortage due to the recent ELD mandate.

• Drivers are no longer able to exceed their hours of operation limit

• Infrastructure and congestion

• Increasing cost of operations and labor

• Inclement weather conditions in the Central and Southeast regions caused terminal and road closures, creating a backlog for the port and rail terminal affected

• Limited free time at the US inland rail ramps

• Chassis shortage on a nationwide basis. There are more coming out and less going back in

The Electronic Logging Device (ELD) Factor

The ELD rule was mandated by congress and is intended to help create a safer work environment for drivers, and the public. It also makes it easier and faster to accurately

track, manage, and share records of on-duty status data. An ELD synchronizes with a vehicle engine to automatically record driving time, for easier, more accurate hours of

service (HOS) recording.

What is the impact?

With the current congestion at the terminals, pre-pulls could be required or port detention could be implemented in areas where currently not assessed by the motor carriers.

Driver free time could be reduced and the cost-per-hour increased once in detention. Layover charges or tiered rating could be implemented on drayage moves 250 miles or

higher. Increased utilization of the inland rail terminals, bringing a heavier volume of local drayage

What can be done to reduce impact?

Ensure customs clearance is done at the port of discharge vs. railing in-bond

Understand how the drivers hours and the ELD mandate could affect your shipment deliveries

Ensure freight payment and the Original Bill of Lading are submitted as early as possible

Divide the volume on multiple sailings and if on same vessel on different Bill Of Ladings

Offer flexible loading & unloading timeslots for drivers 24/7 if possible

Provide quicker loading & unloading turn around eg by having freight staged ready for pick up, or labor ready for unloading

Working directly with our centrally managed drayage partner network on merchant haulage options for pick-ups and deliveries to gain better control of our inland drayage

nationwide

DHL Global Forwarding | OFR Market Update | Feb 2018

Source: DGF

PUBLIC

4 4

High Level Market Development – Supply and Demand

1’000

800

600

400

200

0

Q1

’18

Q4 Q3 Q2 Q1

16

Q1

17

Q4 Q3 Q2

2’000

1’500

1’000

500

0

Q2 Q1

16

Q1

’18

Q4 Q3 Q2 Q1

17

Q4 Q3

800

600

400

200

0

Q4 Q3 Q2 Q2 Q3 Q1

17

Q1

16

Q4 Q1

’18

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

Source: 1)real GDP, Global Insight, Copyright © IHS, Q2 2018 . 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

DHL Global Forwarding | OFR Market Update | Feb 2018

2017F 2018F 2019F 2020F 2021F CAGR

(2018-2021)

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%

DGF World 3.2% 3.2% 3.1% 3.1% 3.1% 3.1%

PUBLIC

Supply Growth %

Demand Growth % 0%

1%2%3%4%5%6%7%8%9%

2015 2016 2017 2018F 2019F 2020F 2021F

SUPPLY/DEMAND GROWTH RATE (ANNUALIZED), IN %1

5 5

Market Outlook February 2018 – Major Trades

Rates from Asia to North America are raising ahead of contract season.

KEY Strong

Increase ++

Moderate

Increase +

No

Change =

Moderate

Janline -

Strong

Janline - -

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 | Feb 2018

Source: DGF

PUBLIC

6 6

Market Outlook February 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 The overall space situation is getting tight before the CNY. An extensive blank sailing program is in place by all alliances and will start

from wk7 onwards

EURO – ASPA & MEA Part of the carriers are trying to keep rates stable; even pushing upwards from certain areas. Others are out with reductions. Translated

to overall volume, it means ongoing slow decay, though.

ASPA – AMLA

Rates to ECSA came down due to 5 extra loaders in Jan 2018 and also PIL entry into this trade. But rates are expected to increase from

Feb 2018, for CNY rush. No blank sailing announcement so far to ECSA. But for WCSA/MX, there are numerous blank sailing for CNY

and shared with internal stake holders.

ASPA – AMNO Full ship situation till CNY. Most carriers are facing stronger rollovers into USEC. All the Alliances have also announced their blank

sailings from week 8 to 10.

EURO – AMNO Ocean rates are stable but US haulage rates are on the up rise due to ELD and shortage.

ASPA – MENAT Pre CNY rush is now ongoing. Carriers has successfully pull through some mitigated GRI into MENAT lanes. Expected this to continue,

with more upcoming blank sailings in February.

ASPA – ASPA

Space ex China to India and Pakistan is expected to be extremely tight as almost 80% of the services in the market will be blanked from

week 7 to week 9 (12 Feb-28 Feb). Various blank sailings have also been planned on the pure IA trade, for those same weeks.The

congestion at Chittagong will continue because of high container yard utilisation. Delays are to be expected.

AMNO – EURO USEC capacity will decrease significantly week 5 & 7 where as USWC capacity will increase drastically week 7 & 9

Rates remain stable

DHL Global Forwarding | OFR Market Update | Feb 2018

Source: DGF

PUBLIC

7 7

Economic Outlook & Demand Development

Wrapping up 2017 and Looking at 2018

Source: DPDHL Group Macroeconomic Outlook, Global Executive Summary, IHS, Purchasing Manager Index Manufacturing,

DHL Global Forwarding | OFR Market Update | Feb 2018

PUBLIC

EURO European growth projection has been raised to 2.3% in 2017 and 2.0% in 2018, mainly driven by a stronger Germany. Continuously improving

labor markets, decent global demand, improving financial stability and currently elevated business and consumer confidence support the growth.

AMNO US economy has proven resilient despite two devastating hurricanes in the third quarter. Euro has gained 10% against US dollar since January

2017, while Canadian dollar remained at relatively stable level. Therefore, the regional forecast rose to 2.3% in 2017.

ASPA In relative terms, the Asia-Pacific region continues to lead global growth. The region is projected to expand 5.0% in 2017 and 4.9% in 2018,

considerably stronger than the world’s GDP growth rate average of 3.2%.

EMERGING

MARKETS

AMLA: Regional GDP forecast improved for 2017 to 1.5%, as Argentina and Brazil came out of recession. Latin America's GDP growth will

continue on a soft accele-ration path, reaching 2.2% in 2018. Brazilian economy is expec-ted to expand modestly in the near term, while

Mexican outlook is clouded by tight fiscal and monetary policies and prolonged renegotiation of NAFTA.

MEA: Economic outlook slightly brightened for 2017. Growth in 2018 is expected to be above 3%. On the downside, Qatar’s political rift with the

GC3+1 (Saudi Arabia, the UAE, Bahrain, and Egypt) as well as IS and conflicts in Syria, Yemen, and Libya pose risk to the regional outlook

DEMAND

DEVELOPMENT

European exports forecast for 2017 improved to 4.5% - Eurozone Manufacturing PMI was above 60 points in November 2017 and at its best

reading apart from April 2000’s series-record high.

USA: On the heels of improved global demand and the depreciation of the U.S. dollar, exports are forecasted to grow 2.9% in 2017 and 3.6% in

2018. Manufacturing PMI has leveled out in November 2017, but remains strong heading into the end of the year

ASPA: 2017 and 2018 export forecasts for major Asian economies have brightened. Chinese manufacturing PMIs signaled expansion in

November. Japanese Manufacturing PMI continued expansion in November 2017, however, continuously strong growth of incoming orders put

pressure on supply chains

AMLA: Brazil manufacturing PMI signaled a solid improvement in November 2017. Mexican PMI signaled contraction in October 2017 as a

result of the earthquakes and volatile exchange rate, but expanded again in November.

MEA: Export outlook was revised down for 2017 and 2018 to 3.4% and 3.6% respectively. UAE PMI signaled strong expansion in November.

8 8

Capacity Development

Source: Alphaliner, carriers

C A P A C I T Y D E V E L O P M E N T

The global containership fleet is expected to grow by 5.6% this year, after taking into account projected vessel deliveries, deferrals and scrapping, to reach 22.28

Mteu by the end of 2018. The pace of the container fleet growth is accelerating from 1.8%, recorded in 2016, and 3.7% in 2017. Total new containership capacity

due to be delivered in 2018 is expected to reach 1.5 Mteu. More than 50% of this is expected to be made up of ULCS from 14,000 teu to 21,000 teu mostly

scheduled for delivery in the first half of the year, with over 1.2Mteu due before the end of June. Several carriers have however taken action by deferring delivers from

2018 to the next year.

Megamax Containership deliveries in Jan 2018 :

MARSEILLE MAERSK and MANCHESTER MAERSK ‘EEE-Mk II’-class ships (20,568 teu) are delivered to Maersk early Jan ‘18. Both vessels have joined the

Maersk-MSC Far East – Europe ‘AE-7/Condor’ loop.

OOCL INDONESIA (21,413 teu) is delivered on 18 Jan ’18 to OOCL and joins OCEAN Alliance Asia-Europe ‘NEU1’ loop

COSCO SHIPPING ARIES (19,273 teu) is delivered to Cosco Shipping and joins the OCEAN Alliance Asia-Europe NEU2’ loop

When the OCEAN Alliance and THE Alliance announced their new 2018 service networks no new Far East – Europe or Far East – North America loops were

announced. Instead, the expected in crease in capacity will be achieved through the injection of ULCS new buildings.

On top of 5 extra loaders in January (CMA, COSCO, Evergreen, 2 Hamburg Sued/Maersk), PIL has launched its own Far East – ECSA string in Jan ‘18, adding

over 5% to the Far East – ECSA trade capacity. Spot freight rates have already fallen since the end of Dec. These moves come ahead of a major revamp of the

trade, resulting from the withdrawal of Hamburg Sued from the ‘Multicarrier Loop 2’ vessel sharing agreement that was demanded by Chinese regulators as part of

the conditions for its acquisition by Maersk.

Shanghai, the world’s biggest port, was the first-ever port to break the 40 mTEU barrier in Dec ‘17, representing a year-on-year growth of 8.3%. Second ranked

port of Singapore is expected to reach a total of 33.7 mTEU in 2017.

The idle containership fleet of vessels with > 500 TEU has fallen to 99 ships as at 8 Jan ’18, down significantly compared to the same time last year when 351

ships were unemployed.

Source: Alphaliner, carriers

DHL Global Forwarding | OFR Market Update | Feb 2018

PUBLIC

9 9

Carriers

Drewry’s Altman Z-Score as of December 2017

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*T1 + 1.4*T2 + 3.3*T3 + 0.6*T4 + 1.0*T5

DHL Global Forwarding | OFR Market Update | Feb 2018

PUBLIC

Total Current Total Current

OOIL (parent of OOCL) 6 months 30. Jun 17 million US$ 2'898 110 9'693 2'783 4'592 5'101 1'437 4'529 2.03

AP Moller-Maersk 9 months 30. Sep 17 million US$ 22'953 322 60'260 25'305 30'954 29'306 14'909 26'665 1.99

CMA CGM 9 months 30. Sep 17 million US$ 15'633 1'291 19'712 6'140 5'612 14'099 5'801 4'674 1.94

Wan Hai 9 months 30. Sep 17 million NT$ 44'970 2'480 75'688 30'509 34'074 41'614 20'588 11'142 1.79

NYK group 6 months 30. Sep 17 billion Yen 1'064 13 2'077 589 587 1'489 505 331 1.57

K Line group 6 months 30. Sep 17 billion Yen 579 6 1'063 406 258 804 283 69 1.55

China Cosco (parent of Cosco Container Lines) (1) 9 months 30. Sep 17 million RMB 67'599 4'567 132'443 45'728 42'981 89'462 42'854 32'765 1.49

Evergreen Marine Corp 9 months 30. Sep 17 million NT$ 113'068 5'893 193'384 62'178 59'025 134'359 45'053 11'810 1.37

MOL group 6 months 30. Sep 17 billion Yen 819 11 2'188 455 687 1'501 441 368 1.30

Hapag-Lloyd Holding 9 months 30. Sep 17 million euro 7'314 268 15'817 2'840 5'780 10'037 3'323 3'157 1.28

Pacific International Lines 6 months 30. Jun 17 million US$ 1'878 98 5'698 1'290 1'804 3'894 1'907 1'034 1.17

Yang Ming 9 months 30. Sep 17 million NT$ 99'263 501 131'096 24'696 17'670 113'426 44'536 -1'752 0.92

Hyundai Merchant Marine 9 months 30. Sep 17 billion Won 3'840 -289 3'442 1'206 636 2'806 774 -2'467 0.40

Zim 9 months 30. Sep 17 million US$ 2'217 115 1'827 590 -82 1'909 653 -1'879 0.39

None of the carriers manage to reach the > 2.99 “safe“ zone, and only OOIL reaches the caution zone, all the remaining carriers are in the distress 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.

Book Value of EquityEBITNet SalesUnitPeriod EndedPeriodCompanyAssets Liabilities

Retained Earnings Z-Score

10 10

Carriers

Source: Alphaliner, carriers

C A R R I E R S

NYK, MOL and K Line have announced in a joint statement on 18 Jan ’18 that their new joint venture, ‘Ocean Network Express’ (ONE), has received all

necessary merger approvals from local competition authorities, after clearing the last regulatory hurdle, with the South Africa Competition Tribunal granting their

conditional approval. South Africa was the last country to approve the merger as all other jurisdictions had already approved the move as of the end of June 2017.

The merger was first announced on 31 October ’16 and the new company is expected to start its operations on 1 Apr ’18, as initially planned.

Maersk and IBM have announced their intentions to form a Blockchain-based JV. The aim of the new company will be to offer a jointly developed global trade

digitization platform built on open standards and ambitiously designed for use by the entire global shipping industry, addressing the need for more transparency

and simplicity in the movement of goods across borders and trading zones. Parties that have piloted the platform include DuPont, Dow Chemical, Tetra Pak, Port

Houston, Rotterdam Port Community System Portbase, the Customs Administration of the Netherlands and U.S. Customs and Border Protection. They also have

received interest from General Motors, Procter & Gamble and Agility. The success of the platform will depend on whether Maersk and IBM can convince the entire

supply chain ecosystem, including shippers, freight forwarders, ocean carriers, ports an customs authorities, to sign up. If they do not, the entire project will fall

down.

Source: Alphaliner, Ti, carriers

DHL Global Forwarding | OFR Market Update | Feb 2018

PUBLIC

11 11

Regulations

Source: Alphaliner, carriers

R E G U L A T I O N S

GST Amendments on Export shipment out of India

The Government of India Notification no. 2/2018 – Central Tax (Rate) dated 25 January 2018, has exempted GST on freight charges for all shipments originating

from India, but same will be applicable on all origin charges e.g. custom clearance, transportation etc.

1. To exempt the service by way of transportation of goods from India to a place outside India by air

2. To exempt the service by way of transportation of goods from India to a place outside India by sea

Post this notification, received 25 January 2018, GST is exempted only on Freight Charges for all Airfreight and Oceanfreight for shipments originating from India.

This exemption is valid through 30 September 2018

Source: DHL

DHL Global Forwarding | OFR Market Update | Feb 2018

PUBLIC

12 12

Did You Know ?

Containership Deliveries, Deletions and Orders by Year, in mTEU

DHL Global Forwarding | OFR Market Update | Feb 2018

Source: Alphaliner

PUBLIC

ORDERBOOK-TO-FLEET RATIO

At 1,2 mTEU for FY’2017 (+26% vs. 2016’s 0.9 mTEU), the total capacity of

ships delivered during 2017 clearly exceeded the vessel ordering. Last

year’s order volume saw the orderbook-to-fleet ratio fall from 15.7% at the

end of 2016 to its current value of 12.6%. The capacity delivered in 2017 is

much smaller than than the record total of 1,735,000 TEU observed in 2015.

DELETIONS

Total deletions from the world container fleet reached 421’562 TEU in 2017,

down 35.8% compared to 2016’s record of 664’717 TEU.

COMING IN 2018

Marginal order increase is expected vs. 2017. Carriers including HMM and

Yang Ming will likely place orders, while several non-operating owners remain

keen to take on new-building projects at the current attractive price level.

Vessel deliveries are expected to increase to 1.5 mTEU

Deletions, mainly from scrapping, are expected to fall to 350’000 TEU. This

would push container fleet growth to 5.6% in 2018, compared to a 3.7%

growth recorded in 2017.

2010 2011 2012 2013 2014 2015 2016 2017 2018 (F)

To

tal

Cap

acit

y,

in m

TE

U

2.5

2.0

1.5

1.0

0.5

0

-0.5

-1.0

VESSEL ORDERING

New ship containership orders increased by 140% in 2017, reaching 671’641

TEU, vs. only 280’480 mTEU in 2016.

This still remains significantly lower than the 2,2 mTEU contracted in 2015 –

before the IMO NOx Tier III requirements, making ships more expensive to

build, came into effect.

13 13

Did You Know ? (2/2)

Top 15 Carriers’ Operated Capacity Growth, Jan 2018 vs. Jan 2017, in mTEU and %

DHL Global Forwarding | OFR Market Update | Feb 2018

Source: Alphaliner

PUBLIC

2,5

1 3,1

5

1,6

2

0,3

7

0,3

1

0,4

6

ZIM

0,3

5

0,3

4

0,3

5

0,2

2

HMM K Line

0,2

4

+10,9%

Wan Hai

+26,9%

+4,7%

CMA-

CGM

APL

+2,7%

MSC

4,1

5

2,8

4

+9,1%

2,1

3

-23,9% +19,4%

+17,8%

+11,1%

Maersk

Hamburg

Süd

-2,9% +7,7% +16,0% +3,5%

+19,0%

+7,1% 3,2

7

1,4

8

1,8

0

COSCO

0,9

9 1,5

5

Hapag-

Lloyd

UASC

0,5

8

Evergreen

1,0

6

0,5

7

0,6

9

OOCL

0,5

0

Yang

Ming

0,5

9

0,3

7

0,3

8

0,5

2

PIL

0,5

6

0,5

8

NYK Line MOL

2018

2017 The total vessel capacity operated by the top 15 container carriers grew by 12.6%, from 16.27 mTEU in 2017 to 18.32 mTEU

in 2018, their combined share of the global capacity increasing from 78.6% to 85.1%. This includes the capacities operated by the

companies acquired over the course of the year.

Over the same period, the total liner capacity only increased by 3.9% from 20.69 mTEU to 21.51 mTEU. However, not all of the

carriers recorded gains, as two carriers posted reductions in their operated capacity. The biggest loser was Hyundai Merchant

Marine (HMM), whose capacity fell by 23.9% from 456k TEU in 2017 to 347k TEU at the beginning of 2018. The reduction was

mainly due to the withdrawal of numerous HMM ships from the Asia – Europe and Asia – East Coast of North America routes.

In contrast, the main gainer last year was the Maersk Group, whose operated capacity grew by 26.8% to reach 1.80 mTEU on 1

January 2018, up from 1.62 mTEU twelve months earlier. The recent takeover of the German carrier Hamburg Süd contributed a

large part of the capacity increase. Without the purchase however, Maersk would still have grown organically by some 10%.

14 14 B A C K - U P

PUBLIC

15 15

Topic of the Month

Top 12 Carriers by Operated Capacity (in Mil. TEU), December 2017

0

1

2

3

4

5

APM-Maersk,

HamburgSüd

MSC COSCO,OOCL

CMA CGM,Mercosul

Hapag-Lloyd ONE (NYK,MOL, K Line)

Evergreen Yang Ming PIL Zim HMM Wan Hai

DHL Global Forwarding | OFR Market Update | Feb 2018

Source: Alphaliner, incl. pending mergers

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.

PUBLIC

16 16

Source: DGF

Market Outlook February 2018 – Ocean Freight Rates Additional Trades (1/2)

Ocean Freight Rates Outlook

EURO – AMLA Rates are stable. Utilization is good up to full.

EURO – SSA

To East and West Africa the market is flat. To South Africa utilization of vessels is satisfactory for the carriers at around 90 – 95 %. Rates

should remain stable for the rest of Q1. Some slight rate increases are expected as of Q2. The situation in Durban has improved, but is not

back to normal yet. Carriers are still giving the opportunity to route cargo via Cape Town or Coega for on-carriages into the South African

hinterland to relieve Durban and prevent delays of cargo.

AMNO – MENAT Rates with some strategic carriers to M. East destinations will have a slight increase ($50/contr)

Space is still tight from USGC Ports and delays caused by inclement weather conditions are causing random space issues from USEC.

AMNO – SSA 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

AMNO – AMLA

Gulf to ECSA/WCSA full. Rate increasing moderately.

USEC to WCSA full GRI’s announced end Jan 2018.

All other lanes static for next 30 days.

AMLA Exports

Increased freight rates from SAEC stabilized

Space constraints lessoned, but forecasts are still needed 2-4 weeks out

Equipment deficits affecting conditions in Colombia

Numerous surcharges and fees being imposed

Source: DGF team

Source: DGF team

Source: DGF team

DHL Global Forwarding | OFR Market Update | Feb 2018

PUBLIC

17 17

Market Outlook January 2018 – Ocean Freight Rates Additional Trades (2/2)

Freight Rates Outlook

EURO MED - AMNO nothing to be highlighted

EUR MED – AMLA nothing to be highlighted

EURO MED – ASPA stable nothing to be highlighted

EURO MED – MENAT stable nothing to be highlighted

EURO MED – SSA nothing to be highlighted

ASPA-SPAC

Peak season in view of the pre-CNY rush is expected to continue until late February. Also, moderately strong bookings are anticipated

even with the blank sailings announcements put forth by most of the shipping lines in the market. Therefore, there have been minimal

adjustments made to the freight rate at this point in time.

DHL Global Forwarding | OFR Market Update | Feb 2018

Source: DGF

PUBLIC

18 18

Market Outlook – Volume Outlook in Main Trade Lanes, 2017 Estimate & Growth

Forecast 2017/20 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%

1.7 mTEU +0.9%

1.7 mTEU +1.3%

0.2 mTEU +3.0%

N O R T H

A M E R I C A I n c l .

M E X I C O

L A T I N

A M E R I C A

E U R O P E

I n c l . M E D

11.9 mTEU +1.6%

7.0 mTEU +0.9%

7.6 mTEU +0.7%

15.8 mTEU +0.9%

7.0 mTEU +0.9%

4.5 mTEU +2.8%

2018e, in mTEU 2018e-2021e CAGR, in %

F A R E A S T

I N T R A A S I A

excl. Oceania

35.1 mTEU +3.1%

3.5 mTEU

+1.3%

2.0 mTEU

+0.7%

L A T I N

A M E R I C A

G L O B A L C O N T A I N E R T R A D E 2 0 1 7 e 1 3 8 . 5 m T E U + 2 . 3 % C A G R 2 0 1 7 e - 2 0 2 0 e

Mid-term growth is mainly driven by Asian tradelanes.

Source: Seabury

DHL Global Forwarding | OFR Market Update | Feb 2018

PUBLIC

19 19

Global Capacity Development all Trades

20 19 23 23 23 24

28 28 27

Highest scrapping level ever Idling remains high

[TTEU]

602

(May 2018)

1,324

Q4

2016

Q4

2015

1,359

Q4

2014

228

Q4

2013

779

Q4

2012

809

Q4

2011

595

Q4

2010

356

Q4

2009

1,480

Returning

capacity

well

absorbed

by

demand

3.0%

[TTEU]

381

2013

444

2012

332

2011

75

2010

131

2009

351

+239%

Apr 17

YTD

205

2016

654

2015

193

2014

Average age Net capacity growth remains low

Net capacity growth 2017E

Scrapping Net capacity

growth

2.7%

-3.3%

-1.8%

Scheduled

capacity growth

Post-ponements

7.7%

Orders placed by year [TEU m] Vessel deliveries by year [TEU m]

0.2

2015

0.0

2016

2.2

2014

1.1

2013

2.0

2012

0.4

2011

1.8

2010

0.6

2009

0.1

2008

1.2

2007

3.2

Apr17

YTD

+33%

1.2

2017E 2016

0.9

2015

1.7

2014

1.5

2013

1.3

2012

1.3

2011

1.2

2010

1.4

2009

1.2

2008

1.4

2007

1.4 15,300 TEU

Very few deliveries expected post 2018

Source: Alphaliner (May 2018), carrier views

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Carrier Mergers, Acquisitions and Alliances

M E R G E R S A N D A Q U I S I T I O N S

China

Shipping Cosco

OOCL TBC

Evergreen APL CMA

CGM Hapag

Lloyd

United

Arab

Shipping

Hyundai

Merchant

Marine

Hamburg

Süd Maersk

Line MSC K Line MOL NYK

Yang

Ming Hanjin

Shipping

CHINA COSCO SHIPPING EVER

GREEN CMA CGM HAPAG-LLOYD/UASC

HYUNDAI

MERCHANT

MARINE MAERSK LINE MSC

OCEAN NETWORK

EXPRESS (ONE) YANG

MING 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

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Acronyms and Explanations

2M - Carrier Alliance: Maersk / MSC OCRS - Operational Cost Recovery surcharge

AMLA - Latin America OWS - Overweight Surcharge

AMNO - North America PH - Philippines

AR - Argentina PNW - Pacific North West

ASPA - AsiaPacific Ppt. - Percentage points

BR - Brazil PSW - Pacific South West

CAGR - Compound Annual Growth Rate RR(I) - Rate Restoration

CENAC - Central Amercia and Caribbean SAEC - South America East Coast

CKYHE - Carrier Alliance: Cosco, K-Line, YangMing, Hanjin and Evergreen SAWC - South America West Coast

CNC - CNC Line (Cheng Lie Navigation Co. Ltd.) SOLAS - Safety of Life at Sea

DG - Dangerous Goods SPRC - South People’s Republic of China – South China

DWT - Dead Weight Tonnage SSA - Sub-Saharan Africa

EB - Eastbound SSL - Steam Ship Line

ECSA - East Coast South America T - Thousands

EURO - Europe TEU - Twenty foot equivalent unit (20‘ container)

FMC - US Federal Marine Commission TP - Trans Pacific

G6 - Carrier Alliance: APL, Hapag Lloyd, Hyundai, MOL, NYK and OOCL TSA - Trans Pacific Stabilization Agreement

GRI - General Rate Increase ULCS - Ultra Large Container Ship

HJS - Hanjin Shipping USGC - US Gulf Coast

HMM - Hyundai US FMC - US Federal Maritime Commission

HSUD - Hamburg Süd USEC - US East Coast

HWS - Heavy Weight Surcharge USWC - US West Coast

IA - Intra Asia VGM - Verified Gross Mass

IPBC - India Pakistan Bangladesh Colombo VLCS - Very Large Container Ship

IPI - Inland Point Intermodal VSA - Vessel Sharing Agreement

ISC - Indian Sub Continent WB - Westbound

MENAT - Middle East and North Africa WCSA - West Coast South America

mn - Millions YML - Yang Ming Line

MoM - Month-on-Month YoY - Year-on-Year

NOO - Non-operating (vessel) owners YTD - Year-to-Date

Ocean 3 - Carrier Alliance: CMA, UASC, China Shipping

DHL Global Forwarding | OFR Market Update | Feb 2018

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