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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

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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

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High Level Market Development Supply and Demand

1000

800

600

400

200

0

Q1

18

Q4 Q3 Q2 Q1

16

Q1

17

Q4 Q3 Q2

2000

1500

1000

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

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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

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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,

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