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  • 1

    OCEAN FREIGHT MARKET UPDATE

    DHL Global Forwarding, Freight

    March 2018

    Dominique von Orelli Global Head, Ocean Freight

    PUBLIC

  • 2 2

    Contents

    TOPIC OF THE MONTH

    ONE Starts Taking Bookings: Breakdown of the Available Capacity

    HIGH LEVEL DEVELOPMENT

    MARKET OUTLOOK

    Freight Rates and Volume Development

    ECONOMIC OUTLOOK & DEMAND DEVELOPMENT

    CAPACITY DEVELOPMENT

    CARRIERS

    ? DID YOU KNOW?

    DHL Global Trade Barometer

    BACK-UP

    PUBLIC

    DHL Global Forwarding | OFR Market Update | Mar 2018

  • 3 3

    Topic of the Month

    ONE Starts Taking Bookings: Breakdown of the Available Capacity

    Breakdown of ONE carrier

    capacity operated by trade route

    (As at Feb 2018)

    Ocean Network Express (ONE), the joint venture

    regrouping the container shipping businesses of K

    Line, MOL and NYK, announced on 1 February

    2018 that it has started accepting bookings for its

    container shipping services that will begin

    operating from 1 April 2018.

    During the interim period preceding the official

    commencement of ONE on 1 April, there will be

    up to four companies operating on the same

    service until the three pre-existing lines

    completely stop operating vessels. The transition

    is expected to be smooth, with customers

    expected to shift over to the new network with

    minimal disruptions during the switchover.

    Only minor changes to the service offerings are

    planned, with no significant fleet rationalizations.

    The largest overlaps between the three liners are

    limited to the intra-Asia trade.

    Source: Alphaliner

    DHL Global Forwarding | OFR Market Update | Mar 2018

  • 4 4

    High Level Market Development Supply and Demand

    1000

    800

    600

    400

    200

    0

    Q1

    18

    Q4 Q3 Q2 Q1

    17

    Q4 Q3 Q2 Q1

    16 BIX MGO

    BIX 380

    ECONOMIC

    OUTLOOK 1)

    GDP GROWTH

    BY REGION

    4) Global Insight, Drewry, 5) Bunker Index, in USD/metric ton, Bunker Index MGO (BIX MGO) = avg. Global Bunker Price for marine gasoil (MGO) port

    prices; (BIX 380= avg. Global Bunker Price for all 380 centistoke (cSt) port prices; both index published on the Bunker Index website.

    DHL Global Forwarding | OFR Market Update | Mar 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)real GDP, Global Insight, Copyright IHS, Q2 2018 . All rights reserved 2) Demand growth = Port-to-Port Container Traffic growth. Supply growth = Fleet

    Growth. Source: Drewry Maritime Research. 3) Shanghai Shipping Exchange, in USD/20ft container & USD/40ft ctnr for US routes, 15 routes from Shanghai.

    BUNKER PRICE INDEX 5)

    0

    100

    200

    300

    400

    500

    600

    700

    800

    Q4 Q3 Q2 Q1

    16 Q1

    18

    Q4 Q3 Q2 Q1

    17

    2000

    1500

    1000

    500

    0

    Q1

    18

    Q4 Q3 Q2 Q1

    17

    Q4 Q3 Q2 Q1

    16

    WORLD CONTAINER INDEX (WCI)3) SHANGHAI CONTAINERIZED FREIGHT INDEX (SCFI)4)

  • 5 5

    Market Outlook March 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 | Mar 2018

    Source: DGF

    PUBLIC

  • 6 6

    Market Outlook March 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 CNY blank sailing program has just started. Some carriers extended the rates until 14.March and starting to announce a mid March

    GRI.

    EURO ASPA & MEA For Far East, carriers are pushing stronger to increase rates, but with no success so far. Like in the past, Middle East seems to be their

    testing field, tough. Trend is up there.

    ASPA AMLA Expecting tight post-CNY situation. Space to MX/WCSA will ease from April 2018, when new capacity injection is expected from CMA &

    Cosco. But no additional capacity expected to ECSA.

    ASPA AMNO Post CNY impact to continue till 1st half of March. Carriers have announced Mar 1st & Mar 15th GRI but expect limited success given the

    weaker outlook.

    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 still ongoing. Carriers has successfully pull through some mitigated GRI into MENAT lanes. Facing tight and/or roll over

    situation due to CNY blank sailing.

    ASPA ASPA In general, space is forecasted to remain tight as bookings pick-up post CNY together with the planned blank sailings . The traditional

    peak season for IPBC is expected in March/April.

    AMNO EURO

    The Resin manufacturers after about 4 years are finally up to production. This will likely change the landscape in Houston, i t will cause

    full ships, rollings, cancellations. Congestion in Savannah/Charleston/Houston ports. Truckers shortage especially in Chicago & Ohio

    valley.

    DHL Global Forwarding | OFR Market Update | Mar 2018

    Source: DGF

    PUBLIC

  • 7 7

    Economic Outlook & Demand Development

    The Near-term Global Economic Outlook Continues to Brighten

    Source:Global Executive Summary, IHS, Purchasing Manager Index Manufacturing,

    DHL Global Forwarding | OFR Market Update | Mar 2018

    PUBLIC

    EURO

    EUs real GDP increased 0.6% quarter on quarter (q/q) and 2.7% year on year (y/y) in the fourth quarter of 2017. For the full year, output

    expanded 2.5%.

    GDP growth is set to reach 2.4% in 2018 ,and then decline to 1.9% in 2019

    AMNO

    US: Fourth-quarter real GDP growth was reported at 2.6%, with a solid growth of final sales (3.2%). 2018 outlooks for US growth and inflation

    are trending up. The Tax Cuts and Jobs Act (TCJA, slashing individual and business tax rates) and the USD300-billion Bipartisan Budget Act

    (BBA) of 2018 are taking effect, making likely a GDP growth of up to 2.753.00% in 2018.

    ASPA

    JP: real GDP growth in the fourth quarter of 2017 was 0.1% q/q, or 0.5% q/q annualized. As a result, real GDP rose 1.6% in 2017the highest

    rate since 2013. Predictions for real GDP growth are 1.4% in 2018, a softening from 2017, yet still above-potential growth.

    CN: Real GDP expanded 6.8% y/y in the fourth quarter. After 6.9% growth in 2017, Chinas expansion is projected to decelerate to 6.7% in 2018,

    6.4% in 2019, and 6.1% in 2020 as the governments reform policies begin to affect growth.

    EMERGING

    MARKETS

    Emerging-market debt levels are much lower than during the crisis years of the 1980s and 1990s, but they have risen steadily since the global

    financial crisis. Commodity prices increased for 12 consecutive weeks through late January, with the IHS Markit Materials Price Index (MPI)

    rising 7% in the first four weeks of 2018 and 16% since the recent streak began. In the three weeks ending 16 February, however, the MPI

    tumbled 7%, erasing the January gains.

    DEMAND

    DEVELOPMENT

    EURO: Persistently low inflation is protecting household purchasing power in the face of moderate earnings growth. European Central Bank

    (ECB) is set to keep monetary policy ultra-loose.

    JP: Consumer demand will probably weaken during the first quarter of 2018, but external demand is likely to remain robust.

    CN: Financial system risk mitigation limits credit expansion, while pollution control restricts growth in heavy industries

  • 8 8

    Capacity Development 1/3

    Source: Alphaliner, carriers

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

    Ocean Network Express (ONE) will offer three new weekly loops covering the trade between Asia, Central America and the West Coast of South America as of

    1st Apr 18. These new Far East-Centram-WCSA services with a total deployment of 34 ships (6,000 13,000 TEU) will be part of the Day ONE global liner network

    and branded as the Asia Lat

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