transportation outlook

Transportation Outlook

March 1st, 2012

Breakbulk China 2012

Shanghai

Susan Oatway

Senior consultant

[email protected]

© Drewry 2012

2 Drewry | Breakbulk China 2012

Agenda

Cargo Demand

Competitive Threat

Fleet Supply

Market outlook

© Drewry 2012


Estimated development of general cargo market

0

500

1,000

1,500

2,000

2,500

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12f

mill

ion

ton

ne

sGeneral cargo market share

Container market share

MPV market share

Total general cargo market

Source: Drewry Maritime Research, WTO

© Drewry 2012


1. Cargo Demand

© Drewry 2012


Dry cargo shipping markets

2011 trade of dry cargo

Source: Drewry Maritime Research

Primary cargo markets

for Multi-Purpose Ships

Major bulk (Multi-Purpose part)

Neo/Agri-bulk (Multi-Purpose part)

Containerised Gen

Cargo (Multi-Purpose part)

Other minor bulk (Multi-Purpose part)

Other Unitised General

Cargo

Specialised General

Cargo

Non-Specialised

Breakbulk General

Cargo

Competing vessel types

Bulk Carriers

Handy bulkers

Ro-Ro Ships

Containerships

Ro-Ro ships

Con-Bulkers

Handy bulkers

Ro-Ro ships

Ferries

Reeferships, car

carriers, Ro-Ro ships

Ro-Ro ships

Heavy lift ships

Major bulk, 2188

Minor bulk, 1,130 General cargo

in containers, 1,458

General cargo

in trailers, 421

Reefer,

vehicles, 62

Non-unitised

general & project,

518

© Drewry 2012


Project cargo – the invisible break-bulk volume

1) Most difficult cargo to analyse as comprises of a multitude of cargoes – no manifest will

state “project cargo” but rather “oil pipes” or “railway locomotives” or “steel blades”.

2) There are four main areas for project cargo growth; Mining, Civil Engineering, Oil & Gas &

Chemicals and Power

3) Recent capital expenditure figures for these areas can be turned into potential volumes

with the following assumptions:

sea freight = 7.5% of value,

average freight rate of $120/rev ton,

average weight/measure ration is 2.5 cbm/tonne,

50% of project cargo is seaborne.

© Drewry 2012


Potential growth in project cargo volumes

(million tonnes)

Source: Drewry Maritime Research, derived from PEG/BBA2011

0

50

100

150

200

250

300

350

400

2011 2012 2013 2014

Mining

Civil

Oil, gas, chemicals

Power

© Drewry 2012


2. Competitive threat

© Drewry 2012


Development of MPV market share

(million tonnes)


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2007 2008 2009 2010 2011 2012 2013 2014

MPV share of general cargo

General cargo

MPV share of minor bulk trade

Minor bulks

MPV share of major bulk trade

Major bulks

MPV share of container trade

Container trade

© Drewry 2012


Competitive threat


0

20

40

60

80

100

120

<= 1980 1984 1988 1992 1996 2000 2004 2008

millio

n d

wt

0

200

400

600

800

1000

1200

1400

no

. v

sls

Handysize Handymax Panamax

Capesize Current Fleet (rt axis)

0

200

400

600

800

1000

1200

1400

1600

<= 1980 1983 1987 1991 1995 1999 2003 2007 2011

'00

0 T

eu

0

50

100

150

200

250

300

350

400

450

no

. v

sls

<1000 teu 1000-1999 teu 2000-2999 teu

3000-4999 teu 5000-7999 teu 8000-9999 teu

10000 teu+ Current Fleet (rt axis)

Handy bulk carrier age profile Containership age profile

© Drewry 2012


Dry bulk and Container markets


Weighted freight rates and

supply/demand index comparison on East-West trades

80

85

90

95

100

105

110

2008 2009 2010 2011 2012

400

600

800

1,000

1,200

1,400

1,600

1,800

East-West supply/demand index

Weighted East/West freight rate

including fuel charges (US$ per teu, right axis)

Weighted East/West freight rate

excluding fuel charges (US$ per teu, right axis)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2007 2008 2009 2010 2011 2012

Handysize

Handymax

Panamax

Capesize

Forecast dry bulk period rates ($ per day)

© Drewry 2012


3. The Fleet

© Drewry 2012


Drewry fleet definitions

Multipurpose vessel:

- dry cargo carrier

- between 1,000 and 54,000 dwt

- grain or bale AND container capacity

- lifting gear with minimum 25-tonne SWL

Project carrier

- multipurpose vessel built after 1989

- with increased lifting capacity as below

Gear SWL(mts) Standard PC Premium PC Premium + PC

Vsl < 5,000 dwt 60 120 145

Vsl 5-10,000 dwt 80 150 180

Vsl 10-14,999 dwt 120 175 210

Vsl 15-19,999 dwt 120 220 265

Vsl 20-24,999 dwt 140 220 265

Vsl 25,000 dwt + 170 250 300


© Drewry 2012


0

500

1,000

1,500

2,000

2,500

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

MPV fleet age profile as at January 1st, 2012

(‘000 dwt)


25,000 dwt+

20-24,999 dwt

15-19,999 dwt

10-14,999 dwt

5-9,999 dwt

< 5,000 dwt

© Drewry 2012


MPV fleet age profile by vessel type as January 1st, 2012

(‘000 dwt)

0

500

1,000

1,500

2,000

2,500

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010


Premium Project Carrier+

Premium Project Carrier

Standard Project Carrier

Heavy Lift

MPV/HL

MPV

© Drewry 2012


MPV fleet and orderbook as at January 1st, 2012

(million dwt)


0

1

2

3

4

5

6

7

8

9

10

<5,000 5,000-9,999 10,000-14,999 15,000-19,999 20,000-24,999 25,000+

Dwt

Orderbook

Fleet

© Drewry 2012


Suggested development of the multi-purpose fleet


-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

2007 2008 2009 2010 2011 2012 2013 2014

'00

0 d

wt

20,000

22,000

24,000

26,000

28,000

30,000

32,000

'00

0 d

wt

Deliveries

Demolition

Fleet (right axis)

© Drewry 2012


World economic growth (% change)

Source: Drewry Maritime Research, from IMF

-15

-10

-5

0

5

10

15

2005 2006 2007 2008 2009 2010 2011 2012f 2013f

Real GDP Trade in goods

© Drewry 2012


Future growth in multipurpose share of dry cargo market (million tonnes)

0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013 2014

Container

Major Bulks

Minor Bulks

General Cargo


© Drewry 2012


Suggested fleet development by vessel type

(‘000 dwt)

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

2007 2008 2009 2010 2011 2012 2013 2014

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

GC deliveries

PC deliveries**

MPV deliveries*

MPV demolitions*

HL demolitions

GC demolitions

MPV fleet* (right axis)

PC fleet** (right axis)

GC fleet (right axis)

* Not including PC. ** Including HL.


© Drewry 2012


Growth in effective fleet versus growth in effective demand (%)


-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

2008 2009 2010 2011 2012 2013 2014

Fleet Growth Demand Growth

© Drewry 2012


Future concerns

1)Competition from Handy bulk carriers due to the overfull orderbook with peak

deliveries in 2013 will lead to increased competition in the break bulk sector. And to a

lesser extent the competition for container cargo will effect the short term market as

carriers scrabble for cargo.

2) Although both global GDP and world trade have shown some recovery after the

crash in 2008/09, there is still some hesitation for new project start-ups. This inherent

time lag will continue to effect recovery in this sector but will it cushion the market

from the competition in the breakbulk sector?

3)The main growth area for the fleet is in project carriers and significant lift capability

increases. Through investment in new ships & methods, project carriers have created

a partially insulated niche within the break-bulk market, which theoretically should

result in higher rates, higher profits and differentiated products/services. Is this niche

sector really insulated from the competition seen in the general cargo market?

© Drewry 2012


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extensive global network of representatives.

Drewry was founded in 1970 as a provider of

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maritime industry. Since then we have worked

with over 4,000 clients in more than 100 countries.

Thank you!

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