Container outlook for 2014 - JOC.com · 2014-03-02 · Annual deliveries to 2016 ... TSA planned...

Container outlook

for 2014

Neil Dekker Containers – Director of research

[email protected]

TPM Long Beach, 3rd March 2014

© Drewry 2013

2 Drewry | Container outlook for 2014

1. Supply

2. Cascading

3. Transpacific

4. Freight rates

5. Profitability

6. Alliances

7. Review/outlook

Agenda

© Drewry 2013


Annual deliveries to 2016 – as of Feb 2014

Orderbook stands at

3.8 million teu

53.2% is for vessels of

over 10,000 teu

capacity

82.3% is for vessels of

over 8,000 teu

Orderbook is 22% of

existing fleet capacity

144 vessels of at

least 10,000 teu due

for delivery

1.6 million teu (a

record) due for

delivery in 2014

A further 1.7 million

teu in 2015

0200,000400,000600,000800,000

1,000,0001,200,0001,400,0001,600,0001,800,000

Teu

2014

2015

2016

0

20

40

60

80

100

120

140

8,000-9,999 teu 10,000-11,999teu

12,000+ teu Totals

No

. o

f ve

ss

els

2014

2015

2016

© Drewry 2013


Growth of 8,000+ teu global fleet

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

2010 2011 2012 2013 2014 2015 2016

Teu

End of yr Fleet totals 0-7,999 teu End of yr Fleet totals 8,000 teu+

% growth p.a . 0-7,999 teu % growth p.a . 8,000 teu+

2010-16: fleet below 8,000 teu growing at 2% p.a.

2010-16: fleet above 8,000 teu growing at 19% p.a.

© Drewry 2013


8,000 – 10,000 teu vessel sector .. saturated?

This is the sector to watch. Where will they be deployed?

Europe-ECSA : 4 of 6 strings at 7,000+ teu level now

Asia-ECSA : 4 of 6 strings at 8,000+ teu level now

Long term fixtures concluded this year for $37-$42,000/day

8,000-10,000 teu vessels on order

(Jan 2014)

Owned tonnage

Total after all deliveries

2014 2015 2016 Total

No. of

vessels Teu

No. of

vessels Teu

No. of vessels 39 56 20 115

Total teu 353,212 505,206 182,940 1,041,358

Fixed No. of vessels 37 46 13 96

Total teu 335,812 416,206 120,940 872,958

Not fixed No. of vessels 2 10 7 19

Total teu 17,400 89,000 62,000 168,400

MSC No. of vessels 2 13 3 18 25 218,878 43 382,084

Total teu 18,806 116,800 27,600 163,206

CMA CGM No. of vessels 6 14 6 26 15 130,543 41 371,233

Total teu 55,200 129,390 56,100 240,690

Maersk No. of vessels 0 0 0 0 58 501,929 58 501,929

Total teu 0 0 0 0

Hamburg Sud No. of vessels 9 0 0 9 4 38,676 13 123,690

Total teu 85,014 0 0 85,014

CSAV No. of vessels 2 7 0 9 7 56,166 16 138,466

Total teu 17,200 65,100 0 82,300

CCNI No. of vessels 2 0 0 2 0 0 2 18,400

Total teu 18,400 0 0 18,400

Evergreen No. of vessels 6 6 0 12 18 152,264 30 253,940

Total teu 50,856 50,820 0 101,676

Notes: data valid from end Jan, 2014 ; operator denotes ordered for own account or long-term chartered

© Drewry 2013


East-West capacity deployment Annualised effective capacity on headhaul East-West trades

Carriers deployed capacity

well in the east-west trades in

2013 and average load factors

remained at around 87%

Winter seasonal

withdrawal of capacity.

Six transpacific loops

suspended during 4Q13

'000 Teu Q-O-Q % Change Y-O-Y % Change

01-Oct-11 35,520

01-Jan-12 32,977 -7.2%

01-Apr-12 31,086 -5.7%

01-Jul-12 34,357 10.5%

01-Oct-12 34,858 1.5% -1.9%

01-Jan-13 32,661 -6.3% -1.0%

01-Apr-13 31,362 -4.0% 0.9%

01-Jul-13 34,451 9.8% 0.3%

01-Oct-13 35,081 1.8% 0.6%

01-Jan-14 32,572 -7.2% -0.3%

Why did spot rates decline by so much?

© Drewry 2013


Cascading

Jan-12 Jan-13 Jan-14

No. of

weekly svces

Ave nominal

teu - vessel

No. of

weekly svces

Ave nominal

teu - vessel

No. of

weekly svces

Ave nominal

teu - vessel

Asia-N Europe 21 8,818 24 9,552 22 11,277

Asia-Med 28 6,199 16 6,848 15 8,156

Asia-USWC 46 6,021 42 6,380 42 6,672

Asia-ECSA 8 4,385 8 5,074 6 7,181

Europe-ECSA 9 4,465 6 4,476 6 6,605

Asia-WCSA 9 3,754 7 5,100 8 6,326

Asia-Mid-East 18 4,532 15 4,859 13 6,177

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

Jan-12 Jan-13 Jan-14

Ave teu per vessel

Asia-ECSA

Europe-ECSA

Asia-WCSA

8,000 teu and above

vessels incl newbuilds

all into the Latin

American trades

© Drewry 2013

8

Big ships are coming

Drewry | Outlook for container shipping in 2014

LB/OAK

CMA CGM 3

MSC 5

Hanjin 2

Cosco 3

Zim 1

Asia-USWC

10,000+ teu

Asia-USEC (Suez)

8,000+ teu

NY

SAV

CHA

NFK

PM

Maersk 9

MSC 13

CMA CGM 8

NYK 1

HL 4

APL 4

OOCL 2

New arrivals – CSCL Spring (10,036 teu) to AAC, calling LAX, OAK

Cosco Fortune (13,092 teu) to SEA, calling LB, Prince Rupert

More big ships

into TP7 from

Asia-Eur trade

© Drewry 2013


Transpacific headhaul capacity forecast

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

15,000

15,500

16,000

16,500

17,000

17,500

18,000

18,500

19,000

19,500

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

'000 teu

EB Capacity '000 teu Qtr-on-qtr % change Yr-on-yr % change

Carriers have managed the cascade well – so far!

Despite the influx of bigger ships, 3Q14 projected capacity 1% up yr-on-yr

Average 2013 headhaul load factors 86%

Tight capacity during seasonal peaks – missed/void sailings (CNY / Golden

Week)

2014 will be more challenging for carriers and shippers. G6 deployment unknown

© Drewry 2013


Transpacific capacity trends

0

10

20

30

No. of ships 10,000+ teu No. of ships 8,000+ teu

0

5

10

15

20

25

10,000+ teu vesselsdue for delivery 2014

8,000-10,000 teu forcascading from Asia-N Europe

Average vessel sizes Big ship deployment

Deliveries/cascading P3 size advantage

Room to upsize many

services

Cascading from Asia-

Europe trade very likely

How will this affect s/d

balance? AND rates?

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

P3 G6 CKYH Evergreen CSCL

Teu

Asia-USWC Asia-USEC

© Drewry 2013

11 Drewry | Outlook for container shipping in 2014

Missed sailings-the main capacity management

Asia-USWC

Dec’12-Feb ’13 – 64

skipped sailings

Dec’13-Feb ’14 – 45

missed sailings

Asia-USEC

Dec’12-Feb’13 – 36

skipped sailings

Dec’13-Feb’14 – 15

Missed sailings

Spot rates have increased since mid-December,

but this is only a temporary tool for carriers

What is the impact for shippers?

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

20

40

60

80

100

120

Oct 12 Dec 12 Feb 13 Apr 13 Jun 13 Aug 13 Oct 13 Dec 13 Feb 14

Capacity reduction ('000 teu) Est load factor gain (percentage points, right axis)

0%

1%

2%

3%

4%

0

2

4

6

8

10

12

14

16

18

Oct 12 Dec 12 Feb 13 Apr 13 Jun 13 Aug 13 Oct 13 Dec 13 Feb 14

Capacity reduction ('000 teu) Est load factor gain (percentage points, right axis)

© Drewry 2013


Freight rate overview-transpac spot rates

Recent carrier GRIs successful – in line with missed sailings

Q214 volatility – will cargo return after CNY?

Peak season Q14? Carriers should no longer rely on or expect this trend.

Are shippers moving product early to avoid possible ILWU issues?

Carrier behaviour now a significant factor

2014/15 Contract rates – too early to tell yet!

575

595

615

635

655

675

695

1500

2000

2500

3000

3500

US$ per feu

Asia-USWC Asia-USEC Rtm IFO $ per tonne (RH axis)

© Drewry 2013


GRI developments : East-west trades

TSA planned March 15 GRI of $300 per feu and another in May

New 2014 contracts to take $300 per feu increase to USWC and

$400 per feu to USEC.

Spot rate

Feb 2014 GRIs

Ave. spot rate

2012

Ave. spot rate

2013

High point

2013

Low point

2013

Swing

factor

Asia-N Europe 2,642 10 2,651 2,082 2,881 990 1,891

Asia-Med 2,857 10 2,577 2,177 2,925 1,283 1,642

Asia-USWC 2,026 8 2,263 2,000 2,516 1,640 876

Asia-USEC 3,045 8 3,409 3,286 3,716 2,908 808

Source: World Container Index US$ per feu

© Drewry 2013


Transpacific supply/demand - headhaul

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

4Q12 1Q13 2Q13 3Q13 4Q13

Capacity changes Demand changes Spot rates changes

Quarter-on-quarter changes in capacity/demand/spot rates

Volatility – cascading of tonnage , constant GRIs

Spot rates increased in 17 of 59 weeks since 1 Jan 2013

Current trend is declining spot rates despite carrier GRIs

Weighted Asia-USWC+USEC spot rate declined to $2,043 per

feu in 4Q13, from $2,377 in 4Q12

© Drewry 2013


Carrier trade route profitability – spot business

-$400

-$200

$0

$200

$400

$600

$800

4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000

Vessel size (Teu)

Net profit or loss at 100% utilisation

Net profit or loss per unit at 85%utilisation


Asia-USWC trade, $per feu

Basis February spot rates of $2,000 per feu ex Asia to USWC

Vast majority of services will be profitable at these rate levels

Big ships could make in excess of $350 per feu profit per round

voyage slot cost

Basis bunkers at $620 / tonne, ave. speed 17 knots round voyage

© Drewry 2013


Carrier trade route profitability-contracts Asia-USWC trade, $per feu

Basis annual contract rates approx $1,700 per feu ex Asia to USWC

Ave, size ships on this trade will not be profitable at 85% load factors

10,000 teu ships will make a small profit at 85% load factors

-$500

-$400

-$300

-$200

-$100

$0

$100

$200

$300

$400

4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000

Vessel size (Teu)

Net profit or loss at 100% utilisation



Basis bunkers at $620 / tonne, ave. speed 17 knots round voyage

© Drewry 2013


The new alliance propositions P3 alliance Jan 2014 P3 alliance post implementation (mid-2014)

No. of

weekly

loops

No. of

vessels

Ave size

teu per

vessel

% of overall

market by

capacity

No. of

weekly

loops

No. of

vessels

Ave size teu

per vessel

% of overall market by

capacity

Transpacific 11 114 7,997 27.8% 9 113 8,765 unknown

Asia-USWC 7 62 8,607 25.3% 5 63 8,900 unknown

Asia-USEC 4 52 7,280 32.4% 4 50 7,500 unknown

G6 alliance Jan 2014 G6 alliance post implementation (mid-2014)

No. of

weekly

loops

No. of

vessels

Ave size

teu per

vessel

% of overall

market by

capacity

No. of

weekly

loops

No. of

vessels

Ave size teu

per vessel


capacity

Transpacific 20 166 6,316 32.3% 18 unknown unknown unknown

Asia-USWC 15 115 6,378 35.3% 12 unknown unknown unknown

Asia-USEC 5 51 6,177 26.9% 6 59 unknown unknown

CKYH alliance Jan 2014 CKYH alliance (mid-2014)

No. of

weekly

loops

No. of

vessels

Ave size

teu per

vessel

% of overall

market by

capacity

No. of

weekly

loops

No. of

vessels

Ave size teu

per vessel


capacity

Transpacific 15 121 5,563 20.7% 15 121 unknown unknown

Asia-USWC 10 70 6,371 21.2% 10 70 unknown unknown

Asia-USEC 5 51 4,633 19.8% 5 51 unknown unknown

© Drewry 2013


The new alliances – product offerings

0

5

10

15

0

2,000

4,000

6,000

8,000

10,000

P3 G6 CKYH

Teu

Asia-USWC services

Ave. vsl size (teu) Weekly services

0

1

2

3

4

5

6

7

0

2,000

4,000

6,000

8,000

P3 G6 CKYH

Teu

Asia-USEC services

Ave. vsl size (teu) Weekly services

Some alliances have unique port

calls and capacity varies

13 major carriers have 82% of

USWC market share and 79%

USEC market share (by capacity)

What can the “outsiders” offer?

0

20

40

60

80

100

120

140

USWC USEC USWC USEC

Total weekly port calls Direct Asian port calls(no. of ports)

P3

G6

CKYH

© Drewry 2013


Key takeaways for 2014

Top heavy orderbook with big ships, very challenging 2014/15

Global cascade will be much more difficult for carriers to manage

Lower unit slot costs for carriers, but effect on s/d balance and rates?

Spot rates will remain volatile, with constant carrier GRIs

Missed sailings will be major capacity management tool – effects for shippers?

Additional capacity for transpacific as carriers upgrade

Emphasis on Suez Canal all-water routes

P3/alliances add stability for global capacity and operations, some short-term rate volatility

Laying the ground for a more efficient/profitable industry in 2016 and beyond

Carriers focus on:

Service proposition

85% load factors are ok!

Forecasting

Shippers focus on:

Service options

Forecasting

Price does not have to be king!

© Drewry 2013


Thank you!

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Container outlook for 2014 - JOC.com · 2014-03-02 · Annual deliveries to 2016 ... TSA planned...

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