dr martin stopford, president, clarkson research, london the new dynamic face of greek shipping 4 th...
TRANSCRIPT
Dr Martin Stopford,
President, Clarkson Research, London
The New Dynamic Face of Greek
Shipping4th Hydra Shipping Conference
15th September 2012
Man
y Fa
ces, M
an
y Fu
ture
s
1. The 7 Faces of Shipping2. Dynamics of Globalization3. Greek Shipping Evolution4. Six Challenges5. Conclusions
How do you play this hand?
4. PRIVATEPARTNERSHIP
KG etc
3. PUBLICCOMPANY
2. PRIVATECOMPANY
5. SHIP OPERATOR
6. MANAGEMENT
COMPANY
7. LEASING COMPANY
1. Shipowner
US Treasury Secretary Henry US Treasury Secretary Henry Morgenthau at Bretton Woods in 1944Morgenthau at Bretton Woods in 1944
We must build a dynamic
world economy
• Before the 2nd World War the world the world (and shipping) was dominated by European Empires
• In 1944 at the Bretton Woods conference in USA set the scene to change the system
• The aim was to “globalize” of the world economy
21/04/23
2nd April 2008
5
1944 Global Free Trade Policy
• At Bretton Woods in 1944 US Treasury Secretary Henry Morgenthau outlined the objective of creating "a dynamic world economy ".
• The method was to establish a new, liberalized trade regime
• To assist in achieving this aim the World Bank, the IMF and GATT were founded.
Delegates at the Bretton Woods Delegates at the Bretton Woods Conference in 1944Conference in 1944
“The objective, gentlemen, is to create a dynamic world economy”
MEETING AT BRETTON WOODS IN USA
The Result – A “Flood” of Trade 1950-2011
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Sea Trade World GDPIndex 1950=100
2012Sea trade
16 times as big as in
1950
Sea trade grew at 4.3% per annum
World GDPGrew at average of
3.6% per annum
2012World GDP 8 times as big as in 1950
FORECAST
The Shipbuilding Cycle
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Deliveries Scrapping
Deliveries 61 m dwt in 1976
Deliveries 162.5 m dwt in 2012
Last phase of 1970s
scrapping!
Million Dwt
Shipyards expand to replace the ships built in the 1970s boom
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3.80
6.30
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Tonnes of sea imports per person a year
Japan
Europe
N. America
China
S America
Africa
2000-20506 billion Non-OECD population want to
consume at OECD levels
1950-2000OECD’s 1.3 billion
population
Globalization Part 1
Bulk Liquids ManufacturesRefrigerated
Container Shipping
Unitized cargoes
Bulk Shipping
Homogeneous cargoes
Bulk carrier, tanker Specialised ship
Specialised Shipping
Specialized cargoes
Unit Load
Container ship
Air Freight
Urgent cargo
Air freighter
The mechanization of sea transport lies at the heart of globalisation – adding value takes place by inter-segment competition
Sea Transport was mechanized:-A new Shipping Model developed in the 1950s
Business Model Maturing
• Low returns, chasing size
• High investment requirement
• Finance problems• Increased energy
costs• Complexities of
globalization
Low High
Lo
w
Hig
h
3. Spec
ialise
d
Transp
ort
Volume tonnes per year
Valu
e $ per to
nn
e
Figure 3 The Potential Cargo Matrix (PCM)
2. Air Freight
4. Bulk Transport
1. Liner
Transport
A B
C
• Globalization provided a massive opportunity for independents
• Control of the fleet moved from imperial owners to independents
• Greece led the way
Greek Owned Fleet & Globalization
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16019
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2010
Shows Gross tonnage and growth rateMillion GRT
1950s18% pa
1960s6% pa
1970s7% pa
1980s-1.4% pa
1990s7% pa
2000s5% pa
Greek owners used charter back $ loans to build the fleet in the 1960
Greek Finance1949 to 2012
0%2%4%6%8%
10%12%14%16%18%20%
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2012
Greece’s share of the fleet grew from 3% in 1949 to 18% in 2008% World Fleet
Euro$ market starts 1958
1974-19905% cut back
during 1970s/80s recession
1996-2012Steady at 15-17%
1949-1973Rapid growth based on time charters &
Euro$ loans
Equity Markets
Bond Markets
Charter backed finance
No GRT % Fleet1 Niarchos (London) Ltd 74 1,398 5%2 Onassis 77 1,300 5%3 Triton (Costas Lemos) 55 886 3%4 S. Livanos Shipbrokers Ltd 47 860 3%5 Capeside Steamship/Global 55 851 3%6 N.J.Goulandris 36 659 2%7 London & Overseas Freighters 41 532 2%8 Chandris 44 455 2%9 J.M. Carras 44 360 1%10 Rethymnis & Kulukundis 29 332 1%
Total Top 10 Fleets 502 7,633 28%Total Greek owned fleet 26,932 72%
Greek Owned Fleet - Top 10 Owners in 1969
• In 1969 the ten biggest international Greek companies owned 502 ships, accounting for 28% of Greek owned GRT
Greek Owned Fleet - Top 10 Owners in 2012
Major Group No. GT %1 Angelicoussis Group 80 8,144 5%2 Dynacom Tankers Mngt 68 5,219 3%3 General Maritime 95 5,185 3%7 Enterprises Shpg. 94 4,464 3%5 Tsakos Group 75 4,179 3%6 Cardiff Marine Inc. 54 4,089 3%8 Navios Group 58 3,878 3%4 Danaos Shpg. 60 3,310 2%9 Minerva Marine Inc. 45 2,910 2%
10 Marmaras Nav. Ltd. 43 2,819 2%Total top 10 Fleet 672 44,197 29%
Total Fleet 151,011 71%
• In 2012 the ten biggest international Greek companies owned 672 (much bigger) ships, accounting for 29% of Greek owned GRT.
Greek Owned Fleet 2012
• Top 10 own 672 ships
• The core are the medium sized companies with 3-15 ships
246
149
73
35
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8
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6
4
0 50 100 150 200 250 300
1-2 ships
3 to 5
6 to 10
11 to 15
16-20
21-25
26-35
36-50
50-70
Number of companies
Top 10 Owners
Big Owners
Medium
Small
Number of ships owned
546 Greek companies owning ships over 5000 dwt
Greek Owned Fleet: Ship Value
• Greek companies owned ships worth $70.6 billion
• $14.8 billion owned by listed companies
• Medium companies have assets worth $32 billion (funding requirement of, say, $20 billion??)
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1-2 ships
3 to 5
6 to 10
11 to 15
16-20
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36-50
50-70
Fleet value $ billion
Top 10 Owners(23% value)
Big Owners (27% value)
Medium (45% value)
Small(5% value)
Values at 1st May 2012 (over 5000 dwt)
Greek Owned Fleet By Type
• Broad portfolio, 80% tankers and bulkers
• Containers only 10% which is low for the third biggest world fleet segment (5,100 ships worth $100 billion).
56
41
108
467
32
40
72
0
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VLCCSuezmaxAframax
PanamaxProductsCapesize
Kamsar maxPanamax
SupermaxHandymax
HandyGasMPP
ContainerCruise & Ferry
Reefer
Fleet value $ billion
Ta
nk
ers
3
7%B
ulkers
42%O
ther
20%
1. Over-capacity2. Energy costs3. Regulatory focus4. Globalization part 25. IT & Comms revolution6. Container model
How do you play this hand?
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M. Dwt
-13%
-3%
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37%
47%% Surplus
World Cargo Fleet 1963-2013World Cargo Fleet 1963-2013
Demand for sea transport runs
ahead of supply
Surplus shipping capacity (% right axis)
From 2009 world fleet surges ahead of demand
Challenge 1: Shipping Over-Capacity
Challenge 2: Energy Costs
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$/day cost
Bunker cost 1 Year TC Rate
THE SHIP USED TO COST MUCH MORE THAN BUNKERS BUT. TODAY BUNKERS COST MORE THAN THE SHIP.
2005Ship costs
3x fuel
2012Ship costs
half fuel
Based on Aframax tanker, 1 year TC rate and Rotterdam bunker price
Challenge 3: Regulation
• Requirement that new ships must comply with the EEDI, a clear attempt to drive efficiency improvements
• The focus on air emissions; ballast water; recycling; energy efficiency and the carbon footprint.
• The dilemma of gas oil versus scrubbers and the uncertainty over of which ballast water system.
• Many shipyards, after a decade when they were able to sell standard ships, are struggling to respond.
Eco-Ship Design – Complex
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24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8
Fuel
cos
t sav
ing
, cha
rter c
ost i
ncre
ase
$000
Shows the effect on fuel cost (green lines) & ship cost (yellow line) of changing speed in 1 knot increments on 5000 mile voyage
best speed at $1500/tonne
bunkers
best speed at $200/tonne
bunkers
Speed of ship (knots)
80% saving
LNGwindNUCLEAR
Hull formEngineering
logistics
Note 1: Just difficult decisions
COATINGS
EEDIscrubbers
No ballast
Fuel Cells
Back haulShipping lanes
Regional imports 1950-2010
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Bill
ion
tons
of
impo
rts
• Over the last 50 years the OECD countries dominated growth
• Asia started to grow in 1970s & China in the 1990s.
• Non OECD trade overtook OECD in 2006
• The next phase of globalization will see more countries; more pressure on resources; and more geo-political tension (piracy a sign)
OECD56%
Non OECD44%
Fleet OwnershipNon OECD
OECD
Challenge 4: Globalization Part 2
Challenge 5: IT & Comms
Fibre optic cable network
Gordon Moore
Invented “Moore’s Law”
Challenge 6: Container Business Model
“Over the centuries technical developments in liner shipping has been not so much a continuous process as an occasional leap forward precipitated by a compelling call for change.
In between there have been long periods of conservatism".
Ronnie Swayne, Chairman OCL 1973
y = 6.5684e0.0888x
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Billion tons
This chart shows container cargo growing to 1.5 billion tonnes today. In 2009 the trade had its first serious “wobble”.
Will the exponential trend of 8.8% trend continue?
The container business will be at the heart of change
1. Lousy hand so aim 1 is to survive2. Major revolution in fuel costs,
technology, software and systems3. Challenging regulatory focus
which the industry is still struggling with
4. Globalization “Part 2” will change the pattern of trade & it’s geopolitics
5. IT Revolution will create “soft” opportunities
6. The container business is due for a “great leap forward”
“fuel costs and environmental regulations are the Wild
Cards”
Amarillo Slim’s Advice
1. “Play the players, not the cards.
2. Watch them from the minute you sit down.
3. Play fast in a slow game , slow in a fast game.
4. Never get out when you are winning.
5. Look for the sucker and, if you don’t see one , get up and leave because the sucker is you”
Oceanic Steam Navigation Company Ltd
• The company is better known as White Star Line which owned the Titanic
• 100 years ago the Chairman was Thomas Bruce Ismay
• In the film Titanic he is the arrogant man who ordered the Captain of the Titanic to go imprudently fast
• He looks bad, but he had a problem the film did not tell you about, which you will understand. Chairman Bruce Ismay
Chairman 1912
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£ pe
r Gro
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on e
arni
ngs
Oceanic Steam Navigation Company Ltd7 year average earnings (in arrears)
Bruce Ismay, Chairman
Titanic loss 2012
Collapse of earnings
1900 to 2010
Cut throat competition between Cunard and White Star
Seaborne Trade – 9 billion Tonnes
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Billio
n to
nnes
of c
argo
..
Coal10%
Iron ore11%
Gas3%
Oil28%
Other bulk18%
Container15%
Other15%
Sea Trade in 2011
Seaborne Imports – 9 billion Tonnes
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Billio
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nnes
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argo
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Coal10%
Iron ore11%
Gas3%
Oil28%
Other bulk18%
Container15%
Other15%
Sea Trade in 2011
Chin
aR
est of the w
orld
Greek Owned Fleet - Ship Type Prospects
Ship Number Ratio
Type of ships Orderbook Trade Growth Orderbook
in fleet % Fleet to 2023 % pa /Trade
VLCC 108 20% 5% 4 Suezmax 142 24% 5% 7 Aframax 155 8% 3% 3 Panamax Tanker 40 10% 2% 5 Products 512 12% 2% 6 Capesize 240 29% 5% 6
Kamsar max 144 38% 5% 8 Panamax 359 38% 4% 9 Handymax 286 25% 3% 8 Handy 275 21% -1% 21- Gas 90 18% 8% 2 MPP 53 16% 2% 8 Container 275 21% 8% 3
Cruise & Ferry 115 na 7%Grand Total 3139 20% 5% 4
Sdource: CRSL estimates
Prospects
The “Ratio” is “orderbook as a % fleet” ÷ trade growth trend