liner wars trilogy, toc asia presentation by tan hua joo
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Container shipping markets in 2014.Presented at the TOC Asia conference8 April 2014TRANSCRIPT
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TOC Container Supply Chain : Asia 8 April 2014
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
EPISODE I – THE LINER WARS (2009-10)
EPISODE II – THE MAERSK EMPIRE STRIKES BACK (2011-13)
EPISODE III – RETURN OF THE LINER ALLIANCES (2014-16)
Page 1
Not too long ago, in a galaxy far, far away…
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
EPISODE I – THE LINER WARS (2009-10)
EPISODE II – THE MAERSK EMPIRE STRIKES BACK (2011-13)
EPISODE III – RETURN OF THE LINER ALLIANCES (2014-16)
Page 2
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
EPISODE I – THE LINER WARS (2009-10)
EPISODE II – THE MAERSK EMPIRE STRIKES BACK (2011-13)
EPISODE III – RETURN OF THE LINER ALLIANCES (2014-16)
Page 3
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services Page 4
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
Protracted warfare in the new Alliance era
Page 5
• 2014-2015 new containership deliveries continue at record pace
Average
= 315,000 teu
Average
= 345,000 teu
Average
= 360,000/470,000 teu
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
The inter-Alliance arms race in 2014
Page 6
2014 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
Maersk - 1 - 9
MSC - - 3 2
CMA CGM - 1 8 -
P3 Total - 2 11 11
APL - - 6 2
HMM - - - 5
MOL - - 1 6
H-L 1 - - 3
NYK - - - -
OOCL - - 2 2
G6 Total 1 - 9 18
COSCO - - - 4
K Line - - - -
YM - 4 1 -
Hanjin - 1 - 5
Evergreen - - 10 8
CKYHE Total - 5 11 17
CSCL - - - 10
CSAV - - 2 -
Hamburg Sud - 4 10 -
PIL - 7 - -
UASC - - 2 1
Independents Total - 11 14 11
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
The arms race to continue in 2015
Page 7
2015 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
Maersk - - - 7
MSC - - 17 10
CMA CGM 3 - 13 6
P3 Total 3 - 30 23
APL - - - -
HMM - - - -
MOL - - - 6
H-L - - - -
NYK - - - -
OOCL - - 2 -
G6 Total - - 2 6
COSCO - - - -
K Line - - - 5
YM - 1 - 10
Hanjin - - 1 2
Evergreen - - 3 -
CKYHE Total - 1 4 17
CSCL - - - 3
CSAV - - 6 -
Hamburg Sud - - - 1
PIL - 6 - -
UASC - - - 12
Independents Total - 6 6 16
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
Keep your friends close, but your enemies closer
Page 8
• Cost savings is a key consideration for the formation of the new mega-Alliances
• But strategic aim of keeping key competitors in check is also a major objective
2014 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
Maersk - 2 - 9
MSC - - 3 2
CMA CGM - 1 8 -
P3 Total - 2 11 11
2015 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
Maersk 0 0 0 7
MSC 0 0 17 10
CMA CGM 3 0 8 6
P3 Total 3 0 25 23
2015 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
Maersk - - - 7
MSC - - 17 10
CMA CGM 3 - 8 6
P3 Total 3 - 30 23
2015 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
Maersk 0 0 0 7
MSC 0 0 17 10
CMA CGM 3 0 8 6
P3 Total 3 0 25 23
2016 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
Maersk - - - -
MSC - - 8 -
CMA CGM - - 7 -
P3 Total - - 15 -
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
If you cant beat them, join them
Page 9
2014 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
COSCO - - - 4
K Line - - - -
YM - 4 1 -
Hanjin - 1 - 5
Evergreen - - 10 8
CKYHE Total - 5 11 17
2015 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
Maersk 0 0 0 7
MSC 0 0 17 10
CMA CGM 3 0 8 6
P3 Total 3 0 25 23
APL 0 0 0 0
HMM 0 0 0 2
2015 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
COSCO - - - -
K Line - - - 5
YM - 1 - 10
Hanjin - - 1 2
Evergreen - - 3 -
CKYHE Total - 1 4 17
2015 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
Maersk 0 0 0 7
MSC 0 0 17 10
CMA CGM 3 0 8 6
P3 Total 3 0 25 23
APL 0 0 0 0
HMM 0 0 0 2
2016 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
COSCO - - 3 -
K Line - - - -
YM - - - 5
Hanjin - - 4 -
Evergreen - - - 10
CKYHE Total - 1 4 17
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
What happens when you run out of ammunition?
Page 10
2014 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
APL - - 6 2
HMM - - - 5
MOL - - 1 6
H-L 1 - - 3
NYK - - - -
OOCL - - 2 2
G6 Total 1 - 9 18
2015 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
APL - - - -
HMM - - - -
MOL - - - 6
H-L - - - -
NYK - - - -
OOCL - - 2 -
G6 Total - - 2 6
2016 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
APL - - - -
HMM - - - 6
MOL - - - -
H-L - - - -
NYK - - - -
OOCL - - - -
G6 Total - - - 6
The G6 carriers will need to order more ships
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
Independents show no signs of giving up
Page 11
First 18,000 teus for CSCL due in 2014; 11 units for CSCL + UASC by 2016
2014 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
CSCL - - - 10
CSAV - - 2 -
Hamburg Sud - 4 10 -
PIL - 7 - -
UASC - - 2 1
Independents Total - 11 14 11
2015 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
CSCL - - - 3
CSAV - - 6 -
Hamburg Sud - - - 1
PIL - - - -
UASC - - - 12
Independents Total - - 6 16
2016 Deliveries < 3,000
TEU 3,000-
6,000 TEU 6,000-
10,000 TEU > 10,000
TEU
CSCL - - - -
CSAV - - - -
Hamburg Sud - - - 2
PIL - - - -
UASC - - - 4
Independents Total - - - 6
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
4 Alliance groups, 19 competing carriers
Page 12
• Stiff competition remains on main trades, despite the formation of the mega-Alliances
FE-Europe Capacity Deployed by Carrier/Alliance :
Feb 2014
P3 carriers emerged as clear winner in Great Battle of 2013
But laggard carriers are not giving up!
• Formation of Alliances does not constitute consolidation
05,000
10,00015,00020,00025,00030,000
Re
v in
US$
mil
2013 Revenue
5.8
%
4.8
%
3.7
%
1.0
%
0.9
%
0.5
%
-0.5
%
-1.0
%
-1.8
%
-2.0
%
-3.2
%
-3.4
%
-3.7
%
-3.8
%
-3.8
%
-5.3
%
-7.1
%
-7.4
%
-8.2
%
Mae
rsk
CM
A C
GM
Wan
Hai
Hap
ag-
Llo
yd
OO
CL
K L
ine
NY
K
CC
NI
MO
L
CO
SCO
N
AP
L
HM
M
EMC
Zim
Han
jin
Sh
g
RC
L
CSC
L
CSA
V
Yan
g M
ing
Op
era
tin
g M
argi
n %
2013 Operating Margin %
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
War of attrition – not achieving its goals
Page 13
• a strategy in which a belligerent side attempts to win a war by wearing down its enemy to the point of collapse through continuous losses in resources and materiel
28
%
61
%
53
%
38
%
58
%
46
%
32
%
69
%
32
% 45
%
48
%
8%
26
%
99
%
23
%
10
%
34
%
22
%
76
%
-10
%
0.00
0.50
1.00
1.50
2.00
2.50
3.00
AP
M-M
aers
k
MSC
CM
A C
GM
Eve
rgre
en
CO
SCO
N
Hap
ag-L
loyd
AP
L
Han
jin S
hg
CSC
L
MO
L
Ham
bu
rg S
üd
NYK
Lin
e
OO
CL
PIL
Yan
g M
ing
K L
ine
Hyu
nd
ai M
.M.
Zim
UA
SC
CSA
V G
rou
p
Cap
acit
y O
pe
rate
d in
TEU
Mill
ion
s
Fleet as at Feb 2014Fleet as at Jan 2009
• No major carrier exits since 2009
• 19 of Top 20 registered capacity increases
• Average 5 year growth rate of 40% or 7% CAGR
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
Alliance armies are (almost) evenly matched
Page 14
0 5,000 10,000 15,000 20,000
AE-10
FAL 1/AEC 2
Silk
Lion
AE-2
AE-6
AE-1
FAL 3
AE-7
Lp 4
Lp 5
Lp 7
Lp 6
Lp 1
NE 3
NE 6
CEM
NE 7
NE 2
CES
AEX 7/AEC 8/FAL 2
AEX 1
FE-North Europe Services Breakdown (Feb 2014) : Ave. TEU per week
P3
Maersk
CMA CGM / UASC
MSC
MSC
Maersk
Maersk
Maersk
CMA CGM
Maersk
G6
H-L / NYK / OOCL / APL / MOL / HMM
H-L / NYK / OOCL / APL / MOL / HMM
H-L / NYK / OOCL / APL / MOL / HMM
H-L / NYK / OOCL / APL / MOL / HMM
H-L / NYK / OOCL / APL / MOL / HMM
CKYHE
COSCO / Hanjin / K Line / Yang Ming
Hanjin / K Line / Yang Ming / COSCO
Evergreen
COSCO / Hanjin / K Line / Yang Ming
K Line / Yang Ming
Evergreen
Independents
CSCL / UASC / CMA CGM
CSCL / Zim
P3
Average Size : 11,600 TEU
G6
Average Size : 11,300 TEU
CKYHE
Average Size : 10,300 TEU
Independents
Average Size : 11,200 TEU
P3 will reduce number of FE-N Eur
strings from 9 to 8 weekly sailings,
with no change in total capacity
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
But P3 retains significant size advantage in some
arenas
0 5,000 10,000 15,000 20,000
Dragon
AE-11/MEX 1
Tiger
AE-20/MEX 3
AE-3/BEX
AE-12/BEX 2
Lp 8
MD 2
MD 1
FEM
MD 3
AMC-1/AMX 1
ABX
EMX
AME
FE-Mediterranean Services Breakdown (Feb 2014) : Ave. TEU per week
Page 15
P3
Average Size : 10,350 TEU
G6
Average Size : 8,200 TEU
CKYHE
Average Size : 7,100 TEU
Independents
Average Size : 5,150 TEU
P3
MSC
Maersk / CMA CGM
MSC
Maersk / CMA CGM
Maersk / CMA CGM
Maersk / CMA CGM
G6
H-L / NYK / OOCL / APL / MOL / HMM
CKYHE
K Line / Yang Ming
COSCO / K Line / Yang Ming / Hanjin
Evergreen
COSCO / K Line / Yang Ming / Hanjin
Independents
UASC / CSCL
CSCL / K Line / Yang Ming / PIL / Wan Hai
Zim / OOCL
Zim
P3 will reduce number of FE-Med
strings from 6 to 5 weekly sailings,
with minimal change in total capacity
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
Skirmishes getting more frequent
Page 16
-500
0
500
1,000
1,500
2,000
2,500
Jan
-09
Ap
r-09
Jul-
09
Oct
-09
Jan
-10
Ap
r-10
Jul-
10
Oct
-10
Jan
-11
Ap
r-11
Jul-
11
Oct
-11
Jan
-12
Ap
r-12
Jul-
12
Oct
-12
Jan
-13
Ap
r-13
Jul-
13
Oct
-13
Jan
-14
Ap
r-14
Jul-
14
Oct
-14
Fre
igh
t R
ate
$/T
EU
Gross FE-N Eur Freight Rate $/teu Base Freight - net of BAF
SSEFC Forward Curve
Successful GRI
Unsuccessful GRI
Announced GRI/PSS
2009 $/teu
❶ 1 Apr 09 250
❷ 1 Jul 09 300
❸ 1 Aug 09 150 PSS
❹ 15 Aug 09 250 PSS
❺ 1 Oct 09 250
❻ 1 Nov 09 150
❼ 1 Dec 09 250
❶ ❷
❸
❹
❺
❻
❼
①
② ③
④ ⑤
❶
❷
❸ ❹
❺
①
②
③
④
⑤ ⑥
⑦ ⑧
❶
Announced GRI/PSS
2010 $/teu
① 15 Jan 10 250
② 1 Mar 10 250
③ 1 Apr 10 250
④ 15 Jul 10 250 PSS
⑤ 1 Aug 10 750/1,000
Announced GRI/PSS
2011 $/teu
❶ 1 Jan 11 250
❷ 1 Jun 11 250
❸ 1 Jul 11 250
❹ 1 Sep 11 250
❺ 26 Dec 11 200
Announced GRI/PSS
2012 $/teu
① 1 Mar 12 775
② 1 Apr 12 400
③ 1 May 12 400
④ 1 Jun 12 350 PSS
⑤ 15 Jun 12 350 PSS
⑥ 1 Aug 12 250
⑦ 1 Nov 12 500
⑧ 15 Dec 12 550
Announced GRI/PSS
2013 $/teu
❶ 10 Jan 13 350
❷ 15 Mar 13 600
❸ 15 Apr 13 500
❹ 1 May 13 500
❺ 1 Jul 13 950
❻ 1 Aug 13 300
❼ 1 Sep 13 400
❽ 1 Nov 13 950
❾ 15 Dec 13 750
❷
❸
❹
❺
FE-North Europe Spot Freight Rates & GRIs Announced (Maersk) : 2009-2014
❻
❼
❽
❾
Announced GRI/PSS
2014 $/teu
① 6 Jan 14 250
② 1 Apr 14 525
①
②
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
Fighting has spread to the outer regions
Page 17
• Main trades are only half the story
• Emerging markets coming under pressure
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
Removal of old droids not keeping pace with new troopers
Page 18
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
Peace is not upon us
Page 19
• CSAV/Hapag-Lloyd : Significant hurdles still to be cleared, merger benefits not apparent
• COSCO/CSCL : Pact a politically driven half measure, doesn’t help either party
• Hanjin/HMM : Selling family silver, but holding on to container assets
• Zim : Debtors pay price, but no exit from container shipping
• NYK/MOL/KL : Held back in last few years, MOL has just committed to Seaspan charters while NYK will need to order new tonnage soon
• Evergreen : Sticking to its guns – new capacity injections will disturb market
• UASC : 14,000/18,000 teu orders – even more aggressive expansion ahead
• Hamburg Sud/PIL : defending niche markets
• APL/OOCL : running out of ideas; could corporate action be imminent?
• MSC/CMA CGM : massive fleet rebuilding with 9,000/18,000 teu orders
• Maersk – how will it react?
• Expect Liner Wars to last until 2016 if capacity build up cannot be curbed this year
ALPHALINER LINER WARS TRILOGY Liner Research Services © Alphaliner/Liner Research Services 1999-2014 – Contents not to be reproduced without permission
TOC Asia : April 2014 © Alphaliner Liner Research Services
End
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