tom boardley cma cgm (uk)cma cgm group key figures ranking : 3rd worldwide turnover 07 teus 07...
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Tom BOARDLEYCMA CGM (UK)
Perspectives on International Container Freight Dynamicsand Expectations for Impacts on the Cotton Supply Chain
CMA CGM GROUP KEY FIGURES
Ranking : 3rd worldwide
Turnover 07
Teus 07
Vessels
Slots available
Services
Staff Worldwide
Staff France
Offices Worldwide
Ports of call
11.8 billion us dollars
7,7 million teus
395
940,000 teus
200
16 000
4 200
650
400
Summary
Part I: Global Shipping EnvironmentPart II: Impacts on the Cotton Chain
Supply
MAIN TRADE ANALYSIS2007 - VOLUME FULL TEUS (‘000)
EB 14 350 / +1,6%
WB 6 257 / +15,9%EB 2 088 +14,1%
WB 2 352-2,4%EB 4 218
+5,4%WB 4 272
+23,1%
EB 1 032+5,8%
WB 9 101+16,6%
Volume growth 2007 = Volume growth 2007 = ++ 12% 12% �� 141,5 million 141,5 million teusteusDrewryDrewry Container Container ForecasterForecaster junejune 20082008
MAIN TRADE ANALYSISFORECAST 2008 - VOLUME FULL TEUS (‘000)
EB 14 347 / +0%
WB 7 098 / +13,4%EB 2 392 +14,6%
WB 2 290-2,6%EB 4 192
-0,6%WB 4 909
+14,9%
EB 1 011-2,1%
WB 9 922+9%
Volume growth forecast 2008 = Volume growth forecast 2008 = ++ 9,1% 9,1% �� 154,4 million teus154,4 million teusDrewryDrewry Container Container ForecasterForecaster junejune 20082008
WORLD CONTAINER TRADE ACTIVITY
0
100
200
300
400
500
600
700
2004 2005 2006 2007 2009Estimation
2008Estimation
Million Teus
World Total Container Handling
World Full Container Traffic
361,4397,6
439,5
494,4
539,9588
+14,9%+10%
+10,5%
+12,5%
+9,2%
+8,9%
105
+14,5%
115,2
+9,7%
126,4
+9,8%
141,5
+12%
154,4
+9,1%
167,8
+8,7%
Thousand of TEUS
Source: CMA CGM Datas
CMA CGM: NUMBER OF CONTAINERS CARRIED
7000
6000
5000
4000
3000
2000
1000
0
16151900
2300
2800
3900
5200
6000
2000 2001 2002 2003 2004 2005 2006 2007 2008
7700
x 5
9000
Source: AXS-Alphaliner Septembere 2008
TOP 10: MAIN CARRIERS – Dtatic Capacity / share of tradecapacity
1.Maersk Line –Denmark 2 000 000 16 %
2.MSC – Switzerland 1 300 000 10 %
3.CMA CGM – France 960 000 7.6 %
4.Evergreen – Taïwan 630 000 5.3 %
5.Hapag Lloyd – Germany 500 000 4.2 %
6.COSCO– China 450 000 3.7 %
7.CSCL – China 430 000 3.7 %
8.APL - Singapore 430 000 3.7 %
9.NYK – Japan 410 000 3.2 %
10.MOL –Japan 360 000 3.0 %
WHAT NEXT: CONSOLIDATION ?
� Increase in vessel sizes
� Technological evolutions
� Environment contraints
� Fuel cost
� End of conference system
MAIN RECENT EVOLUTION OF THE INDUSTRY
1956….début de la Conteneurisation
CMA CGM13 300 Evp
Delivery 2009 / 2010
Dimensions
Lenght h.t. : 365 m
width : 51,20 m
Gross weight: 132 800 tons
Speed: 24,1 knots
365m
VESSEL SIZE GIGANTISM
60%
FUEL COST: THE NEW DRIVER
BUNKER CONSUMPTION VERSUS SPEED
> A FULL TANK ON 01/01/2007 :> 10 000 tons @ $ 250 / ton = $ 2 500 000
> A FULL TANK TODAY :> 10 000 tons @ $ 582 / ton = $ 5 820 000 *
• Houston september average / price as per Bunker World)
MEASURES TAKEN BY SHIPPING COMPANIES TO REDUCE COST:
> Reduction of speed of vessels : 24 knots to 19 knots. > Most lines deploy 1 additionnal vessel on services : hence increasing
rotations and transit time.
> BUNKER SAVING :> 1 000 tons @ $ 582 = $ 582 000
> ADDITIONAL COST OF :> $ 5 238 000 – $ 2 500 000 = $ 2 780 000
Example based on fuel cost only, not including charterign cost
CARRIERS CANNOT ABSORB THIS BILL ALONE !
1New Services
2Bigger ships
3Terminals
4Land
Transportation
SHIPPING COMPANY MAIN CHALLENGES
KINGSTON
MALTE
KHOR FAKKAN
PORT KELANG
LE HAVRE
A MIX OF DIRECT AND RELAY SERVICESINTER CONNECTION AROUND FIVE STRATEGIC HUBS
A COMPLETE NETWORK OF EAST / WEST + NORTH / SOUTH LINES
AN EXAMPLE OF GLOBAL COVERAGE : CMA CGM CHOICE
Still growing … at a slower pace
2008 : + 4,3 % (forecast)2008 : + 6 % (forecast)
2009 : + 5,4 % (forecast)2009 : + 7 % (forecast)
2007 : + 9,5 %2007 : + 9,5 %
�WORLD CONTAINER TRADE GROWTH in teus�WORLD TRADE GROWTH
Total world trade growth is expected to slow down in 2008.
US housing market continues to show no signs of recovery, with financial market
erosion and increasing energy & food prices. High price of oil remains one of biggest
obstacles to sustaining the pace of world economic growth.
Global insight – june 2008
Seaborne trade by service type
�Containerized trade grows faster than other seaborne trades and gains some of the
lost market share from liquid bulk trade.
Global Insight june 2008
Shares of total sea trade in 2008 (% tons)
Dry bulk 38%
Container 13%
General Cargo / neo bulk 5%
Tanker 44%
Will cotton take advantage of increasing capacities?
> KEY LANES FOR COTTON TRAFFIC>USWC TO FAR EAST
>USEC/USGC TO FAR EAST
>BRAZIL TO FAR EAST
>WEST AFRICA TO FAR EAST
>SOUTH/EAST AFRICA TO FAR EAST
>EAST MED TO FAR EAST
> INDIA TO FAR EAST
Where are big vessels being deployed?
Markets supported by a steady growth:
> ASIA TO EUROPE TRADE
> ASIA TO USWC TRADE
Limits to deployment of bigger vessels on other tradelanes
> Operationnal issues:
> Port capacity: draft; space on quays, local limitations…
> Bigger vessel are over Panamax (over 5100 teus)
> Mid size vessels from 2800 to 4400 teus will be redeployed on secondary
lanes (West Africa, Brazil, East Med)
> Future developments will be dictated by market trends in emerging
markets. For example:
> Asia to West Africa trade is a fast growing market
> CMA CGM invest in Sao Tome – future HUB for West African Trade
> Cotton exports will benefit of these additionnal capacities.
A weaker dollar, generalisation of container freight: the competition to cotton
> US exports have increased by 20% this year: equipment in the USA has been a major issue for shipping companies. Small
exporters, scrap and grain have become serious competitors to
cotton trade.
Today, East bound Transatlantic (ex USA to Europe/East Med) is
the strong leg.
> Generalisation of commodities shipped in containers: sugar, waste paper, wood pulp, tobacco, cashew nuts, coffee, scrap,
grains…
The rising demand for equipment
> The rise is sustained by the development of containers floatcapacity.
> CMA CGM estimates a progression of 200 000 teus of its fleetcapacity per year.
> The cost of a container has increased by 50% in less than a yearfollowing the rise of steel price !!!
Increasing costs: the Bunker Adjustement Factor
> We have seen that this rising cost cannot be supported anymore by shipping
companies.
> Even low paying lanes are expected to participate : the strong leg can not bear
the burden of the round trip…
Optimisation of vessels and equipment turnover
> Main challenge for shipping companies is to optimise space on bigger vessels entering the fleet. They need to sail full on stronglanes!
> Equipment turnover is therefore of vital importance: containers need to be where they are expected for exports as soon as possible.
> A question is rising: are shipping companies ready to absorb the repositioning cost of empty to meet demand quickly?
> As long as revenue generated by commodities allow shipping companies to cover cost of repositionning, the answer is NO.
THANK YOU FOR YOUR ATTENTION