16.May.

17
European demand trends and
changing commodity patterns

Is consumer demand driving growth?

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Healthy but contrasting demand growth on key trade lanes
Rapid growth on Asian import trades have helped demand growth recover in recent months,
while European and American import trades still remain largely flat

Containerized ocean trade growth, Dec’16 – Feb’17

YoY growth, %1

15 2
3 0
0

0 2
3 14
0 0 1 -1 -4 0 0
7 4

7
8

Global containerized trade growth: 5.2%

Intra-Asia and back-haul trades drive most of the recent growth spurt
1) 2015-2016 grow th in terms of TEUs; thickness of arrows is representative Jan-Dec 2016 trade lane size in TEUs
Source: Seabury Global Ocean Trade Database & Seabury Ocean Dashboard, excluding UN Comtrade; Seabury analysis (March 2017)

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Recent demand growth is on a path of clear recovery
Global demand growth has some unusual beneficiaries, like double-digit growth of European
exports to Asia; while Intra-Asia’s steady growth continues

Growth trends on selected trade lanes, 2014 – 2017

YoY growth, %1
15%

Europe to Asia
10%

5% Intra-Asia

World
0
Asia to Europe

-5%

-10%
J F M A M J J A S O N D J F M A M J J A S O N D J F
2015 2016 2017

Current recovery of demand growth is almost reminiscent of the ‘good old days’
1) Smoothened for enhanced clearness
Source: Seabury Global Ocean Trade Database, excluding UN Comtrade; Seabury analysis (May 2017)

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The long term growth trend is still on a declining path
After sustained double digit growth early in the century; growth rates in the container
industry have continuously dropped since 2008 to the current low single-digit levels

Global TEU growth rate, 2000 – 2016

5-year CAGR (%)

15%
+8.1% +2.5%

Declining industry
10% growth rates

5%

0%
’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16

The container industry has grown below 3% on average in recent years

Source: Seabury Global Ocean Trade Database, Seabury analysis (May 2017)

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Drop in TEU growth cannot be explained by economy alone
Although GDP growth has also declined over the past years, containerized trade has seen a
much faster decline in growth, and now grows at similar levels as the overall economy

5-year average GDP multiplier 1 ,2000 – 2016

TEU / GDP growth
4 2000 2016
> 3.5
TEU: 8% 2%
GDP: 3% 2%
3

2
< 1.5

0
’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 15 ’16

Notes: (1) The 2.4 ratio on 1990 means that TEU on average grew 2.4 times faster than GDP over the period 1985-1990
Source: Seabury Global Ocean Trade Database, EIU, World Bank; Seabury analysis, (May 2017)

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What has caused trade growth to drop so rapidly?
Both the nature of the global economy and international container trade have changed
significantly since the 2008 financial crisis

Economies have changed:

 GDP growth is slowing down
 China and other emerging markets are transitioning towards service
based economies
 “New” emerging markets like Vietnam and Bangladesh lack scale

Trade has changed as well:

 The boom of “supply chain globalization” after China entered the WTO is
coming to an end
 Production and final assembly location sites of some industries are
moving back towards end-consumer markets
 Finished goods no longer drive TEU growth, and intermediate goods and
raw materials are growing in importance

The impact of finished goods declining in importance is often overlooked

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Top trade-lanes were dominated by US imports back in 2000
In 2000, container trade was mostly driven by finished goods exports from emerging to
developed markets, and trade of intermediate goods between mature economies

Top-10 global container trades, 2000

Million TEU
Importer Exporter Annual volume by commodity type
1 China USA 24% 3.3

2 China Japan 33% 1.0

3 USA Japan 32% 1.0

Japan USA 0.9

Taiwan USA 0.6

Italy USA 0.6

Germany USA 0.6

Taiwan Hong Kong 0.5

Finished goods
China S. Korea 0.5
Intermediate goods
USA China 0.5 Raw materials

Intermediate goods were only of secundairy importance on top-3 trade lanes

Source: Seabury Global Ocean Trade Database (May 2017)

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China has taken over the role of container empire by 2016
Container trade has become much less dependent on the US consumer market, and now
relies strongly on China as an exporter & importer of a wide range of commodities

Top-10 global container trades, 2016

Million TEU
Importer Exporter Annual volume by commodity type
1 China USA 43% 9.5

2 USA China 23% 2.5

3 China Japan 57% 2.3

China S. Korea 2.2

China UK 1.2

China India 1.1

Thailand China 1.1

China Germany 1.1

Finished goods
China Vietnam 1.1
Intermediate goods
Japan China 1.1 Raw materials

Intermediate goods are now even more important on world’s largest trades

Source: Seabury Global Ocean Trade Database (May 2017)

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Intermediate goods drive global container trade growth
Intermediate goods have consistently outgrown the market, first at the expense of raw
materials, and for the last 8 years at the expense of finished goods

Container trade growth by commodity type, 2000-2016

Absolute growth in million TEU
133
2
14
110 8
9

30

59 11

2000 Raw Intermediate Finished 2008 Raw Intermediate Finished 2016

8-year CAGR: 6% 9% 8% 8% 3% 3% 1% 2%

Finished goods have grown by only 1% on average in the last 8 years

Source: Seabury Global Ocean Trade Database; Seabury analysis (May 2017)

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The fashion industry’s characteristics have changed
Fashion made of textiles has a relatively straight forward supply chain; cotton > thread >
fabric > clothes, but the importance of each segment changed over time

Global containerized trade of fashion goods

Million tonnes

2000 2008 2016

48
Clothing

35 Fabrics
Thread & yarns
Fibers
21
14 15

Clothing Inputs Clothing Inputs Clothing Inputs

8-year CAGR, %: 7% 8% 1% 5%

Less finished goods were shipped, even though overall fashion-related trade grew

Source: Seabury Global Ocean Trade Database (May 2017)

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European imports of fashion goods are a case in point
While European fashion import growth relied mainly on finished clothing until 2008, imports of
clothing stalled since 2008, while imports of fabrics and other fashion inputs continued to grow

European fashion imports by commodity type, 2000-2016

Index (2000=100) 2008-2016 CAGR:
250
231 0%
222

200 3%
200
2%
153

150

97 3%
100
78

50
’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16

Relative strong growth of “fashion intermediates” suggests near-sourcing in Europe

Source: Seabury Global Ocean Trade Database, Seabury analysis (May 2017)

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The changes are clearly visible in the European market
The center of growth shifts from consumer markets such as the UK, Germany and France,
to more production heavy markets like Italy, Spain and Poland

Top-8 clothing importers Europe, 2016 Top-8 fashion-inputs importers Europe, 2016
Thousand TEU 8-year CAGR Thousand TEU 8-year CAGR

UK 158 2% Italy 63 -2%

Germany 133 -1% Germany 61 1%

Netherlands 94 9% Belgium 48 2%

Spain 85 2% UK 45 5%

France 76 1% Spain 44 4%

Italy 57 -2% Netherlands 38 7%

Belgium 44 -1% Poland 29 11%

Denmark 18 2% Portugal 18 3%
2008 2016 increment

Intermediate goods grow faster, and to different markets than finished goods

Source: Seabury Global Ocean Trade Database, Seabury analysis (May 2017)

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Cargo weight per TEU varies considerably by commodity type
Finished clothes are light-weight, with intermediate goods and raw materials coming in
heavier containers

Average stuffing factor per commodity type Impact stuffing factor on TEU growth
Tons per laden container (TEU) Incremental TEU’s per 1,000 tons growth
5.2 tons

191
5.2 t x

116
8.6 t x

96
10.4 t x

87
11.5 t x

Any increase in cargo weight of heavier cargo translates into fewer additional TEU

Source: Seabury Global Ocean Trade Database, Seabury analysis (May 2017)

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Market outlook
Demand trends and developments we see in container shipping today are not all positive,
but certainly also not all negative!
Market outlook

 Less additional outsourcing to Asia-Pacific

Trade
patterns  Different commodities driving growth
 East-West trades not catering for the majority of growth anymore

 Structurally lower
TEU growth  More on short-distance (‘Intra’ trades) and N-S trades
 Non-dominant legs currently growing faster than dominant legs

 Most commodities that can be containerized have been containerized

Container-
 Reefer market offers some potential for additional containerization
ization
 Breakbulk and OOG potentially less attractive due to back-haul growing fast

 China becoming less export oriented

Emerging  Consumer demand from developed markets less of a driving force for emerging
markets markets
 No ‘New China’ on the horizon as ‘new’ emerging markets are relatively small-scale

Current lower growth cycle is likely to continue in the short term

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Contact details
For more information, please contact…

Michel Looten Ronald Veldman

Director Maritime Senior Maritime Business Analyst

Seabury Consulting Seabury Consulting

E-mail: mlooten@seaburygroup.com E-mail: rveldman@seaburygroup.com

Cell: +31 62 139 1196 Cell: +31 62 129 0489
Phone: +31 20 880 4265 Phone: +31 20 880 4258
Website: www.seaburygroup.com Website: www.seaburygroup.com

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Introduction Seabury Consulting
As part of Accenture and with over 200 dedicated professionals, Seabury is the largest global
advisory practice in aviation and logistics, and the leading advisor to the global cargo industry

 Founded in 1995, Seabury provides management

consulting and business intelligence, originally for the
aviation industry, but also for other logistics industries
Shipping lines  Seabury Cargo Advisory provides services to many of
the world’s leading shipping lines, ports, forwarders,
integrators, airlines and airports
Integrators Forwarders  Seabury Cargo Advisory has an unparalleled range of
expertise in:
Seabury - Strategy consulting and business planning
Cargo - Operational improvement (e.g. cost reduction, revenue
Advisory boosting, contract negotiations and outsourcing)
- Network and alliance optimization; fleet selection, acquisition
Terminal and financing
Airlines
Operators - Business intelligence, market research and forecasting

Port  The practice is led by a combination of former cargo

airline and maritime experts, and consultants from
Authorities
leading cargo consulting firms

 Seabury’s proprietary suite of software tools are

considered the industry’s best with a depth of
analytics necessary to support rapid decision making

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Global Ocean Trade Database
Seabury provides the industry's most comprehensive, reliable and up-to-date set of ocean
trade data with extensive historical time series and forecasts

200 countries
 Covering ~99% of global ocean
trade
 Country-to-country trade lanes
 City-level detail for China, Brazil,
India & USA
Example: from Nanjing to Germany
Ocean trade
~2000 commodities
 Measured in TEU, weight and value  Using an in-house classification in
 Split by Containerized, Non- 12 sectors and 70 industries,
Containerized and Oil, Fuel & LNG tailored to international trade
 Specific stuffing factors, supplied by  Input based on HS6 or lower
participating carriers, used to  Allows to analyze key industries as
convert container weights into TEU well as detailed products
Example: TEU Example: frozen bovine meat

Exports from South China to Europe

TEU (‘000s)
Monthly 10
Air conditioners High update
Christmas articles
& yearly data 8 frequency
 Yearly data from 2000 onwards 6  Up-to-date customs data processed
provide insights on long-term trends and delivered every month
 Quarterly data from 2000 and 4
 Lean and efficient processing times
monthly data from 2005 onwards allow to supply datasets with
provide insights on seasonality 2
minimum time lags
patterns
0
Example: monthly data J A J O J A J O J A J O J A J O Example: year-to-date
2013 2014 2015 2016

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China Shipper Trade Database
Seabury’s China Shipper Trade Database allows analysis of shipments to and from Chinese
zip codes, capturing trade behavior of individual shippers by mode

375,000 shippers
& manufacturers
Air, Ocean, Rail Weight, value & shipments
Database & Map
& Road Modes
14,000 Zip codes
Updated monthly 2000 commodities
7 Industries

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