Professional Documents
Culture Documents
OCEAN FREIGHT
MARKET UPDATE
February 2019
Publication Date 30th January 2019
1
PUBLIC
Contents
MARKET OUTLOOK
Freight Rates and Volume Development
CAPACITY DEVELOPMENT
CARRIERS
REGULATIONS
COSCO Shipping has the second largest vessel orderbook in 2019, with 12 units and a total
capacity of 180,970 TEU. Most of the ships are expected to be delivered in the 1st half of the
year. Notably, another 6 19,200 – 21,200 TEU units will complete COSCO Group’s current ‘megamax’ vessel program. The 6 new megamaxes are expected to
join the OCEAN Alliance’s Far East – North Europe ‘NEU3/AEU7’ loop, replacing ships of 13,000 – 14,000 TEU.
Evergreen has an orderbook of 10 ships in 2019, including 6 G-class 20,388 TEU units. The first 2 G-class megamax units will be assigned to the Asia – North
Europe CEM service, which is currently being upgraded from the 13,800-14,000 TEU size to the 20’000 TEU scale. The remaining G-class units are expected to
follow onto the same service later this year. Evergreen is also expected to launch a jumboisation program for some of its 8,500 units later this year.
Hapag-Lloyd, ZIM and Wan Hai have no new ships due for delivery in 2019. All 3 carriers will have to rely on the charter market for any capacity expansion this
year. This counts also for carrier HMM. It’s newbuilding program includes 12 ships of 23,000 TEU and 8 units of 15,000 TEU, but this will only be delivered in the
2nd quarter of 2020 and 2021 respectively.
Source: Alphaliner
WORLD CONTAINER INDEX (WCI)3) SHANGHAI CONTAINERIZED FREIGHT INDEX (SCFI)4) BUNKER PRICE INDEX5)
3,000 1,200 1,000
1,100
2,500 800
1,000
2,000
900 600
1,500 800
700 400
1,000 Actual Actual BIX 380
600
200
500 Forecast Forecast BIX MGO
500
0 400 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
’17 ’18 ’19 ’17 ’18 ’19 17 18 ’19
1) real GDP, Global Insight, Copyright © IHS, Q4 2018 . All rights reserved. 2) Demand growth = Port-to-Port Container Traffic growth. Supply growth = Fleet Growth. Source: Drewry Maritime Research. 3) Drewry, in USD/40ft container, including BAF & THC both ends, 42 individual routes, excluding
intra-Asia routes, 5.5% predicted freight rate increase. 4) Shanghai Shipping Exchange, in USD/20ft container & USD/40ft ctnr for US routes, 15 routes from Shanghai. 5) Bunker Index, in USD/metric ton, Bunker Index MGO (BIX MGO) = avg. Global Bunker Price for marine gasoil (MGO) port prices; (BIX
380= avg. Global Bunker Price for all 380 centistoke (cSt) port prices; both index published on the Bunker Index website., Forecast based on HIS Market assumption of avg. USD70 per Brent barrel equaling Nov18 price. 6) DHL Global Trade Barometer Mar18, index value represents weighted average of
current growth and upcoming two months of trade, a value at 50 is considered neutral, expanding above 50, and shrinking below 50.
Carriers have announced an extensive blank sailing program in anticipation of the weaker demand during Chinese New Year
EXPORT REGION IMPORT REGION CAPACITY RATE EXPORT REGION IMPORT REGION CAPACITY RATE
AMNO = + AMNO = ++
EURO AMLA
AMLA = =/- ASPA + +
ASPA + =/- EURO = ++
MENAT + =/- MENAT = +
SSA = = SSA -- ++
AMLA = + ASPA - =
AMNO ASPA
ASPA = = AMNO - -
EURO = = AMLA = -
MENAT = = EURO -- =
SSA = + MENAT - =
--(AU) = (AU)
OCEANIA
KEY
Strong
++
Moderate
+
No
=
Moderate
-
Strong
-- - (NZ) + (NZ)
Increase Increase Change Decline Decline
Source: DGF
ASPA – AMNO No major rush prior Chinese New Year. Extensive blank sailings are expected between wk6 to wk8 (particularly into USEC).
Ocean rates are strong and still increasing; inland carriages in US remain problematic; congestion on USEC & CAEC causes severe
EURO – AMNO
delays into USMW area
As predicted, space is getting tight before Chinese New Year period. Carriers are also restricting low paying cargo onboard. Most of the
ASPA – MENAT
FAK rates have been extended till mid February.
ASPA – ASPA Blank sailings have been planned during the Chinese New Year period. No significant changes to the FAK rates expected.
AMNO – EURO No change with rates & Capacity in February. Space remains tight out of Houston.
Source: DGF
Fiscal stimulus coming in DE, FR & IT will lead to a temporary pickup in real GDP in Q1 ’19. UK parliament’s rejection of the Withdrawal
EURO
Agreement support cautious near-term UK growth projections.
Recent turbulences in financial markets implied that volatility had spiked, and risk spreads had widened. The partial government shutdown
AMNO
in Jan will cut an estimated 0.1 percentage point from real GDP growth, and the assumption is that losses will be recovered in Q2.
Real GDP recovered in JP in Q4 18, tanks to a rebound in domestic demand – consumer spending & capital expenditure remain solid.
However, imports increased more rapidly than exports in Q4. The scheduled increase in sales tax in Oct ’19 will contribute to volatility in
ASPA quarterly GDP growth patterns, as consumers & businesses shift purchases forward. Economic growth in CN should stabilize as the
Government’s measured stimulus policies gradually kick in. Meanwhile, exports, industrial production, & retail sales have decelerated, as
has factory price inflation.
EMERGING While currency pressures on emerging markets have eased, weakening global growth and more pessimism on commodity prices will do
MARKETS little to boost growth prospects.
JPMorgan Global PMI sank to its lowest level in 27 months. Meanwhile, optimism about the year ahead slipped to its weakest reading in 2 ½
DEMAND
years, suggesting the slowdown has further to run. Deteriorating goods trade was once again the major factor behind the slowdown.
DEVELOPMENT
Manufacturing PMIs for a number of countries (CN, FR, IT, CZ,PL, TW, MY, KR, MX, TR) are below the 50-point threshold.
Source: IHS Markit Global Executive Summary, IHS Purchasing Manager Index Manufacturing, a PMI at 50 is considered neutral, expanding above 50, and business shrinking below 50.
Carriers / Capacity
CARRIERS
The OCEAN Alliance members CMA CGM, COSCO Shipping, Evergreen and OOCL (part of COSCO Group) have unveiled their new ‘Day 3 Product’ that is
due to start from April 2019. It will offer 38 liner services on East – West trades, to be ensured with 330 ships, representing a total fleet capacity of 3.8 MTEU.
The 4 carriers have also decided to extend their cooperation until 31 Mar 2027. The OCEAN Alliance was launched in Apr 2017 for an initial period of 5 years with
an option for a 5-year renewal. The OCEAN Alliance ‘Day 3 Product’ is an expansion of the current ‘Day 2 Product’ with several significant enhancements,
such as, addition of a 7th Far East – North Europe loop, with a full up-grade of a 3rd string to the 20,000 TEU scale, an upgrade of the Far East – Middle
East ‘MEA5’ service to the 20,000 TEU scale. This will make the ‘MEA5’ the first service to employ megamax ships outside of the Asia – North Europe route and
an improved Vietnam coverage.
The OCEAN Alliance is expected to continue to expand at the fastest pace in 2019, compared to its rivals in 2M and THE Alliance. OCEAN Alliance’s growth
will be pushed by the scheduled deliveries of ULCS newbuilding for COSCO and Evergreen. Although MSC also has substantial pipeline of ULCS units
scheduled for delivery this year, most of MSC’s ships will be delivered in the 2 nd half of the year, while COSCO and Evergreen’s ships will be mostly delivered in
the 1st half.
ZIM and the 2M partners (Maersk and MSC) will extend their cooperation to the Transpacific North West and Asia – East med routes from March 2019,
subject to regulatory approvals. They already had concluded a 1st strategic cooperation agreement for the Asia – US East Coast trade in Jul 2018. Although this
extended cooperation will bring some changes in the services the overall trade capacity is expected to remain largely unchanged, with the 2M services to be
upsized to accommodate the ZIM volumes.
CAPACITY DEVELOPMENT
The idle containership fleet fell slightly to 561,187 TEU as at 7 Jan 2019, with healthy capacity utilization on the Asia – Europe and Transpacific routes over the
year and keeping idle capacity in check. The number of idle ships of over 12,500 TEU dropped to only 8 units compared to 13 ships in Dec 2018. This mainly due to
the return of several vessels to active duty on the Asia- Europe route, involving Maersk, CMA CGM, Hapag-Lloyd and Yang Ming tonnage. However vessel
demand is expected to fall again in February as the Lunar New Year holidays in the Far East starting on 5 Feb 2019, will put more ships out of work.
OOIL 1) 6 months 30. Jun 18 million US$ 3'115 51 9'939 3'136 4'637 5'302 1'580 4'575 2.28
AP Moeller-Maersk 9 months 30. Sep 18 million US$ 28'837 408 61'787 23'232 34'116 27'671 12'229 29'749 2.24
CMA CGM 9 months 30. Sep 18 million US$ 17'176 399 20'381 6'115 5'632 14'749 5'991 5'276 1.81
Wan Hai 9 months 30. Sep 18 million NT$ 48'185 474 75'695 26'449 34'279 41'416 19'785 11'649 1.69
Hapag-Lloyd Holding 9 months 30. Sep 18 million euro 8'428 301 15'099 1'742 6'192 8'907 3'101 3'086 1.43
NYK group 9 months 30. Sep 18 billion Yen 916 -4 2'096 502 565 1'532 604 331 1.24
K Line group 9 months 30. Sep 18 billion Yen 416 -12 1'037 322 285 753 243 102 1.18
Evergreen Marine Corp 9 months 30. Sep 18 million NT$ 120'035 -1'015 218'491 62'598 66'626 151'865 50'194 8'850 1.10
MOL group 9 months 30. Sep 18 billion Yen 620 15 2'263 415 654 1'609 532 311 0.97
Pacific International Lines 6 months 30. Jun 18 million US$ 2'244 -38 6'666 1'714 1'728 4'938 2'349 952 0.93
Yang Ming 9 months 30. Sep 18 million NT$ 103'349 -6'223 140'155 33'289 20'449 110'705 47'530 -7'037 0.71
China Cosco 2) 9 months 30. Sep 18 million RMB 82'130 1'565 227'872 64'350 54'986 172'886 95'823 10'216 0.60
Zim 9 months 30. Sep 18 million US$ 2'395 -125 1'802 630 -186 1'909 653 -1'879 -0.07
Hyundai Merchant Marine 9 months 30. Sep 18 billion Won 3'777 -493 3'419 951 337 3'082 1'059 -3'310 -0.49
The Z-Score is a statistical analysis to predict a company’s probability of failure in the next two years, using data from the company’s financial statement.
Z-Score 2.99 = company is “safe”; Z-Score between 1.8 and 2.99 = exercise caution (“grey zone”); Z-Score 1.8 = Higher risk of the company going bankrupt
(“distress zone”)
Source: Drewry Sea & Air Shipper Insight Aug 2018, 1) parent of OOCL, 2) parent of Cosco Container Lines; Z-score is calculated as follows: T1 = (Current Assets - Current Liabilities) / Total Assets, T2 = Retained Earnings / Total Assets, T3 =
Annualized EBIT / Total Assets, T4 = Book Value of Equity / Total Liabilities, T5 = Annualized Sales / Total Assets, Z-score bankruptcy rating = 1.2*T1 + 1.4*T2 + 3.3*T3 + 0.6*T4 + 1.0*T5
Source: Alphaliner
BACK-UP
11
PUBLIC
Market Outlook January 2019 – Ocean Freight Rates Additional Trades (1/2)
EURO – AMLA Capacity unchanged, space is available, rates remain stable and are expected to slightly decrease until end of Q1
EURO – MENAT ME region shows same trend as ASPA; low space but stable rates
EURO – SSA Rates remain stable and space is available. Congestion / PSS surcharge for PODs in Nigeria from all carriers still in force
Rates in the market are stable. Space can be an issue from US Gulf Coast while bookings are 2 weeks out. USEC is in a better shape where
AMNO – MENAT
we mostly can manage to get space for the next week sailings.
Rates to South Africa and West Africa were stable for long time but direct carriers announced GRIs for February. No changes in capacity.
AMNO – SSA
Space is available. (Direct Service is currently shared by Maersk/Safmarine/MSC/HSUD).
AMNO – AMLA Fuel is raising cost slightly. Q 1 2019 outlook soft to begin the year.
Roll over and space constraints affecting entire region. MX/BR/SAWC region facing port omissions/blank sailings/congestion. Shippers are
strongly urged to provide forecasts 4-6 weeks out.
AMLA Exports Lack of trucking capacity in Mexico interrupting supply chain/extensive delays in cargo movement.
GRI’s and Emergency Fuel surcharges announced daily on all trades.
F/Time/Drop off conditions coming with a cost.
Heavy delays at several rail ramps and ports affecting export cargo. Market is stable in terms of rates for January / February. Space is tight for
AMNO – ASPA
Oceania direct services off USWC. Pre-booking 2-3 weeks ahead recommended.
Source: DGF
Market Outlook January 2019 – Ocean Freight Rates Additional Trades (2/2)
Source: DGF
N O R T H N O R T H
A M E R I C A A M E R I C A
I n c l . 4.0 mTEU +2.4% 8.5 mTEU +4.7% I n c l .
M E X I C O F A R E A S T M E X I C O
M E R G E R S A N D A Q U I S I T I O N S
United Hyundai
China CMA Hapag Hamburg Maersk Yang
Cosco OOCL Evergreen APL Arab Merchant MSC K Line MOL NYK
Shipping CGM Lloyd Süd Line Ming
Shipping Marine
HYUNDAI
CHINA COSCO SHIPPING EVER CMA CGM MAERSK LINE OCEAN NETWORK YANG
HAPAG-LLOYD MERCHANT MSC
OOCL GREEN APL MARINE Hamburg Süd EXPRESS (ONE) MING
A L L I A N C E S
F O R M E R A L L I A N C E S P R E S E N T A L L I A N C E S
MAERSK LINE OOCL
CMA CGM
MSC
MAERSK LINE CHINA SHIPPING OCEAN CMA CGM
2M OCEAN 3 2M HMM (strategic
MSC UNITED ARAB
cooperation until Apr
ALLIANCE CHINA COSCO SHIPPING
SHIPPING COMPANY EVERGREEN
2020)