Container Industry. Jim Dwyer, Vice President Network Planning September 2008

Transcription

1 Container Industry Jim Dwyer, Vice President Network Planning September 2008

2 Session 1: Overview Page 2 September 2008 Container Industry

3 Transportation at A Glance Transportation Passenger Cargo 90% of global cargo by weight moved by container ships Land Rail/truck Air Ocean Tanker Bulk Container Ship Page 3 September 2008 Container Industry

4 Movement of International Cargo Typically, cargo is moved by a combination of rail/truck and plane/ship Shipper s Warehouse Consignee s Warehouse Los Angeles Shanghai Page 4 September 2008 Container Industry

5 Containerization: A Brief History. and is still an ongoing process that involves multiple parties to build a compatible system that can move cargo to destinations efficiently Standardization Efficiency Cost Effective Late 1960 s -- agreement between railroads, shipping companies & trucking companies Today 20ft, 40ft, 48ft and 53ft standardized containers Speed up loading & unloading process Compatible equipment amongst railroads, marine ships and trucking companies Lower freight rate Increased trade Smaller world Larger economy Source: U.S. Army Transportation Museum; Transportation Research News Page 5 September 2008 Container Industry

6 Types of Containers Standard types of containers are most common in cargo transport Type Cubic Capacity (m3) High Cube High Cube High Cube High Cube Page 6 September 2008 Container Industry

7 Special Types of Containers Special types of container have also been designed to match the customers requirements Cargo being loaded by crane from top-side of an open top container Tank container being hauled A flat rack container carrying cargo that is too tall and too wide for a standard container Page 7 September 2008 Container Industry

8 Increasing Size of Container Ships Containership size has grown more than 15 times in past 40 years Generation Capacity (TEU) length (m) width (m) draft (m) 1. (1968) (1972) 1, (1980) 3, (1987) 4, (1997) 5, (1999) 8, (2007) 11, , Simulation JadeWeserPort 20, Page 8 September 2008 Container Industry

9 Factors Considered When Deciding Ship Size Distance required to travel and transit time affects the no. of ships deployed Distance & Transit time Infrastructure Ships Port infrastructure determines the size of the ships that can be called Draft and availability of cranes to service the ships matters Utilization Optimal ship size is necessary to maximise utilization for the trade lane Different ship sizes have different fuel consumption requirements Source: Inno-C analysis Fuel consumption Optimal Speed Optimal speed that ship of certain size can travel for efficient fuel consumption Page 9 September 2008 Container Industry

10 Nominal Capacity Vs Effective Capacity Increase in nominal capacity does not get fully translated into effective capacity Page 10 September 2008 Container Industry

11 Global Container Routes TRANS-ATLANTIC 2007 size: 6.6 m TEU ASIA-EUROPE 2007 size: 21.2 m TEU TRANS-PACIFIC 2007 size: 20.7 m TEU LATIN AMERICA 2007 size: 10.1 million TEU INTRA-ASIA 2007 size: 55.4 m TEU Source: Drewry, FEFC, IADA, IRA, ISAA, GPS, Clarksons, MDS and NOL estimates Page 11 September 2008 Container Industry

12 Container Transportation: More than Port-to-Port Container Shipping is not just about ocean shipping but the entire set of activities across the supply chain not all carriers have highly developed capabilities beyond port-to-port Page 12 September 2008 Container Industry

13 Container Shipping Page 13 September 2008 Container Industry

14 Logistics Page 14 September 2008 Container Industry

15 Terminals/Truck and Rail Page 15 September 2008 Container Industry

16 Global Players in Key Supply Chain Segments Source: MDS, NOL GPS 2007 Source: Armstrong & Associates 2007 Source: Drewry 2007 Page 16 September 2008 Container Industry

17 Alliance Developments Since Global Alliance New World Alliance NWA created in 1998 after NOL acquisition of APL. HMM formerly from loose partnership with Kline in TP Grand Alliance Grand Alliance MISC GA reorganised in 1998 after P&O and Nedlloyd merger. MISC partners only on Asia-Europe trades Grand Alliance MISC GA reorganised in 2006 after Maersk acquisition of P&O Nedlloyd. Hapag- Lloyd acquisition of CP Ships TriCon/United Alliance Cho Yang Other main carriers Maersk acquired Safmarine and Sealand in 1999 Evergreen acquired LT in 1998 Hanjin acquired majority control of Senator in Cho Yang declared bankrupt in 2001 MSC operates largely as an independent carrier Informal Alliance expanded in late 2001 with slot exchange with Hanjin CKYH Alliance Maersk acquired P&O Nedlloyd in 2005 renamed Maersk Line in 2006 Other main carriers loosely grouped in various slot-exchange or joint service arrangements. Cooperation limited to specific trades with no global partnership Page 17 September 2008 Container Industry

18 More Alliances and Liner Companies Multi Carrier Alliances Major Independent Operators (3 main East-West trades) Grand Alliance 145 Vessels 20 Strings CHKY Alliance 187 Vessels 29 Strings Maersk Line 169 Vessels 22 Strings 994,532 TEU MSC 109 Vessels 14 Strings MISC 815,787 TEU 971,823TEU Evergreen Group 678,175TEU New World Alliance 119 Vessels 18 Strings 632,231 TEU UASC Cooperates in selected trades 29 Vessels 7 Strings 96,045 TEU 90 Vessels 16 Strings 444,584TEU China Shipping 44 Vessels 9 Strings 282,218TEU CMA CGM 106 Vessels 22 Strings 525,285TEU Page 18 September 2008 Container Industry

19 The Business of Liner Shipping Service Touch Points CSR Response Time Order/Info Capture to Standard Knowledgeable Responsive Sales & CS Documentation Timing & Reqs Security & Export Compliance Customs & Security Compliance Rating Accuracy Arrival/Avail Notification Intmdl Routing & Billing Service Reporting POD Confirmation Cargo Release & Delivery Cargo Receipt & ConSol Eqmt Space Stow Feeder Connection Relay Stow Vessel Transport Intmdl Connect Inland Transit Dest Availability Warehousing To Standard Delivery (POD) Page 19 September 2008 Container Industry Operational Reliability

20 Freight Rates Freight rates have various components: Basic Ocean Rates; Terminal Handling; Inland; Bunker and Currency Freight rates have historically been cyclical Page 20 September 2008 Container Industry

21 Freight Rate Trends Cyclical nature of freight rates can vary between trades Significant spread between headhaul and backhaul rates Page 21 September 2008 Container Industry

22 Key Costs Overview Page 22 September 2008 Container Industry

23 Managing Key Cost Components Port to Port Costs Dependencies: Efficiency, leverage and price volatility Source: APL data,; Inno-C analysis Page 23 September 2008 Container Industry

24 Typical Port-to-Port Cost Structure Major cost drivers for ocean transportation cost Page 24 September 2008 Container Industry

25 Ship Running Costs Are Another Factor Shipping costs over the lifetime of ship may be greater than the capital cost of the ship Management Fee Insurance Drydocking M&R Supplies-Spare Parts Supplies-General Labour wages Typical cost structure of SOC Management and Labour wages 1/2 of the cost M&R,DD and Supplies of spare parts accounts for 34% Page 25 September 2008 Container Industry

26 Industry Bunker Spot Price Slower economic growth and rising bunker costs, which continue to grow as a proportion of operating costs, are putting substantial strain on the container shipping industry. Average Monthly Bunker spot price (US$/MT) US$/MT $800 $700 $600 $500 Period Y-o-Y : 92% YTD : 38% Peak Spot Price (15 July 08): $761 P6 2008: $644 1 Aug: $704 $400 P1 2008: $467 $300 P6 2007: $351 $200 P1 2007: $266 $ Year Source: Platts (High Sulphur Fuel Oil SIN 380cst Grade) Page 26 September 2008 Container Industry

27 Vessel Operating Cost Are Dramatically Higher Example: Bunker cost increases are over 70% of total vessel operating cost in the Transpacific Total Vessel Cost (Transpacific) 2004 $186 / MT Mar 2008 $500 / MT Aug 2008 $680 / MT Fuel 40% Fuel Fuel 64% 71% Page 27 September 2008 Container Industry