Transportation Outlook Breakbulk China 212 Shanghai Susan Oatway Senior consultant oatway@drewry.co.uk March 1 st, 212
Agenda Drewry Breakbulk China 212 2 Cargo Demand Competitive Threat Fleet Supply Market outlook
million tonnes Estimated development of general cargo market Drewry Breakbulk China 212 3 2,5 General cargo market share Container market share MPV market share Total general cargo market 2, 1,5 1, 5 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12f Source: Drewry Maritime Research, WTO
Drewry Breakbulk China 212 4 1. Cargo Demand
Drewry Breakbulk China 212 5 Dry cargo shipping markets General cargo in trailers, 421 211 trade of dry cargo Reefer, vehicles, 62 General cargo in containers, 1,458 Source: Drewry Maritime Research Non-unitised general & project, 518 Minor bulk, 1,13 Major bulk, 2188 Primary cargo markets for Multi-Purpose Ships Major bulk (Multi-Purpose part) Other minor bulk (Multi-Purpose part) Neo/Agri-bulk (Multi-Purpose part) Containerised Gen Cargo (Multi-Purpose part) Other Unitised General Cargo Specialised General Cargo Non-Specialised Breakbulk General Cargo Competing vessel types Bulk Carriers Handy bulkers Handy bulkers Ro-Ro Ships Containerships Ro-Ro ships Con-Bulkers Ro-Ro ships Ferries Reeferships, car carriers, Ro-Ro ships Ro-Ro ships Heavy lift ships
Project cargo the invisible break-bulk volume Drewry Breakbulk China 212 6 1) Most difficult cargo to analyse as comprises of a multitude of cargoes no manifest will state project cargo but rather oil pipes or railway locomotives or steel blades. 2) There are four main areas for project cargo growth; Mining, Civil Engineering, Oil & Gas & Chemicals and Power 3) Recent capital expenditure figures for these areas can be turned into potential volumes with the following assumptions: sea freight = 7.5% of value, average freight rate of $12/rev ton, average weight/measure ration is 2.5 cbm/tonne, 5% of project cargo is seaborne.
Potential growth in project cargo volumes (million tonnes) Drewry Breakbulk China 212 7 4 35 3 Mining Civil Oil, gas, chemicals Power 25 2 15 1 5 211 212 213 214 Source: Drewry Maritime Research, derived from PEG/BBA211
Drewry Breakbulk China 212 8 2. Competitive threat
Drewry Breakbulk China 212 9 Development of MPV market share (million tonnes) 1, 9, 8, 7, 6, 5, 4, 3, MPV share of general cargo General cargo MPV share of minor bulk trade Minor bulks MPV share of major bulk trade Major bulks MPV share of container trade Container trade 2, 1, 27 28 29 21 211 212 213 214 Source: Drewry Maritime Research
million dwt no. vsls ' Teu no. vsls Drewry Breakbulk China 212 1 Competitive threat Handy bulk carrier age profile Containership age profile 12 14 16 45 1 12 14 12 4 35 8 1 1 3 6 8 8 25 2 6 6 15 4 4 4 1 2 2 2 5 <= 198 1984 1988 1992 1996 2 24 28 Handysize Handymax Panamax Capesize Current Fleet (rt axis) <= 198 1983 1987 1991 1995 1999 23 27 211 <1 teu 1-1999 teu 2-2999 teu 3-4999 teu 5-7999 teu 8-9999 teu 1 teu+ Current Fleet (rt axis) Source: Drewry Maritime Research
Drewry Breakbulk China 212 11 Dry bulk and Container markets Weighted freight rates and supply/demand index comparison on East-West trades Forecast dry bulk period rates ($ per day) 11 15 1 95 1,8 1,6 1,4 1,2 1, 14, 12, 1, 8, 6, Handysize Handymax Panamax Capesize 9 85 8 East-West supply/demand index Weighted East/West freight rate including fuel charges (US$ per teu, right axis) Weighted East/West freight rate excluding fuel charges (US$ per teu, right axis) 28 29 21 211 212 8 6 4 4, 2, 27 28 29 21 211 212 Source: Drewry Maritime Research
Drewry Breakbulk China 212 12 3. The Fleet
Drewry fleet definitions Drewry Breakbulk China 212 13 Multipurpose vessel: - dry cargo carrier - between 1, and 54, dwt - grain or bale AND container capacity - lifting gear with minimum 25-tonne SWL Project carrier - multipurpose vessel built after 1989 - with increased lifting capacity as below Gear SWL(mts) Standard PC Premium PC Premium + PC Vsl < 5, dwt 6 12 145 Vsl 5-1, dwt 8 15 18 Vsl 1-14,999 dwt 12 175 21 Vsl 15-19,999 dwt 12 22 265 Vsl 2-24,999 dwt 14 22 265 Vsl 25, dwt + 17 25 3 Source: Drewry Maritime Research
MPV fleet age profile as at January 1 st, 212 ( dwt) Drewry Breakbulk China 212 14 2,5 2, 1,5 1, 5 197 1972 1974 Source: Drewry Maritime Research 25, dwt+ 2-24,999 dwt 15-19,999 dwt 1-14,999 dwt 5-9,999 dwt < 5, dwt 1976 1978 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21
MPV fleet age profile by vessel type as January 1 st, 212 ( dwt) 2,5 Premium Project Carrier+ Premium Project Carrier Standard Project Carrier 2, Heavy Lift MPV/HL MPV Drewry Breakbulk China 212 15 1,5 1, 5 197 1972 1974 1976 1978 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 Source: Drewry Maritime Research
MPV fleet and orderbook as at January 1 st, 212 (million dwt) 1 Drewry Breakbulk China 212 16 9 8 Orderbook Fleet 7 6 5 4 3 2 1 <5, 5,-9,999 1,-14,999 15,-19,999 2,-24,999 25,+ Source: Drewry Maritime Research Dwt
' dwt ' dwt Suggested development of the multi-purpose fleet Drewry Breakbulk China 212 17 3, 2,5 2, 1,5 1, 32, 3, 28, 5-5 -1, -1,5 26, 24, 22, -2, -2,5 Deliveries Demolition Fleet (right axis) 27 28 29 21 211 212 213 214 2, Source: Drewry Maritime Research
Drewry Breakbulk China 212 18 4. Market Outlook
World economic growth (% change) Drewry Breakbulk China 212 19 15 1 5-5 -1-15 25 26 27 28 29 21 211 212f 213f Real GDP Trade in goods Source: Drewry Maritime Research, from IMF
Future growth in multipurpose share of dry cargo market (million tonnes) Drewry Breakbulk China 212 2 9 8 7 6 5 4 3 Container Major Bulks Minor Bulks General Cargo 2 1 27 28 29 21 211 212 213 214 Source: Drewry Maritime Research
Suggested fleet development by vessel type ( dwt) Drewry Breakbulk China 212 21 4, 35, 3, 3, 2, 25, 1, 2, -1, -2, -3, GC deliveries PC deliveries** MPV deliveries* MPV demolitions* HL demolitions GC demolitions MPV fleet* (right axis) PC fleet** (right axis) GC fleet (right axis) 15, 1, 5, -4, 27 28 29 21 211 212 213 214 * Not including PC. ** Including HL. Source: Drewry Maritime Research
Drewry Breakbulk China 212 Growth in effective fleet versus growth in effective demand (%) 22 5% 4% 3% 2% 1% % -1% -2% -3% -4% 28 29 21 211 212 213 214 Fleet Growth Demand Growth Source: Drewry Maritime Research
Future concerns Drewry Breakbulk China 212 23 1)Competition from Handy bulk carriers due to the overfull orderbook with peak deliveries in 213 will lead to increased competition in the break bulk sector. And to a lesser extent the competition for container cargo will effect the short term market as carriers scrabble for cargo. 2) Although both global GDP and world trade have shown some recovery after the crash in 28/9, there is still some hesitation for new project start-ups. This inherent time lag will continue to effect recovery in this sector but will it cushion the market from the competition in the breakbulk sector? 3)The main growth area for the fleet is in project carriers and significant lift capability increases. Through investment in new ships & methods, project carriers have created a partially insulated niche within the break-bulk market, which theoretically should result in higher rates, higher profits and differentiated products/services. Is this niche sector really insulated from the competition seen in the general cargo market?
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