OCEAN FREIGHT MARKET UPDATE

Transcription

1 DHL Global Forwarding, Freight OCEAN FREIGHT MARKET UPDATE March 2019 Publication Date 4th March 2019 Dominique von Orelli Global Head, Ocean Freight 1

2 Contents TOPIC OF THE MONTH Asia North Europe capacity set to surge this year HIGH LEVEL DEVELOPMENT MARKET OUTLOOK Freight Rates and Volume Development ECONOMIC OUTLOOK & DEMAND DEVELOPMENT CAPACITY DEVELOPMENT (see TOPIC OF THE MONTH) CARRIERS REGULATIONS? DID YOU KNOW? Independent short-sea operators losing market share to main line carriers 2

3 Topic of the Month Asia North Europe capacity set to surge this year Vessel capacity on the Far East North Europe trade lane remains a key challenge Carriers are planning to add up to 28,000 TEU weekly on the Asia North Europe trade in 2019, representing a capacity increase of 10% on the route. Weekly capacity on this route will reach 300,000 TEU in Apr 2019, compared to an average of 270,000 TEU in the same period last year. Since the first megamax ships of over 18,000 TEU were delivered in 2013, they have been deployed exclusively on the Far East North Europe route. On short-term, carriers are withdrawing capacity by cancelling sailings (blanked sailings). Any further deterioration in spot rates could trigger further capacity withdrawals. However this would leave carriers saddled with more surplus ships that, also because of their size, see limited deployment options outside of the Asia Europe route. In Feb MSC sent the 19,462 TEU MSC ELOANE to the US West Coast for one sailing. The shift will see the first-ever megamax ship call at a US port. While deployments of these ultra large vessels on the transpacific routes are only ad hoc arrangements for the time being, COSCO will start assigning seven of its megamax ships to the OCEAN Alliance s Far East - Middle East MEA5 service on permanent basis from April. The carrier s move could help ease capacity pressure on the Far East North Europe route, but could shift pressure towards the Middle East routes. Source: Alphaliner 3

4 High Level Market Development Supply and Demand ECONOMIC OUTLOOK GDP GROWTH BY REGION 1) DHL TRADE BAROMETER 6) SUPPLY/DEMAND GROWTH (ANNUALIZED), IN % 2) 2) 2018F 2019F 2020F 2021F 2022F CAGR ( ) EURO 2.1% 1.6% 1.5% 1.5% 1.7% 1.6% MEA 2.9% 3.1% 3.4% 3.3% 3.3% 3.3% AMER 2.6% 2.6% 2.1% 1.8% 1.8% 2.1% ASPA 4.9% 4.7% 4.5% 4.7% 4.7% 4.7% DGF World 3.3% 3.1% 2.9% 2.8% 2.9% 2.9% Q1 16 Q2 Q3 Q4 Q1 17 Q2 Q3 Q4 Q1 18 Q2 Ocean Global Q3 Q4 7% 6% 5% 4% 3% 2% 1% 0% Demand Growth % Supply Growth % F 2019F 2020F 2021F 2022F WORLD CONTAINER INDEX (WCI) 3) SHANGHAI CONTAINERIZED FREIGHT INDEX (SCFI) 4) 3,000 2,500 2,000 1,500 1, Actual Forecast 1,200 1,100 1, BUNKER PRICE INDEX 5) 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 Q ) real GDP, Global Insight, Copyright IHS, Q 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 Dec18, 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. Actual Forecast 1, BIX 380 BIX MGO 4

5 Market Outlook March 2019 Major Trades Carriers announcing additional blank sailings because of the slow volume pick up after Chinese New Year EXPORT REGION IMPORT REGION CAPACITY RATE EURO AMNO = + AMLA = = ASPA - +/= MENAT - +/= SSA = = EXPORT REGION IMPORT REGION CAPACITY RATE AMLA AMNO = ++ ASPA + + EURO = ++ MENAT = + SSA AMNO AMLA = = ASPA = = ASPA ASPA = = AMNO - - EURO = = AMLA = - MENAT = + EURO + - SSA = = MENAT = = KEY Source: DGF Strong Increase ++ Moderate Increase + No Change = Moderate Decline - Strong Decline - - OCEANIA + (SEA-AU) = (NEA AU) = (NZ) - (SEA-AU) - (NEA AU) = (NZ) 5

6 Market Outlook March 2019 Ocean Freight Rates Major Trades Market outlook on smaller trades available in the back-up O C E A N F R E I G H T R A T E S O U T L O O K ASPA EURO EURO ASPA & MEA ASPA AMLA ASPA AMNO EURO AMNO ASPA MENAT The pick-up after the CNY holiday is slower than expected and there is some pressure on the FAK rates. Carriers announcing additional blank sailings. Ocean rates slightly increasing for certain commodities/short term agreements (monthly FAK). The slight increase is supported by the space crunches because of upcoming blank sailings and bunker developments. Long Term agreements remain stable. Rates have declined till end Feb Space is also manageable despite the post-cny blank sailings. There could be upswing in rates during mid-march as volumes traditionally pick up during this period. Thus expecting tighter space in Mar Carriers continue to announce void sailings into Mar due to the slow recovery from post CNY. Carriers also announced an extension of Feb rates till 14 th Mar Ocean rates are strong and still increasing; inland carriages in US remain problematic; congestion on USEC & CAEC causes severe delays into USMW area. CA: carriers are pushing for a congestion fee because of delays at Montreal port. MX: Carriers pushing for a PSS based on the tight space situation Carriers have extended their Feb rates till mid Mar 2019, and we do not foresee any huge increase/surprise in March. ASPA ASPA AMNO EURO Several carriers have announced a re-structuring as well as introduction of new services on the Intra-Asia trade. The impact on the rates and capacity remains to be seen. Manila port is still congested, especially Manila South. Cargo is being moved to Batangas and Subic Bay as an alternative. However, these two ports are also starting to experience congestion as well. Space remains tight out of Houston to Europe NC. MSC is now calling London Gateway instead of Felixstowe. Source: DGF 6

7 Economic Outlook & Demand Development Global Economy Growing More Slowly But Not Slumping - Yet EURO AMNO ASPA EMERGING MARKETS DEMAND DEVELOPMENT IT fell back into recession, DE came close. However, FR fared a little better & ES showed continued vigor. IHS Markit projects real GDP growth to slow from 1.8% in 18 to 1.2% in 19 & 1.0% in 20 before returning to 1.2% in 21. UK growth rates in are marked down by 0.2 ppt owing to Brexit-related concerns. Improved financial conditions in early 19 (equity values have rebounded, dollar has retreated, long-term Treasury yields low, risk spreads narrowing) are helping to support continued growth in the private sector. On the other hand, less support from the public sector is projected. These effects roughly offset, leaving growth forecast little changed at 2.4% in 2019, 2.0% in 2020, and 1.7% in Rebounds in consumer spending & private fixed investment have improved growth in JP. Quarterly growth in 19 is likely to remain volatile. Prolonged uncertainties over US-CN trade will continue to restrain JP s exports, also weighing on fixed investment. CN s growth in 18 was 6.6% - the slowest since While continued pressure on the CN economy will lead to additional stimulus, CN s large debt overhang will keep the government cautious but it should be able to stabilize the economy as it has done successfully in the past. Vulnerable to headwinds & structural trends facing CN s economy. Trade war between CN & US along with the CN government s deleveraging campaign, are cutting CN trade volumes & ensnaring other countries (especially in Asia) in the trade conflict. The big structural shift in CN from investment to consumer spending means slower growth in demand for raw materials from the emerging world. Global PMIs continue their slide. Manufacturing led the slowdown, with the factory output index easing to a 31-month low & slipping closer to stagnation amid an increased rate of decline in worldwide export volumes. Composite PMIs indicated that growth slowed in all major developed & emerging economies, with the exceptions of the US & IN, both of which saw indexes hold steady thanks to faster manufacturing expansions. UK reported an especially weak performance, while BR & RU pointed to relatively solid growth. CN report one of its slowest expansions since mid 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. 7

8 Carriers 1/2 C A R R I E R S MSC has secured a $439M syndicated loan to finance the manufacture and installation of exhaust gas scrubbers on 86 MSC containerships. Funding will be provided by five banks under a consortium led by BNP Paribas. The amount is backed by Sinosure, China s state-owned Export and Credit Insurance Corporation, with the conversions to be carried out at various Chinese yards. MSC s container ship fleet currently comprise of 523 vessels with a total capacity of 3.3 MTEU, incl 195 owned ships with an overall capacity of 1.01 MTEU. The loan secured by MSC is expected to finance the retrofit of scrubbers on MSC s existing ships, including long-term leased tonnage. MSC has previously confirmed it will fit scrubbers on its fleet of 23,000 TEU newbuildings that are scheduled for delivery in 2019 and MSC was also behind a $197M scrubber order placed with Finland s Wärtsilä in July 2018 for 9,000 14,000 TEU containerships. Furthermore MSC has also reached agreements with various non-operating owners to install scrubbers on several time chartered ships. These moves will bring the total tally of scrubbers for MSC to over 120 units, making the MSC scrubber fleet the largest by far amongst all operators. So far, MSC has eschewed the LNG option for its fleet and has instead opted for a scrubber-centered solution as it prepares to comply with the new IMO2020 Sulphur emissions rules. Hapag-Lloyd will convert its 2014-build ULCS container vessel SAJIR to operate on liquefied natural gas (LNG), instead of fuel oil. The ship s heavy fuel oilburning engine will be modified to either burn natural gas or low-sulphur fuel oil (LSFO), and its fuel system will be adapted accordingly. Hapag-Lloyd will implement the changes along with the ship s first class dry dock in the 2 nd half of 2019, to have the SAJIR redelivered before the Jan 2020 deadline, when the IMO s strict new sulphur oxide emissions regulations take effect. Hapag-Lloyd s SAJIR is one of 17 vessels in carrier s fleet that have been designed for easy conversion to LNG power. The SAJIR will be the largest containership converted to run on gas to date. It will however be eclipsed by CMA CGM s nine 23,000 TEU LNG-powered newbuildings, scheduled for delivery in 2020 and CMA CGM puts the first scrubber-retrofitted mainline ULCS in service. The 16,020TEU CMA CGM JULES VERNE and CMA CGM ALEXANDER VON HUMBOLDT have become the largest containerships to be retrofitted with exhaust gas scrubbers. Both vessels completed their fist commercial voyages in Feb 2019, following conversions works at Yui Lian Dockyard, Chiwan, in Nov and Dec 2018, where the ships docked for periods of 35 and 39 days, respectively. The two CMA CGM ships are the first scrubber-retrofitted ULCS to enter commercial service and their newly-installed funnel structures are clearly visible over the engine rooms. Source: Alphaliner, Dynaliners, carriers 8

9 Carriers 2/2 C A R R I E R S Ocean Network Express (ONE) has reported a net loss of -$179M in Q4, 2018 (fiscal Q3 for the Japanese financial year), bringing its total net loss to -$491M in the first 9 months since the company began operations in Apr ONE is projecting continued losses in Q1, 2019 (fiscal Q4) of -$104M, which would bring its full fiscal year results to a consolidated net loss of -$594M. The inauspicious start for ONE s first year of operations was blamed on higher than expected bunker costs, as well as teething problems that affected ONE s liftings during the initial months of its launch. Although bunker costs is projected to drop in Q based on ONEs projections, it will not be enough for the company to achieve positive results. However ONE said that it remains confident of achieving 75% of its initial forecast of synergy cost savings of $1,050Bn in the first full year of integration, with full benefits expected in its fiscal year. HMM has issued preliminary financial results in 2018 on 12 Feb 2019, with the company reporting a consolidated net loss of KRW808Bn ($720M) for the full financial year. The negative results follow a net loss of KRW1,190Bn ($1,060M) recorded in Despite the dismal performance, HMM remains upbeat on its expansion plans as it prepares to upgrade several of its existing services in 2019 ahead of the planned delivery of 12 newbuildings of 23,000 TEU in 2020 and a further 8 new ships of 15,000 TEU in COSCO Shipping Holdings has completed the private issuance of new A shares in China on 24 January to raise RMB 7.72 Bn ($1.15 Bn) in gross proceeds that will be used to pay for 20 of its container newbuilding orders. Half of the shares issued was subscribed by COSCO Shipping, which raised the stake held by the COSCO Group from 45.5% to 46.2%. The fund raising took over a year to be completed after it was first announced on 30 Oct 2017 due to poor shipping market performance and weak stock market conditions. OOCL reported improved liftings and higher average freight rates in its Q4, 2018 operational update. It is its first full quarter of operations following the completion of its acquisition by COSCO Shipping and associated interests in Aug Total liftings reached a record of MTEU in Q4 2018, 6.4% more than Q and 0.3% higher than Q3, Source: Alphaliner, Dynaliners, carriers 9

10 Regulations R E G U L A T I O N S European Union: New Phytosanitary Requirements for Import Wooden Packaging from China and Belarus Effective 01 October 2018, all consignments from Belarus and China that are listed in the Annex of the enclosed European Union Implementing Decision will be submitted to compulsory documentary controls. As soon as the port authorities or other authorities responsible for the control of movement of goods are aware of the imminent arrival of specified commodities in a wooden packaging are required to give advance notice to the customs office of the point of entry and to the responsible official body of the point of entry. Link for attachment located below: Morocco: New Customs Requirement Starting 01 March 2019, it is mandatory for all Ocean Import Cargo to Moroccan ports to show the number of Common Company Identifier (Identifiant Commun de l Entreprise or ICE) on the consignee and notify party of both HBL and MBL. If Shipper cannot provide the ICE, DHL Morocco can support accordingly. Below is the link of the announcement: Source: DHL 10

11 Did you know? Independent short-sea operators losing market share to main line carriers North European short sea The Main Line Operators (MLO) share of the Northern European short sea and feeder capacity has increased from 34% to 56% over the last decade. The four largest European MLOs (MSC, Maersk, CMA CGM and Hapag-Lloyd) are the dominant players in this area, with all of them growing their short sea coverage over the last ten years. COSCO has also been growing its presence in North Europe in recent years, aided by the inclusion of OOCL s long standing activities in the market. In contrast, the independent short sea carriers and common feeder operators in Northern Europe face an uncertain future, as they continue to lose market share to MLOs. The market share of these carriers dipped from 66% to 44% and the total capacity operated has fallen from 164,000 TEU in 2009 to 117,000 TEU currently. Some of the existing independent carriers have shrunk their operations and other established players have either ceased operations or were absorbed by other carriers. Team Lines recent announcement to shut down on 11 Feb 2019 marked another departure of an established North European short sea operator. Intra-Far East short sea Independent short-sea and feeder operators on the intra Far-East routes are also losing market share to MLOs. The total capacity operated on intra-far East liner services, excluding cabotage trades, has more than doubled over the last decade from 890,000 TEU at the beginning of 2009 to 1,900,000 TEU as at Jan Over the same period, the capacity share of MOLs on this route has increased from 50% to 56%. Although the capacity share of the independent short sea and feeder operators in the intra-far East trade has shrunk, these carriers have still managed to grow their total capacity operated by 86% over the last 10 years, with the five largest independent short sea operators (Wan Hai, SITC, KMTC Sinokor and TS Lines) all managing to more than double their size on this trade. The independent intra-far East carriers have remained remarkably resilient in the face of the challenge from MLOs, with attrition limited to only a handful of smaller carriers. North Europe shortsea/feeder capacity deployed 2009 vs 2019 Intra Far East shortsea/feeder capacity deployed 2009 vs 2019* Source: Alphaliner, Dynaliners, carriers *excl capacity operated on domestic/cabotage routes) 11

12 B A C K - UP 12

13 Market Outlook March 2019 Ocean Freight Rates Additional Trades (1/2) O C E A N F R E I G H T R A T E S O U T L O O K EURO AMLA EURO MENAT EURO SSA AMNO MENAT AMNO SSA AMNO AMLA AMLA Exports AMNO ASPA Capacity unchanged, space is available, rates are expected to remain stable in March ME region shows same trend as ASPA; low space but stable rates 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 generally stable. Only few carriers announced minimal GRIs to Middle East. Space can still be an issue from US Gulf Coast. Space situation from USEC is manageable and it s mostly possible to get space for next/following week sailings. Despite the GRI announcements for Feb, rates to South Africa and West Africa are expected to remain unchanged until end of 1st Q Except the Congestion Surcharges to Nigeria. No changes in capacity. Space is available (Direct Service is currently shared by Maersk/Safmarine/MSC/HSUD). Space situation as well as fuel and rates are stable. Market Jan-Feb was soft on US southbound outbound and the trend is expected to continue for Mar 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. 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. Market is stable in terms of rates. No GRIs announced for Q Pre-booking is strongly advised. Source: DGF 13

14 Market Outlook March 2019 Ocean Freight Rates Additional Trades (2/2) O C E A N F R E I G H T R A T E S O U T L O O K EURO MED - AMNO EURO MED AMLA EURO MED ASPA EURO MED MENAT EURO MED SSA ASPA-SPAC Unchanged / stable. Nothing to be highlighted Unchanged / stable. Nothing to be highlighted Unchanged / stable. Nothing to be highlighted Unchanged / stable. Nothing to be highlighted Unchanged / stable. Nothing to be highlighted With upcoming new SEA-Australia service, rates are expected to reduce substantially in this market. In all other regions, with Capacity unchanged and New year rush subsiding, it is expected that rates will soften in Mar Source: DGF 14

15 Market Outlook Volume Outlook in Main Trade Lanes, 2018 Estimate & 2019/22 Growth Forecast in % 2018e, in mteu 2019e-2022e CAGR, in % N O R T H A M E R I C A I n c l. M E X I C O 4.0 mteu +2.4% F A R E A S T 8.5 mteu +4.7% N O R T H A M E R I C A I n c l. M E X I C O 2.2 mteu +3.1% 12.8 mteu +2.4% 18.7 mteu +3.1% 2.0 mteu +4.5% 1.6 mteu +4.3% L A T I N A M E R I C A 1.6 mteu +4.3% 1.7 mteu +2.5% E U R O P E I n c l. M E D 7.3 mteu +3.4% I N T R A A S I A excl. Oceania 1.7 mteu +2.2% 4.2 mteu +4.6% L A T I N A M E R I C A 41.6 mteu +4.8% G L O B A L C O N T A I N E R T R A D E e m T E U % C A G R 2019e- 2022e Mid-term growth is mainly driven by Asian tradelanes. Source: Seabury Nov18 update 15

16 Carrier Mergers, Acquisitions and Alliances M E R G E R S A N D A Q U I S I T I O N S China Shipping Cosco OOCL Evergreen APL CMA CGM Hapag Lloyd United Arab Shipping Hyundai Merchant Marine Hamburg Süd Maersk Line MSC K Line MOL NYK CHINA COSCO SHIPPING OOCL EVER GREEN CMA CGM APL HAPAG-LLOYD HYUNDAI MERCHANT MARINE MAERSK LINE Hamburg Süd MSC OCEAN NETWORK EXPRESS (ONE) Yang Ming YANG 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 2M MAERSK LINE MSC OCEAN 3 CMA CGM CHINA SHIPPING UNITED ARAB SHIPPING COMPANY 2M MAERSK LINE MSC HMM (strategic cooperation until Apr 2020) OCEAN ALLIANCE OOCL CMA CGM CHINA COSCO SHIPPING EVERGREEN G6 *Source: Carriers HAPAG-LLOYD MOL NYK APL HYUNDAI MERCHANT MARINE OOCL CKYHE COSCO EVERGREEN HANJIN SHPPING K-LINE YANG MING THE ALLIANCE HAPAG-LLOYD ONE YANG MING 16

17 Acronyms and Explanations 2M - Carrier Alliance: Maersk / MSC AMLA - Latin America AMNO - North America AR - Argentina ASPA - AsiaPacific BR - Brazil CAGR - Compound Annual Growth Rate CENAC - Central Amercia and Caribbean CKYHE - Carrier Alliance: Cosco, K-Line, YangMing, Hanjin and Evergreen CNC - CNC Line (Cheng Lie Navigation Co. Ltd.) DG - Dangerous Goods DWT - Dead Weight Tonnage EB - Eastbound ECSA - East Coast South America EGLV - Evergreen Marine Corp EURO - Europe FMC - US Federal Marine Commission G6 - Carrier Alliance: APL, Hapag Lloyd, Hyundai, MOL, NYK and OOCL GRI - General Rate Increase HJS - Hanjin Shipping HMM - Hyundai HL - Hapag -Lloyd HSUD - Hamburg Süd HWS - Heavy Weight Surcharge IA - Intra Asia IPBC - India Pakistan Bangladesh Colombo IPI - Inland Point Intermodal ISC - Indian Sub Continent MENAT - Middle East and North Africa ML - Maersk Line mn - Millions MoM - Month-on-Month NOO - Non-operating (vessel) owners Ocean 3 - Carrier Alliance: CMA, UASC, China Shipping OCRS - Operational Cost Recovery surcharge OOCL - Orient Overseas Container Line OWS - Overweight Surcharge PH - Philippines PNW - Pacific North West Ppt. - Percentage points PSW - Pacific South West RR(I) - Rate Restoration SAEC - South America East Coast SAWC - South America West Coast SOLAS - Safety of Life at Sea SPRC - South People s Republic of China South China SSA - Sub-Saharan Africa SSL - Steam Ship Line T - Thousands TEU - Twenty foot equivalent unit (20 container) TP - Trans Pacific TSA - Trans Pacific Stabilization Agreement ULCS - Ultra Large Container Ship USGC - US Gulf Coast US FMC - US Federal Maritime Commission USEC - US East Coast USWC - US West Coast VGM - Verified Gross Mass VLCS - Very Large Container Ship VSA - Vessel Sharing Agreement WB - Westbound WCSA - West Coast South America WHL - Wan Hai YML - Yang Ming Line YoY - Year-on-Year YTD - Year-to-Date 17