DynaLiners. Glass Half Full. Trades Review Analytical News & Commentary on the Worldwide Liner Trades

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1 DynaLiners Analytical News & Commentary on the Worldwide Liner Trades Trades Review 2017 Glass Half Full

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4 Dirk Visser Managing Editor Senior Shipping Consultant Darron Wadey, MILT Author Shipping Analyst Frans Waals Editor Design and photography Senior Shipping Consultant Published and distributed by Dynamar B.V. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the permission of the publisher. Statistics and figures in tables and overviews may contain estimates. The publisher cannot guarantee the accuracy of the information in this publication, nor does it accept responsibility for any errors or omission or their consequences. Dynamar BV, June 2017 One copy of this issue is available free of charge to current subscribers of DynaLiners. Additional copies may be obtained at 110 for DynaLiners subscribers (pdf 110, both 190) for other parties (pdf 220, both 260). Prices include postages and handling.

5 DYNALINERS TRADES REVIEW foreword Dear DynaLiners fan, Welcome to our DynaLiners Trades Review 2017! Talking of an eventful and dramatic year, 2016 must rank high on the calendar of container liner shipping since A result of pressure being built up over nearly a decade, it was such a year that for a while we even considered naming this 24th edition of the DynaLiners Trades Review The Great Liner Depression! The latter stages of this period gave rise to an unprecedented wave of consolidation whereby eight original Top 20 liner brands will disappear. Who, in ten years time, will still remember APL, China Shipping, Hamburg Süd, Hanjin, K Line, MOL, NYK or UASC? The culmination of prolonged industry pressure manifested itself through dramatic financial results of the same original Top 20. Following continuous losses since 2010, the last year of bumper profits, collectively they had posted a deficit of more than USD 25 billion However, miracles exist: the final quarter of last year saw potential signs of recovery. With volumes picking up, improved capacity management, scrapping exceeding orders by 2.5 times and rates heading north, it was just possible to look forward on a more hopeful note than possible for many a year and view the GLASS HALF FULL As usual, our Trades Review looks back at the year just gone, again with its wealth of liner data, analysis and commentary, keeping the reader right up-to-date with stories that continued on, or perhaps even broke, into Non-containerised cargo operators are not going through healthy times either. This does not diminish the fascination surrounding this shipping segment whose cargoes one can see, feel, touch and smell instead of commoditised inside a steel box. Check the Breakbulk/Project, Heavy Load, Reefer and Ro/Ro pages in this edition! It takes a team effort to realise a liner cargo shipping-devoted publication à la DynaLiners Trades Review. Appreciation and thanks are due to the complete Dynamar team and to author Darron Wadey and DynaLiners Editor Frans Waals (design and editing) in particular. We trust to have presented you which another highly interesting shipping magazine, holding good for continuous consultation until the next edition. And remember: we appreciate your feedback! Dirk Visser Managing Editor DynaLiners Senior Shipping Consultant FOREWORD

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7 DYNALINERS TRADES REVIEW TABLE OF CONTENTS Glass Half Full 9 The story of The Glass Empty the Glass Half Empty...12 The year to come the glass half full...13 TRADES 15 GLOBAL CONTAINER TRADES...15 EAST-WEST TRADES...15 Europe/Mediterranean-Far East Transatlantic Transpacific North-South Trades...20 Australasia Sub-Saharan Africa Middle East and Indian Sub Continent Latin America REGIONAL TRADES...28 COMPANIES 32 CARRIERS...32 Alliances A new dawn...39 Alliances, pre-april Alliances, post-april RegulationS...44 New Alliances Raids and more ports, terminals and arteries 46 Ports...46 North America Indian Sub Continent Middle East Australasia Mediterranean Far East Terminals...51 Acquisitions and sales Many a small change Arteries...52 Panama Canal Suez Canal Nicaragua Interoceanic Grand Canal project ships and containers 60 Ships...60 Biggest ships - pause for breath? Global fleet developments Shipyards...68 Shipowners...68 Germany s continued consolidation Listed owners Green Shipping...72 Containers...72 Global equipment fleet Manufacturing Competition in the reefer sector Container orders Container Leasing Containers and their contents COUNTRIES 79 The only certainty, is uncertainty...79 The UK and the European Union East African Community and discord Venezuela non-container trades 80 Breakbulk (Multipurpose/Heavy-Lift)...80 Heavy-Load...82 Deepsea Ro/Ro...82 Reefer And Finally 87 The Irresistable Force...87 The immovable object...88 Liner Shipping Summary 91 Index of Tables 108 TABLE OF CONTENTS

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9 DYNALINERS TRADES REVIEW Glass Half Full The story of 2016 The story of 2016 had been brewing for nigh-on a decade, for there is no getting away from it, since 2008, the liner shipping sector has been in the doldrums. With the false dawn of 2010 more than compensating for the acute losses of the year before, post-2010 the largest carriers have lost more than USD 22 billion (approaching USD 28 billion not counting Maersk). Consider too that since 2013, the sector has sold non-liner assets for at least USD 21 billion, much of this going towards redcing the losses posted. It is the length and depth of the losses that could earn this period the sobriquet of The Great Liner Depression. Leading container carriers, combined annual results Year Total L23* L23 less Maersk ,602-10, ,193-2, , , ,472-4, ,868-8, ,279 12, ,155-10, ,233 5, ,905 12,791 Aggregate -2,403-8,196 -post ,665-27,697 USD million. *Based upon data sourced from: 23 leading carriers as per start-2007 including those who are no longer active, have been acquired or similar, namely: APL, CCNI, CSAV, China Shipping, Horizon Lines, Hanjin, UASC In such a situation, it is simply a case of Darwinian survival: the strongest will survive, the weakest will not. Unfortunately, nobody foresaw that the liner shipping recession would turn into a depression of unprecedented scale. Projections were clouded by mixed messages. The most obvious of those was the spectacular 2010, but ultimately all that year served to show us was, in stock market speak, that even dead cats bounce (but what a bounce!). Hope for the future came from global volumes growing consistently. In fact, the last year of decline was Since then, volumes have grown at an average of 4% a year which, whilst not spectacular, is not unreasonable. Growth of worldwide full container trade Year TEU Growth y-o-y CAGR 5-yr CAGR 10-yr ,900,000 2% 2% 3% ,300,000 2% 3% 4% ,000,000 4% 5% 5% ,600,000 3% 2% 6% ,000,000 1% 3% 7% ,600,000 8% 5% 8% ,200,000 11% 5% 8% ,200,000-10% 5% ,900,000 5% 10% ,100,000 11% 12% ,000,000 11% 12% ,500, ,200, ,700, Estimates and forecasts. CAGR = Compound Annual Growth Rate (average annual growth rate) Business, and shipping is no different here, is all about risk. In trying to plot a way through the malaise, CSAV and UASC took a risk on big ships and, by necessity, big networks. It is no coincidence that they could not sustain this growth, and despite the deep pockets of major shareholders as copper magnates (CSAV) or Arab states (UASC) they merged into another carrier. In these cases, it seems as if Hapag-Lloyd, the recipient of both, has turned itself into the rescue centre for the over-extended. Yet it was not just these carriers. Growing volumes, however moderate, would be fine and dandy if all carriers had taken a sustainable approach to the market situation. They didn t. Instead, virtually all the leading operators went about constructing ever larger ships, leading to an unprecedented period of capacity expansion to go along with an unprecedented depression. As a result, from 2009 through to 2016, capacity expanded at an average of 3.4 percentage points more than carryings each year.

10 10 GLASS HALF FULL Development of global containership fleet capacity Year Total TEU Growth y-o-y CAGR 5-yr CAGR 10-yr ,680,000 2% 5% 7% ,258,000 8% 6% 8% ,822,000 6% 7% 9% ,764,000 6% 6% 9% ,803,000 6% 8% 9% ,899,000 7% 8% 10% ,809,000 9% 10% 10% ,643,000 5% 11% ,024,000 11% 12% ,691,000 10% 11% - As at 31 December of each year. Analysis based on data sourced from Alphaliner. Figures in italics are forecasts. Understandably, in these contexts of chronically modest volume growth and chronically explosive capacity growth, rates suffered. Factor in a period of record oil and bunker prices since 2008 as well, it s no wonder that heavy losses resulted. Rate Indices developments '16/'15 '15/' CTS (Europe export, 7 trades) -15% -10% CTS (Europe import, 7 trades) -14% -15% SCFI (Far East export, 9 trades) -11% -31% ,070 CCFI (Far East export, 9 trades) -19% -19% ,087 WCI (11 East-West trades) -16% -29% 1,169 1,392 1,974 All are composite annual averages. CTS = Container Trade Statistics; SCFI = Shanghai Containerized Freight Index relates to overall; CCFI = China Containerized Freight Index; WCI = Word Container Index. These losses on their own, whilst unpleasant as incidents, were unsustainable if repeated over an extended period of time, not the least because of their impact upon any company already heavily indebted like Hyundai and Hanjin. And even though bunker prices offered some belated relief in , that was more than outweighed by the negative rates developments. Development of annual average bunker prices '16/'15 '15/' Average -21% -48% Rotterdam -20% -51% Genoa -20% -49% Fujairah -21% -48% Singapore -21% -48% Tokyo -21% -46% Durban -26% -42% Houston -23% -51% Long Beach -19% -51% Source: Oil Shipping (Bunkering) BV, Rotterdam. All prices are in USD for 380 centistokes (CST) except Durban which is for 180 CST. Durban, Houston and Long Beach are all ex-wharf prices And so, the specific story of 2016 was when something in what had become a prolonged survival test eventually gave way, and resulted in a major carrier, Hanjin, falling by the wayside. Given the results posted by many of the main carriers that year, and in the context of the post-2010 world, it was not a surprise. Major container carriers, summary performance figures Year '16/' Revenue -14% 98, , , ,036 Operating profit - -3,332 2,829 4,851 1,350 Net Result - -10, , Liftings (TEU x 1,000) 3% 111, , , ,357 Revenue per TEU -16% 880 1,050 1,186 1,239 Op. Profit per TEU Net Result/TEU Based upon data sourced from: CMA CGM (and APL), CoscoSL (and predecessors), Evergreen, Hanjin (9M 2016 only), Hapag-Lloyd, Hyundai, "K" Line, Maersk Line, MOL, NYK, OOCL, RCL, SITC, Wan Hai, Yang Ming and ZIM, all accounting for an average of 62% of globally operated TEU capacity. Financial figures in USD x million, excepting per TEU which are USD x 1. Revenue and operating results are container liner activities, net result are consolidated group Major container carrier performance figures without Maersk Year '16/' Revenue -14% 77,829 90, , ,840 Operating profit - -2,936 1,398 2, Net Result - -10,032-2, ,149 Liftings (TEU x 1,000) 2% 91,146 89,518 89,112 85,679 Revenue per TEU -15% 854 1,009 1,130 1,189 Op. Profit per TEU Net Result/TEU Based upon data sourced from above listed carriers less Maersk Line. The Glass Empty Up to 2016 the main carriers had done absolutely everything possible to avoid leaving the sector unwillingly. Pretty much all had engaged in some form of operational realignment. Rightsizing could be the term used. However, so deep and long was the depression, even measures proved insufficient and a number of carriers decided to withdraw from the sector altogether. They jumped before circumstances dictated they should be pushed. These were not companies built on foundations of sand. Many counted substantial backing from not only the copper magnates and Arab states as already mentioned, but also governments, sovereign wealth funds, or substantial conglomerates. Look at China with China Shipping and Coscon; Singapore s Temasek and NOL/APL; and Germany s Oetker Group and Hamburg Süd.

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12 12 GLASS HALF FULL Carrier-carrier consolidation post-2007 Bought Buyer Year UASC* Hapag-Lloyd 2017 Hamburg Süd** Maersk Line 2017 NOL/APL CMA CGM 2016 China Shipping Coscon 2016 Interocean Lines King Ocean Services 2016 Trinity Shipping King Ocean Services 2016 OPDR CMA CGM 2015 Mariana Express Lines PIL 2015 Tschudi Logistics Unifeeder 2015 CCNI* Hamburg Süd 2014 CSAV* Hapag-Lloyd 2014 United Feeder Services Unifeeder 2013 UAFL Deutsche Afrika Linien 2011 Contaz Containerships 2009 IMCL Unifeeder 2009 Selection only. Carriers asterisked* relate to liner operations only; **to be completed. Essentially, none of these backers were willing to accept the continual losses and/ or the necessary and vast investments required to build the scale perceived to be needed to stay relevant. It was these that contributed to the corporate mergers or takeovers made or announced in 2016, namely of APL by CMA CGM, UASC into Hapag-Lloyd, Hamburg Süd by Maersk and the coming together of the Japanese carriers container activities. In the previous DynaLiners Trades Review we predicted that there could be...an event that liner shipping has not seen since the cessation of Cho Yang back in This forecast was quite clearly met with the demise, late in 2016, of Hanjin. Whilst the event turned out to be a certainty, the victim was by no means certain. In fact it was a close run thing between Hanjin and compatriot Hyundai. Hanjin and Hyundai net results Year Hanjin Hyundai ,923* , Total -5,431-2,627 -since ,245-3,163 USD million. *9M 2016 only. Neither Hanjin nor Hyundai were state-owned, but, considering government support for other financially distressed compatriots in the past and the present, one of the pair - Hanjin - reckoned too much upon a similar rescue. Unfortunately, tsouth Korea s shipbuilding sector, much higher up in the domestic political consciousness, also needed rescuing and there was simply not enough goodwill, political and financial, to save all the country s shipyards and major carriers at pretty much the same time. The combined costs of reorganising (read: saving) South Korea s shipping and shipbuilding sectors was estimated by the International Monetary Fund at USD 27 billion, equivalent to 1.9% of the country s 2016 GDP of USD 1,411 billion the Glass Half Empty When comparing 1Q 2017 with 1Q 2016 there is one caveat that needs to be borne in mind, namely that the first quarter of 2016 was so weak it would be pretty difficult to be worse. Even with this qualification, global volumes still only rose by a modest 2% in 1Q 2017 compared with the same period of However, this was down mainly to a weak performance of the intra-far East trade. The headhauls of the key East-West routes all showed reasonable to strong improvements. Global container carryings development, 1Q Q'16/1Q'15 1Q Q 2016 Global volumes, incl 2% 36,775,000 36,112,000 - FE to Europe 5% 3,809,000 3,613,000 - FE to N.America 9% 4,154,000 3,818,000 - Europe to N.America 8% 1,105,000 1,024,000 - FE to ME/ISC 2% 1,712,000 1,682,000 - FE to Latin America 5% 752, ,000 Source: Container Trade Statistics Alongside, the growth of global shipping capacity appeared to have slowed down significantly with end 1Q 2017 only 1% up on end-1q In comparison, when looking back from 1Q 2016 to 1Q 2015, the growth rate for the year was +7%. However, in the second quarter of 2017, the industry took started to take delivery of the raft of 14,000+ TEU vessels it had ordered. Included in that, in short and consecutive order, were three vessels who all claimed the title of the largest containerships ever seen. All three were 20,000 TEU or more and they all have a number of sisters yet to be delivered. Container shipping capacity development, 1Q Q17/1Q16 1Q17/YE16 1Q Q 2016 YE 2016 Cap (TEU) +1% +0% 20,722,000 20,566,000 20,680,000 Source: Alphaliner. Situations as at end of respective periods. The development of rates was mixed as CTS composite index fell whereas the spot/short/medium term SCFI, CCFI and WCI indices reflected strong to spectacular growth rates. Rate Indices developments Q Q 17/ 1Q'16 1Q'17/ FY'16 1Q Q 2016 FY 2016 CTS (Europe export, 7 trades) -4% +2% CTS (Europe import, 7 trades) -5% -3% SCFI (Far East export, 9 trades) +65% +34% CCFI (Far East export, 9 trades) +6% +9% WCI (11 East-West trades) +58% +36% 1,585 1,000 1,169 All are composite annual averages. CTS = Container Trade Statistics; SCFI = Shanghai Containerized Freight Index relates to overall; CCFI = China Containerized Freight Index; WCI = Word Container Index. Still, the overall impression from the key figures for the first quarter of 2017 is positive, even when considering an increase in bunker prices over that period. In fact it was a continuation of the late 2016 jump with 1Q 2017 average prices rising by 41% compared with full-year 2016 and by more than double compared with 1Q Development of annual average bunker prices, 1Q Q 17/ 1Q'16 1Q'17/ FY'16 1Q Q 2016 FY 2016 Average +104% +41% Rotterdam +111% +40% Genoa +99% +38% Fujairah +101% +38% Singapore +95% +38% Tokyo +93% +39% Durban +94% +41% Houston +115% +40% Long Beach +137% +52% Source: Oil Shipping (Bunkering) BV, Rotterdam. FY = Full Year. All prices are in USD for 380 centistokes (CST) except Durban which is for 180 CST. Durban, Houston and Long Beach are all ex-wharf prices As a result of the carryings, capacity, rates and bunker trends, the available interim results to end-march 2017 showed promising turnaround albeit still somewhat short of total sector net profit. Combined revenue improved by 5%; aggregate operating result moved from a clear negative to similarly clear positive whilst net result, which was still USD 681 million in the red, was more than USD 1.1 billion better than 1Q The super-con-

13 DYNALINERS TRADES REVIEW tainership of negativity, under the impetus of the underlying capacity, rate, volume factors, was slowly turning. Major container carriers, performance 1Q Q'17/1Q'16 1Q Q 2016 Revenue 12% 20,442 18,261 Operating profit Net Result ,446 Based upon data sourced from: APL (2016 only), CMA CGM, CoscoSL, Evergreen, Hanjin (2016 only), Hapag-Lloyd, Hyundai, Maersk Line, RCL, Wan Hai, Yang Ming, ZIM. Financials figures in USD x million. Revenue and operating results are container liner activities, net result are consolidated group. In addition are partial figures from OOCL (Revenue -17%), Hyundai (Revenue -19%, Net Result USD -242 million) and RCL (Revenue: -14%; Net Result USD - 7million). Major container carriers, performance 1Q 2017, without Maersk 1Q'17/1Q'16 1Q Q 2016 Revenue 13% 14,949 13,287 Operating profit Net Result ,483 Based upon data sourced from above listed carriers less Maersk Line. The overall impression though is still one of a glass half empty, even when considering that 96%, or USD 656 million of the aggregated 1Q 2017 net loss came from Hyundai, who is clearly not out of the woods just yet. The year to come the glass half full Yes, late-2016 and into 2017 certainly seemed more hopeful than one year previously. However, over-capacity will continue despite the first quarter of 2017 promising otherwise. In that period, scrapped capacity exceeded incoming newbuild capacity. Seventy-eight vessels and 248,500 TEU were sent for recycling compared with thirty-five ships totalling 224,500 TEU being added to the fleet. Unfortunately, the situation returned to abnormal by the midpoint of 2017 as the market ate into the fifty-four 14,000+ TEU vessels, totalling 920,000 TEU, that were expected to be delivered during the year. After this wave though, if, and it s a big if, shipowners can maintain ordering restraint (around twenty-five ships totalling 45,000 TEU ordered to mid-2017), come 2019 there may well actually be a situation where cargo growth outweighs capacity growth. The greenest of green shoots poking through, but only if discipline is maintained. Growth of worldwide full container capacity and trade Growth Capacity Trade Year Growth Growth diff. (TEU) (TEU) % 0.1% 22,403, % 173,400, % 4.7% 22,390, % 169,000, % 3.4% 21,392, % 163,300, % 2.1% 20,680, % 158,900,000 NOTES: Estimates and forecasts. Growth difference is between growth rates of capacity (based upon year-end 2015 orderbook and advised delivery dates) and forecast global volumes. Staying on the hopeful theme, Maersk Line is looking at (adjusted) net income reaching at least USD 1 billion for the This is not to say that the container sector is in recovery just yet though, and there could even well be another major corporate consolidation event in the system by the time the next Review is finished. Considering the number of absorptions just undergone or to be done, it might actually be an extra disruption the market could do without. That being said, after the corporate decimation of the last decade, we are now moving into a new period in the history of the liner sector. In order for that to come about, the numerous operational and corporate changes need time to bed-in, settle down, the second, oft-forgotten element of proper consolidation. In the DynaLiners Trades Review 2014 (covering 2013), we borrowed from Churchill by suggesting we were at the end of the beginning. Perhaps, just perhaps, we are now, in 2017, at the beginning of the end of the Great Liner Shipping Depression and instead of the mixed market message pointing to a glass half empty, now is the time to look at a glass half full, and, most importantly, with the promise of a refill on its way.

14 14 GLASS HALF FULL Figure 1 BUNKER MARKET PRICE FOR 380 CST (USD/ton) Date RTM GOA FJR SIN TYO DUR HOU LGB 1-Jan Jan Jan Jan Jan Feb Feb Feb Feb Mar Mar Mar Mar Mar Figure 2 10-YEAR DEVELOPMENT ROTTERDAM BUNKER PRICES (USD/ton, 380 cst) Year Average Increase Lowest Highest % % % % % % % % % % Apr Apr Apr Apr May May May May Jun Jun Jun Jun Jun Jul Jul Jul Jul Aug Aug Aug Aug Sep Sep Sep Sep Sep Oct Oct Oct Oct Nov Nov Nov Nov Dec Dec Dec Dec Average Notes: RTM GOA FJR SIN TYO DUR HOU LGB Rotterdam Genoa Fujairah Singapore Tokyo Durban (ex-wharf/180 CST) Houston (ex-wharf) Long Beach (ex-wharf) Source: Oil Shipping (Bunkering) BV, Rotterdam Figure 3 10-YEAR BUNKER/CRUDE ratios Year Average Increase Lowest Highest % % % % % % % % % % Notes: Brent - Light North Sea crude oil, average monthly forward prices /barrel Bunker Cst (Centistoke, a viscosity unit), Rotterdam prices per ton Ratios - the costs of bunkers per ton/the price of crude per barrel

15 DYNALINERS TRADES REVIEW GLOBAL CONTAINER TRADES In 2016, global container volume is estimated to be around million TEU. One source, Container Trade Statistics (CTS), who receives data from most of the players in the liner industry, narrowed that down to approaching 154 million TEU, a growth of 3.5% year-on-year. Within the total figure, for the first time ever, inter-continental consignments passed 100 million TEU. However, intra-regional cargoes grew more healthily at 5% to increase their share of the global total slightly to 34%. Global container volumes according to CTS '16/' Intercontinental 3% 101,980,900 98,875,300 97,571,300 Intra-regional 5% 51,956,200 49,663,100 48,711,200 Total trade 4% 153,937, ,538, ,282,500 Share intercontinental - 66% 67% 67% Share intra-regional - 34% 33% 33% As of late-2016 there were six carriers considered global as they deployed vessels along: All three main East-West trades Two of the three parallel East-West trades Three of the four North-South trade areas At least five intra-regional routes Broad global carriers trade lanes Trade Areas East-West (main): - Transatlantic (North Europe-North America) - North Europe-Far East - Transpacific (Far East-N.America W.Coast) East-West (parallel): - Transatlantic (Mediterranean-N.America) - Mediterranean-Far East - Transpacific (Far East-N.America W.Coast) North/South: - Africa (sub-saharan) - Australasia - Latin America - Middle East/Indian Subcontinent Regional: - Intra-Far East, intra-north Europe etc This number of global carriers decreased by one compared with Hapag-Lloyd no longer fulfilled all the criteria because it did not deploy vessels on the requisite number of intra-trades. The five other carriers were unchanged. Global Carriers 2016 E-West main E-W parallel North/South TRADES EAST-WEST TRADES In the course of 2016, the clarity of membership of the established G6, CKYHE and Ocean Three alliances became somewhat muddied. This followed CMA CGM (Ocean Three) taking over APL (G6), and Coscon (CKYHE) receiving Ocean Three member China Shipping s container liner services. As a result, CMA CGM and the resultant Cosco Shipping Lines ended up being full members of two different arrangements. These events, and others as the proposed merger of UASC into Hapag-Lloyd, must surely have been major factors in framing the subsequent re-organisation of the Alliance system. Thus, as of 1 April 2017, and announced way back in 2016, the East-West shipping scene was presented with two new arrangements replacing the then existing three of G6, CKYHE and Ocean Three. These newcomers were: Ocean Alliance: CMA CGM, China Cosco Shipping, Evergreen, OOCL THE Alliance: Hapag-Lloyd (including UASC commitments), K Line, MOL, NYK, Yang Ming The 2M (Maersk Line and MSC) was the only existing alliance unaffected by this change around. Hanjin, previously a CKY- HE member, was removed from the prospective THE Alliance due to its filing for administration and subsequent bankruptcy. Hyundai (previously G6 Alliance) was left out, probably because of its precarious financial situation at the time these new arrangements were negotiated. It, however, managed to arrive at an association of sorts with the individual 2M members, Maersk Line and MSC. UASC, previously Ocean Three and working towards a merger into Hapag-Lloyd, was not a member of the new Alliances. However, any commitments of UASC capacity made by Hapag-Lloyd were included in THE Alliance. Europe/Mediterranean-Far East Overall container trade between Europe (including the Mediterranean) and the Far East rose by 2% in 2016 to 22.3 million TEU. This was achieved despite the larger North Europe route shrinking by 2% because the susidiary Mediterranean trade enjoyed a 10% growth to 8.1 million TEU. This latter growth was powered by Mediterranean imports rising by 13%. In contrast, cosignments to NOrht Europe dropped by 4%. Far East-North Europe Transpacific West Coast Transatlantic North Europe Far East-Mediterranean Carrier CMA CGM Y Y Y Y Y Y Y Y Y Y Y Cosco Shg Y Y Y Y Y Y Y Y Y Y Y Evergreen Y Y Y Y Y - Y Y Y Y Y Maersk Line Y Y Y Y Y Y Y Y Y Y Y MSC Y Y Y Y Y Y Y Y Y Y Y Yang Ming Y Y Y Y Y - Y - Y Y Y All told, the six global carriers provided 403 liner connections (includes multiple counting for joint services). This was from a total of 1,287 provided by the Top 25 container liner carriers at that point in time. Transpacific East Coast Transatlantic Mediterranean Middle East/Indian Subcontinent Africa Latin America Australasia Intra-trades North Europe-Far East container trade, in TEU Trade '16/' WB to N. Europe -4% 9,333,700 9,691,900 10,173,500 EB to Far East 2% 4,915,900 4,803,900 4,825,400 Total trade -2% 14,249,600 14,495,800 14,998,900 Imbalance TEU 4,417,800 4,888,000 5,348,100 Imbalance % 47% 50% 53% Source: Container Trades Statistics Mediterranean-Far East container trade, in TEU Trade '16/' WB to Med. 13% 5,892,600 5,218,700 5,217,600 EB to Far East 2% 2,188,000 2,138,100 2,028,800 Total trade 10% 8,080,600 7,356,800 7,246,400 Imbalance TEU 3,704,600 3,080,600 3,188,800 Imbalance % 63% 59% 61% Source: Container Trades Statistics Europe/Mediterranean-Far East container trade, in TEU Trade '16/' WB to Europe/Med 2% 15,226,300 14,910,600 15,391,100 EB to Far East 2% 7,103,900 6,942,000 6,854,200 Total trade 2% 22,330,200 21,852,600 22,245,300 Imbalance TEU 8,122,400 7,968,600 8,536,900 Imbalance % 53% 53% 55% Source: Container Trades Statistics

16 16 GLASS HALF FULL With the pre-existing Alliances carrying on as normal (as could be) through 2016, they continued to adjust their service networks as best befitted the trade lane. As a result, from mid-2015 to mid-2016, the combined North Europe/Mediterranean-Far East trade lane contracted by four service loops and forty-three ships. Despite a 1,000 TEU increase in average shipboard capacity, Annual Trade Capacity corrected itself by nearly 5% following the sharp expansion (+12%) of a year earlier. Annual Trade Capacity: Europe/Mediterranean-Far East Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Jul ,400 4,629,900 15,150, % Jul ,400 4,746,800 15,908, % Jul ,200 4,310,000 14,248, % Jul ,400 4,050,000 14,192, % Jun ,900 3,943,000 14,471, % Above refers to annual trade capacity based upon homogeneous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. Far East-North Europe As is often the case, the driving force behind these overall tradelane changes was the main North Europe route. Four services were withdrawn leaving 17 weekly loops, all provided by one of the four contemporary Alliances. Forty ships were withdrawn from the specific North Europe trade fleet to now number 195 units. Although the average capacity of these rose by a substantial 1,300 TEU each (+10%), this was still insufficient to prevent Annual Trade Capacity falling more than 11% to 9.4 million TEU, the lowest figure noted since mid A much needed correction to capacity had taken place. All that was needed now were volumes to improve and, consequently, rates to follow suit. Annual Trade Capacity: North Europe-Far East Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Jul ,700 2,860,100 9,439, % Jul ,400 3,145,700 10,678, % Jul ,500 2,859,000 9,502, % Jul ,700 2,513,000 8,879, % Jun ,500 2,560,000 9,463, % Above refers to annual trade capacity based upon homogeneous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. Far East-Mediterranean In contrast to the North Europe route, the number of Far East-Mediterranean services remained stable at sixteen with only three fewer vessels. With average capacity per ship rising by 1,100 TEU, or 12.5%, Annual Trade Capacity rose strongly too, by more than 9% to 5.7 million TEU. Surprisingly, this is not the largest recorded by Dynamar. That honour falls to the 5.8 million TEU noted in mid-2008 (not seen in the below table). The sixteen Far East-Mediterranean services continued to be provided by the same carriers or groupings as one year previously, namely fourteen by one of the four Alliances with ZIM operating the remaining two. Annual Trade Capacity: Mediterranean-Far East Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Jul ,900 1,769,800 5,711, % Jul ,800 1,601,100 5,229, % Jul ,400 1,451,000 4,746, % Jul ,800 1,537,000 5,313, % Jun ,900 1,383,000 5,008, % Above refers to annual trade capacity based upon homogeneous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. Volumes and Rates With the first necessary element of a healthier trade in place, namely reduced capacity overall, volumes did their part too. Although the increase in Far East-Europe volumes was unspectacular at 2%, it was still an increase all the same and provided a better base for sustainability when set against reduced capacity. Europe/Mediterranean-Far East container trade, TEU Month '16/' January -1% 1,898,200 1,915,300 1,999,600 February -9% 1,584,000 1,735,800 1,424,900 March 10% 1,770,800 1,609,300 1,866,300 April 7% 1,877,800 1,760,100 1,850,100 May -2% 1,910,600 1,951,500 1,944,900 June 0% 1,909,000 1,909,000 1,925,400 July 2% 1,976,000 1,941,500 1,988,200 August 1% 1,923,400 1,897,100 1,978,800 September 4% 1,786,600 1,722,400 1,806,700 October 17% 2,041,600 1,747,100 1,763,600 November 4% 1,718,600 1,649,600 1,727,500 December -4% 1,933,500 2,013,700 1,963,400 Total 2% 22,330,200 21,852,600 22,239,300 - of which WB 2% 15,226,300 14,910,500 15,385,700 - of which EB 2% 7,103,800 6,942,000 6,853,700 Imbalance - -8,122,400-7,968,500-8,532,000 Source: Container Trades Statistics That being said, the total volumes along the trade were still similar to those of two years earlier, so it was really down to rates, the final element of the holy trinity of sustainable shipping, to make the difference. Unfortunately, these did not turn up to the party and there was even anecdotal evidence around March 2016 of enquiries to forwarders for zero freight rates to North Europe. Whilst not so drastic, Container Trade Statistics (CTS) figures (based upon manifest freight and expressed as an index with 100 set at 2008) showed an 18% and 10-point drop in the annual average along the dominant westbound leg to Europe. This came on top of disastrous 26% and 21-point drops in The return eastbound decline was also significant at -17% and -13 points. Overall, the only bright spots were the comparative improvements shown for the final three months of 2016 on the westbound route. This may go a little way to explaining why some major carriers as CMA CGM and Hapag-Lloyd managed to generate net profit in the fourth quarter of the year when in the preceding ones they had posted net losses. CTS - Europe/Mediterranean-Far East rate indices Month Westbound Eastbound '16/' '16/' January -30% % February -42% % March -45% % April -31% % May -20% % June -2% % July -7% % August -7% % September -36% % October 14% % November 15% % December 21% % Average -18% % High 21% % Low -45% % Variance 66% % The Shanghai Containerised Freight Index, this being based upon spot rates and expressed in US dollars, suggested a slightly more optimistic note with the turnaround for both North Europe and Mediterranean starting in May with the final three months reflecting consistently high improvements compared with the fourth quarter of Even so, for the Mediterranean run the annual average of monthly spot rates fell again, by 7%. Luckily, the dominant North Europe trade managed to post a 10% improvement.

17 DYNALINERS TRADES REVIEW SCFI - All-inclusive 20' westbound spot rates Shanghai to Europe Month North Europe Mediterranean '16/' '16/' January -39% 672 1,095-44% 752 1,332 February -64% 363 1,000-72% 380 1,339 March -67% % April -12% % May 17% % June 106% % July 32% % August 19% % September 63% % October 96% % November 73% % December 86% 1, % Average 10% % High -4% 1,048 1,095-28% 960 1,339 Low -30% % Variance 6% % Monthly averages based upon data sourced from Shanghai Containerised Freight Index. The slightly less volatile World Container Index also reflected similar patterns of improvements (generally) from May and beyond with North Europe better for the whole year, on an average basis, yet with the Mediterranean still showing a reduction. parallel California Express which runs to/from the Mediterranean. Annual Trade Capacity: North Europe-North America Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Sep , ,800 2,414, % Sep , ,000 2,484, % Sep , ,000 2,215, % Aug , ,000 2,199, % Aug , ,000 2,135, % Above refers to annual trade capacity based upon homogeneous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. Canada St. Lawrence Seaway services not included. The reduction in Annual Trade Capacity was compensated somewhat by the fleet upgrade undertaken in 2016 by Atlantic Container Line (ACL, Grimaldi Group) who started to phase in its series of 3,900 TEU Container-Roll on/roll off vessels (Con- Ro). Five examples of these so-called G4 ships were ordered to replace their predecessor G3 ships of 2,900 TEU. By the end of 2016, four had been deployed with the fifth launched in the opening months of In preparing for the extra capacity, ACL had chartered in slots on the westbound leg of an MSC service from North America to North Europe. WCI - 20' westbound spot rates Shanghai to Rotterdam/Genoa Month Rotterdam (N.Europe) Genoa (Med) '16/' '16/' January -33% 1,466 2,177-28% 1,840 2,554 February -64% 733 2,046-69% 850 2,715 March -71% 411 1,437-77% 457 1,957 April -37% % 835 1,082 May 9% 1,187 1,092 3% 1,678 1,628 June 154% 1, % 1, July 29% 1,640 1,269 26% 1,621 1,282 August 19% 1,576 1,323-2% 1,455 1,481 September 65% 1,764 1,072-1% 1,211 1,223 October 127% 1, % November 71% 1, % 1,327 1,032 December 121% 1, % 1, Average 9% 1,300 1,189-9% 1,291 1,420 High -17% 1,818 2,177-32% 1,840 2,715 Low -28% % Variance -12% 1,407 1,606-39% 1,383 2,256 Monthly averages based upon data sourced from World Container Index for tariff rates with validity of 7-30 days. Although it may have taken its time and one must not forget the different natures of the spot and contract rates the carriers withdrawal of capacity seems to have worked. This started with service closures, conversions and suspensions in 2015 and which were followed up in For example, the G6 Alliance initially suspended its Loop 6 from February to May 2016 before ultimately making that an indefinite stop. Before then, the CKYHE had closed its CES/NE8 service of 8x 8,500 TEU ships. Transatlantic North Europe-North America Having attracted too much capacity during 2015, in the context of modest volumes growth of 2%, in 2016 the Transatlantic (North Europe) trade experienced an adjustment with a near 3% drop in Annual Trade Capacity. This came, principally, from two fewer services, one provided by the G6 Alliance and one coming from the 2M. The number of vessels reduced even more dramatically (-16%). The main contributor to this reduction was CMA CGM, Hamburg Süd and UASC s Transatlantic/Transpacific Vespucci pendulum of fifteen ships being curtailed into a dedicated Transatlantic (North Europe) loop of five. Post-dating the Trade Capacity survey, MSC then announced it was to close its unique North Europe-via Panama-US West Coast service, transhipping any North Europe cargoes onto the Mediterranean-North America Having adjusted, sensibly, post 2013, the Transatlantic (Mediterranean) trade saw its Annual Trade Capacity expand by more than 15% in 2016 to exceed 2.0 million TEU. This came despite the number of services being the same. A reorganisation of the existing services actually resulted in fewer ports being called outside the Transatlantic (Mediterranean) trade that were previously siphoning off trade capacity from this route. Alongside, average vessel capacity also grew by 300 TEU (+6%) to 5,500 TEU per ship. Annual Trade Capacity: Mediterranean-North America Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Dec , ,200 2,059, % Dec , ,900 1,780, % Dec , ,000 1,846, % Dec , ,000 2,226, % Dec , ,000 1,663, % Above refers to annual trade capacity based upon homogeneous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. Volumes and Rates The motivation for the increase in trade capacity cannot really be laid at the feet of improved volumes either. Whilst return cargoes from North America stagnated, dominant westbound leg consignments to North America only rose by 3%. As a consequence, the imbalance from the North America perspective rose sharply to exceed 1.7 million TEU. Over the space of two years, the size of the imbalance had actually grown by 550,000 TEU and 46%. Transatlantic container trade, in TEU Trade '16/' EB to Europe/Med 0% 2,588,200 2,585,400 2,730,900 WB to N. America 3% 4,324,800 4,181,100 3,916,900 Total trade 2% 6,913,000 6,766,500 6,647,800 Imbalance TEU -1,736,600-1,595,700-1,186,000 Imbalance % -67% -62% -43% Source: Container Trades Statistics On the westbound headhaul trade to North America, after an encouraging start to the year, rate indices showed marked declines for every one of the last nine months. The return eastbound leg fared even worse with every month being weaker than the equivalent month of The annual average index of 74 was down ten points and 13% on that of 2015.

18 18 GLASS HALF FULL CTS - Europe-North America rate indices Month Westbound Eastbound '16/' '16/' January 3% % February 7% % March 0% % April -8% % May -8% % June -14% % July -14% % August -16% % September -14% % October -15% % November -17% % December -15% % Average -9% % High 7% % Low -17% % Variance 24% % 14 9 Transpacific Of all the trades affected by the collapse of Hanjin, it was the Transpacific, in its entirety, that was operationally impacted most of all. In total, Hanjin provided vessels to around eight different Transpacific services connecting with both North America coastlines. For the first nine months of 2016, it was responsible for more than 1.0 million TEU of the total 15.0 million TEU moved between the Far East and United States (all coasts), a share of 7%, and this including one month under administration whereby its operations pretty much ceased. Hanjin s Transpacific portfolio was mixture of standalone and joint loops and it is those, in particular, that caused wider ripples. For example, it was a vessel providing partner together with NYK on the G6 Alliance s Middle East-Far East-US West Coast SE3 loop. NYK s response was simply to cut out the Middle East aspect. As soon as Hanjin stopped normal operations what remained was essentially winding down other carriers tried to make up for the perceived shortfall brought about by the Korean carrier s paralysis. After a stuttering start, the 2M partners initiated the TP9/Maple to the Pacific North West and the Sequoya/ TP3 to Long Beach. Hyundai also stepped in to the breach converting ad hoc sailings into a regular service, the Hyundai New Start, of five ships. These and other ships that it then provided to the G6 Alliance helped form the basis of its independent three Transpacific (West Coast) services portfolio post-april In accordance with the agreement reached earlier, the 2M partners of Maersk Line and MSC also had access to these services. In return, Hyundai was able to secure slots from an East Coast loop plus two Transatlantic and five Far East-Europe services operated by the 2M. As part of Hanjin s administration and liquidation process, its Transpacific services, amongst others, were put up for auction. The winner was dry bulk carrier Korea Lines although its parent, SM Group, decided that creating a new entity would be the best way forward. As a result, come April 2017, SM Line took to the seas operating a standalone Transpacific loop of five vessels of around 6,700 TEU, all acquired from Hanjin. Far East-North America West Coast At around the same time as Hanjin entered administration, there were eighteen different carrier combinations providing forty-six Transpacific (West Coast) services. Whilst the number of carrier combinations grew by one, the number of services dropped by one, net. The number of vessels deployed along the route dropped by more than thirty as there were two fewer pendulum services, these being services that always deploy many more vessels (to cover the other trade). Overall, Annual Trade Capacity grew by a marginal 1% to 13.4 million TEU despite average vessel capacity rising by 4% to 7,900 TEU Annual Trade Capacity: Far East-North America West Coast Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Sep ,900 2,999,700 13,395, % Sep ,600 3,105,500 13,231, % Sep ,100 2,484,000 12,498, % Sep ,600 2,294,000 12,544, % Sep ,300 2,144,000 11,486, % Above refers to annual trade capacity based upon homogeneous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. Services refer to weekly sailings. Far East-North America East Coast The parallel Transpacific (East Coast) trade continued its strong development. Whereas in 2015 this came from more services and a slightly larger average ship capacity, for 2016 it came from a 1,200 TEU increase (+20%) in vessel size. However, with three fewer services, net, Annual Trade Capacity only grew by 9%. The vessel capacity growth was down to the expanded Panama Canal. In 2015 Dynamar counted 158 vessels transiting the Panama Canal on Transpacific (East Coast) services. They totalled 725,000 TEU in carrying capacity, an average of 4,600 TEU. One year later the figures were 125 ships, 847,000 TEU total and 6,800 TEU average, this last an increase of 2,200 TEU and 48% compared with Annual Trade Capacity: Far East-North America East Coast Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Sep ,200 1,608,300 5,275, % Sep ,000 1,536,500 4,831, % Oct ,900 1,365,000 4,279, % Sep ,700 1,311,000 4,228, % Aug ,200 1,203,000 4,073, % Above refers to annual trade capacity based upon homogeneous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. Surprisingly, the completion of the Panama Canal expansion did not result in a wholesale desertion of services sent via Suez. On the contrary, instead of the eight services noted as via Suez in 2015, there were now ten although two also transited Panama in pendulum/round-the-world type loops. Volumes and Rates In 2016, North America exports grew by a higher rate, 8%, than the 5% growth enjoyed by imports. However, because imports are that much bigger in number, this smaller growth rate still translated into more containers at an absolute level so that the imbalance actually grew by around 306,000 TEU to 9.4 million TEU. For every 100 TEU North America imported it returned 46 full TEU back, an improvement of 1 TEU year-on-year.

19 DYNALINERS TRADES REVIEW

20 20 GLASS HALF FULL Transpacific container trade, in TEU Trade '16/' EB to N.America 5% 17,276,200 16,394,100 15,491,500 WB to Far East 7% 7,871,600 7,325,200 7,567,800 Total trade 6% 25,147,800 23,719,300 23,059,300 Imbalance TEU 9,404,600 9,068,900 7,923,700 Imbalance % 54% 55% 51% Source: Container Trades Statistics Comparing year-end with year-start, 2015 all-inclusive SCFI Transpacific spot rates to both United States coastlines continued to reflect very weak situations. Over the year, average monthly rates to the West Coast fell by 15% whilst those to the East coast dropped by even more at 34%. It was only in the final four months, this coinciding with Hanjin s struggles, that rates improved year-on-year. With rates so low, there was, as a result, little room for volatility and for both USD coastlines, the variance between the highest and lowest points were both much reduced. SCFI - All-inclusive 40' spot rates from Shanghai to United States Month US West Coast US East Coast '16/' '16/' January -30% 1,420 2,024-47% 2,471 4,635 February -46% 1,179 2,195-56% 2,185 5,006 March -56% 801 1,801-62% 1,706 4,470 April -51% 825 1,697-56% 1,692 3,859 May -49% 806 1,577-51% 1,618 3,297 June -40% 797 1,321-47% 1,590 2,973 July -3% 1,283 1,321-35% 1,817 2,797 August -24% 1,204 1,582-40% 1,758 2,931 September 24% 1,730 1,397-3% 2,437 2,522 October 48% 1,888 1,279 14% 2,595 2,285 November 77% 1, % 2,650 1,809 December 87% 1, % 2,561 1,521 Average -15% 1,268 1,501-34% 2,090 3,175 High 87% 1,888 2,195 68% 2,650 5,006 Low -56% % 1,590 1,521 Variance -21% 1,091 1,373-70% 1,061 3,484 North-South Trades In 2016, the North-South trades accounted for 31% of all inter-continental imports and 19% of exports. On both scores the shares had barely moved from the previous year. At the same time, exports grew more quickly than imports at 4% against 1%. North-South container trades 2016, in TEU Trade areas '16/'15 Export '16/'15 Import Australasia 7% 2,408,800 9% 3,930,500 Sub Saharan Africa -1% 2,543,400-4% 6,331,300 Mid East & ISC. 5% 7,849,100 3% 13,252,400 Latin America 4% 6,472,300 0% 8,105,200 North-South 4% 19,273,600 1% 31,619,400 Inter-continental 3% 101,980,900 3% 101,980,900 North-South share 19% 31% Source: Container Trades Statistics. Excludes intra-regional volumes. With the differing growth rates for the two directions, the export imbalance for North-South routes managed to shrink by 379,000 TEU to 12.3 million TEU. This approximated to around 61 TEU exported by the North-South trades for every 100 TEU imported. For 2015 the ratio was 59/100 TEU. The largest of the North/South routes is the Middle East/Indian Sub Continent whose total volume exceeded 21 million TEU in Second largest was Latin America with a total of well over 14 million TEU. The remaining two trade lanes saw 8.9 million TEU to and from sub-saharan Africa, the only North/South trade to experience contraction, and 6.3 million TEU along the Australasia lane. Australasia Container volumes to and from Australasia grew by a strong 9% in 2016 to register over 5.6 million TEU. This improvement was seen in both directions with the already dominant southbound imports slightly stronger at 9% too. Exports grew by 8%. As a result, the gap between exports and imports continued to grow to very nearly 1.7 million TEU. This approximated to 54 TEU sent north for every 100 TEU coming in. Main Australasia container trades, in TEU Trade '16/' To Australasia 9% 3,663,700 3,351,000 3,309,400 From Australasia 8% 1,972,700 1,832,400 1,860,800 Total trade 9% 5,636,400 5,183,300 5,170,200 Sources: Container Trades Statistics Whilst many of the Top 20 carriers deploy vessels to the Far East-Australasia route, services are consolidated around a few multilateral consortia or joint operations whose memberships and service provisions change frequently. This is a reflection of the nature of the trade, i.e. difficult or tight, at best. In times such as The Great Liner Shipping Depression, when carriers are pressured on a number of fronts, it makes sense for them to redraw their networks, cutting off the exposed extremities to concentrate and help shore up or stabilise positions elsewhere. In this context, in 2016, NYK executed its previously announced withdrawal from the Far East-Australia trades. Compatriot MOL, for its part, left the Far East-New Zealand trade as a vessel operator. In these circumstances, starting a new service, let alone being a completely new entrant, would be considered brave. In August 2016 a new carrier was indeed launched, Great Southern Shipping Australia, a joint venture of Chinese and Australian interests. It planned to connect the Chinese port of Rizhao to five Australian ports ultimately aiming at a flotilla of five chartered-in 5,000 TEU vessels. These would be reflagged as Australian so they could carry Australian cabotage consignments. That was the plan, anyway. Unfortunately, due to local technical reasons, the reflagging was not possible and the cargo simply didn t materialise. Within a few months of starting, the carrier was reportedly experiencing difficulties and had only deployed vessels of around 2,500 TEU. By the end of the year, the service and the company had both closed. In the context of an overall Far East-Australasia trade volume growth of 12%, Great Southern Shipping s failure to survive only a few months could be considered a surprise. Suggesting an all-round trade improvement, both northbound and southbound directions grew with southbound imports slightly firmer. As a result, the size of the imbalance grew again, by 135,000 TEU, to 1.1 million TEU. The ratio of Australasia return cargoes fell to 57.8 TEU for every 100 TEU imported, the lowest figure since Far East-Australasia container trade, in TEU Trade '16/' Far East-Australasia 12% 2,711,000 2,421,100 2,361,800 Australasia-Far East 11% 1,567,700 1,412,800 1,451,900 Total trade 12% 4,278,700 3,833,900 3,813,600 Source: Container Trades Statistics The North America-Australasia trade is also relatively small, it providing only 12% of the sub-total of all the main trade lanes. In 2016 the size of the specific North America trade lane shrank by 3% to less than 590,000 TEU. Both aspects, southbound imports and northbound exports contracted although it was the latter that suffered most by losing 5% of 2015 s figures. The dominant southbound cargoes were relatively better off losing only 1%. These figures led to the Australasia export imbalance growing again to 144,000 TEU having improved in Overall, Australasia sent back 61 TEU for every 100 TEU imported.

21 DYNALINERS TRADES REVIEW

22 22 GLASS HALF FULL North America-Australasia container trade, in TEU Trade '16/' NA.-Australasia -1% 366, , ,400 Australasia-NA -5% 223, , ,400 Total trade -3% 589, , ,900 Source: Container Trades Statistics (CTS) The Europe-Australasia trade is small, arguably marginal when set against a global scale. Although the trade total volume of 768,000 TEU grew by 3% for the year, it only represented 0.5% of 2016 s global volumes (including intra-regional). The dominant southbound trade grew more strongly at 5% whilst the return northbound trade to Europe shrank by 2% to 182,000 TEU, one of the lowest returns noted since As a result, the total imbalance grew to more than 403,000 TEU. The imbalance ratio dropped further to reflect 31.0 TEU in northbound cargoes for every 100 TEU imported (southbound). This compared with 33.2 TEU northbound in 2015 and was the lowest ratio seen since Europe-Australasia container trade, in TEU Trade '16/' Europe-Australasia 5% 586, , ,200 Australasia-Europe -2% 181, , ,500 Total trade 3% 768, , ,700 Source: Container Trades Statistics (CTS) Sub-Saharan Africa Combined trade volumes along the main routes to and from Africa showed a second consecutive 3% fall following only marginal growth in However, if there is comfort to be drawn it is in the reducing imbalance as Africa exports actually increased in At the end of that year, the imbalance was still a substantial 3.0 million TEU but had lost more than 400,000 TEU since Main Africa container trades, in TEU Trade '16/' To Africa -5% 4,997,400 5,242,000 5,317,300 From Africa 1% 1,969,500 1,953,000 1,972,400 Total trade -3% 6,966,900 7,195,000 7,289,700 Source: Container Trades Statistics Far East-Africa container trade, in TEU Trade '16/' Far East-Africa -8% 2,688,700 2,909,500 3,039,100 Africa-Far East 3% 1,018, ,300 1,068,500 Total trade -5% 3,706,800 3,894,800 4,107,600 Source: Container Trades Statistics Europe-Africa container trade, in TEU Trade '16/' Europe-Africa -1% 2,009,900 2,037,100 1,965,000 Africa-Europe -2% 829, , ,400 Total trade -2% 2,839,000 2,882,600 2,743,400 Source: Container Trades Statistics North America-Africa container trade, in TEU Trade '16/' NA-Africa 1% 298, , ,200 Africa-NA 0% 122, , ,500 Total trade 1% 421, , ,700 Source: Container Trades Statistics West Africa The previously buoyant Far East-West Africa trade, which grew by 11% in 2014, contracted for the second year in a row in Also occurring for the second year in a row was the contraction of shipments from the Far East to West Africa, but there was strong 10% growth in cargoes from West Africa back to the Far East. Whilst the resulting imbalance from West Africa s perspective was 870,000 TEU, it was still the lowest seen since There was also a significant improvement in return cargoes to 27.4 TEU for every 100 TEU imported (2015: 22.9 TEU), the best seen for at least seven years. Far East-West Africa container trade, in TEU Trade '16/' Far East-West Africa -8% 1,198,000 1,298,400 1,372,000 West Africa-Far East 10% 327, , ,800 Total trade -4% 1,525,800 1,595,400 1,624,800 Source: Seabury "World Ocean Yearly" Database. West Africa = Mauritania-DR Congo range including landlocked countries. Annual Trade Capacity along the Far East-West Africa trade grew by more than 11% over the mid-2015 to mid-2016 period posting a new record of 1.7 million TEU. This was despite there being two fewer weekly connections. However, the average size of ships deployed on the trade grew by 37% to 5,900 TEU so that their total shipboard capacity was the highest ever seen at 610,000 TEU, even with thirty fewer vessels. The build-up of shipping capacity began in 2015 with MSC placing tonnage of 8,500 TEU-9,200 TEU on its Far East service. It was followed by other main players as CMA CGM, Maersk Line and PIL who all increased capacity substantially. The boundaries kept being pushed into 2016 as well with vessels in excess of 10,000 TEU also being seen on the route. Annual Trade Capacity: Far East-West Africa Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Jun , ,700 1,659, % May , ,000 1,489, % May , ,000 1,371, % Apr , , , % Apr , , ,000 - Above refers to Annual Trade Capacity based upon homogenous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. This capacity expansion ran counter to the state of the trade. At the start of 2016, Coscon (as was) and MOL, plus Gold Star and Hapag-Lloyd, merged their respective FWAS/WA1 and FAX/ WSX services into a new loop. Evergreen had already left the FWAS service. A couple of months later, NileDutch and PIL closed down their fortnightly FEWA service of 7x 4,000 TEU. Carrying on into early 2017, CMA CGM and Maersk withdrew their joint WAX2/FEW5 of 10x 5,000 TEU (average), all a reaction to the dire market conditions. The combination of increasing capacity but decreasing headhaul volumes over the past few years also impacted freight rates. From 2014 to 2016, the average freight rate for a 20 container from China to Lagos (Nigeria) fell by USD 646 and 35% to USD 1,191. Freight rate developments Far East-West Africa '16/' Start -10% 1,510 1,676 1,935 Finish 18% 1,786 1,510 1,676 Change for the year - 18% -10% -13% High 4% 1,786 1,715 1,978 Low -28% 841 1,168 1,676 Variance 73% Average -17% 1,191 1,439 1,837 Figures are USD per 20' for China-Lagos based upon weekly Shanghai Containerised Freight Index (SCFI) figures. Container traffic along the West Africa-Europe trade lane stagnated in 2016 at 1.3 million TEU. However, underlying that, the dominant southbound cargoes from Europe (including the Mediterranean) shrank by 6%. At the same time, the much weaker northbound return cargoes rebounded from 2015 s fall to record a 17% growth. As a result, the West African export imbalance fell below 600,000 TEU for the first time since Its return ratio of 38.5 TEU for every 100 TEU received was the best noted for at least seven years.

23 DYNALINERS TRADES REVIEW

24 24 GLASS HALF FULL Europe-West Africa container trade, in TEU Trade '16/' Europe-West Africa -6% 950,600 1,006,000 1,047,500 West Africa-Europe 17% 366, , ,800 Total trade 0% 1,316,700 1,320,000 1,393,300 Source: Seabury "World Ocean Yearly" Database. Europe is North Europe + Mediterranean, including Black Sea and North Africa. West Africa = Mauritania-DR Congo range including landlocked countries. The specific North Europe trade is the larger of the two components, it continuing to account for 68% of all Europe-West Africa volumes in North Europe-West Africa container trade, in TEU Trade '16/' N. Europe-W. Africa -5% 630, , ,400 W. Africa-N. Europe 18% 266, , ,500 Total trade 0% 896, , ,900 Source: Seabury "World Ocean Yearly" Database. Between North Europe and West Africa, Annual Trade Capacity rebounded somewhat from s sharp contraction of 16%. The return of an 11% growth came in spite of there being one fewer service and five fewer ships as average vessel capacity rose by 10%. The Annual Trade Capacity total of 695,000 TEU was, though, still the second lowest noted since Annual Trade Capacity: North Europe-West Africa Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Mar , , , % Mar , , , % Feb , , , % Feb , , , % Feb , , , % Annual Trade Capacity based upon homogenous vessel capacity at 70% of nominal (vessel) space and as adjusted for multipurpose ships and non-core ports. Southern Africa The situation along the Far East-Southern Africa trade exhibited a 15% drop in dominant southbound cargoes. Overall, two-way trade shrank by 12% to 911,200 TEU and was at its smallest since 2011 (891,000 TEU). The imbalance reduced by 120,000 TEU to 467,000 TEU with Southern Africa now returning 32.4 TEU for every 100 TEU received. These were the best returns seen since 2011 and Far East-Southern Africa container trade, in TEU Trade '16/' Far East-S. Africa -15% 688, , ,600 S. Africa-Far East -1% 222, , ,300 Total trade -12% 911,200 1,034,900 1,162,900 Source: Seabury "World Ocean Yearly" Database. Southern Africa = Angola-South Africa-Mozambique range, including landlocked countries. With South Africa experiencing economic difficulties, it is no surprise that containerised trade between Europe, as in North Europe plus Mediterranean, and Southern Africa, dropped in The rate of drop, 8%, may have been a surprise. Underlying that, southbound imports fell most sharply at 12% with there being very little difference in return northbound cargoes. Southern Africa s export imbalance therefore shrank by around 55,000 TEU to 139,000 TEU (the lowest seen since 2011) and approximated to 67.6 TEU being sent back to Europe for every 100 TEU received (the highest since 2010). Europe-Southern Africa container trade, in TEU Trade '16/' Eur/Med-S. Africa -12% 428, , ,600 S. Africa-Eur/Med -1% 289, , ,300 Total trade -8% 717, , ,900 Source: Seabury "World Ocean Yearly" Database. Europe is North Europe + Mediterranean, including Black Sea and North Africa. East Africa = Eritrea-Tanzania range + landlocked countries + Indian Ocean Islands Between Europe/Mediterranean and Southern Africa, Annual Trade Capacity stayed slipped back slightly from 2015 s highpoint. This was entirely due to average and total shipboard capacity falling. The number of departures has stayed the same at three or four each week as one loop, MACS multipurpose operation, only runs at a fortnightly frequency. Annual Trade Capacity: North Europe-Southern Africa Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Jan , , , % Aug , , , % Jul , , , % Jul ,800 98, ,000 - Services relates to average sailings per week East Africa Spectacular was the 9% growth of the Far East-East Africa trade. Whilst both northbound/southbound aspects improved, it was the exports north to the Far East that grew the most at 18%. Whilst this approximated to a difference of 21,000 TEU, the 8% growth of the much more dominant southbound trade from the Far East translated into an extra movement of 58,000 TEU. The export imbalance grew therefore by 37,000 TEU to 685,000 TEU. East Africa returned only 17.0 TEU for every 100 TEU it received from the Far East. Far East-East Africa container trade, in TEU Trade '16/' Far East-East Africa 8% 825, , ,400 East Africa-Far East 18% 140, , ,100 Total trade 9% 965, , ,500 Source: Seabury "World Ocean Yearly" Database In contrast to its West and Southern Africa neighbours, East Africa experienced modest growth in both imports from (+2%) and exports to (+1%) Europe. Overall, volumes improved by 2%. The East Africa export imbalance continued to grow slightly, reaching 219,000 TEU. This equated to East Africa returning 38.6 TEU for every 100 TEU it imported. Europe-East Africa container trade, in TEU Trade '16/' Eur/Med-E. Africa 2% 356, , ,900 E. Africa-Eur/Med 1% 137, , ,500 Total trade 2% 494, , ,400 Source: Seabury "World Ocean Yearly" Database. Europe is Continental Europe including Ukraine and Russia, plus Iceland, Faroes and Greenland. East Africa = Sudan to Tanzania range, including landlocked countries Middle East and Indian Sub Continent The combined main Middle East/Indian Sub Continent (ME/ ISC) container trades enjoyed another year of growth seeing 4% more cargo transported at 18.2 million TEU. ME/ISC exports actually grew by 6%, compared to imports improving by 2%. This latter was still dominant at 11.9 million as the difference with imports expanded to 5.9 million TEU from the previous 5.7 million TEU. Main Middle East/Indian Sub Continent container trades, in TEU Trade '16/' To M. East/ISC 2% 11,908,300 11,620,600 10,980,400 From M. East/ISC 6% 6,318,500 5,966,000 5,836,300 Total trade 4% 18,226,800 17,586,500 16,816,800 Sources: Container Trades Statistics (CTS) In 2016, the growth of ME/ISC exports to the Far East, specifically, outpaced imports by three percentage points. However, given the relative differences between the two directions, with westbound imports cargoes more than one-and-a-half times the size of exported eastbound shipments, the imbalance stayed pretty much the same at 4.3 million TEU. At a ratio level, the Middle East/Indian Sub Continent returned 37.8 TEU for every 100 TEU imported when in 2015 the ratio was 36.5/100 TEU.

25 DYNALINERS TRADES REVIEW Far East-Middle East/ISC container trade, in TEU Trade '16/' Far East-M. East/ISC 2% 6,954,500 6,835,700 6,471,100 M. East/ISC-Far East 5% 2,632,100 2,500,800 2,463,400 Total trade 3% 9,586,500 9,336,500 8,934,500 Sources: Container Trades Statistics When the new Ocean Alliance was announced in 2016, interesting was that it included Far East-Middle East services. Whilst a regular first destination for vessels cascaded from Far East-Europe services, this trade lane has never formally been considered an East-West route which, with incidental examples aside, traditionally set the operational limits of the Alliances. When THE Alliance was presented shortly after the Ocean Alliance, it also included a Far East-Middle East loop, suggesting that and again whilst not formally being an East-West trade the trade lane was being increasingly viewed by the Alliances as falling within their operational remit. At the time of launch, in April 2017, the Ocean Alliance boasted seven Far East-Middle East loops split 5/2 between the Gulf/Red Sea. THE Alliance provided a single service connecting with the Gulf. The relative improvement of ME/ISC exports over imports seen along the Far East route was repeated on the Europe trade. Here the exports increased by 7% with cargoes in the return direction moving up by 3%. This reduced the cargo imbalance to less than 1.2 million TEU, but was still the second largest noted since For every 100 TEU of cargo imported, the Middle East/Indian Sub Continent returned more than 68 TEU, which was a small improvement on 2015 s 66/100 TEU. The year 2016 saw the limited return of IRISL/HDS to the Middle East-North Europe/Mediterranean trade following the relaxation of sanctions associated with Iran s nuclear development programme. The link was resumed with a few relatively small vessels of around 2,500 TEU albeit not sailing on fixed schedules. Europe-Middle East/ISC container trade, in TEU Trade '16/' Europe-M. East/ISC 3% 3,743,800 3,632,700 3,375,700 M. East/ISC-Europe 7% 2,559,700 2,401,400 2,383,400 Total trade 4% 6,303,600 6,034,100 5,759,000 Sources: Container Trades Statistics To and from North America, overall trade grew by 5% to 2.3 million TEU. ME/ISC exports were up slightly more than imports at 6% as opposed to 5%. This only served to narrow the difference between the two, which was already less than 90,000 TEU and now numbered 83,000 TEU. At the same time, the Middle East/ Indian Sub Continent now managed to return 93 TEU for every 100 TEU received, up from the previous 92 TEU. North America-Middle East/ISC container trade, in TEU Trade '16/' NA-M.East/ISC 5% 1,210,000 1,152,100 1,133,700 M.East/ISC-NA 6% 1,126,700 1,063, ,600 Total trade 5% 2,336,700 2,215,900 2,123,300 Source: CTS Along the specific North Europe-Indian Sub Continent trade lane, Annual Trade Capacity stabilised pretty much at 905,000 TEU, up only 1% on the situation of one year earlier. This was despite the number of services dropping by one to four and the trade losing seven of its thirty-nine vessels in the process. Average vessel size ballooned by 1,700 TEU per ship to 9,900 TEU, which was due entirely to MSC and SCI s joint service of eight ships averaging 12,000 TEU. The next largest came from Maersk Line s standalone loop of 8x 9,900 TEU. Annual Trade Capacity: North Europe-Indian Sub Continent Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Mar , , , % Mar , , , % Feb , , , % Feb , , , % Feb , , , % Above refers to Annual Trade Capacity based upon homogenous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. In mid-2016, CMA CGM and partner UASC dissolved their joint EPIC service. The EPIC had antecedents in the Europe Pakistan India Consortium service launched in the late 1990s with CMA (as distinct from CGM) as one of the founding partners. CMA CGM and UASC moved over to parallel loops, these being the IOS of Hamburg Süd and Hapag-Lloyd and IPAK of MSC. Coincidentally, the IOS was established by the two German carriers in 2008 upon their departure from the EPIC. Latin America In 2016, total containerised trade to and from Latin America grew marginally by 1% to reflect 13.4 million TEU. Within that, Latin America exports increased by 3%, to 5.7 million TEU, whilst imports went the other way at -1% to 7.7 million TEU. As a result, the imbalance shrank by more than 200,000 TEU to just over 2.0 million TEU. This translated into the region exporting 74 TEU for every 100 imported. Main Latin America container trades, in TEU Trade '16/' Imports -1% 7,747,100 7,789,500 7,893,000 Exports 3% 5,710,000 5,526,600 5,338,100 Total trade 1% 13,457,200 13,316,200 13,231,200 Source: Container Trade Statistics (CTS) Far East-Latin America container trade, in TEU Trade '16/' Far East-L. America 2% 3,276,300 3,224,600 3,235,800 L. America-Far East -2% 1,555,200 1,579,600 1,551,000 Total trade 1% 4,831,500 4,804,200 4,786,800 Source: CTS Europe-Latin America container trade, in TEU Trade '16/' Europe-L. America 1% 1,604,200 1,581,800 1,593,800 L. America-Europe 4% 1,832,500 1,753,800 1,645,900 Total trade 3% 3,436,700 3,335,600 3,239,700 Source: CTS North America - Latin America container trade, in TEU Trade '15/' USA-Latin America -1% 2,581,500 2,595,300 2,643,100 Latin America-USA 3% 1,994,000 1,933,500 1,888,500 Total trade 1% 4,575,500 4,528,800 4,531,600 Source: CTS East Coast South America In general, ECSA container trades exhibit curious characteristics. Exports are heavily based around refrigerated cargoes with reefer containers having to be repositioned back empty. At the same time, imports into ECSA are principally dry cargoes, the containers for these having to be returned to origin, also empty. Thus, and regardless of direction, vessels sailing to and from East Coast South America always have a large number of empty containers on board. Container trade between the East Coast of South America (ECSA) and the main North America, Europe and Far East trade lanes contracted by 5% in 2015 to fall below 4.5 million TEU. This came on top of a 3% drop in Southbound imports were again the driving factor as they fell by 11% (equivalent to 286,000 TEU). On the other hand, and again continuing 2015 s theme, northbound exports improved by 3% to well over 2.1

26 26 GLASS HALF FULL million TEU. The result of these two developments meant that the export imbalance shrank dramatically from 580,000 TEU to 225,000 TEU. In 2013 (not shown) it was 950,000 TEU. As a ratio, ECSA now returned 90.5 TEU for every 100 TEU imported, an improvement over 2015 s 78/100. Main ECSA Container Trades, in TEU Trade '16/' Imports -11% 2,361,900 2,648,400 2,909,300 Exports 3% 2,136,900 2,068,100 1,955,600 Total trade -5% 4,498,800 4,716,500 4,864,900 Source: Datamar The largest of ECSA s deepsea trades is with the Far East. Overall, volumes dropped by 11% in 2016 to 1.9 million TEU. This came from both imports and exports falling, principally the 15% drop in the dominant exports, which translated into 209,000 TEU fewer. The export difference was not even 20,000 TEU. The imbalance shrank by 31% to 428,000 TEU. At the same time ECSA returned 63 TEU for every 100 TEU it imported, up from the 55/100 of Far East-East Coast South America container trade, in TEU Trade '16/' Far East-ECSA -15% 1,164,000 1,373,400 1,507,000 ECSA-Far East -3% 736, , ,800 Total trade -11% 1,900,400 2,129,300 2,212,800 Source: Datamar The difficult trades saw an appropriate response from the carriers. As per mid-2016, the number of Far East-East Coast South America service loops had halved to three when compared with the situation of twelve months earlier. The trade had effectively coalesced around two joint service arrangements. One involved Maersk Line, MSC and MOL with the other being a two-loop system involving nine vessel providing partners in total. The change in service provision had a dramatic impact upon the number of ships, which also halved to thirty-seven. However, as average capacity per ship rose by 20% to 9,100 TEU, the impacts upon shipboard and trade capacities were not as acute as the drop in services and ships. Shipboard capacity went down by 40% to 335,000 TEU whilst Annual Trade Capacity fell by 34% to 967,000 TEU. Both of these figures were the lowest noted since 2010 with only 2009 (not shown) reflecting smaller capacities, on both counts. Annual Trade capacity: Far East-East Coast South America Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth May , , , % May , ,000 1,460, % Apr , ,000 1,389, % Mar , ,000 1,358, % Mar , ,000 1,196, % Above refers to Annual Trade Capacity based upon homogenous vessel capacity at 70% of nominal (vessel) space and as adjusted to exclude non-core ports. The situation reflected in this table was, pretty much, the end result of an ongoing process of standalone and joint services increasingly coming together to form true multiparty services of more than one loop. Gradually individual loops were scrapped and/ or the multiparty loops would merge with another. This activity reached its epoch in the course of 2015 when five different services offering six loops formed into three services providing six loops. The final evolutions came in 2016 with: The two-loop NHX/ESA arrangement dropping the NHX loop The CSW (of MOL) and Ipanema (MSC + Maersk) merging into one The two loop SEAS (of six carriers) and now single-loop ESA (four carriers) joining to form a two-loop and nine-carrier operation Preceding these changes, late in 2015 MOL had already mused aloud that it considered leaving the trade as, after the Far East-Europe route, Far East-South America was its biggest loss-maker. The consolidation and/ or reduction of services was the logical consequence after an extended period of too much capacity chasing too little cargo. Somewhat belatedly, the capacity management that the trade undertook through reducing services had a positive impact. Average freight rate for 2016 increased by more than two-and-a-half times that of Freight rate developments Far East-East Coast South America '16/' Start -56% ,649 Finish 642% 2, Change for the year - 642% -56% -48% High 141% 2,908 1,206 1,742 Low -21% Average 251% 1, ,121 Figures are USD per 20' for China-Santos based upon weekly Shanghai Containerised Freight Index (SCFI) figures. Between Europe/Mediterranean and the East Coast of South America (ECSA) volumes only decreased by 1%, barely 10,000 TEU. It was (southbound) imports that drove this with a 4% contraction. However, as this was the weaker leg, the 2% growth of northbound exports almost compensated for that loss. In 2016, ECSA sent 69,000 TEU more northbound than it received from Europe. This translated into 109 TEU exported for every 100 TEU imported. Europe-East Coast South America container trade, in TEU Trade '16/' Europe/Med-ECSA -4% 758, , ,900 ECSA-Europe/Med 2% 827, , ,900 Total trade -1% 1,586,200 1,596,500 1,644,800 Source: Datamar The North Europe-ECSA trade continues to be built upon three main services that combine to provide 94% of Annual Trade Capacity. Maersk and its pending acquisition target Hamburg Süd operate separate standalone services each whilst MSC and Hapag-Lloyd team up on a joint loop. The two other services offering North Europe-ECSA connections are provided by CMA CGM/Marfret (north Brazil ports only and as part of longer service to the Caribbean) and Grimaldi (container-ro/ro service). Although Annual Trade Capacity expanded by 1% to 905,000 TEU over , it was still noticeably smaller than 2012 and In fact, and not seen below, it was smaller than in 2010 and 2011 too. Annual Trade Capacity: North Europe-East Coast South America Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Apr , , , % Mar , , , % Mar , , , % Mar , , , % Mar , , , % Above refers to Annual Trade Capacity based upon homogenous vessel capacity at 70% of nominal (vessel) space and as adjusted to exclude non-core ports. Overall trade between North America (United States, Canada and Mexico) and ECSA actually staged a minor recovery with 2% growth in Southbound imports performed (very) poorly in comparison with northbound exports. In this case southbound consignments shrank acutely by 10% whilst northbound volumes experienced a substantial growth of 14%. This consolidated the switch around in dominant leg that occurred in 2015 so that the following year, exports outweighed imports by 133,000 TEU and 130 TEU for every 100 TEU imported.

27 DYNALINERS TRADES REVIEW

28 28 GLASS HALF FULL North America-East Coast South America container trade, TEU Trade '16/' N. America-ECSA -10% 439, , ,400 ECSA-N. America 14% 572, , ,900 Total trade 2% 1,012, ,800 1,007,300 Source: Datamar Looking at the service provision, although the metrics surrounding numbers of services, ships, average and total shipboard capacities were virtually unchanged, there was still a more than 4% growth in Annual Trade Capacity to 712,000 TEU, effectively returning to the situation of The increase came from the fact that in 2016, twenty-nine of the forty ports called by the four services, equivalent to 72.5% of the total, were located in either North America or South America s East Coast. For the early 2017 survey, the proportion of core ports had risen to 76.7%, therefore attracting a greater share of Annual Trade Capacity. Annual Trade Capacity: US East/Gulf Coast-East Coast South America Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Mar , , , % Mar , , , % Mar , , , % Mar , , , % Mar , , , % Above refers to Annual Trade Capacity based upon homogenous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. West Coast South America Containerised cargoes along the Far East-West Coast South America route reflected marginal 1% growth rates across the board, both directions. With imports from the Far East being dominant, the imbalance also grew slightly to around 472,000 TEU. Similarly, the return ratio dropped by a small amount to 55.3 TEU exported for every 100 TEU imported (2015: 461,000 TEU and 55.8/100). Far East-WCSA trade, in TEU Trade '16/' Far East-WCSA 1% 1,056,900 1,041,800 1,023,600 WCSA-Far East 1% 584, , ,100 Total trade 1% 1,641,500 1,622,700 1,584,800 Source: Seabury "World Ocean Yearly" Database. WCSA = Colombia-Chile range Following the significant growth rates experienced in 2015, one year later the North Europe-WCSA trade shrank ever so slightly. Within that, the weaker southbound imports from North Europe managed a tiny improvement with the stronger northbound exports from WCSA moving the other way. However, the limited cargo volumes meant that the difference between the two directions did not even close by 10,000 TEU. As a result, WCSA still sent out 214 TEU for every 100 TEU it imported, albeit down from the near 220 TEU of North Europe-WCSA container trade, in TEU Trade '16/' N. Europe-WCSA 1% 220, , ,700 WCSA-N. Europe -2% 471, , ,400 Total trade -1% 691, , ,200 Source: Seabury "World Ocean Yearly" Database. WCSA = Colombia-Chile range Caribbean (and Central America) Along the North Europe-Caribbean trade, in 2016 there were twenty-one services, one fewer than a year earlier. Five services offered this connection on a wayport basis en route East or West Coast South America, leaving sixteen dedicated. In 2015 the split was fourteen dedicated and eight wayport. With average vessel capacity increasing by 9%, Annual Trade Capacity followed suit with a 10% growth. Annual Trade Capacity: North Europe-Caribbean Year Number Capacity (TEU) Services Ships Average Shipboard Trade Growth Sep , ,300 1,259, % Dec , ,000 1,142, % Aug , , , % Aug , , , % Aug , , , % Above refers to Annual Trade Capacity based upon homogenous vessel capacity at 80% of nominal (vessel) space and as adjusted to exclude non-core ports. One of the wayport loops for 2016 was the new service MSC created in the light of the then newly expanded Panama Canal. It merged two separate loops between 1) North Europe-WC- SA and 2) US East Coast-WCSA into a North Europe-Caribbean-WCSA-USEC-Europe service. The new loop was provided by ten ships averaging 8,800 TEU and replacing seventeen of 5,300 TEU each. At the start of 2016, Streamlines, previously the container (space) operating arm of conventional reefer carrier Seatrade, opened its own service of five ships of 1,400 TEU between North Europe, the Caribbean and Florida. REGIONAL TRADES Intra-regional cargoes, i.e. intra-europe, intra-asia, intra-north America etc, account for around a third of all container volumes (CTS statistics). Of that, the intra-far East is dominant with, consistently, three-quarters of all intra- volumes and a quarter of global container trade. Both individually and as a whole, the intra-regional trades experienced reasonable to very strong growth. In particular was Sub-Saharan Africa, admittedly from a small base of 155,000 TEU, which saw volumes increase by 11% to 173,000 TEU. At the other end of the scale was Latin America whose modest 2% growth was the smallest seen of these regional trades. Even so, coming on top of an existing 1.5 million TEU, its absolute growth of 25,000 TEU was still larger than Africa s 17,000 TEU. Intra-regional container trades, in TEU Trade '16/' Far East 5% 39,213,200 37,436,300 36,696,200 Europe 3% 6,927,700 6,711,600 6,725,900 Mid East/ISC 6% 3,337,200 3,133,800 2,961,600 Latin America 2% 1,549,300 1,523,400 1,482,800 Australasia 7% 489, , ,500 North America 9% 267, , ,000 Sub Saharan Africa 11% 172, , ,300 Total Intra-Trades 5% 51,956,200 49,663,100 48,711,200 All global trades 4% 153,937, ,538, ,282,500 Intra-Regional share - 34% 33% 33% Source: Container Trades Statistics (CTS) Intra-Far East The demise of Hanjin caused a certain amount of rearrangement along some intra-far East trades, although considering that the South Korean carrier concentrated more upon deepsea cargoes than regional ones, any inconvenience was limited. One of the reactions to Hanjin s difficulties saw four of its compatriots, Heung-A, Hyundai, KMTC and Sinokor, establish the so-called Mini Alliance. This set out to co-operate on four North East-South East Asia loops using a fleet of fifteen ships in total. At the end of 2016 a new carrier, SM Line, was formed. This was the destination for Hanjin s Transpacific and intra-far East services and started operations around the same time as the new East-West Alliances in April Its intra-far East portfolio comprised two North East Asia-South East Asia loops and a single intra-north East Asia service. Elsewhere, a few new carriers entered the scene. In North East Asia, MSR International Shipping opened a Busan-Zarubino (Russia Far East) service and non-operating owner TVL Ship-

29 DYNALINERS TRADES REVIEW ping opened a China-Taiwan loop. In South East Asia, BMS Line opened a West Malaysia-East Malaysia-Brunei service. Intra- Europe The intra-(north) Europe trades are always busy with new players entering although not all manage to survive. In 2015 (fifteen) two intended new services (Germanische Shipping and Atlantic Open Feeder) apparently failed to launch. Another two who did get that far, Faher Maritime and TKN Operator Shipping Line, only lasted for a short while. Starting late in 2015, TKN Shipping did manage to survive up to August 2016 at least, having actually brought in a second vessel on its north Spain-Antwerp service only two months previously. Surviving in the region can be challenging and success may depend upon specific markets. Ones that seem to be successful involve a Netherlands-North Sea element as evidenced by A2B-online. It started off in mid-2013 offering a single port pair link between Moerdijk (near Rotterdam) and Immingham (UK). Three-and-a-half years later, it offered four distinct routes deploying a flotilla of five ships of TEU. In 2016, a new company, Viasea, launched its North Sea anchored service. Centred on the same Dutch port of Moerdijk as A2B-online, it provides a single vessel link with two Norway ports. Landside Modal Split at main North West Europe ports 2016, TEU Port Handlings Transhipment Gateway Road Rail Barge Antwerp 10,040 3,610 6,420 3, ,340 Bremerhaven 5,530 3,185 2,345 1, Hamburg 8,910 3,306 5,604 3,116 2, Le Havre 2, ,960 1, Rotterdam 12,385 4,087 8,298 4, ,951 Zeebrugge 1, , Totals 40,781 14,836 25,945 15,385 4,848 0 Figures in TEU x 1,000. Includes estimates. Landside Modal Split at main North West Europe ports 2016, shares Port Handlings Transhipment Gateway Road Rail Barge Antwerp 10,037 36% 64% 56% 7% 36% Bremerhaven 5,530 58% 42% 67% 31% 2% Hamburg 8,910 37% 63% 56% 42% 2% Le Havre 2,519 22% 78% 87% 4% 9% Rotterdam 12,385 33% 67% 54% 11% 36% Zeebrugge 1,400 6% 94% 70% 23% 7% Totals 40,781 36% 64% 59% 19% 22% Inland modal split shares relate to GATEWAY traffic. Intra-Middle East When intra-north Europe carrier Unifeeder took over intra-mediterranean operator United Feeder Services (UFS) back in 2013, the not unreasonable expectation was that UFS would be gradually eased to the background and ultimately absorbed into its parent alike earlier acquisitions Unifeeder had made (IMCL, Feederlink and Tschudi Lines). To date though, the only change to UFS has been cosmetic with it now being named Unimed Feeder Services. Whilst conceding UFS may well still be absorbed into Unifeeder in the future, it is not only being maintained for the moment, it is also being used to make tentative first steps into brand new markets for them both, namely the intra-middle East trades. Having entered through slots along part of UASC s India-Gulf GIS service in 2016, it has grown to offer sailing opportunities via six loops within the Middle East, three being intra-red Sea and the other three intra-gulf.

30 30 GLASS HALF FULL Figure 4 NEW CONTAINER SERVICES LAUNCHED IN 2016 East/West Trades Carriers/Consortium Trade name Trade Month Frequency Number Average TEU Annual TEU started of ships per ship capacity CMA CGM, CoscoSL, Hanjin, UASC Amerigo Express Med-US Mar , ,000 Hanjin CAX FE-USWC Mar , ,000 2M TP18/Lone Star Exrpess FE-UWEC Apr , ,000 "K" Line, Yang Ming Calco-C FE-USWC May , ,600 CMA CGM, Hamburg Sud, UASC Liberty Eur-USEC Aug , ,600 2M TP1/Maple FE-USWC Sep , ,000 Hyundai Hyundai New Start FE-USWC Sep , ,000 Evergreen JPI NEA-SEA Sep , ,000 Total new East/West services ,900 2,020,200 North/South Trades Carriers/Consortium Trade name Trade Month Frequency Number Average TEU Annual TEU started of ships per ship capacity StreamLines Blue Stream EUR-CA Jan ,400 72,800 Maesk Line/Sealand Atlantico NA-CA Jan ,300 67,600 Wan Hai, MOL, PIL CI2 FE-ISC Jan , ,800 CoscoSL, Gold Star, Hapag-Lloyd, MOL FWAS FE-WAF Jan , ,000 IRISL ECL Eur-ME Feb ,500 60,667 CMA CGM, UASC IMEX Med-ME Mar , ,000 Maersk Line WAF3 Eur-WAF Apr , ,000 Great Southern Shipping GSS service FE-AUS Aug , ,000 CoscoSL, KMTC, T.S. line FIX FE-ISC Jun , ,000 Maersk Line AC1 FE-ECSA Jun , ,000 IRISL SCY FE-ISC Jun ,000 20,222 Hyundai CMS FE-ME Jul , ,200 Arkas, CoscoSL, Messina, ZIM WAS Med-WAF Jul , ,000 ANL, CoscoSL, OOCL Northern Express FE-AUS Sep , ,400 ANL, CoscoSL, OOCL Central Express FE-AUS Sep , ,400 ANL, CoscoSL, OOCL Southern Express FE-AUS Sep , ,200 MSC Cheetah ISC-EAF Aug , ,400 Cheng Lie, CoscoSL, PIL CTV NEA-SEA Aug , ,000 CMA CGM, CoscoSL, Simatech, TS Lines IEX FE-ISC Dec , ,400 CoscoSL, PIL EAS FE-EAF Dec , ,400 Total new North/South services ,900 3,658,489 Regional Trades Carriers/Consortium Number Number Average TEU Annual TEU of services of ships per ship capacity Intra-Africa ,200 Intra-Americas , ,800 Intra-Australasia Intra-Europe ,000 Intra-Indian Sub Continent , ,000 Intra-Far East ,100 2,979,600 Intra-Mediterranean ,900 1,085,400 Intra-Middle East 5 6 1, ,600 Total new regional services ,800 5,622,600

31 DYNALINERS TRADES REVIEW Figure 5 NAMED ALLIANCES, CONSORTIA AND JOINT SERVICES Liner shipping companies and their main individually operating subsidiaries, sister companies and brands East-West Alliances Alliance name 2M Ocean Alliance THE Alliance Partners Maersk Line, MSC CMA CGM, CoscoCS, Evergreen, OOCL Hapag-Lloyd, K Line, MOL, NYK, Yang Ming Figure 6 ALLIANCES FLEET AND CAPACITY SUMMARY Alliances fleet and capacity summary Trade lanes Totals 2M Ocean Alliance The Alliance Other Ships Capacity Ships Capacity Ships Capacity Ships Capacity Ships Capacity Transatlantic (North Europe) 70 67, , , , ,000 Transatlantic (Mediterranean) 65 48, , , , ,000 Far East-North Europe , , , , Far East-Mediterranean , , , , ,000 Transpacific (West Coast) , , , , ,000 Transpacific (East Coast) , , , , ,000 Totals , , , , ,000 Alliance shares per Trade Lane Trade lanes Totals 2M Ocean Alliance The Alliance Other Ships Capacity Ships Capacity Ships Capacity Ships Capacity Ships Capacity Transatlantic (North Europe) 100% 100% 30% 34% 16% 22% 41% 34% 13% 10% Transatlantic (Mediterranean) 100% 100% 22% 29% 9% 10% 8% 9% 62% 52% Far East-North Europe 100% 100% 35% 39% 37% 36% 28% 24% 0% 0% Far East-Mediterranean 100% 100% 26% 32% 40% 38% 25% 27% 8% 3% Transpacific (West Coast) 100% 100% 16% 29% 32% 6% 27% 38% 25% 27% Transpacific (East Coast) 100% 100% 27% 24% 36% 39% 26% 28% 11% 9% Totals 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Trade Lane shares per Alliance Trade lanes Totals 2M Ocean Alliance The Alliance Other Ships Capacity Ships Capacity Ships Capacity Ships Capacity Ships Capacity Transatlantic (North Europe) 8% 8% 9% 8% 4% 6% 12% 9% 6% 6% Transatlantic (Mediterranean) 7% 6% 6% 5% 2% 2% 2% 2% 28% 24% Far East-North Europe 21% 31% 30% 37% 25% 41% 22% 26% 0% 0% Far East-Mediterranean 14% 15% 14% 15% 17% 21% 13% 15% 7% 4% Transpacific (West Coast) 27% 24% 17% 22% 27% 5% 28% 32% 43% 53% Transpacific (East Coast) 22% 17% 24% 13% 25% 24% 22% 16% 15% 13% Totals 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Notes: As per mid-2017 Capacities are weekly shipboard

32 32 GLASS HALF FULL CARRIERS At the end of 2016, the ten largest carriers by capacity controlled a combined 14.1 million TEU in shipboard container slots. This was equivalent to 68% of the global total of 20.7 million TEU, an increase of five percentage points over the year. The top twenty carriers controlled 17.2 million TEU, good for a share of 83% (down 1%). Major developments surrounding carriers and groupings of all sizes, not just the top 10 or 20, are summarised below. Figures in between (brackets) relate to year-end Maersk Line (Rank 1; Ships 631; Capacity 3,273,000 TEU) + Hamburg Süd (Rank 7; Ships 116; Capacity 604,000 TEU) After a relatively quiet corporate 2015 and much of 2016, Maersk Line finished the year with something of a bang. Commentators were warmed up when, in September 2016, the parent Maersk group announced that its new strategic direction would be as a container-based logistics and transport operation. Essentially the group was to be separated into two main operating segments concentrating container related activities in one and oil and gas in the other. The containerised side, the Transport and Logistics division, comprised Maersk Line and its subsidiaries, plus APM Terminals, logistics operator Damco, box manufacturer Maersk Container Industry and tugs and towage operator Svitser. In particular, Maersk was, and is, seeking higher levels of cargo interaction between the liner-terminal-logistics elements. As for the new Energy division, there is speculation aplenty as to Maersk s intention, including disposal or spin-off in some form. Alongside the new strategy, Maersk also announced that liner business growth would be through acquisition. Terminal development, in contrast, would be through improving efficiency and occupancy of existing terminals rather than expanding its network footprint. It was read into this that Maersk Line would be calling APM Terminals facilities more often. The commitment towards liner acquisition was soon realised. On 1 December 2016, Maersk announced it would buy North/ South trades carrier Hamburg Süd. Maersk will pay around USD 4 billion cash without having to use external financing or engage in asset sales. The expectation is that the whole process will take until the end of 2017, although an at least could easily be added to that. Maersk will retain the Hamburg Süd brand, which is ironic for the German carrier absorbed virtually all its own acquisition targets of which there were twenty-one over a 26-year period to The only one to survive as a recognisable brand, and then for local reasons, was Aliança of Brazil. Selling a familiy heirloom The connection between Hamburg Süd and the Oetker Group, who is selling it, cannot be underestimated. The late Rudolf August Oetker, grandson of the original group founder and architect of the modern-day Oetker Group, had been involved in the carrier since 1934 although it was only integrated into the group in For him, shipping was more a fascination than a business. Following the acquisition of Deutsche Nah-Ost Linien (DNOL) in 1986, Dr. Oetker s passion adopted an aggressive strategy of growth through acquisition with twenty-one more by the end of Even so, it was still short of scale - today s byword for survival. The economic realities of the consistent and massive investments needed to achieve that scale outweighed any sentimental attachment the older generation of the Oetker family, at least, had to the carrier. Perhaps learning from the painful experiences of integrating Sea-Land (1999) and P&O Nedlloyd (2005-6), Maersk will apply what it calls a light touch to this amalgamation. The Hamburg headquarters and much of Hamburg Süd s management COMPANIES structure will be retained. Most integration (read: savings) will occur in back office activities. The attraction for Maersk Line was Hamburg Süd s extensive North/South trades network whose strength, and roots, lie along the South America trades, especially East Coast South America (ECSA) where, in terms of Annual Trade Capacity, it is second only to MSC (as of start-2017). The agreement also includes Hamburg Süd s dry bulk related businesses carried out, principally, by Rudolf A Oetker KG (RAO). Whilst not insignificant, they still fall short of Maersk s overarching doctrine of being present in a few industries but then in scale. Maersk Line and Hamburg Süd combination Item Total Maersk Line Hamburg Süd 2016 Revenue (USD mn) 26,184 20,715 5, Carryings (TEU) 25,225,000 20,830,000 4,395,000 Capacity start-2016 (TEU) 3,641,000 2,995, ,000 Capacity share start % 15% 3% Capacity end-2016 (TEU) 3,877,000 3,273, ,000 Capacity share end % 16% 3% It would, therefore, not be a surprise to see RAO and/ or its activities sold-off sometime after the acquisition has been concluded. If this decision is made, Maersk will surely hope that the process will be quicker than with Safmarine MPV. When Safmarine physically moved from Belgium to Denmark in 2012, the MPV operations stayed behind in Antwerp as a separate entity. These were earmarked for sale, but unfortunately, no buyer was forthcoming or willing to acquire Safmarine MPV en bloc. As a result, it was eventually disposed of piecemeal, this process staring in December 2015 when its vessels were sold off to Thorco. The US Gulf service was closed in January 2016 with, the following month, the South Africa-West Africa multipurpose service sold to Fairseas International of South Africa. The end came in March/April 2016 when the Europe-West Africa service was sold to NileDutch. CMA CGM (Rank 3; Ships 448; Capacity 2,131,000 TEU) CMA CGM spent 2016 completing the acquisition of APL having, at the end of 2015, agreed to buy the 67% held in Neptune Orient Lines, parent of APL, by Singapore s investment vehicle Temasek. APL was, at that time, the 13th largest carrier by capacity. The deal went through smoothly with APL formally becoming a subsidiary of CMA CGM in June Through acquiring other shares in tranches, ultimately, CMA CGM was able exercise a compulsory purchase to bring its ownership stake up to 100% and thereby delist NOL the following September. The integration of APL has yielded mixed results with it contributing 2.8 million TEU or 18% of the full-year carryings of 15.6 million TEU, and USD 2.6 billion (16%) of the USD 16.0 billion total revenue. However, it contributed relatively more to the net loss, namely USD 127 million, equivalent to 28% of the total USD 452 million written in red ink. Despite the 2016 net loss, there were hopeful signs for CMA CGM. It managed to post a net profit for the final quarter of the year and had already repaid all it had taken on in credit to help finance the acquisition. This was arranged (partly) through the sale and leaseback of ships and containers and the selling of future cash flow. Maybe these underlying factors gave CMA CGM the confidence to come out in the opening months of 2017 and say it was not a matter of who will buy who but what CMA CGM will buy [in the future].

33 DYNALINERS TRADES REVIEW

34 34 GLASS HALF FULL Figure 7 TOP-20 OPERATORS BY FULL CONTAINER CARRYINGS Rank Main/parent Share company 2016 TEU TEU TEU 3 CMA CGM 9.8% 15,641,000 12,995,000 12,223,700 4 CoscoSL 10.6% 16,903,000 9,827,700 9,437,500 5 Evergreen 4.7% 7,400,000 7,200,000 7,200,000 7 Hamburg Süd 2.8% 4,395,000 4,101,000 3,375,000 6 Hapag-Lloyd 4.8% 7,599,000 7,401,000 5,907, Hyundai 1.9% 3,090,000 2,996,000 3,302, IRISL 0.8% 1,293,000 1,114,000 1,066, "K" Line 2.0% 3,142,000 2,948,000 3,144, KMTC 1.6% 2,464,000 2,010,000 1,498,000 1 Maersk Line 13.1% 20,830,000 19,044,000 18,884, MOL 2.7% 4,289,000 3,717,000 3,802,000 2 MSC 10.2% 16,200,000 14,870,000 14,230, NYK 2.7% 4,355,000 4,232,000 4,162,000 8 OOCL 3.8% 6,081,000 5,575,900 5,585, PIL 2.3% 3,725,000 3,756,000 3,700, UASC 1.9% 3,026,000 6,571,500 4,747, Wan Hai 2.4% 3,818,000 3,500,000 3,356, X-Press 4.2% 6,638,000 5,300,000 4,736,000 9 Yang Ming 2.9% 4,572,000 4,018,000 3,967, ZIM 1.5% 2,429,000 2,308,400 2,360,000 Total Top % 137,890, ,485, ,683,900 Estimated world total 100% 158,900, ,300, ,000,000 Share Top 20 87% 80% 76% Notes: Selection based upon year-end 2016 Top 20 by fleet capacity Ranking by 2016 carryings Data originates from a large variety of sources, including carriers own and Dynamar estimates (italics) Figure 8 TOP-20 OPERATORS BY CAPACITY (Capacity as at 31 December, Index 2005=100) 2016 Main/parent Index Growth Rank company '16/'15 TEU TEU TEU 3 CMA CGM % 2,131,500 1,820, ,700 4 CoscoSL % 1,618, , ,300 5 Evergreen 208 7% 992, , ,600 7 Hamburg Süd 272-7% 603, , ,900 6 Hapag-Lloyd 147 2% 950, , , Hyundai % 455, , , IRISL % 102,200 88,600 53, "K" Line 154-9% 350, , , KMTC % 137, ,200 23,200 1 Maersk Line 197 9% 3,273,600 2,995,100 1,665, MOL % 495, , ,300 2 MSC 363 6% 2,847,000 2,684, , NYK 172 6% 519, , ,200 8 OOCL 246 3% 575, , , PIL 273 0% 366, , , UASC 712 3% 526, ,800 74, Wan Hai 191 2% 218, , , X-Press % 161, ,700 29,100 9 Yang Ming 303 6% 570, , , ZIM % 305, , ,400 Notes: Shipboard capacity of all vessels operating in liner services, (excluding the orderbook) irrespective of type and size Analysis based on data sourced from Alphaliner Figure 9 TOP-20 OPERATORS BY OPERATING PROFIT AND TURNOVER Main/parent company Profit Turnover Profit Turnover Profit Turnover USD USD USD USD USD USD CMA CGM , , ,739 CoscoSL , , ,151 Evergreen , , ,551 Hapag-Lloyd 639 8, , ,265 Hyundai , , ,582 "K" Line , , ,688 Maersk Line ,715 1,431 23,729 2,504 27,531 MOL , , ,626 NYK , , ,847 OOCL , , ,495 Wan Hai 58 1, , ,112 Yang Ming , , ,251 ZIM 50 2, , ,409 Sub-total -2,624 89,515 3,130 97,014 4, ,247 Notes: Million USD Figures for K Line, NYK and MOL relate to financial year ending 31 March Figure 10 TOP-20 OPERATORS OPERATING PROFIT PER TEU Main/parent company Profit Liftings Profit Liftings Profit Liftings USD/ TEU Figure 11 MERGERS AND TAKEOVERS Buyer Took over From China Shipping China COSCO China Shipping Group Euro Container Line Samskip Wilson & Sons Hamburg Süd* Maersk Line Oetker Group Interocean Lines King Ocean Services Shareholders NOL/APL CMA CGM Temasek & other shareholders Portline Containers International Via Maritima (Sousa Group) Portline Transportes Maritimos Internacionais SA Safmarine MPV NileDutch A.P.Moller-Maersk group Trinity Shipping Line King Ocean Services Shareholders UASC** Hapag-Lloyd (merger) Shareholders Notes: *Not completed **Completed in May 2017 TEU USD/ TEU TEU USD/ TEU CMA CGM -5 15, , ,224 CoscoSL , , ,438 Evergreen -33 7, , ,200 Hapag-Lloyd 84 7, , ,907 Hyundai , , ,302 "K" Line -90 3, , ,144 Maersk Line , , ,884 MOL -69 4, , ,802 NYK -26 4, , ,162 OOCL -23 6, , ,586 Wan Hai 15 3, , ,356 Yang Ming , , ,968 ZIM 21 2, , ,360 Notes: Liftings: 1,000 TEU Based upon operating profit. Figures for K Line, NYK and MOL relate to financial year ending 31 March Includes estimates TEU

35 DYNALINERS TRADES REVIEW Finally, having withdrawn the Delmas brand in 2015, CMA CGM did the same to the US Lines brand late in Originally a small vessel operator when acquired back in 2007, it was placed as a subsidiary of CMA CGM group member ANL and became a non-vessel operating common carrier on the Transpacific, including Australasia, trades. Evergreen Line (Rank 5; Ships 188; Capacity 993,000 TEU) At the start of 2016 Evergreen had to come to terms with the sad death of founder and guiding light Dr. Chang, Yung-fa he received a number of honorary doctorates plus a range of national honours from various countries at the age of 88. He was the still the (greater) group Chairman and President although day-to-day management had been transferred to a team of senior managers some years previously. The question of succession at Evergreen had still been a pertinent one for a number of years prior to Dr. Chang s death as all four of his sons had worked within but left the group (although one did return later). Following Dr. Chang s passing there arose an internecine struggle for control which, mercifully, was concluded within the space of a few weeks. Essentially, his fourth son (by his second wife) claimed the Evergreen Chairman title, but this was disputed by three sons and a daughter from his first marriage. Crucially, they exercised a greater control of shares in group holding company Evergreen International. Through the brutal yet elegant method of 1) abolishing the position of group Chair and 2) replacing the accompanying management setup with Evergreen International, they effectively won the day. They have stayed as shareholders only, leaving the day-to-day running to group senior management. Hapag-Lloyd (Rank 6; Ships 167; Capacity 950,000 TEU) + UASC (Rank 10; Ships 55; Capacity 527,000 TEU) Having finalised the merger-in of CSAV in December 2014, it may have been expected that Hapag-Lloyd would wait until making further moves, especially as it only listed on Frankfurt Stock Exchange the following October. However, it was not too long, April 2016 in fact, before it confirmed it was in discussions with UASC of Dubai regarding another merger à la that of CSAV into Hapag-Lloyd. The negotiations were successfully completed in mid The individual shareholders of UASC, these comprising six Gulf states, will accumulate a total 28% stake in the newly enlarged entity. The existing major shareholders of Hapag-Lloyd, namely CSAV, the State of Hamburg and Kuhne Maritime, will see their holdings diluted somewhat but still larger than the 14% held by Qatar individually, the largest of UASC s shareholders. The general expectation was that the merger would be completed well before the inauguration of the new THE Alliance in April 2017, of which Hapag-Lloyd is a member. This was not possible and the longstop date for completion of the merger was extended. A contingency was adopted whereby any UASC capacity pledged by Hapag-Lloyd was still delivered to the Alliance under vessel sharing agreements. The background to the merger can be seen in Hapag-Lloyd s desire to acquire scale in order to survive. For UASC such a move became necessary because, in a remarkably similar path to CSAV before it, it engaged upon a dramatic expansion in capacity and network but without the results to go with it: UASC only posted a net profit once since the end of As a result, from then until the nine-month point of 2016, its aggregate net loss totalled USD 1.98 billion. Hapag-Lloyd will surely hope that the annual synergies of USD 435 million expected as from 2019 do indeed arrive on time. Hapag-Lloyd and UASC combination Item Total Hapag-Lloyd UASC 2016 Revenue (USD mn) 12,304 8,986 3, Net result (USD mn) Result post-2008 (USD mn) -3,081-1,101-1, Carryings (TEU) 9,829,000 7,559,000 2,270,000 Capacity start-2016 (TEU) 1,443, , ,000 Capacity share start % 5% 3% Capacity end-2016 (TEU) 1,477, , ,000 Capacity share end % 5% 3% Cosco Shipping Lines (Rank 4; Ships 290; Capacity 1,618,000 TEU) Prior to 2016, both Cosco Container Lines (Coscon) and compatriot China Shipping Container Lines had been struggling financially. From 2008 until 2014, their combined net loss amounted to USD 3.2 billion despite substantial assets sales of more than USD 3.1 billion in 2013 and The malaise went deeper than purely the container operations of the state-owned parents, China Shipping (Group) and China Ocean Shipping (Group), COSCO. As a result, late in 2015, it was decided to merge these two groups into a new entity, China Cosco Shipping Corporation. Through a complicated series of swaps and transfers, specific segment activities were consolidated under one of the original groups. Thus, China Shipping s container liner activities were moved across to Coscon. Alongside Coscon, and under the China COSCO Holdings sub-group, container terminal activities were also consolidated. Moved out were dry bulk shipping to another part of the China Cosco Shipping group, as were Florens container leasing activities. These later were moved to China Shipping Container Lines who became a containership and box owning and leasing company. Although the integration officially began in March 2016, serious trade lane activities were moved across in stages over June-August. By the end of the year, the various entities took on new names with Coscon becoming Cosco Shipping Lines. One of Coscon s regional subsidiaries, Cosco Container Lines South East Asia, actually took on the name of the China Shipping entity that was merged into it, namely Golden Sea Shipping. Major Cosco/China Shipping reorganisation name changes Former name New name Cosco Container Lines Cosco Shipping Lines China Shipping Container Lines China Shipping Development Cosco Container Line South East Asia Golden Sea Shipping Dong Fang Int'l Asset Management Florens Cosco Pacific Cosco Shipping Ports China Shipping Ports Development Cosco Shipping Ports China Cosco Holdings Cosco Shipping Holdings With Coscon being a member of the CKYHE Alliance and China Shipping the Ocean Three, technically, until the Alliance change-around of April 2017, Cosco Shipping Lines was a member of two separate collaborations. Following the disbanding of these two it became a member of the Ocean Alliance together with CMA CGM, Evergreen and OOCL. The changes have not provided for an immediate respite turn around in the group s container (liner) fortunes. For 2016, China Cosco Holdings posted a net loss of USD 1.43 billion. Ocean Network Express (Virtual Rank 5; Ships 238; Capacity 1,366,000 TEU) Ocean Network Express, ONE, is an agglomeration of the three Japanese carriers NYK (capacity ranked 11th end-2016, 99 ships and 520,000 TEU), MOL (9th/79/495,000TEU) and K Line (15th/60/351,000 TEU). All three are shipping groups ac-

36 36 GLASS HALF FULL tive in a wide range of sectors so that combined, they operate around 2,200 vessels of all types. At the same time, all three have been trying to reduce their exposure to and the influence of container shipping upon their operations and results. None has met this with any great success; for the financial years, their combined operating result for container operations approximated USD -3.3 billion. These fed through into group results which, for the same period, aggregated USD -3.2 billion. Given this context, it was no great surprise when, in October 2016, the three Japanese carriers announced that they were to essentially pool their container liner operations under a new joint venture. Planned to be established as of 1 July 2017 with operations commencing the following April, based upon fleet, (contemporary) profitability and asset values, NYK will hold 38% whilst the other two will hold 31% each. The expectation is that the venture will save USD 1 billion alone from simply selecting the best supplier contracts from the three available. Ocean Network Express combination Item Total "K" Line MOL NYK 2016 revenue (USD million) 15,553 4,710 5,578 5, op. result (USD billion) net result (USD mn) -3,594-1, ,388 Agg. revenue (USD mn) 135,970 41,788 51,123 43,059 Agg. opr. result (USD mn) -3,522-1,054-1, Agg. net result (USD mn) -4,724-2,026-1,191-1,508 Carryings 2016 (TEU) 11,788 3,142 4,289 4,357 Capacity start-2016 (TEU) 1,430, , , ,000 Capacity share start % 2% 3% 2% Capacity end-2016 (TEU) 1,366, , , ,000 Capacity share end % 2% 2% 3% All figures based upon Japanese financial year(s) ending 31 March Revenue relates to container operations; net results relate to all activities. Yang Ming (Rank 9; Ships 100; Capacity 570,000 TEU) Another company showing the (early) signs of distress is Yang Ming of Taiwan. Its aggregated net loss from 2009 to the first half of 2016 amounted to USD 1.2 billion. As with others, it has engaged in asset sales albeit not on the scale or regularity of the South Korean operators for example. Yang Ming s last real bout came in 2013 when three deals for containers or shares in other companies brought in around USD 115 million. It reverted to asset sales again in Around USD 60 million was raised from selling an office building in Taipei and, in the second half of the year, at least 19,700 TEU in container equipment was put up for sale. Early in 2017 an extra 161 million shares were sold to six shareholders, including the government, which was already the largest at 35%. Hyundai Merchant Marine (Rank 13; Ships 66; Capacity 456,000 TEU) For a short while, it seemed that it would be Hyundai, not Hanjin, who would fall by the wayside, a thought the announcements of the new 2017 alliances did nothing to dispel. Whilst Hanjin was initially included in THE Alliance, Hyundai was notably absent from both the proposed THE and Ocean Alliances. Further, membership of an Alliance was a condition for Hyundai reaching any sort of agreement with creditors. Luckily, Hyundai did manage to find accommodation of sorts with an alliance, this being the 2M, but this was very much negotiated from a position of necessity and weakness. Critically, the agreement was with the two individual members of the 2M, Maersk Line and MSC, rather than the 2M as an organic body. Whilst Hyundai gained slot access to some 2M services, in return it gave up its vessel-based operations on certain East-West loops. This was managed by turning the relevant ships over to the 2M partners, Maersk Line and MSC, with the inevitable consequences for its fleet and capacity ranking. In the run-up to this state of affairs, Hyundai Merchant Marine had experienced a long-running period of net losses. From start-2009 through to the mid-point of 2016, its aggregate result approached USD -3 billion. It was also heavily indebted with USD 1.5 billion of its long-term debt due in 2016 coming on top of the USD 2.3 billion that had to be paid the year previously. Total debt of whatever sort at the end of 2015 amounted to more than USD 4.0 billion. In combating its financial situation, Hyundai embarked upon a variety of asset sales raising USD 1.6 billion in These, and others planned, were still unable to help and early in 2016, there were regular rumours of Hanjin (also struggling financially) and Hyundai being forced into a merger by, essentially, the South Korean government. For whatever reason, this did not come about; one would have to question the attractiveness of a carrier that would have generated a combined net loss (i.e. Hyundai + Hanjin) of USD 6.6 billion since What did come about was the negotiation and successful completion of Hyundai s own financial restructuring plan, one that was touted by South Korea s government as being very necessary for its survival. Hyundai received charter rate reductions of around 20-25% from shipowners, these lasting until late 2019, from out of a total USD 2 billion charter bill over the period. Half of that was covered through issuing extra shares to the shipowners, with the remainder to be repaid financially from 2022 onwards for a period of five years. Alongside, through a reverse swap of shares, the controlling Hyundai Group s stake in the carrier shrank from around 21% to a marginal 0.5%. Other creditors received shares and ultimately ended up with around 40% in Hyundai with Korea Development Bank emerging as the largest shareholder at 14%. The changes certainly gave Hyundai more hope and was boosted by the early 2017 corporate bond credit rating improvement from the equivalent of default to stable. However, an expressed hope to return to operating profit in the latter half of 2017 may be too optimistic, especially in light of Hyundai s 2016 net loss of USD 427 million. As a result, since 2008 to end-2016 it has posted an aggregate loss of USD 3.35 billion. IRISL/HDS (Rank 20; Ships 48; Capacity 102,000 TEU) The country of Iran was subject to United Nations sanctions related to its nuclear development programme since Following negotiations that were conducted in earnest over , a plan to remove these was agreed and took effect in October With the verification in January 2016 that Iran s obligations under this plan were carried out, the sanctions were lifted.

37 DYNALINERS TRADES REVIEW

38 38 GLASS HALF FULL Throughout this period, Iran s national carrier, the Islamic Republic of Iran Shipping Line, was severely hampered in its operations. Through container liner operator HDS Lines, operated capacity stayed rigidly at the 88,000 TEU level. Back in the wider international fold in 2016, IRISL, formally a shipowner chartering out to carriers HDS, Valfajre-8 and Khazar Shipping, stated an ambition to be within the Top 10 liner carriers by capacity. By the end of 2016, the IRISL group controlled 102,000 TEU in capacity, enough to place it in 20th spot. Whilst this was a jump of three places, it was purely down to events higher up the table, namely CMA CGM buying APL, Coscon integrating China Shipping s liner activities and Hanjin s bankruptcy. That being said, the more relaxed environment gave IRISL the confidence to also re-establish an orderbook. From a start point of one long-standing order for a 2,300 TEU ship at the end of 2015, one year later it had four vessels of 14,500 TEU each (others suggest it could be a series of eight ships). Even if these four were added immediately, en bloc, to its existing fleet, with all other things remaining equal IRISL/HDS would still only occupy 19th position (and only 18th if it were eight ships). The number ten spot is not unobtainable though. With further developments as the coming together of NYK, MOL and K Lines liner activities removing two protagonists net, and the consolidation moves involving Maersk/Hamburg Süd, Hapag-Lloyd/UASC, and maybe others to come, tenacity and longevity, rather than capacity accumulation, may well see IRISL end up with the Top 10. It is a quality taht has served it well in the last decade. SM Line (Rank n/a; Ships 0; Capacity 0 TEU) Emerging from the ashes of Hanjin Shipping, well, its Transpacific and intra-far East business at any rate, is SM Line. When these operations were put up for auction by the court, the surprising winner, considering container carrier Hyundai had also tendered, was dry bulk operator Korea Line Corp (KLC) and which itself entered court receivership in Two years later, it was bought by the Samra Midas Group (SM Group), and it was they who decided that building a new entity to house Hanjin s activities, SM Line, would be a better step. The company was established at the end of 2016 just before formally taking over Hanjin s Transpacific and intra-far East activities at the start of Initially, SM Line will operate 11 ships able to carry around 40,000 TEU, enough for it to be considered the 37th largest carrier by capacity. Its service portfolio covers the transpacific, northeast-southeast Asia, intra-northeast Asia service and Far East-Indian Sub Continent, this last through slots with the rest all being provided by SM Line operated tonnage. It reportedly has aims for a turnover of USD 830 million in Hanjin Since 2008, Hanjin struggled with consistent losses and heavy indebtedness. It only made a net profit in 2010 and 2015 and that latter was marginal at USD 3 million on the back of asset sales. At the mid-point of 2016, accumulated losses since 2008 had reached USD 3.7 billion. At the same point in time, longterm debt amounted to USD 1.5 billion, but more alarmingly, short-term borrowings and trade payables had ballooned to USD 3.6 billion. Following rumours of a potential merger between Hanjin and the equally distressed compatriot Hyundai, quickly denied by the latter in particular, in April 2016 Hanjin had to submit to restructuring which effectively resulted in major creditor, Korea Development Bank, taking over management of the company. Thereafter it was a case of trying to stave off a collapse through raising revenue and re-arranging its debt. These came on top of the various asset sales Hanjin had undertaken over the previous couple of years these raising at least USD 400 million. Unfortunately, at the end of August 2016, major lenders rejected a liquidity plan Hanjin had submitted, this ordered by KDB, and on 1 September 2016 the carrier filed for bankruptcy protection (administration/court receivership). This procedure is not uncommon in South Korea, especially in shipping when there have been examples of companies being under court protection for years. As such, there was no immediate reason to suspect that Hanjin was doomed based on this filing alone, even though the (financial) fundamentals weren t good. South Korea s Financial Services Commission estimated that Hanjin needed to raise at least USD 1 billion to survive the next two years. South Korean shipping examples of court receivership Pan Ocean Pan Ocean Co. Ltd., principally a dry bulk operator but with some container liner activities, operated under court receivership for just under nine years from late 1993 to Thereafter it remained under the control of its major creditor banks until 2004 when it was sold to STX to become STX-Pan Ocean. Although STX listed its new subsidiary on both Korea and Singapore stock exchanges, the whole experience was not exactly an unmitigated success as STX-Pan Ocean filed for court receivership again in mid It emerged from this half a year later without the STX prefix and before the arrival of new owners later in Heung-A Heung-A, a publicly listed company, entered administration in December 1985 and emerged almost exactly 19-years later in December 2004 having successfully applied to have that administration order removed. Supporting its own appeal were the facts that it had repaid debts and posted profits consistently since It is now a well-regarded carrier and, unlike a number of others, has managed to post a marginal aggregate profit over the period. At the time of the filing, Hanjin was the 7th largest liner operator in the world with a fleet capacity of more than 609,000 TEU from 97 container vessels. The courts in Seoul quickly ruled that all vessel charter contracts would be cancelled once they had discharged cargoes. This would leave Hanjin with a fleet of thirty-seven owned vessels, although more than twenty of those were also penned for sale. The courts also decided to sell Hanjin s Transpacific and intra-far East activities. In all honesty, it was this decision that probably sealed Hanjin s fate although the conclusion did take its time, this arriving in early At the start of this process Hanjin harboured what proved to be false hopes of continuing as an intra-far East operator once all was settled. Perhaps this hope, whilst noble, if not fanciful, illustrated the disconnect from reality that Hanjin had become. It had, in all respects, become a salvage and not a rescue operation.

39 DYNALINERS TRADES REVIEW The supply-chain contagion arising from Hanjin s demise An estimated 8,000 shippers had around 540,000 TEU in cargoes thought to be worth in excess of USD 14 billion booked on Hanjin vessels Around 750,000 TEU in containers leased-in from box owners and managers Hanjin vessels arrested for non-payment of fees, with logistics impacts along a number of supply-chains Carriers refusing to accept Hanjin operated boxes or place their own equipment on Hanjin vessels Hanjin suspended from membership of the CKYHE Alliance; other vessel sharing agreements or joint services sought replacement partners or were closed down or shortened in response to Hanjin s de facto withdrawal Many ports considered no go for Hanjin for fear of arrest Shippers were unwilling to pay out to Hanjin for fear that, ultimately, they would incur greater (prepayment) costs than those owed to Hanjin when having to recover their cargoes Stevedores reluctant or unwilling to handle Hanjin cargoes without security of payment, however, Hanjin could not pay if it was not receiving payment from shippers Hanjin boxes started to pile up ashore. Within a week, 15,000 boxes had accumulated at Los Angeles/Long Beach alone. Not just here, but overall the issues went deeper than just who pays for on-carriage to consignee and/ or storage. There were the logistics, and costs, of repatriating leased units back to owners. Total claims lodged against Hanjin from at least 3,000 parties far outweighed what was on its balance sheet at a mind-boggling (converted) USD 26 billion. At the end of the first nine months of 2016, this including one month under administration, Hanjin s accumulated loss since 2008 had exploded to USD 6.2 billion. Unsurprisingly, Hanjin s independent auditor concluded that liquidation of the troubled carrier was preferred to rehabilitation. Gradually the organisation of Hanjin wound down. Its Transpacific and intra-far East activities were taken on by the Samra Midas Group with other assets also placed on the market, not the least its signigficant terminal activities. Early in 2017, Seoul s Central District Court declared the company bankrupt. Amazingly, that was not the formal end as Hanjin s shares were still listed on the Korea Stock Exchange. Even more amazingly, throughout its troubles, some had bet on a recovery. They bet wrong: in March 2017 Hanjin was delisted from the stock exchange, its shares worth a (converted) pitiful USD 0.01 apiece. Hanjin share price development Date Event Price p.share Converted Dec-09 Listing KRW 21,300 USD Jan-11 Highpoint KRW 38,694 USD Sep-16 Administration KRW 1,240 USD 1.07 Feb-17 Bankrupt KRW 780 USD 0.67 Mar-17 Delisted KRW 12 USD 0.01 Carriers entering and leaving the shipping scene Alongside the major developments analysed already, there were many other corporate developments in In summary, those covering entrance, departures and other changes include: Carriers entering the liner shipping scene 2016 Company Month Trade(s) Neepa Paribahan Ltd. Mar Bangladesh-India Continental Shipping Line Mar Yangon-Colombo-Chennai Navemar & Marine CL Apr Mexico cabotage TVL Shipping May Taiwan-China Great Southern Shipping Australia Aug Australia-China Pilbara Express Line Aug Jurong-Dampier BMS Line Oct Malaysia domestic MSR International Shipping Co. Oct Busan-Zarubino (Russia Far East) Navemar & Multimodal Maritima Nov Mexico cabotage Pioneer Shipping CL Nov West Europe Med-North Africa Viasea Shipping AS Nov Netherlands-Norway Navemar & Multimodal is restart of Navemar & Marine service but with Navemar engaging with different partner. Great Southern Shipping closed down by year's end. CL =Container Line(s) Carriers leaving the liner shipping scene 2016 Company Month Trade(s) Navemar & Marine CL May Mexico cabotage Peruvian Amazon Line Aug Peru (Amazon)-US/Mexico (Gulf) TKN Operator Shipping Line Aug Northern Spain-Antwerp US Lines (CMA CGM brand) Oct Transpacific/Australasia (nvocc) Great Southern Shipping Dec Australia-China Other carrier changes 2016 Company Change Result Finnlines Shareholding Grimaldi now owning 100% Orient Express Lines (Transworld Group) Renamed as Transworld Feeders Polynesian Line (Neptune Pacific/Govt of Samoa) Merged into Pacific Forum Line (Neptune Pacific) Alliances A new dawn Alliances, pre-april 2017 And so it came to be: 2015 and 2016 did turn out to be the eye of an Alliance storm encircled as it was by the upheavals of 2014 (as experienced) and 2017 (as foretold). By way of reminder, in essence, 2014 started with three Alliances and ten members but ended with four alliances, or similar, and sixteen members: Alliances structure start-2014 Alliance CKYH Alliance Grand Alliance New World Alliance Members Coscon, "K" Line, Yang Ming, Hanjin Hapag-Lloyd, NYK, OOCL APL, Hyundai, MOL Alliances structure start-2015 Alliance Members CKYHE Alliance Coscon, "K" Line, Yang Ming, Hanjin, Evergreen G6 Alliance APL, Hapag-Lloyd, Hyundai, MOL, NYK, OOCL Ocean Three China Shipping, CMA CGM, UASC 2M Maersk Line, MSC For all intents and purposes, this is how the situation stayed through 2015 and the eye of the storm. By the end of that period, change was already in the air following announcements that three of the existing arrangements would be replaced by two new ones in 2017: Alliances structure April 2017 Alliance Members THE Alliance (new) CMA CGM, Cosco Shipping, Evergreen, OOCL Ocean Alliance (new) Hapag-Lloyd, K Line, MOL, NYK, Yang Ming 2M (unchanged) Maersk Line, MSC As well as one fewer Alliance, the number of carriers active in the Alliance systems were cropped to eleven carriers in total. Part of this reduction came from corporate developments, principally, the acquisition of APL by CMA CGM and the transfer of China Shipping s container liner activities to Coscon, becoming Cosco Shipping Line. These two moves actually impacted three of the existing arrangements as CMA CGM and China Shipping were part of the Ocean Three, APL was part of G6, and Coscon was part of CKYHE. A by-product of these developments was that through their acquisitions both (the new) Cosco Shipping and (the enlarged) CMA CGM ended up as members of two separate arrangements. A reorganisation of the alliance system was, therefore, not a surprise. Two others who missed out were the South Korean carriers of Hanjin and Hyundai. Initially, Hanjin was put forward as a member of THE Alliance. However, its filing for administration (bankruptcy protection) in September 2016 effectively rendered that null and void, a fact made moot with the liquidation and delisting of Hanjin early in Hanjin had, concurrent with it en-

40 40 GLASS HALF FULL tering administration, been suspended from CKYHE, which by then and alike the G6 and Ocean Three alliances, had become a lame duck organisation. Ironically, Hanjin s proposed inclusion in THE Alliance was viewed as putting it at a distinct advantage when compared with compatriot Hyundai who was also struggling with financial issues. For Hyundai, membership of an Alliance was a prerequisite for its rescue package and the signing of a Memorandum of Understanding to join 2M, albeit this occurring just after negotiations with creditors had been concluded, seemed to serve the purpose. As it turned out though, Hyundai s membership was anything but full, and in all honesty, it ended up with a slimmed down vessel-based presence on the East-West trades compared with the situation ante. The final carrier missing from the new situation was UASC, previously of the Ocean Three. However, it was covered, to a degree, by virtue of the agreed, but not completed, merger with Hapag-Lloyd. Alliances, post-april 2017 Ocean Alliance Announcements regarding the proposed formation of the Ocean Alliance were made in April The four members, CMA CGM, Cosco Shipping, Evergreen and OOCL came from existing arrangements, namely the Ocean Three (CMA CGM and Cosco, this through China Shipping), G6 (OOCL) and CKY- HE (Cosco/Coscon and Evergreen). All told the Ocean Alliance membership, including their pending acquisitions (APL by CMA CGM) or mergers (China Shipping into Coscon), could pool together a vessel fleet capable of carrying 5.4 million TEU. By way of comparison, 2M at the time (April 2016) could carry 5.7 million TEU. Having filed its agreement with the US Federal Maritime Commission, approval was given for the Ocean Alliance in November 2016 although it had to concede on jointly negotiating contracts with suppliers. A precedent regarding this had already been set back in 2014, as a similar concession was a stipulation of the FMC in passing the P3 Network. The Ocean Alliance has a duration of five years with an option to extend by another five years. Notice period is one year but cannot be given until March 2021 (i.e. the four-year point). Its service network covers the Transpacific (twenty service loops, thirteen to the West Coast); Far East-Europe (eleven services, six to North Europe), Transatlantic (three services, two to North Europe) and the Far East-Middle East (seven services, five to the Gulf). THE Alliance The announcement of the Transportation High Efficiency Alliance (THE Alliance), which alike 2M is formally a vessel sharing agreement, was made in May 2016, a month after the Ocean Alliance had been presented to the world. At the time, THE Alliance planned to comprise Hapag-Lloyd, MOL, NYK from G6, and Hanjin, K Line and Yang Ming from CKYHE. A few months later, when THE Alliance announced its service package, Hanjin was omitted having, in the meantime, filed for bankruptcy protection. The omission of UASC from any of the post-april 2017 Alliances was also noteworthy. However, considering that UASC had agreed to merge into Hapag-Lloyd, its contributions to THE Alliance services were covered through Hapag-Lloyd as if the merger had already taken place. It was initially expected that the integration of the two would have taken place before the THE Alliance took effect, but this was not to be. ZIM, never a member of any alliance, did have an established bilateral services relationship with the G6 Alliance and Grand Alliance before it though. In light of the (pending) changes it arranged a services relationship with THE Alliance along the Transatlantic (Mediterranean) trade. THE Alliance brought Japan s three major carriers, K Line, MOL and NYK, together in a strategic grouping for the first time. Whether by design or not, the announcement provided a virtual template for a broader collaboration of the three whereby they will pool their collective resources into a joint container liner venture. It will not be an overnight creation though: announced in October 2016, it is envisaged that operations will only commence in April United States Federal Maritime Commission approval for THE Alliance was received late in It has an initial duration of five years with one year optional extension. Any party wishing to leave must give one year s notice but this cannot be issued before April 2020 (i.e. at three years). THE Alliance s service network covers the Transpacific (sixteen service loops, eleven to the West Coast); Far East-Europe (eight services, five to North Europe), Transatlantic (six, five to North Europe) and the Far East-Middle East (one service). 2M The 2M is a vessel sharing agreement that commenced operations on 10 January Originally, it came from the ashes of what was the proposed P3 Network of CMA CGM, Maersk and MSC and which was bounced back by Chinese regulatory authorities in mid A mere month after that, Maersk and MSC announced they planned to come together in the form of the bilateral 2M. In stark contrast to the much more regimented and centralised P3, the 2M is a looser arrangement, which was advantageous when undergoing regulatory scrutiny. Vessels and network are shared with voyage planning, stowage and port operations conducted individually, although there is a Joint Coordination Committee that meets daily. The agreement has an initial duration of ten years with a notice period of two years should one party wish to leave although this will only take effect at the year-eight point even if issued before then. Its service network covers the Transpacific (eleven service loops, six to the West Coast); Far East-Europe (nine services, five to North Europe), Transatlantic (five services, three to North Europe). This setup has been subject to some amendment concurrent with the creation of the Ocean and THE Alliances. Late in 2016 the individual 2M members, an important distinction from 2M as a single body, arrived at a services and vessel sharing agreement with Hyundai along 2M s trades. Although less than the full membership the South Korean carrier dearly wanted, it was perhaps better than nothing, even considering the price to be paid. The agreement (agreements), which has (have) an initial duration of three years, see Hyundai withdrawing from the Far East-Europe trade and Far East-US East Coast trades and MSC and Maersk take over operations of nine 10,000+ TEU chartered in vessels Hyundai deployed along the Far East-Europe route. In return, Hyundai receives slot allocations from a range of 2M services. Alongside, Hyundai will operate three Transpacific (West Coast) services on a standalone basis, occupying 19 vessels, from which Maersk and MSC receive slot allocations.

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42 42 GLASS HALF FULL Figure 12 LINER OPERATORS AND THEIR SUBSIDIARIES Liner shipping groups and their main operating subsidiaries, sister companies or brands, effective June 2016 By Parent A.P. Møller-Mærsk A/S, Copenhagen, Denmark Maersk Line, Copenhagen, Denmark MCC Transport, Singapore Mercosul Line Navegação e Logística, Sao Paulo, Brazil Safmarine Container Lines, Copenhagen, Denmark Seago Line, Copenhagen, Denmark SeaLand, Miramar, United States China Navigation Company, London (John Swire & Sons Ltd., London) China Navigation Company/Swire Shipping, Singapore Greater Pacific Shipping, Auckland, New Zealand Pacifica Shipping, Lyttelton, New Zealand Polynesia Line, San Francisco, USA CMA CGM, Marseilles, France ANL Container Line, Melbourne, Australia APL, Singapore Cheng Lie Navigation, Taipei, Taiwan Feeder Associate Systems, Marseilles, France MacAndrews & Co, London, UK OPDR, Hamburg, Germany Cosco Shipping Holdings, Shanghai, China CoHeung Marine Shipping Co, Seoul, South Korea Cosco Shipping Lines, Shanghai, China Golden Sea Shipping, Singapore Shanghai Panasia Shipping Co, Shanghai, China Dr. Oetker, Bielefeld, Germany Hamburg Süd, Hamburg, Germany Aliança Navegaçao e Logistica, Sao Paulo, Brazil CCNI, Hamburg, Germany Eimskip Island ehf, Reykjavik, Iceland Eimskip Island, Reykjavik, Iceland Eimskip Norway, Sortland, Norway Faroe Ship, Tórshavn, Faroe Islands Evergreen Line, Taipei, Taiwan Evergreen Marine Corporation, Taipei, Taiwan Italia Marittima SpA, Trieste, Italy Grimaldi Compagnia di Navigazione, Naples, Italy Atlantic Container Line, Westfield, New Jersey, USA Finnlines Plc, Helsinki, Finland Malta Motorways of the Seas, Valetta, Malta IRISL, Teheran, Iran HDS Lines, Teheran, Iran Valfajre Eight Shipping, Teheran, Iran Khazar Shipping, Bandar Anzali, Iran John T. Essberger Group Deutsche Afrika-Linien, Hamburg, Germany United Africa Feeder Line, Port Louis, Mauritius Matson Navigation, Honolulu, Hawaii Matson South Pacific, Auckland, New Zealand Pacific International Lines, Singapore Advance Container Lines, Singapore Pacific Direct Line, Auckland, New Zealand Pacific Eagle Lines, Singapore Mariana Express Lines, Singapore Peel Ports, Manchester, UK BG Freight Line B.V., Rotterdam, Netherlands Coastal Container Line Ltd, Liverpool, UK Regional Container Lines, Bangkok, Thailand Siam Paetra, Bangkok, Thailand Samskip Holding B.V., Rotterdam Samskip hf, Reykjavik, Iceland Samskip Multimodal Container Logistics, Rotterdam, Netherlands Samudera Indonesia, Jakarta, Indonesia Samudera Shipping Lines, Singapore Schöller Holdings, Limassol, Cyprus Austral Asia Line, Singapore Bengal Tiger Line, Singapore New Pacific Line, Singapore Sinotrans CSC Group Corporation, Beijing, China Sinotrans Container Lines, Shanghai, China Lufeng Shipping Co. Ltd, Qingdao, China By subsidiary Advance Container Lines Aliança Navegaçao e Logistica ANL Container Line, Atlantic Container Line APL Austral Asia Line Bengal Tiger Line BG Freight Line B.V. CCNI Cheng Lie Navigation Coastal Container Line Ltd CoHeung Marine Shipping Co Cosco Shipping Lines Deutsche Afrika-Linien Eimskip Island Eimskip Norway Evergreen Marine Corporation Faroe Ship Feeder Associate Systems Finnlines Plc Gold Star Line Golden Sea Shipping Greater Pacific Shipping Hamburg Süd HDS Lines Interasia Lines Italia Marittima SpA Khazar Shipping Lufeng Shipping Co. Ltd MacAndrews & Co Maersk Line Malta Motorways of the Seas Mariana Express Lines Matson South Pacific MCC Transport Mercosul Line Navegação e Logística New Pacific Line OPDR Orient Express Lines Ltd Pacific Direct Line Pacific Eagle Lines Pacifica Shipping Polynesia Line Safmarine Container Lines Samskip hf Samskip Multimodal Cont. Logistics Samudera Shipping Lines Seago Line SeaLand Shanghai Panasia Shipping Co Shreyas Shipping Ltd Siam Paetra Sinotrans Container Lines Swire Shipping United Africa Feeder Line Unimed Feeder Services Valfajre Eight Shipping, Teheran, Iran Transworld Group, Dubai. UAE Orient Express Lines Ltd, Dubai, UAE Shreyas Shipping Ltd, Mumbai, India Unifeeder, Aarhus, Denmark Unimed Feeder Services, Limassol, Cyprus Wan Hai Lines Ltd. Taipei, Taiwan Interasia Lines, Tokyo, Japan ZIM Integrated Shipping Services, Haifa, Israel Gold Star Line, Hong Kong Pacific International Lines Dr. Oetker CMA CGM Grimaldi Compagnia di Navigazione CMA CGM Schöller Holdings Schöller Holdings Peel Ports Dr. Oetker CMA CGM Peel Ports Cosco Shipping Holdings Cosco Shipping Holdings John T. Essberger Group Eimskip Eimskip Evergreen Line Eimskip CMA CGM Grimaldi Compagnia di Navigazione ZIM Integrated Shipping Services Cosco Shipping Holdings China Navigation Company Dr. Oetker IRISL Wan Hai Lines Evergreen Line IRISL Sinotrans CSC Group Corporation CMA CGM A.P. Møller-Mærsk A/S Grimaldi Compagnia di Navigazione Pacific International Lines Matson Navigation A.P. Møller-Mærsk A/S A.P. Møller-Mærsk A/S Schöller Holdings CMA CGM Transworld Group Pacific International Lines Pacific International Lines China Navigation Company China Navigation Company A.P. Møller-Mærsk A/S Samskip Holding Samskip Holding Samudera Indonesia A.P. Møller-Mærsk A/S A.P. Møller-Mærsk A/S Cosco Shipping Holdings Transworld Group Regional Container Lines Sinotrans CSC Group Corporation China Navigation Company John T. Essberger Group Unifeeder IRISL

43 DYNALINERS TRADES REVIEW Figure 13 CONFERENCES AND DISCUSSION AGREEMENTS Code AADA ABC ACTA AFDA AFDG ANZDA ANZUSDA ASA/SERC AWATA AWCSA BOBCON CADA CALFO CTSA CFTC CSA CWTSA IADA IRA IRSA ISAA JPFC JSPFC KNFC LAA PDA SEASA/ATFA TAFBOA TAFLO TFA TFG TSA VDA WCSADA YLSC Full Name Asia Australia Discussion Agreement ABC Discussion Agreement Asia to Caribbean Trade Agreement Australia Fiji Discussion Agreement Asian Feeder Discussion Group Asia New Zealand Discussion Agreement Australia/New Zealand Discussion Agreement Asian Shipowners Association/Shipping Economics Review Ctee Asia-West Africa Trade Agreement Asia-West Coast South America Freight Conference Bay of Bengal/Japan/Bay of Bengal Conference Central American Discussion Agreement Calcutta Feeder Operators Canada Transpacific Stabilization Agreement Chittagong Feeder Trade Committee Caribbean Shipowners Association Canada Westbound Transpacific Stabilization Agreement Intra-Asia Discussion Agreement Informal Rate Agreement Informal Red Sea Agreement Informal South Asia Agreement Japan/Philippines Freight Conference Japan/South Pacific Freight Conference Korea Nearsea Freight Conference Latin America Agreement Pacific Islands Discussion Agreement South East Asia and South Asia/Australia Trade Facilitation Agmt Trans-Pacific American Flag Berth Operators Agreement Trans-Atlantic American Flag Liner Operators Australia/North and East Asia Trade Facilitation Agreement Australia/South East Asia and South Asia Trade Facilitation Agmt Transpacific Stabilization Agreement Venezuela Discussion Agreement West Coast of South America Discussion Agreement Yellow Sea Liners' Committee Notes: Overview of Conferences, Discussion Agreements and other relevant groupings of which the members are allowed, in some form and depending on the relevant jurisdiction, to fix or recommend or discuss rates and surcharges and to manage or discuss capacity For members and their web links, please visit Figure 14 CARRIER GROUPINGS Name and members Box Club - International Council of Containership Operators ANL, CMA CGM, CoscoSL, Crowley, Evergreen, Hamburg Süd, Hapag-Lloyd, Hyundai, K Line, Libra, Maersk Line, MOL, MSC, Norasia, NYK, OOCL, PIL, UASC, Wan Hai, Yang Ming, ZIM Global Shippers' Forum (GSF) Australian Peak Shippers Association, Canadian Industrial Transportation Association, Consejo de Cargadores, Freight Transport Association, National Industrial Transportation League, New Zealand Shippers Councils, South African Shippers Council, Union of African Shippers' Councils Ocean Carrier Equipment Management Association Agreement ACL, APL, Allianca, China Shipping, CMA CGM, CSAV, Coscon, Evergreen, Hamburg Süd, Hapag-Lloyd, Hyundai, "K" Line, MOL, MSC, NYK, OOCL, UASC, Wan Hai, Yang Ming, Wan Hai, ZIM Heavy Lift Club (Int. Council of Heavy Lift and Project Cargo Carriers) Austral Asia Line, Asia Break Bulk, BBC Chartering, Chipolbrok, Hanssy Shipping, Industrial Maritime Carriers, J. Poulsen Shipping, Ocean7 Projects, Peter Döhle, Rickmers Linie/NPC Projects, SE Shipping World Shipping Council (WSC) A.P. Moller-Maersk, Coscon, CMA CGM, Crowley, Evergreen, Hamburg Süd, Hanjin, Hapag-Lloyd, Hyundai, ICL, "K" Line, MSC, MOL, NYK, OOCL, PIL, TOTE Inc., UASC, Wallenius Wilhelmsen Logistics, Wan Hai, Yang Ming, ZIM Trident Alliance American Roll-on Roll-off carriers, Ardmore, Biglift, Cargill, Crowley, DFDS, EML, Eukor Car Carriers, DS Norden, Fjord Line, Grieg Star, Hamburg Süd, Hapag-lloyd, Hoegh Autoliners, Intermarine, Ionic, J. Lauritzen, Maersk Line, Maersk Tankers, Marinvest, Nordic Tankers, Rickmers-Linie, Scandlines, Scorpio, Seatrade, Solvang ASA, Spliethoff, Stena, Torval Klaveness, Transfennica, UECC, Ultrabulk, Ultragas, Ultratank, Unifeeder, Wallenius Wilhelmsen Logistics, Wilh. Wilhelsen, Wijnne Barends Figure 15 COMMON CARRIER E-PLATFORMS Name and members Cargosmart Lines: ANL, Cheng Lie, CMA CGM, Coscon, Evergreen, Hapag-Lloyd, ICL, K Line, Maersk Line, Matson, MCC Transport, MOL, MSC, NYK, OOCL, Seago Line, Yang Ming GT Nexus Lines: APL, CMA CGM, Crowley, Emirates Shipping, Hanjin, Hapag-Lloyd, Hyundai, ICL, K Line, Maersk Line, MOL, NYK, Seaboard Marine, Yang Ming, ZIM INTTRA Lines: Aliança, ANL, APL, CMA CGM, Cheng Lie, Containerships, DAL, Dole, Emirates Shipping, Evergreen, Grimaldi, Hamburg Süd, Hapag-Lloyd, ICL, Intermarine, K" Line, Maersk Line, Marfret, MCC Transport, MOL, MSC, NileDutch, NYK, PIL, Safmarine, UASC, WEC, Yang Ming, ZIM

44 44 GLASS HALF FULL RegulationS New Alliances Given that the new Ocean Alliance (CMA CGM, Cosco Shipping, Evergreen, OOCL) and THE Alliance (Hapag-Lloyd, K Line, MOL, NYK, Yang Ming) commenced operations as planned in 2017, those overseeing the (anti-)competitiveness of such arrangements clearly had no major objections. That being said, the Ocean Alliance had to give up its proposed joint procurement aspect to receive approval from the United States Federal Maritime Commission (FMC). It was actually a surprise to see it included in the original filing. In 2014 when the FMC approved the proposed P3 Network (CMA CGM, Maersk and MSC), the removal of a similar joint procurement aspect was also required, so why would it succeed now when only a couple of years earlier it did not? Still, that was all and the Alliance sailed on as planned. Raids and more After what was a long gestation it seems in some jurisdictions that anti-trust investigations proceed at glacial speed a resolution was arrived at with regards to the European Commission s investigation into certain liner behaviour. In mid-2011, the offices of fifteen major carriers were raided by the Commission, which resulted, as from late 2013, in a formal investigation surrounding so-called signalling of price rises through General Rate Increases. Suspicion was aroused by the carriers regularly announcing similar rate rises at around the same time. Under an agreement proposed by the carriers and concluded in 2016 with the European Commission, carriers will now have to publish binding maximum rates 31 days in advance. The point of difference here is that announcements relate to maximum rates rather than simply the magnitude of rate increases. Essentially, General Rate Increases, as they were, no longer exist in Europe. From the Commission s side, no wrongdoing against the carriers was found and none faced punitive action. Another case was that of Russia s Federal Anti-monopoly Service (FAS). It opened an investigation in 2013, and at the end of 2015 found that five carriers, CMA CGM, Evergreen, Hyundai, Maersk Line and OOCL, had co-ordinated surcharges on rates between the Far East and Russia. They were fined a total of USD 22.5 million. Maersk and Evergreen unsuccessfully appealed although Maersk, at least, managed to subsequently negotiate a much-reduced fine the following year. Elsewhere, in 2016 the relevant authorities in Peru and South Africa took the initial steps towards any proceedings. In addition, whilst 2017 was still in its first quarter, the United States Department of Justice raided a meeting of the International Council of Containership Operators (the Box Club) serving subpoenas on its members, the leadership of the world s largest carriers, in connection with an unspecified investigation. Anti-trust interest in liner shipping Authority When Closed Carriers European Commission 2011 (mid) Russia, Federal Anti-monopoly Service South Africa, Competition Commission of 2013 (Q1) 2016 No (mid) Peru 2016 (Q1) United States, Department of Justice 2016 (mid); agreement with carriers to publish max. rates 31 days in advance, no wrongdoing found 2015 (end); five carriers* guilty of co-ordinating surcharges No 2017 No (Q1) China Shipping (as was, now Cosco Shipping Lines); CMA CGM, Coscon (as was, now Cosco Shipping), Evergreen, Hamburg Süd, Hanjin, Hapag-Lloyd, Hyundai, OOCL, Maersk Line, MOL, MSC, NYK, UASC, ZIM CMA CGM* (and APL), China Shipping (as was), Coscon (as was), Evergreen*, Hyundai*, K Line, Maersk Line*, MSC, NYK, OOCL*, ZIM CMA CGM, Hamburg Süd, Maersk Line, MSC, PIL CMA CGM (and APL), Hapag-Lloyd, Hamburg Süd, K Line, Maersk Line, MOL, MSC, NYK Regulators raid meeting of the Box Club; members (leaders of major liner companies) served with subpoenas

45 DYNALINERS TRADES REVIEW

46 46 GLASS HALF FULL Ports North America ports, terminals and arteries Canada conundrum Canada might be considered a steady and unspectacular country in terms of container shipping, and in keeping with such a (mis)conception, in 2016 the main East coast port of Montreal commissioned its first new terminal in over 30 years, the 350,000 TEU first phase of the Viau Terminal. A further phase will add another 250,000 TEU bringing the port s total capacity up to 2.1 million TEU. With a 2016 throughput of 1.3 million TEU, Montreal s expansion might appear to have come just in time. However, the port s 10-year compound annual growth rate is only 0.4 percent. If maintained going forward, then it will take a very long time before the port reaches 2.0 million TEU handled. There could be another threat to this slow and steady development from two new port projects in Nova Scotia. The first is Sydney, about 300 kilometres to the north and east of Halifax. The so-called Novaporte project (it was only named that in 2016) dates back to the previous decade and even got so far as to finish dredging the access channel back in Novaporte is to be built on 200 hectares of reclaimed land with space for a 1,600-metre quay line and the ability to handle 18,000 TEU vessels. The construction contract has conditionally been awarded to China Communication Construction Corporation, but work has yet to get started. Late in 2016, Ports America signed an agreement with Sydney Harbour Investment Partners to promote, develop and manage the port. Sydney is located on Cape Breton Island, the north west coastline to be precise. Cape Breton Island is separated from mainland (peninsula) Nova Scotia by the Strait of Canso, which is around 110km to the south west of Sydney. This Strait houses the second port project, i.e. Melford, mainland Nova Scotia, and which also saw some progress in The plan to build a port at Melford has also been around since at least the last decade with initial hopes to start operations in Arguably, it is behind Sydney in terms of progress and required authorisation from the government of Nova Scotia in 2016 to extend the deadline for the commencement of work until October Maher Terminals had been part of the Melford project as the prospective terminal operator, at the least, since 2010 but in 2016, SSA Marine took its spot. The whole project, now renamed Melford Atlantic Gateway, will be set on 127 hectares and have a capacity of around 1.5 million TEU. It also hopes to attract the largest of containerships. Therein lies the problem for both projects: attracting business. Their completion may be conditional upon attracting an anchor customer. Unfortunately, it s not as if there is much business to go around and neither are blessed with the most crowded of immediate hinterlands. Even if the entire East Coast of Canada were counted, the cargoes are clearly unable to sustain such a boost in port capacity. Total handlings along this coastline only amounted to 1.9 million TEU in The 10-year compound annual growth rate was less than 1%. On top of weak background volumes growth, and surely vital in lieu of extensive captive hinterlands, neither Sydney nor Melford are connected to the Canadian rail network. In contrast, Halifax, Nova Scotia s main and east Canada s second port (480,000 TEU handled in 2016), is. Who would want to back or build a port without an anchor customer? Yet who would want to patronise a port that were not connected to a major railway? And who would want to develop rail connections without guarantees a port would be built and, more importantly, be patronised? Canada East Coast, main ports throughput, TEU Halifax 480, , , ,200 Montreal 1,336,300 1,446,100 1,402,400 1,356,800 St John (NB) 90,300 97,100 89,600 76,300 Total 1,907,300 1,961,500 1,892,100 1,875,300 Growth -3% +4% +1% +2% Indian Sub Continent India s encirclement? China s much discussed and impressive One Belt One Road (OBOR) project of ports and hinterland infrastructure development reaching from China all the way up to Europe by both inland and ocean means has clear geopolitical considerations. The ocean element, the Maritime Silk Road, places Chinese soft investment, development and construction power at various points in the Indian Ocean whilst, at the same time, leaving the feeling that India has been bypassed, literally. Any sense of India being bypassed (arguably encircled) is only heightened by Chinese involvement in both Pakistan to the west and Sri Lanka to the east. In 2016 test operations commenced at Gwadar International Terminal and Pakistan Deepwater Container Port (Karachi), both in Pakistan. The former is operated by China Overseas Port Holding - it was originally a PSA operated terminal - and will have a 500,000 TEU initial capacity. Hutchison Ports of Hong Kong is involved in the Pakistan Deepwater project of million TEU. Gwadar, the anchor of the China-Pakistan Economic Corridor, is fairly isolated being 60 kilometres from the border with Iran. A further 200 kilometres to the west of Gwadar is the port of Chabahar, Iran. In, perhaps, an attempt to avoid geopolitical (geo-port-al?) encirclement or outflanking, a joint venture of Jawaharlal Nehru Port Trust and Kandla Port, together with a local Iranian company, will refurbish and operate the container facilities there. Indeed, a Memorandum of Understanding regarding the port s development was signed in To the East of India, in Sri Lanka, Chinese involvement in the island nation s main port of Colombo is well known. Less well known is its involvement in Hambantota in the south of the country. This latter was in fact a large project that included an airport. It was developed with Chinese assistance and China Merchants was awarded the port concession. However, both air and seaports have failed to attract much in the way of traffic. It seems that Sri Lanka was aware of possible Indian sensibilities regarding purely Chinese involvement with port projects. For example, Sri Lanka is also keen to develop Trincomalee on the island s (north) east coast and was looking for foreign investment and assistance with Japan and India mentioned in these contexts. In fact, early in 2017 the Sri Lankan government confirmed that negotiations regarding Indian involvement were close to being finalised. The courting of Indian assistance was interpreted as offering a geo-political/strategic balance to the presence of China and Chinese interests in Sri Lanka. However, soon after Sri Lanka s pronouncements regarding negotiations, they were denied by India saying it had no interest in developing the port.

47 DYNALINERS TRADES REVIEW

48 48 GLASS HALF FULL The effort is certainly being made by Sri Lanka to encourage Indian participation in port projects. Late in 2016, the government actually amended the tender conditions for the Build-Operate-Transfer contract for Colombo s new East Container Terminal. The change requested the bidding consortia to include Indian representatives. As a result, Tata Realty and Infrastructure, Shapporji Pallonji and Concor are now all part of one consortium each. which has a projected 1.8 million TEU capacity from phase I. In 2016, the Indian Government approved the development of the grandly named Enoyam International Container Transhipment Terminal. Costing perhaps as much as USD 4.0 billion in total, its phase I development will boast a capacity of 1.6 million TEU and is aimed at both regional gateway traffic and East-West transhipment cargoes. It is, however, only 30km to the southwest of Vizhinjam. Prosperity begins at home India, for its part, has its own port-based logistical development programme. Called the Sagarmala Project or Plan, rather than projecting investment, commercial and engineering power abroad, this is much more insular, a domestic issue. The aim of the Sagarmala Project is reduce India s logistics costs to around 10% of national GDP from the current 14-18%. In industrialised countries the share is around 7-9%. To that end, in December 2016, the Sagarmala Development Company was inaugurated. Its role is to identify, co-ordinate, monitor and invest in Sagarmala projects, including any already underway. The projects themselves will be implemented by ports or regional government bodies through purely private or Public-Private-Partnership means. By the end of the Indian financial year (March 2017), 415 projects had been identified covering new port development, port modernisation, port-linked industrialisation, port connectivity and coastal development. Six new port projects were identified including Vadhaven (Mumbai) and Enayam (southern tip of India), of which more later. In total, up to around USD 11 billion will be spent on port developments with more to be spent on the hinterland. Too much capacity built in too little space Southwest and Eastern India have certainly been left behind by the development of Colombo in Sri Lanka with around 70% of that port s activity (2016 throughput: 5.7 million TEU all told) said to be related to Indian (transhipment) cargo in one form or another. Indian national and regional governments would much prefer that cargo to come directly to India and a variety of container terminals have been developed in the hope of attracting more India related and/ or mainline transhipment cargoes. Unfortunately, results have not been all that good. The International Container Transhipment Terminal in Vallarpadam (Kochi), south-west India, which was inaugurated in 2011, only sees around 5% of its throughput as transhipment In 2012 the 1.2 million TEU Kattupalli container terminal, located on India s east coast and just to the north of Madras, was commissioned. It took a year to be called by its first regular commercial service and saw its operator, ICTSI, withdraw due to lack of volumes in Thereafter it fell under the control of the port s owners, Larsen & Toubro. Although business has been growing, handlings still only reached 115,000 TEU for the financial year to April During 2016, Kattupalli was taken on by port operator Adani Ports and Special Economic Zones (ASPEZ). Considering the port s background, this could be considered quite a brave move, especially as ASPEZ is also developing the delayed Ennore Container Terminal, a brand new 1.5 million TEU terminal barely 10km to the south of Kattupalli. It barely seems conceivable that unless there is a wholesale change in mainline carrier behaviour, there will be enough (gateway) cargo for one let alone both of these terminals. A similar situation may occur on the south western tip of India where ASPEZ is also busy developing a port in Vizhinjam, Middle East A diplomatic encirclement In mid-2017, the Gulf state of Qatar suddenly found itself in the middle of a diplomatic dispute with neighbours Saudi Arabia, the United Arab Emirates and Bahrain, plus Egypt, (Eastern) Libya, the Maldives and Yemen. This had an impact upon shipping as those countries refused entry to any vessels sailing to or from Qatar. Suddenly, Qatar was somewhat isolated with a number of carriers (temporarily) suspending bookings to the country whilst alternative routes were considered. These alternatives came principally from transhipment via the Omani ports of Salalah on the Arabian Sea and Sohar, on the Gulf of Oman. In fact, Sohar received patronage from the Ocean Alliance s China India Middle East Express 3 after it removed the call to Qatar s still relatively new port of Hamad. The dispute and compensatory measures undertaken by carriers could give Sohar a further boost in its aim to be not only a transhipment port but, with brand new connecting infrastructure, also a gateway port far beyond its own country. The multipurpose port is a joint venture between the government and the Port of Rotterdam and in 2016 received four remotely steered Ship-to-Shore cranes capable of handling 20,000 TEU vessels for its Oman International Container Terminal. Handlings in 2016 showed a healthy 15% growth to 619,000 TEU; those in 2015 (536,000 TEU) were 62% up. Whilst still a way behind compatriot Salalah (3.3 million TEU in 2016) and regional powerhouse Dubai (14.8 million TEU), it has come a long way from the 8,200 TEU handled in Australasia Having been the subject of much local discussion, debate and parliamentary delay, in 2016 the tender for the 50-year concession for the port of Melbourne was finally launched. Bidders included China Merchants and a number of different consortia with one of those, the so-called Lonsdale consortium of the Australia federal government s Future Fund together with QIC, Global Infrastructure Partners and Ontario Municipal Employees Retirement System, ending up as winners. Their offer was equivalent to USD 7.3 billion which compares with an initial tender price of USD 4 billion. Mediterranean After what seemed like a tortuous process, the port of Piraeus was finally privatised. Yet even with all hurdles apparently overcome, this story still had the capacity to surprise (if not frustrate) right up to the very end. In April 2016, with the share purchase agreement signed between the Greece s privatisation body and the purchasers, China Cosco Shipping, Greece s Shipping Minister expressed opposition to the whole idea. Considering that the agreement was still subject to Parliamentary approval, this intervention was symptomatic of a saga that could still be derailed right at the very end. And so it nearly came to be: the Bill presented to Parliament appeared to show amendments that were not part of the agreement, much the dissatisfaction of China Cosco Shipping.

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50 50 GLASS HALF FULL With the potential for maximum political embarrassment, as Greece s Prime Minister was about to embark on a visit to China with the Piraeus deal to be portrayed as a centrepiece of Sino-Greco co-operation, these changes were quickly removed and eventually, the transfer took place. Initially Cosco received a 51% share of the port. It will rise to 67% five years later, conditional upon the mandatory investment of USD 400 million. In contrast, privatisation of Limassol on Cyprus proceeded relatively smoothly. With at least fourteen bids received, a consortium of Eurogate (60%), Interorient Navigation Company (20%) and East Med Holdings (20%) won the concession for the 500,000 TEU container terminal. The transfer to the winning party took place early in Far East Alike India, throughout the major economies of South East Asia there seems to be an explosion of general infrastructure projects including major, if not mega, port developments. Indonesia The 1.5 million TEU capacity New Priok Container Terminal 1 was inaugurated in the second half of A joint venture of state-owned stevedore Pelindo II together with Mitsui & Co, NYK and PSA, this terminal was the first of the larger Kalibaru port development to be completed. All told, this development, part of Tanjung Priok (Jakarta), will accommodate seven container-handling facilities with a total capacity of 12.5 million TEU. The Indonesian government also approved the development of Patimban port around 160km east of Jakarta/Tanjung Priok. Construction is due to begin in 2017 with phase I finishing two years later. Initial capacity will be 250,000 TEU but this could rise to 7.5 million TEU by In addition, on the island of Borneo, Pelindo II (again) plans to develop a 500,000 TEU container facility at Kijing Beach to help relieve Pontianak which only has a capacity of around 217,000 TEU. Malaysia Staying on Borneo, but then on the East Malaysia side, the Sapangar Bay Container Terminal expansion is expected to start work in 2017 and be completed in Handling capacity in the port will increase by 750,000 TEU to 1.25 million TEU. This development is targeted at Malaysian cargoes and not Indonesia hinterland or transhipment cargoes. In contrast, transhipment is what mainland Malaysia appears to be targeting seriously with a variety of projects and developments that could be seen as (scattergun) responses to developments in Singapore. They are very ambitious plans, which, as always, carry their own health warnings as to authorisation, progress and, even if complete, success: Kuantan: located on Malaysia s eastern coastline, facing the South China Sea, is developing its Deep Water Port. Aimed at dry bulk and container vessels it will be able to service 18,000 TEU ships instead of the current 3,000 TEU ships to which it is limited. It hopes to be able to attract transhipment traffic. Carey Island: is the proposed site of a multipurpose port to be developed by Port Kelang. A 20-year project that could start construction in 2017, it will also and ultimately incorporate 30 million TEU container handling capacity Melaka Gateway Project: to be developed by local and Chinese interests, these including Yantian Port Group and Rizhao Port Group, this is a USD 1.9 billion multipurpose port located on the island of Pulau Melaka in the Strait of Malacca and will include a container terminal, amongst other facilities, and residential and leisure areas. More conventional development will be undertaken by the operator of Port Tanjung Pelepas, Pelabuhan Tanjung Pelepas, who will spend USD 2 billion to double the port s capacity to 22 million TEU come This will be achieved by renewing existing handling equipment (adding 2.7 million TEU in new capacity) and embarking on Phase III of the port s expansion which will add six berths, 3,000m of quay line and 9 million TEU in capacity. Construction is expected to start in 2018 or Singapore In 2016 work began on the massive Tuas development on the southwest of Singapore. This four-phase development will eventually house all the island s container handling infrastructure with a projected capacity of 65 million TEU. Elsewhere, on 1 January 2017, one of the existing facilities, Tanjang Pagar Terminal, handled its last scheduled containership. It will continue on an overflow basis but will now predominantly handle cars. The port s lease on the land lapses in 2027 whereupon it will be turned into a residential area. Also occurring in 2016, CMA CGM and PSA entered into the 49/51 CMA CGM-PSA Lion Terminal joint venture. It will cover four container berths in Pasir Panjang, Singapore, with a combined handling capacity of 3.0 million TEU. PSA s owner is Temasek, the previous 67% shareholder of NOL/APL who sold that stake to CMA CGM. The latter is (was) also a major patron of Port Kelang in Malaysia. At the very least, there has to be a question mark over whether CMA CGM will maintain the same level of commitment to Port Kelang once the CMA CGM-PSA Lion Terminal is fully up and running. Vietnam Having enthusiastically embraced terminal developments in the previous decade, with predictable impacts upon utilisation when volumes struggled, Vietnam is seemingly recovering its appetite for port projects. In 2016 a new terminal, SP-ITC, was commissioned at Nha Be River, South East Vietnam, and only three kilometres upstream Tan Cang-Cat Lai Container Terminal. It is operated by the local International Transportation and Trading Company. Most intriguingly was the return of another long-standing development when the government gave permission to Nha Trang Port to restart the Van Phong Bay International Transhipment Port project. Despite at one point having the support of Sumitomo Corp of Japan (associated in particular with the accompanying shoreside development), the project was cancelled in 2013 due to difficulties being experienced by the national carrier Vinalines, who was also involved in the project. Nha Trang is around 50km to the south of Van Phong Bay which some believe offers ideal opportunities as a regional transhipment hub.

51 DYNALINERS TRADES REVIEW Not all projects come to fruition In contrast, some work has had to be put aside. The Davao Sasa Port Modernisation Project (Philippines) was downsized if not cancelled outright. In East Malaysia, on the island of Borneo, Bintulu port suspended its plan to convert 300m of general cargo quay to dedicated container operations. Terminals Alongside port news, there were developments in the terminal operators sector, the main ones of which are summarised below. Acquisitions and sales APM Terminals/Grup TCB APM Terminals of the Netherlands (APMT) agreed late in 2015, in two separate stages, to acquire Grup Maritim TCB of Spain with the actual transaction taking place in March TCB controlled six Spanish facilities, four in Latin America, including one under construction, and one in Turkey. However, when the deal was completed, terminals in Turkey and the Canary Islands were not included in what APMT described as this initial transaction, this implying a hope that they will eventually come across. TCB helped APMT improve equity-adjusted liftings by 3.7% in 2016 to 37.3 million TEU. Without TCB, the growth would only have been 1%. It would seem that the TCB deal is the last acquisition that can be expected from APMT for the short to medium term at the least. Later on in 2016 it announced it would no longer grow through acquisition but organically instead. Much of that will come from an increase of Maersk Line business as the group seeks higher levels of cargo interaction between its various liner-terminal-logistics elements. Alongside, APMT will focus upon improved utilisation (for which Maersk Line volumes will help greatly) and cost savings from operational streamlining and the application of technology, amongst others. China Cosco Ports The consolidation of the China Shipping and China Ocean Shipping groups under the new China Cosco Shipping group led to a reorganisation and combination of the two previously separate container terminal arms. From the China Shipping side, CS Terminal Development was effectively moved across to COSCO Pacific, which, at that time, principally comprised container terminals and container leasing, this latter under Florens. The leasing aspect was moved across to China Shipping Container Lines leaving COSCO Pacific to concentrate upon container terminal operations. The resulting terminals entity was renamed Cosco Shipping Ports (CS Ports). It is still publicly listed, albeit also 44% owned by Cosco Shipping Holdings, the publicly listed owner of Cosco Shipping Lines, which is itself the combination of the previous Coscon (the surviving entity) and China Shipping Container Lines. CS Ports consolidated thirty-eight terminals spread around China (27), Europe/Mediterranean (7), Hong Kong (2), and the United States, South Korea and Singapore (all one each). Patrick Terminals (Australia) In 2016, Australia s competition commission approved the proposed takeover of Asciano Limited by a consortium led by Qube Holdings and Brookfield Infrastructure. Originally, in 2015, the two had been competing against each other for Asciano, who was active in port operations and railfreight. Its port operations included the container terminal activities of Patrick Terminals. The largest operator in Australia, in financial (ending June 30) Patrick handled more than 3.1 million TEU. Patrick Terminals Facility Port Port Botany near Sydney East Swanson Dock Melbourne Fisherman Islands Brisbane North Quay Terminal Fremantle Year Handlings (TEU) ,122, ,060, ,981,300 Financial years ending June 30 Yilport In 2016, the ambitious Yilport officially inaugurated its new terminal at Sjursoya (Oslo, Norway). It also boosted its portfolio through the acquisitions of 20% of Gävle container terminal (Sweden; it already owned 80%) and Tertir of Portugal, operator of seven terminals in Portugal, Peru and Spain. Individual terminal sales in 2016 included Facility From To Share APMT Aarhus Aarhus Service APM Terminals 40% Euromax Rotterdam ECT [Hutchison] COSCO Pacific 35% Gävle CT Gävle Council Yilport 20% Independent Maritime Term. ICL Group Sea-Invest 100% Alexandria ICT MENA Infra Hutchison Ports 30% Conateco COSCO Pacific Marinvest [MSC] 50% NUTEP Terminal* Delo Group DP World 49% Trieste CT Shareholders Aponte fam. ** 5% Busan Intl Terminal Hanjin Shipping Sinokor 33% Dalian Port Co. Shareholders China Merchants 21% Hyundai Pusan Newport Hyundai MM PSA 40% Korea Express Busan Term. CJ Korea Express CS Terminal Dev. 20% Yokohama-Kawasaki Intl Port Shareholders Japan govt 50% Penang Port * Seaport Terminal MMC Corp Bhd 49% Tan Cang-Cai Mep IT/TCIT Hanjin Shipping Hanjin Transp. 20% Maher Terminals (Newark) Deutsche Bank Macquarie/NYK 100% Cartagena Container Term. Compas S.A. APM Terminals 51% Individual terminals only. ICT/CT = (International) Container Terminal. *Asterisked = agreed not approved/completed. **Taking total holding up to 50% Grouped terminal sales in 2016 included Grouping From To Share Patrick Terminals Shareholders Br. Columbia Inv. 6% Patrick Terminals Shareholders Brookfield Infra. 33% Patrick Terminals Shareholders GIC 6% Patrick Terminals Shareholders Qatar Invest. 6% Patrick Terminals Shareholders Qube Holdings 50% Grup Maritime TCB Shareholders APM Terminals 100% Marsa Maroc Morocco govt IPO 40% Piraeus port Greece govt Cosco Shg Ports 51% Pusan Newport Co. Samsung Corp DP World** 24% Soc. Port. de Caldera SPR de Buenaventura SAAM 51% Tertir [Portugal] Mota-Engil, Novo Banco Yilport [Yildirim] 100% Vado Holding* APMT Cosco SP 40% Vado Holding* APMT Qingdao Ports Intl 9% *Agreed not necessarily approved/completed; ** taking total holding up to 66%. Differences may occur due to rounding Many a small change It was not just Cosco Pacific that underwent a change of name. In the course of 2016 at least three other significant if not substantial terminal operators changed name whilst another, Terminal Investment (TIL), changed domicile to Geneva, Switzerland, at the same address as MSC. Usually this last named wouldn t merit a mention, but considering that there was never confirmation of a direct ownership link between TIL and MSC until 2013, this latest move was noteworthy. In its past, TIL had been administered out of the Netherlands but registered in Luxembourg or Guernsey. Other terminal operator changes Operator Change Result Bolloré Africa Logistics Renamed as Bolloré Transport and Logistics China Merchants Holdings (Int.) Renamed as China Merchants Port Holdings Hutchison Port Holdings Renamed as Hutchison Ports Terminal Investment Limited Redomiciled From Luxembourg to Switzerland

52 52 GLASS HALF FULL Arteries Panama Canal After all the talk and problems surrounding its construction, the expanded Panama Canal was finally inaugurated on 26 June 2016 with the passage of the 9,500 TEU COSCO Shipping Panama from the Agua Clara Locks at the Atlantic end to the Cocoli Locks at the Pacific end of the artery. Summary of Panama Canal maximum dimensions Canal status Length Breadth Draught Max cap Original 294.0m 32.3m 12.0m 5,300 TEU Expanded 366.0m 49.0m 15.2m 13,200 TEU Max capacities based upon data sourced from maritime.ihs utilising maximum breadth. Eighteen newbuilds capable of transiting the expanded canal and due to be completed in 2017 or 2018 will fall within the 13,500-14,500 TEU range. This wasn t the end of the project s problems though. The consortium that carried out the work, the Spanish-led Grupo Unidos por el Canal (GUPC), will try and claim an extra USD 2 billion on top of the USD 3.2 billion that was agreed. The basis for this claim comes from a range of factors as incorrect information from the Panama Canal Authority (ACP), labour disputes and geological and regulatory issues, all of which contributed to the project s delays. In turn, there is the possibility of GUPC being brought to court by a party other than ACP for defrauding the nation s resources. Suez Canal Despite having a ten month head start over the Panama Canal with the commissioning of its own expansion programme (which saw 35km of new parallel infrastructure and widening along another 37km), the Suez Canal still struggled through both 2015 and Part of this was due to inherent trade lane pressures along the Far East-North Europe/Mediterranean axis, which saw fewer services and skipped sailings on those loops that were retained. In late 2015, a new trend emerged whereby return sailings to the Far East from North America (East Coast) and North Europe were directed around Southern Africa and the Cape of Good Hope instead of using the shorter Suez Canal route. Economics were, as always, the driving force as the low oil prices of 2015 and 2016 made such diversions viable; the cost implications of the extra sailing distance were less than the Canal fees saved. By the second quarter of 2016 it was estimated that seven Far East-North America (East Coast) services returned via Southern Africa having sailed westbound via Suez. On top, a number of North Europe services also returned via the Cape. In response to these challenges, the Suez Canal Authority offered discounts for Far East-North America deployed vessels from March 2016 to the end of the year. The canal may have to provide further incentive as overall transits fell by 4% with containership movements dropping even more at 9%. In comparison, the number of Panama transits fell by 6% and 3% respectively. Nicaragua Interoceanic Grand Canal project This much talked about project suffered yet another delay. After the ground-breaking ceremony at the end of 2014, construction proper was planned to begin a year later. This was put back to late 2016 as the developer, Hong Kong Nicaragua Canal Development Investment Co. Ltd (HKND), requested extra geological assessment(s), and then again to the first quarter of 2017, although this seems to have been missed too. Vessel transits Bosporous Strait '16/' Container Transits -4% 2,600 2,664 3,073 All transits -3% 42,400 43,544 45,529 Container share Transits 6% 6% 7% Bosporous 2016 estimate based upon previous years performances and trends. Vessel transits Kiel Canal '16/' Container Transits -1% 4,919 4,980 5,867 All transits -9% 29,284 32,036 32,589 Container share Transits 17% 16% 18% Vessel transits Panama Canal Panama Canal '16/' Container Transits -3% 2,977 3,067 2,891 All transits -6% 11,684 12,386 11,956 Container share Transits 25% 25% 24% As per Panama Canal fiscal years, ending September 30 Vessel transits Strait of Malacca '16/' Container Transits +1% 25,768 25,389 25,071 All transits +3% 83,740 80,959 79,344 Container share Transits 31% 31% 32% Vessel transits Suez Canal '16/' Container Transits -9% 5,414 5,941 6,129 All transits -4% 16,833 17,483 17,148 Container share Transits 32% 34% 36% Vessel transits main global arteries '16/' Container Transits -1% 41,646 42,041 43,031 All Transits -1% 183, , ,566 Container share Transits 23% 23% 23%

53 DYNALINERS TRADES REVIEW

54 54 GLASS HALF FULL Figure 16 CONCESSIONS AWARDED IN 2016 Facility Port Operator Cap Europe/Mediterranean Limassol CT Limassol Eurogate/Interorient/EMed 0.50 Delwaide Antwerp Sea-Invest - North America Rodney CT St. John DP World - Tampa Bay CT (ext) Tampa Ports America - Virginia Terminals (ext) Virginia Virginia Intl Gateway 2.00 Indian Sub Continent/Middle East Kandla CT Kandla JM Baxi Group 0.60 Berbera port Berbera DP World - Khalifa Port CT2 Abu Dhabi Cosco Shipping Ports 2.40 Africa Terminal C Lagos Sifax Group - Latin America Colon CT (ext) Colon Evergreen - Panama Colon CP Colon Shandong Landbridge 2.50 Paranagua CT (ext) Paranagua Tecon Paranagua 1.50 Tecon Salvador (ext) Salvador Wilson Sons - Port operations Manta Agunsa - Posorja port Posorja DP World 0.75 Puerto Bolivar* Puerto Bolivar Yilport 2.50 Notes: Cap = Initial capacity in TEU x million Concessions related to individual terminals or whole ports *Puerto Bolivar capacity is total upon expansion Figure 17 NEW TERMINALS COMMISSIONED IN 2016 Facility Port Operator Cap Europe/Mediterranean Terminal 2 Gdansk Gdansk Deepwater CT 1.50 Liverpool2 Liverpool Peel Ports 0.90 Yilport Oslo Oslo Yilport (Yildirim) 0.30 Port Bronka St. Petersburg MSCC Bronka 0.50 North America TEC2 L. Cardenas APM Terminals 1.20 Pier-E Long Beach Long Beach CT (OOCL) - Viau Terminal Montreal Termont 0.35 Far East Hanjin Incheon CT Incheon Hanjin - SP-ITC Intl CT* Ho Chi Minh Int'l Transp. & Trading 2.00 New Priok CT1 Tanjung Priok Pelindo2/Mitsui/PSA/NYK 1.50 Middle East Basra MPP Terminals Basra TIL - Basra Gateway Basra ICTSI 0.30 Hamad Port Hamad Mwani 2.00 Arrica Kamsar CT Kamsar Emirates GL Aluminium - Matadi Gateway Matadi ICTSI 0.18 Takoradi CT Takoradi GPHA 0.30 Kipevu CT Mombasa Kenya Ports Authority 0.55 Notes: Cap = Initial capacity in TEU x million Figure 18 CLOSED FACILITIES/CANCELLED PROJECTS IN 2016 Facility Port Action Cap CHZ Zeebrugge Closed 1.10 Hull CT Hull Concession ended - La Union CT La Union Tender cancelled - Outer Harbor Terminal Oakland Closed 1.50 Bintulu ICT Bintulu Postponed - "Mega Terminal" Chennai Suspended, two years 4.80 Durban dig-out port Durban Postponed 9.60 Notes: Capacities are TEU x million Figure 19 NEW TENDERS/PROJECTS DEVELOPMENTS IN 2016 Facility Port Action Cap Ready Europe/Mediterranean Ny Vesthaven Kalundborg Announced Hamdania Port Chercell Construction Terminal 2 Damietta MoU construction - - Anaklia Deep Sea Port Anaklia Investment agmt APMT MedPort Tangier Announced Isla Verde Spain Tender launched - - Far East 7th Container Centre Kaohsiung MoU, DP World Patimban Port Indonesia Approved Thilawa SEZ Myanmar Construction Cebu container port Cebu Approve Tuas Singapore Commenced Tien Sa Port Da Nang Commenced Van Phong Bay Vietnam Resurrected (?) Indian Sub Continent/Middle East Enayam ICT India Announced n/a- Vadhavan India MoU n/a- Gwadar ICT Pakistan Test operations - -n/a- Pakistan Deepwater Karachi Test operations East CT Colombo EOI Trincomalee port (CT) Sri Lanka Announced - - Shahid Rajaee CT3 Bandar Abbas Pre-qualification - - Jebel Ali Terminal 4 UAE Construction - - Africa New CT San Pedro Planned, MSC - - Badagry Port CT Nigeria Approved Latin America Puerto Antioquia Antioquia Construction Corozal Terminal Balboa Tender (no bids) Notes: Capacity in TEU x million Capacities and completions are provisional Figure 20 EXISTING TERMINAL DEVELOPMENTS IN 2016 Facility Port Action Cap Ready North America Veracruz Mexico Planned Port Elizabeth CT New York/NJ Announced Far East Phases 3-I and 3-II T. Pelepas Planned Sapangar Bay Kota Kinabalu Planned Indian Sub Continent/Middle East Adani ICT Mundra Expansion Visakha CT Visakha. Approved Chabahar CT Chabahar MoU - - Red Sea Gateway Jeddah Expansion Africa Freetown Terminal Freetown Announced Australasia Fergusson CT Auckland Announced Notes: Capacity in TEU x million Capacities and completions are provisional Figure 21 TERMINALS UPGRADED IN 2016 Facility Port Operator Cap Davao ICT berth 2 Davao Davao ICT 0.70 (+100%) Gujarat Pipapav Port Pipavav APM Terminals 1.35 (+59%) Port Reunion CT Port Reunion GPM Reunion - Muella Costa Valencia Noatum 1.00 (n/a) Notes: Capacities are TEU x million and reflect new capacities with difference (%)

55 DYNALINERS TRADES REVIEW Figure 22 GLOBAL TERMINAL OPERATOR STATISTICS (Throughput by equity share) Rank Stevedores share TEU TEU TEU 3 APM Terminals 5.4% 38,300,000 39,000,000 37,100, Bolloré 0.4% 2,800,000 2,600,000 2,400,000 6 CMP 3.7% 26,300,000 25,800,000 23,100, CMA CGM 0.9% 6,100,000 7,600,000 8,200,000 5 Cosco SP 4.1% 29,400,000 28,000,000 27,000,000 4 DP World 5.2% 37,000,000 35,800,000 32,800,000 9 Eurogate 1.0% 7,100,000 7,000,000 6,700,000 8 Evergreen 1.1% 7,500,000 7,800,000 7,400,000 2 Hutchison 6.6% 47,000,000 4,700,000 45,000, Hyundai 0.4% 2,700,000 2,800,000 2,800, ICTSI 1.0% 7,000,000 6,800,000 5,800, "K" Line 0.3% 2,200,000 2,800,000 3,100, MOL 0.3% 2,400,000 2,400,000 2,700, NYK 0.4% 3,000,000 3,900,000 3,600, OOCL 0.5% 3,300,000 3,200,000 2,900,000 1 PSA 7.5% 53,100,000 55,100,000 52,900, SSA Marine 0.9% 6,500,000 6,400,000 6,100,000 7 TIL/MSC 2.6% 18,400,000 16,800,000 15,400, Yang Ming 0.3% 2,400,000 2,400,000 2,500, Yilport 0.5% 3,400, Total above operators 43% 305,900, ,900, ,500,000 Estimated World Total 100% 710,000, ,000, ,000,000 Notes: Data sourced from Drewry, equity based Figures consolidated according to early-2017 existance of stevedores, i.e. CMA CGM includes APL, CoscoSP includes China Shipping PSA and Hutchison adjusted to account for PSA 20% in Hutchison TIL excludes volumes of terminals owned directly by MSC APM Terminals, The Hague Africa: Abidjan, Cotonou, Douala, Lagos, Luanda, Monrovia, Namibe, Onne, Pointe Noire, Port Said, Tangier Med, Tema Americas: Buenaventura, Buenos Aires, Callao, Cartagena, Itajai, Los Angeles, Miami, Mobile, New York/New Jersey, Paranaguá, Pecem, Progreso, Puerto Limon, Puerto Quetzal, Santos, Tacoma, Lázaro Cárdenas Asia: Aqaba, Colombo, Dalian, Guangzhou, Khalifi Bin Salman, Kobe, Laem Chabang, Nhava Sheva, Ningbo, Pipavav, Qingdao, Saigon, Salalah, Shanghai, Tanjung Pelepas, Tianjin, Vostochny, Xiamen, Yokohama Europe: Aarhus, Algeciras, Aliaga, Barcelona, Bremerhaven, Castellon, Gijon, Gothenburg, HaminaKotka, Helsinki, Marseilles, Poti, Rotterdam, Savona, St Petersburg, Ust-Luga, Valencia, Wilhelmshaven, Zeebrugge Bolloré Africa: Abidjan, Conakry, Cotonou, Douala, Freetown, Kribi, Lagos, Libreville, Lome, Monrovia, Moroni, Pointe Noire, Tema Asia: Port Reunion, Tibar Bay, Tuticorin Europe: Nantes/St. Nazaire China Merchants Ports, Hong Kong Africa: Bagamoyo, Casablanca, Djibouti, Lagos, Lome, Tangier Med Americas: Houston, Miami Asia: Busan, Colombo, Dalian, Hambantota, Kaohsiung, Ningbo, Qingdao, Shenzhen, Tanjung Sauh, Batam, Tianjin, Xiamen, Zhangzhou Europe: Antwerp, Dunkirk, Istanbul (Ambarli), Le Havre, Marsaxlokk, Marseilles, Nantes/St. Nazaire CMA CGM, Marseilles Africa: Casablanca, Kribi, Tangier Med Americas: Degrad des Cannes, Dutch Harbour, Fort de France, Houston, Kingston, Long Beach, Los Angeles, Miami, Pointe-a-Pitre Asia: Busan, Kaohsiung, Kobe, Laem Chabang, Lattakia, Mundra, Qingdao, Saigon, Singapore, Umm Qasr, Xiamen, Yokohama Europe: Antwerp, Dunkirk, Le Havre, Marsaxlokk, Marseilles, Nantes/St. Nazaire, Odessa, Rotterdam Cosco Group/Cosco Shipping Ports, Hong Kong Africa: Port Said Americas: Long Beach, Los Angeles, Seattle Asia: Abu Dhabi, Busan, Dalian, Guangzhou, Hong Kong, Jinzhou, Kaohsiung, Lianyungang, Nanjing, Ningbo, Qingdao, Qinhuangdao, Qinzhou, Quanzhou, Shanghai, Shenzhen, Singapore, Suzhou - Taicang, Suzhou - Zhangjiagang, Tianjin, Xiamen, Yingkou Europe: Antwerp, Istanbul (Ambarli), Marseilles, Naples, Piraeus, Rotterdam, Savona, Zeebrugge DP World, Dubai Africa: Algiers, Berbera, Dakar, Djen-Djen, Djibouti, Maputo, Sokhna Americas: Buenos Aires, Callao, Caucedo, Nanaimo, Paramaribo, Posorja, Prince Rupert, Santos, Vancouver BC Europe: Antwerp, Contstantza, Izmit, Le Havre, London, Marseilles, Rotterdam, Southampton, Tarragona Asia: Batangas, Busan, Chennai, Cochin (Kochi), Dubai, Fujairah, General Santos, Hong Kong, Jeddah, Kaohsiung, Laem Chabang, Manila, Mundra, Nhava Sheva, Port Qasim, Qingdao, Saigon, Surabaya/Tanjung Perak, Tianjin, Visakhaptnam, Yantai Australasia: Brisbane, Fremantle, Melbourne, Sydney Eurogate, Bremen Africa: Tangier Europe: Bremerhaven, Cagliari, Gioia Tauro, Hamburg, La Spezia, Limassol, Lisbon, Ravenna, Salerno, Ust-Luga, Wilhelmshaven Evergreen, Taipei Americas: Colon, Los Angeles, Oakland, Tacoma Asia: Colombo, Kaohsiung, Laem Chabang, Osaka, Taichung, Taipei, Tokyo Hutchison Ports, Hong Kong Africa: Alexandria, Dar es Salaam Americas: Balboa, Buenos Aires, Colon, Freeport, Vera Cruz, Ensenada, Lázaro Cárdenas, Manzanillo (Mex) Asia: Ajman, Busan, Dammam, Hong Kong, Jakarta/Tanjung Priok, Karachi, Kwangyang, Laem Chabang, Ningbo, Port Kelang, Saigon, Shanghai, Shantou, Shenzhen, Sohar, Xiamen, Yangon, Zhuhai Australasia: Brisbane, Sydney Europe: Barcelona, Felixstowe, Gdynia, Harwich, Nynashamn, Rotterdam, Stockholm, Thamesport Hyundai, Seoul Americas: Long Beach, Los Angeles, Seattle, Tacoma Asia: Busan, Kaohsiung, Tokyo Europe: Algeciras, Rotterdam ICTSI, Manila Africa: Matadi, Toamasina (Tamatave) Americas: Buenaventura, Guayaquil, La Plata, Portland, Puerto Cortes, Suape, Manzanillo (Mex) Asia: Batangas, Cagayan de Oro, Davao, Davao del Norte/Tagum, General Santos, Jakarta/Tanjung Priok, Karachi, Makassar, Manila, Subic Bay, Umm Qasr, Yantai Australasia: Melbourne Europe: Batumi, Gdynia, Rijeka K Line, Tokyo Americas: Long Beach, Tacoma Asia: Kobe, Nagoya, Osaka, Tokyo, Yokohama Europe: Antwerp, Rotterdam MOL, Tokyo Americas: Jacksonville, Los Angeles, Oakland Asia: Hai Phong, Kobe, Laem Chabang, Nagoya, Osaka, Saigon, Tokyo, Yokohama Europe: Rotterdam MSC/Terminals Investment Ltd (TIL), Geneva Africa: Las Palmas de Gran Canaria, Lome, San Pedro Americas: Buenos Aires, Callao, Freeport, Long Beach, Montreal, Navegantes/ Itajai, New York/New Jersey, Oakland, Santos, Seattle Asia: Ashdod, King Abdullah Seaport, Mundra, Ningbo, Singapore Europe: Antwerp, Bilbao, Bremerhaven, Civitavecchia, Genoa, Gioia Tauro, Iskenderun, Istanbul (Ambarli), Klaipeda, La Spezia, Le Havre, Livorno, Marseilles, Naples, Rotterdam, Sines, St Petersburg, Tekirdag, Trieste, Valencia, Venice NYK, Tokyo Americas: Charleston, Halifax, Los Angeles, Montreal, New Orleans, New York/ New Jersey, Oakland Asia: Dalian, Hai Phong, Jakarta/Tanjung Priok, Kaohsiung, Kobe, Laem Chabang, Nagoya, Tokyo, Yokohama Europe: Rotterdam OOCL, Hong Kong Americas: Long Beach Asia: Kaohsiung, Ningbo, Tianjin PSA, Singapore Americas: Balboa, Buenaventura, Buenos Aires Asia: Busan, Chennai, Dalian, Dammam, Dongguan, Fuzhou, Guangzhou, Inchon, Jakarta/Tanjung Priok, Kakinada, Kitakyushu, Kolkata/Haldia, Laem Chabang, Lianyungang, Nhava Sheva, Qinzhou, Saigon, Singapore, Tianjin, Tuticorin Europe: Antwerp, Genoa, Mersin, Sines, Venice SSA Marine, Seattle Americas: Barranquilla, Charleston, Colon, Jacksonville, Long Beach, Oakland, Philadelphia, Port au Prince, San Antonio, San Vicente/Talcahunao, Santa Marta, Savannah, Seattle, Tuxpan, Wilmington (NC), Manzanillo (Mex) Asia: Cai Lan Yang Ming, Taipei Americas: Los Angeles, Tacoma Asia: Kaohsiung, Taipei Europe: Antwerp Yilport, Kocaeli Americas: Paita, Puerto Bolivar Europe: Ferrol, Gävle, Gemlik, Izmit, Leixoes, Lisbon, Marsaxlokk, Oslo, Setubal

56

57

58 58 GLASS HALF FULL Figure 23 MILLIONAIRE CONTAINER PORTS Ranking Port / Ranking Port / TEU 14 TEU TEU TEU TEU 14 TEU TEU TEU Abu Dhabi 1,550 32% 1,504 1, Manila 4,427 13% 4,135 3,673 3, Alexandria 1,634 6% 1,662 1,567 1, Manzanillo 2,580 4% 2,458 2,369 2, Algeciras 4,760-1% 4,516 4,556 4, Marsaxlokx 3,060 7% 3,064 2,869 2, Ambarli 2,780-11% 3,062 3,445 3, Marseilles 1,225 4% 1,220 1,170 1, Antwerp 10,037 8% 9,654 8,978 8, Melbourne 2,640 2% 2,579 2,533 2, Ashdod 1,443 5% 1,307 1,250 1, Mersin 1,406-4% 1,430 1,484 1, Balboa 2,985-5% 3,294 3,468 3, Miami 1,028 15% 1, Bandar Abbas 2,109-4% 1,703 1,767 1, Mombasa 1,091 6% 1,076 1, Bangkok 1,498 0% 1,538 1,536 1, Montreal 1,336 3% 1,446 1,402 1, Barcelona 2,238 4% 1,965 1,894 1, Mundra - 10% 2,990 2,710 2, Beirut 1,147-7% 1,130 1,210 1, Nagoya 2,658-4% 2,631 2,738 2, Bremerhaven 5,490-4% 5,520 5,777 5, Nanjing 3,084 6% 2,920 2,760 2, Brisbane 1,147 4% 1,139 1,097 1, New York 6,250 10% 6,372 5,772 5, Buenos Aires - 0% 1,433 1,429 1, Nhava Sheva 4,500 1% 4,491 4,466 4, Busan 19,433 3% 19,296 18,683 17, Ningbo 21,560 6% 20,626 19,450 17, Callao 2,055-5% 1,900 1,992 1, Oakland 2,370-5% 2,278 2,394 2, Cartagena - 17% 2,607 2,237 1, Osaka 2,216-9% 2,222 2,438 2, Charleston 1,986 10% 1,973 1,792 1, Penang 1,437 5% 1,329 1,266 1, Chennai 1,495 1% 1,565 1,552 1, Piraeus 3,675-7% 3,328 3,585 3, Chittagong 2,346 15% 1,867 1,626 1, Port Everglades - 5% 1,060 1, Colombo 5,734 6% 5,185 4,908 4, Port Kelang 13,183 9% 11,887 10,946 10, Colon 3,268 9% 3,577 3,287 3, Port Qasim - 10% 1, Dalian 9,414-8% 9,301 10,128 9, Port Said - -15% 3,462 4,062 3, Dammam 1,785 12% 1,954 1,747 1, Puerto Limón 1,075 2% 1,109 1,090 1, Dandong 1,990 9% 1,830 1,672 1, Qingdao 18,010 5% 17,505 16,624 15, Dongguan 3,610 19% 3,363 2,836 1, Quanzhou 2,100 6% 2,000 1,885 1, Dubai 14,772 2% 15,592 15,249 13, Rizhao 3,010 16% 2,810 2,420 2, Durban 2,620 5% 2,784 2,664 2, Rotterdam 12,385-1% 12,235 12,298 11, Felixstowe - -1% 4,043 4,072 3, Saigon 7,950 11% 7,212 6,514 5, Freeport - 0% 1,400 1,399 1, Salalah 3,325-15% 2,569 3,034 3, Fuzhou 2,650 23% 2,430 1,978 1, San Antonio 1,288 7% 1,170 1,094 1, Gdansk 1,300-10% 1,091 1,212 1, San Juan - -8% 1,211 1,320 1, Genoa 2,298 3% 2,243 2,173 1, Santos 3,394 3% 3,780 3,685 3, Gioia Tauro 2,797-14% 2,547 2,970 3, Savannah 3,640 11% 3,730 3,346 3, Guangzhou 18,885 9% 17,570 16,160 15, Shanghai 37,130 4% 36,540 35,285 33, Guayaquil - 8% 1,747 1,621 1, Shantou 1,162-10% 1,075 1,199 1, Hai Phong - 15% 2,441 2,131 2, Shenzhen 23,979 1% 24,204 24,037 23, Haifa 1,268 2% 1,215 1,196 1, Sines 1,513 9% 1,332 1, Haikou 1,402-6% 1,266 1,347 1, Singapore 30,900-9% 30,922 33,869 32, Hamburg 8,910-10% 8,820 9,775 9, Southampton 1,957 3% 1,954 1,895 1, Hong Kong 19,580-10% 20,114 22,300 22, St Petersburg 1,745-28% 1,720 2,375 2, Honolulu - 7% 1,213 1,130 1, Surabaya - 0% 3,121 3,128 3, Houston 2,183 9% 2,131 1,951 1, Suzhou 5,626 18% 5,238 4,450 5, Inchon 2,677 1% 2,368 2,335 2, Sydney 2,325 4% 2,290 2,206 2, Jeddah 3,957-3% 4,102 4,218 4, Tacoma/Seattle 3,616 2% 3,529 3,456 3, Kaohsiung 10,465-3% 10,264 10,593 9, Taichung 1,535-4% 1,447 1,514 1, Karachi - 8% 1,720 1,594 1, Taipei 1,477 6% 1,335 1,257 1, Keelung 1,388-14% 1,445 1,686 1, Tangier 2,964-3% 2,964 3,070 2, Khor Fakkan - 9% 4,142 3,800 4, Tangshan 1,932 37% 1,519 1, King Abdullah 1, % 1, T. Pelepas 8,029 7% 8,799 8,232 7, Kingston - 1% 1,653 1,638 1, Tanjung Priok - 9% 6,600 6,053 6, Kobe 2,801 3% 2,707 2,617 2, Tianjin 14,500 0% 14,110 14,050 13, Kwangyang 224-1% 2,322 2,338 2, Tokyo 4,251-5% 4,629 4,894 4, La Spezia 1,272 0% 1,300 1,302 1, Valencia 4,722 4% 4,615 4,442 4, Laem Chabang 7,227 4% 6,821 6,583 6, Vancouver 2,930 5% 3,055 2,913 2, Lagos - -19% 1,300 1,600 1, Virginia Ports 2,650 7% 2,549 2,393 2, L. Cárdenas 1,110 6% 1, , Xiamen 9,614 7% 9,183 8,572 8, Le Havre 2,519 0% 2,560 2,551 2, Yantai 2,600 4% 2,452 2,361 2, Lianyungang 4,680 0% 5,009 5,005 5, Yingkou 6,086 3% 5,922 5,768 5, London - 4% 1,104 1, Yokohama 2,781-3% 2,787 2,880 2, Long Beach 6,775 5% 7,192 6,821 6, Zhuhai 1,338 3% 1,210 1, Los Angeles 8,857-2% 8,160 8,340 7,869 Total millionaires 2% 574, , ,694 Notes: Other ports 27% 104,492 82,466 90,306 Unit: 1,000 TEU, *Fiscal April-March, **Fiscal July-June World total 5% 679, , ,000 Selection based upon 2015 millionaires Share millionaires 85% 87% 86% Chinese port statistics often contain (substantial) inland barge handlings

59 DYNALINERS TRADES REVIEW

60 60 GLASS HALF FULL Ships Biggest ships - pause for breath? In April 2015, UASC s 19,900 TEU newbuild the Barzan was delivered. Originally reported at 18,800 TEU, an extra tier of containers on top and, apparently, a different or more efficient way of stowing boxes created the extra capacity needed to make this the largest containership ever. Unlike its two immediate predecessors, the Barzan managed to hold on to this accolade for pretty much two years. This was the longest noted since the delivery of the 15,500 TEU Emma Maersk in September 2006, who was eventually replaced by the 16,000 TEU CMA CGM Marco Polo more than six years later. Delivery of largest ships What Capacity Delivery OOLC Hong Kong 21,100 TEU May-17 Madrid Maersk 20,600 TEU Apr-17 MOL Triumph 20,200 TEU Apr-17 Barzan 19,900 TEU Apr-15 MSC Oscar 19,200 TEU Jan-15 CSCL Globe 19,000 TEU Nov-14 Maersk Mc-Kinney Moller 18,300 TEU Jul-13 CMA CGM Marco Polo 16,000 TEU Nov-12 Emma Maersk 15,500 TEU Sep-06 However, proving that history does repeat itself, when it was dethroned, three different designs then surpassed the Barzan in short order. In April 2017 the MOL Triumph of 20,200 TEU was delivered. Then, within a month or so it was bested by the 20,600 TEU Madrid Maersk and then again by the 21,100 TEU OOCL Hong Kong. Whilst these three are the start of whole series of 20,0-00+ TEU vessels, biven the still dire state of the container market, it is unlikely that the orderbook for a similar size will be added to anytime soon. Indeed, the market probably influenced CMA CGM s decision to delay delivery of three ships of 20,600 TEU from 2017 to Do not be surprised to see these emerge having found a way to stow another 501 TEU to make them the largest. And this brings us back to the very first of the largest ships (14,000+ TEU), the Emma Maersk and her seven sisters, for they will expand capacity by 900 TEU to 16,500 TEU after an extensive refit. However, seeing as the deadweight will remain unchanged, it is foreseen that this extra capacity will only be for empty containers, if at all. The problem with ordering vessels is that the decision appears, to onlookers, to be made in the context of that point in time and not how the market might be at the time of delivery. Thus, despite the disastrous market fundamentals, in 2016 the number of 14,000+ TEU vessels increased by twenty-eight units, more than 28%, to 126. They added 462,000 TEU in nominal capacity, another 29% for this particular segment. Maximum loads According to a pilot, at the start of 2017, UASC s 19,870 TEU Al Nefud, a sister ship of the Barzan, arrived at the port of Felixstowe with a world-record 18,749 TEU on board, a load factor of 94.4%. The previous reported record load was the 18,601 TEU carried by another sister, the Al Muraykh, in December 2015 (93.5% utilisation) at Port Kelang. The record utilisation is the 15,500 TEU reported on board the 15,500 TEU Emma Maersk in Zeebrugge, October ships and containers Yet despite the market circumstances, 2017 and 2018 promise to be even more dramatic years with the specific 14,000+ TEU fleet set to grow by 76% after the addition of 96 new ships. Segment capacity will grow by 81% with the arrival of another 1.9 million TEU. With the best will in the world, even if some deliveries are pushed back, an awful lot of capacity will still need to be scrapped to maintain supply parity, and we haven t even delved into all the containerships due to be delivered that are smaller than 14,000 TEU. Delivery of +14,000 TEU vessels by capacity class and year Class Range All +14,000 TEU ,000 TEU ,000 TEU Total Situation as of end Confirmed orders only. Differences may occur due to rounding. Capacity of +14,000 TEU vessels, by capacity class and year Class Range All +14,000 TEU , ,000 TEU , ,000 TEU Total 1, ,951 Ave. per ship Situation as of end Figures are TEU x 1,000. Confirmed orders only. Differences may occur due to rounding. However, as the table suggests, an end is in sight. Other things remaining equal, expected deliveries of 14,000+ TEU ships will hit a cliff edge in 2019 with just 12 ships and 200,000 TEU (average: 16,700 TEU) expected to be delivered that year and none the year after that. On top, 2016 was a poor year for the shipbuilders in terms of new orders received. This was especially so for the 10,000+ TEU size. In fact, IRISL s reported order for four (some say eight) ships of 14,500 TEU and NYK s order for five ships of 14,000 TEU turned out to be the largest for the year. The next largest were four of 11,800 TEU placed by PIL early in Global fleet developments Headline figures At the end of 2016, the capacity of the global container carrying fleet amounted to 20.7 million TEU, an increase of 2% year-onyear despite the number of vessels dropping by 80 units (-1.3%) to just over 6,000. The absolute growth of capacity, 422,000 TEU, was not only the lowest for a decade, but also the lowest pretty much this century. With total capacity still growing but the number of vessels falling, the average ship could carry 3,440 TEU, up from 3,330 TEU of a year earlier. Container capable fleet available to liner operators Year Ships TEU Growth % Growth TEU ,007 20,680,000 2% 422, ,087 20,258,000 8% 1,436, ,968 18,822,000 6% 1,058, ,974 17,764,000 6% 961, ,942 16,803,000 6% 904, ,992 15,899,000 7% 1,090, ,967 14,809,000 9% 1,166, ,897 13,643,000 5% 619, ,062 13,024,000 11% 1,333, ,914 11,691,000 10% 1,045,000 CAGR 1% 8% Ave 7% 1,003,000 As at 31 December of each year. Analysis based on data sourced from Alphaliner. Growth is year-on-year. Containership deliveries Deliveries for the year fell off dramatically, helped in part by carriers delaying receipt of some newbuilds. The number of ships delivered (133) and the capacity they could bring (877,000 TEU) were both the lowest noted in at least a decade. Their average capacity of 6,600 TEU was the smallest since These additional units accounted for just 4% of the capacity provided

61 DYNALINERS TRADES REVIEW by the averaged out 2016 fleet, again the smallest for at least a decade. Containerships delivered Year Ships Ø TEU TEU Delivery Share Average fleet for the year , ,000 4% 20,469, ,100 1,744,000 9% 19,540, ,600 1,401,000 8% 18,293, ,300 1,370,000 8% 17,284, ,200 1,286,000 8% 16,351,000 Averages 191 7,000 1,336,000 7% 18,387,000 Deliveries can only be put off so long. The projected deliveries of 14,000+ TEU ships will actually be higher in both 2017 and 2018 than in Overall, Clarksons expects a total capacity of 1.3 million TEU to be delivered in 2017 which, if coming true, would place it on a par with the period. Even though so few boxships were delivered in 2016, there were still some interesting examples received over the year. Notable vessel deliveries in 2016 included What Operator Description Delphis Bothnia (1,900 TEU) Delphis (owner) First of series of so-called "Kiel [Canal] max" ships, with draught of 9.5m and length of 177m Dole Caribbean (1,440 TEU) Dole Final unit of three reefer container vessels capable of carrying 770x 40' containers Ivalo Arctica & Minik Arctica (36 TEU) Kashan (2,300 TEU) MSC Reef (19,400 TEU) NYK Blue Jay (14,000 TEU) Perla del Caribe (3,100 TEU) Seatrade Orange (2,600 TEU) Tihama (19,900 TEU) Royal Arctic Line IRISL/HDS MSC NYK Tote Maritime Seatrade UASC First of four multipurpose ships (two different designs) for Royal Arctic Line, intended to serve the coastal Greenland routes Only the third ever containership built in Iran, originally part of an order of five ships, the series now stops with this unit Sixth and final ship of a series owned by Bank of Communications (China) and chartered long-term to MSC First of series of ten ships ordered, in total, for operation by NYK, and its first newbuild received since 2007 Second of two LNG powered containerships ordered by Tote for the Jacksonville-Puerto Rico route First of six reefer-container carriers Last of six ships of 19,900 TEU, the largest series afloat Containership recycling Whilst not necessarily an immutable law of container shipping physics, by and large, when orders are low, demolitions are high. The year 2016 certainly proved that, although the number of units sent to the breakers, 201, was not the largest in even the past five years, let alone further back. That honour went to 2013, which saw 204 ships sent for recycling. The capacity that was torched was remarkable at 699,000 TEU and was more than the previous two years combined. As a result, the share of that scrapped capacity of the averaged fleet for the year was 3.4%, better than 2013 s 2.8%. Containerships sold for demolition Year Ships Ø Age Ø TEU TEU Scrapped share Average fleet for the year , ,000 3% 20,469, , ,000 1% 19,540, , ,000 2% 18,293, , ,000 3% 17,284, , ,000 2% 16,351,000 Averages , ,000 2% 18,387,000 Differences between year-end fleet figures and the contributions from orders/ demolitions may occur as ships will enter and leave the global fleet list for other reasons (e.g. casualty, conversion). The average age of scrapped fleet in 2016 dropped by nearly five whole years to 18.6 and was illustrated by the regular reports of relatively and increasingly younger ships being scrapped. This reached a zenith - or so we thought - at the end of 2016 when the financially distressed Rickmers Maritime Trust sold the 2009-built, 4,250 TEU oldpanamax India Rickmers for recycling. Being delivered after the 2008 collapse of Lehman Brothers, it was the youngest ship ever sent for recycling surpassing the 2007-built pair of 5,100 TEU units sent to the breakers by another distressed non-operating owner, Box Ships, a little earlier. In turn, these had displaced the 2006-built 4,500 TEU Hermann Wulf which was sold for scrap in September The trend did not stop with the end of 2016 though, for the 4,250 TEU Hammonia Grenada, the same design as the India Rickmers but built one year later in 2010, was sold for scrapping early in From the youngest, to the oldest: in the first half of 2016, the 1973-built and 1,500 TEU Horizon Fairbanks was scrapped. The steam-powered ship had already been in lay-up for eight years. One reason for the increased size of the scrapped fleet was the commissioning of the expanded Panama Canal and the impacts this had upon the old Panamax segment, in particular ships in the 4,000-5,000 TEU bracket. The list of ever-younger vessels summarised above is predominantly ships of that sort of capacity. Overall, the largest ships sent to the breakers were the 6,600 TEU JPS Debussy and a series of five ships of 6,500 TEU. In all, eleven ships of 6,000 TEU or larger were scrapped in Recycling continued in 2017 with seventy-eight vessels scrapped for 248,500 TEU in the first quarter. This compared with twenty-nine ships and 97,000 TEU for the same period of This continuance, if not acceleration of scrapping, is not only because of the expected inflows of capacity but also because of the very low prices that selling existing tonnage on for further trading will reach. Writing early in 2017, VesselValue estimated that around a third of all containerships were worth no more than their scrap value. For the pressurised oldpanamax segment, it was much worse with 85% of such ships only worth their scrap value. Containerships ordered Following the surge in ordering in 2015, influenced as much by impending (2016) changes to Marpol regulations as by market conditions, for 2016 the number of orders collapsed to just 68 ships. These could provide 284,000 TEU only at a relatively small average of 4,200 TEU each. In all three aspects, number, total TEU and average TEU, this was the smallest return in the last decade excepting 2009 when an exceptional two vessels were ordered (for a total of 2,000 TEU). Containerships ordered Year Ships Ø TEU TEU Order Share Average fleet for the year , ,000 1% 20,469, ,900 2,258,000 12% 19,540, ,500 1,002,000 5% 18,293, ,000 1,653,000 10% 17,284, , ,000 3% 16,351,000 Averages 143 7,900 1,131,000 6% 18,387,000 Only refers to vessels ordered in each calendar year In this context, IRISL s order for four ships of 14,500 TEU and NYK s order for five ships of 14,000 TEU could have been considered a spectacular. Other specific and notable orders included the two container-ro/ro ships ordered by Matson Navigation of the United States. Able to carry 2,700 TEU and 800 vehicles, they will be deployed upon the US mainland-hawaii trade. They have to be US built, owned, flagged and crewed to be able to carry US domestic cargo and were contracted to General Dynamics NASSCO at USD million each, almost the price of two 20,000 TEU vessels constructed in the Far East. When de-

62 62 GLASS HALF FULL Figure 24 TOP 20 CARRIERS OPERATED FLEET VERSUS ORDERBOOK (as at 31 December 2016) Rank Parent/main Operated fleet Orderbook company Ships TEU Ships TEU Share 3 CMA CGM 448 2,130, ,700 11% 4 CoscoSL 290 1,618, ,800 34% 5 Evergreen , ,000 33% 7 Hamburg Süd , ,400 5% 6 Hapag-Lloyd , ,800 3% 13 Hyundai , % 20 IRISL , , % 15 "K" Line , ,400 20% 19 KMTC , % 1 Maersk Line 631 3,273, ,100 11% 12 MOL , ,900 24% 2 MSC 485 2,848, ,800 10% 11 NYK , ,200 30% 8 OOCL , ,600 22% 14 PIL , ,200 39% 10 UASC , ,000 6% 17 Wan Hai , ,200 7% 18 X-Press Feeders , % 9 Yang Ming , ,400 17% 16 ZIM , % Total 3,385 17,204, ,689,500 16% Other 2,622 3,475, ,500 16% World total 6,007 20,679, ,244,000 16% Share top 20 56% 83% 52% 83% - Notes: Operated fleet: all container capable ships operating in liner services, Orderbook: cellular vessels only, Analysis based on data sourced from Alphaliner Figure 25 CONTAINERSHIP LAY-UP DEVELOPMENT BY MONTH, 2017 Month Ships Total TEU Share Average Dec 344 1,419, % 4,100 Nov 357 1,504, % 4,200 Oct 397 1,547, % 3,900 Sep 344 1,207, % 3,500 Aug 308 1,031, % 3,300 Jul , % 3,400 Jun , % 400 May 256 1,037, % 4,100 Apr 318 1,398, % 4,400 Mar 322 1,471, % 4,600 Feb 346 1,431, % 4,100 Jan 326 1,289, % 4,000 Averages 1,194, % 3, , % 3, , % 2, , % 2, , % 2,500 Figure 26 CELLULAR FLEET COMPOSITION FORECAST (As at 1 Jan of each year) Number of Ships Size category Ships Ships Ships Ships 18, ,300-17, ,000-13, ,500-9, ,100-7, ,000-4, ,000-3, ,000-2, ,000-1,999 1,289 1,344 1,383 1, Total ships 5,112 5,325 5,475 5,501 Growth - 4.2% 2.8% 0.5% TEU Capacity Size category TEU TEU TEU TEU 18, ,000 1,395,000 1,936,000 2,026,000 13,300-17,999 1,830,000 2,164,000 2,375,000 2,501,000 10,000-13,299 2,512,000 3,001,000 3,296,000 3,320,000 7,500-9,999 4,176,000 4,241,000 4,241,000 4,241,000 5,100-7,499 2,911,000 2,940,000 2,940,000 2,940,000 4,000-4,999 3,077,000 3,023,000 3,023,000 3,023,000 3,000-3, , , , ,000 2,000-2,999 1,572,000 1,675,000 1,755,000 1,760,000 1,000-1,999 1,816,000 1,902,000 1,686,000 1,970, ,664, , , ,000 Total ships 25,316,000 21,887,000 22,841,000 23,377,000 Growth % 4.4% 2.3% Capacity share Size category Share Share Share Share 18,000+ 4% 6% 8% 9% 13,300-17,999 7% 10% 10% 11% 10,000-13,299 10% 14% 14% 14% 7,500-9,999 16% 19% 19% 18% 5,100-7,499 11% 13% 13% 13% 4,000-4,999 12% 14% 13% 13% 3,000-3,999 3% 4% 4% 4% 2,000-2,999 6% 8% 8% 8% 1,000-1,999 7% 9% 7% 8% % 3% 3% 3% Total 100% 100% 100% 100% Notes: All figures subject to -yet unknown- slippage and scrapping Analysis based on data sourced from Alphaliner Notes: Number of ships and total nominal capacity in lay up (all carriers/owners) in the 2nd half of each month

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64 64 GLASS HALF FULL Figure 27 OWNED AND CHARTERED CAPACITY BY LINER OPERATORS (As at 31 December 2016) Rank Rank Operator Operated Owned Owned Chartered Chartered Share of Chart, Oper, (main company) capacity capacity share capacity share total charter Cap, Cap, TEU TEU % TEU % capacity % 3 3 CMA CGM 2,130, ,900 38% 1,323,800 62% 1.1% 4 4 CoscoSL 1,618, ,800 28% 1,165,700 72% 2.1% 5 5 Evergreen 992, ,000 55% 444,900 45% 11.8% 10 7 Hamburg Süd 603, ,400 53% 284,100 47% 3.8% 6 6 Hapag-Lloyd 950, ,200 55% 423,000 45% 3.8% 9 13 Hyundai 455, ,100 36% 290,800 64% 3.4% IRISL 102, , % 0 0% 3.4% "K" Line 350,900 80,200 23% 270,800 77% 4.2% KMTC 137,800 49,100 36% 88,800 64% 0.8% 2 1 Maersk Line 3,273,200 1,763,800 54% 1,509,400 46% 2.1% 8 12 MOL 495, ,300 31% 344,100 69% 3.0% 1 2 MSC 2,848,800 1,073,500 38% 1,775,300 62% 11.9% NYK 519, ,000 51% 252,100 49% 3.9% 14 8 OOCL 575, ,700 71% 164,800 29% 15.7% PIL 366, ,400 82% 64,900 18% 2.0% UASC 526, ,000 77% 118,900 23% 2.0% Wan Hai 218, ,600 78% 48,700 22% 1.5% X-Press Feeders 163,600 26,700 16% 136,900 84% 1.0% 7 9 Yang Ming 570, ,400 38% 352,600 62% 3.3% ZIM 305,200 27,800 9% 277,400 91% 3.2% Total of the above companies 17,204,800 7,868,000 46% 9,336,900 54% 83.9% Total liner fleet (owned & chartered) 20,679,800 9,202,500 45% 11,477,300 56% 100.0% Notes: TEU capacity is just a snapshot, chartering or redelivery of vessels obviously has its impact on the fleet operated by the individual carrier Analysis based on data sourced from Alphaliner Figure 28 INDICATIVE CHARTER RATES 2015 Hamburg Index In USD/slot/day (based on homogeneous 14 tons TEU capacity) category ,000-2,551-3, ,299 3,099 3,800 TEU size TEU TEU TEU TEU TEU TEU geared/g less geared geared geared geared both both January February March April May June July August September October November December Average Dynamar-calculated monthly charter rates In USD/ship/day (based on nominal TEU capacity) category ,700 2,000 2,750 4,400 6,800 TEU size TEU TEU TEU TEU TEU TEU Geared/g'less geared geared geared G less G less G less January 6,200 7,000 6,800 6,000 5,950 15,000 February 6,750 7,000 6,500 6,000 5,800 14,000 March 6,850 7,050 6,500 6,000 5,400 13,500 April 6,850 7,050 6,500 6,000 5,400 13,500 May 6,800 7,100 6,250 6,000 5,200 13,000 June 6,800 7,000 6,200 6,000 5,150 13,000 July 6,700 6,900 6,150 6,000 5,100 13,000 August 6,700 6,700 6,100 5,900 4,700 13,000 September 6,550 6,750 6,100 6,000 4,450 13,000 October 6,250 6,650 6,000 6,000 4,400 13,000 November 6,100 6,300 5,900 6,050 4,250 12,500 December 6,100 6,200 5,900 6,050 4,150 12,500 Figure 29 ACTUAL CHARTER RATES REPORTED (In USD per ship per day for the period indicated) Month Year of built TEU USD Months January ,400 6, mths February ,000 6, mths March ,300 6, mths April ,900 10, mths May ,400 8,500 9 mths June ,200 9, mths July ,800 11, mths August ,400 6, mths September ,500 5, mths October ,200 4, mths November ,900 6, mths December ,400 5, mths

65 DYNALINERS TRADES REVIEW Figure 30 CONTAINERSHIP ORDERS by/for CARRIERS Operator Month Ships TEU Total TEU Ansheng Shipping Jul 4 2,400 9,600 CMA CGM Jan 2 1,700 3,400 CMA CGM Jun 4 3,300 13,200 IRISL Dec 4 14,500 58,000 Matson Sep 2 2,750 5,500 NYK Jul 5 14,000 70,000 PIL Dec PIL Feb 4 11,800 47,200 T.S. Lines Jul 4 1,800 7,200 Tropical Shipping Jun 2 1,100 2,200 Tropical Shipping Dec 1 1,100 1,100 Wan Hai Jul 8 1,900 15,200 Zhonggu Shipping Apr 1 2,500 2,500 Zhonggu Shipping Jun 4 2,500 10,000 Zhonggu Shipping Jun 4 2,500 10,000 Total 50 5, ,700 Notes: Carriers having ordered (either directly or through others) containership newbuildings Figure 33 CHINA NEWBUILDING PRICE INDEX, CONTAINERSHIPS Month January February March April May June July August September October November December Average High Low Notes: Note: All results are as per 15th of each month; 1,000 = 1 July Source = China Newbuilding Price Index Figure 31 CONTAINERSHIP ORDERS by Non-operating Owners Owner Month Ships TEU Total TEU Jiangsu Ocean Sep 3 1,900 5,700 Jungerhans Mar 4 1,000 4,000 Kotoku Kaiun May 2 1,100 2,200 Nord Feb 3 2,500 7,500 Nordic Hamburg Jul 4 1,400 5,600 Prevalence Holding Ltd Jun 2 1,800 3,600 Total 18 1,600 28,600 Notes: Non-operating owners having ordered containership newbuildings without a prospective charterer attached at the date of ordering Figure 32 INDICATIVE VESSEL ORDERS USD/TEU Owner TEU Ships USD Million USD/TEU Matson 2,750 TEU USD 92,909 Wan Hai 1,900 TEU USD 14,737 Prevalence Holding 1,800 TEU USD 13,333 Figure 34 FORECAST OF CELLULAR CONTAINERSHIP DELIVERIES Size categories Ships TEU Ships TEU Ships TEU 18, , , ,000 13,300-17, , , ,700 10,000-13, , , ,600 7,500-9, , ,100-7, , ,000-4, , ,000-3, , , ,100 2,000-2, , , ,600 1,000-1, , , , , , Total 214 1,695, ,227, ,300 Notes: All figures subject to -yet unknown- slippage and scrapping Analysis based on data sourced from Alphaliner

66 66 GLASS HALF FULL livered they will replace three of the five existing units deployed on the route, all of which were built between 1973 and There is also one other dent in prospective orderbook. In 2016 Maersk Line announced a new strategy whereby it would only expand by acquiring other carriers and not ordering newbuildings. At the time of this announcement in the latter half of 2016, the Danish carrier still had a substantial 30 ships totalling 385,000 TEU to be delivered. Its unilateral moratorium on ordering still does not stop it expanding existing ships (see the Emma Maersk and her sisters) and may still see it delve into the second hand market, although that has never been a particular Maersk trait. Thus, with orders dropping in 2016 and being exceeded by deliveries, the outstanding orderbook of all vessels still to be delivered shrank by more than 90 ships and 900,000 TEU. As a share of the existing year-end fleet, this would add another 16% in capacity, the lowest seen this century. Containership orderbook development Year Ships TEU Share Ave TEU ,244,000 16% 7, ,151,000 20% 8, ,326,000 18% 7, ,816,000 21% 7, ,430,000 20% 7,000 CAGR -4% -3% Ave 19% 8,000 As at 31 December of each year. Share = share of existing fleet Analysis based on data sourced from Alphaliner Containerships laid-up The size and share of the lay-up fleet jumped somewhat in the closing months of With the exception of the peak May to September months, these levels were maintained through Given Hanjin s demise over the final quarter of 2016, the post-september 2016 jump was arguably more than just a seasonal adjustment. Overall, the idle fleet averaged 315 ships in 2016 for a total of 1.2 million TEU, with the average share of the total fleet at 6.2%. All these measurements were way higher than anything experienced in the preceding four years at least. In fact, only 2009 would seem to have been worse with 504 ships, 1.3 million TEU and an average of more than 10% of global capacity in lay-up. Illustrating the difficulties in 2016, especially with regards to the largest ships, the 19,200 TEU MSC Oliver and MSC Maya were both idled by MSC in the first half of the year. Apparently, they were too big for cascading to other trades. Both have since found employment on the Far East-North Europe route. Containership sales The vessel sales market was somewhat muted during the year with 125 ships sold on (and not for recycling). This was the lowest noted since 2012 s 107 ships. Included in the total was a reasonable number of ships larger than 10,000 TEU with two 13,100 TEU vessels, the MSC Margrit and MSC Renee, the largest. It was only in 2014 when the first ships above 7,000 TEU were sold. Vessel sales by capacity 2016 Capacity range Ships Ø TEU Total TEU 1,000-2, , ,000 3,000-4, ,900 54,000 5,000-6, ,800 34,600 7,000-9, ,400 59,100 10,000-13, , ,600 Total , , , , , , , , , ,100 Sales as noted by Dynamar from a variety of sources. The next largest to be sold were part of the Hanjin fallout as lender HSH Nordbank found itself with three ex-hanjin ships of 13,000 TEU. When sold late in 2016 they fetched a surprisingly healthy USD million apiece (on average), surprising because the equivalent newbuilds were actually cheaper. Casualties TS Taipei If 2015 reminded us of the inherent dangers faced by seafarers in the wake of the sinking of the El Faro in the Caribbean, 2016 reminded us of the risks taken by emergency services. In March 2016 the 1,600 TEU TS Taipei grounded on rocky shallows around 330 metres offshore the northern tip of Taiwan. The vessel suffered extensive damage and was ultimately a total loss. However, during the search and rescue operation, a helicopter that was also carrying engineers and coastguard officials crashed into the sea close to the vessel. Whilst some were saved, there were also, very sadly, two fatalities. Containership total losses Year Number Year Number Year Number Period ave: Source: Allianz Global Corporate & Specialty Some comfort for MOL The MOL Comfort case reached a resolution of sorts in The 8,100 TEU vessel dramatically split in two pieces in the Indian Ocean in Three years later, a court in China ruled that this was down to faulty design. Sister ships of the MOL Comfort and a vessel operated by APL of the same design also showed buckling or deformities at the hull bottom the court heard. There are still many more cases to hear. With claims totalling at least USD 5 00 million being lodged, the ship s operator, MOL is being sued by cargo interests whilst MOL, in turn, is suing the shipbuilder Mitsubishi Heavy Industries. Rena resolution In October 2011 the 3,400 TEU Rena got stuck on the Astrolabe Reef just off Tauranga, New Zealand. After a 20-day hearing held in 2016, twenty-three technical reports and 151 other submissions, the relevant authorities granted permission for the remains of vessel to stay where they are on the reef. The salvage costs, including for the recovery of more than 1,100 containers, exceeded USD 500 million.

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68 68 GLASS HALF FULL Containership casualties in 2016 included Vessel Owner/ Incident Operator TS Taipei (1,600 TEU) TS Lines/ TS Lines Lost engine power and ran aground at Shimen, north Taiwan. Vessel broke into two pieces and lost some of its 617 containers of cargo overboard YM Wind (14,200 TEU) CCNI Arauci (9,000 TEU) Safmarine Maru (4,100 TEU) Northern Jasper (8,800 TEU) APL Austria (6,300 TEU) Seaspan/ Yang Ming Hamburg Süd/Hamburg Süd Maersk/ Maersk Norddeutsche/ Maersk Shoei Kisen/ APL (CMA CGM) Broke loose from mooring at CSBC Shipyard Kaohsiung and collided with StS gantry cranes during Typhoon Meranti Fire ignited by welding work whilst berthed at Hamburg Collided with Northern Jasper and suffered severe damage and fire on board leading to vessel being abandoned. Vessel towed to Ningbo and later declared total loss See Safmarine Meru Fire broke out on board damaging an undisclosed number of containers Shipyards Much like their shipping line compatriots, the major shipyards in South Korea were suffering from chronic losses and indebtedness. The combined 2015 loss of these four, Daewoo SME, Hanjin HI, Hyundai HI and Samsung HI, exceeded USD 6.0 billion. Half of that was for Daewoo alone and whilst Hanjin HI got off relatively lightly with a loss of around USD 222 million, it was still the sixth straight year of negative earnings. As a result, Hanjin HI sought a voluntary debt agreement with its creditors and Daewoo (DSME) received a USD 3.5 billion lifeline from Korea Development Bank (KDB) who effectively took control of the shipyard as a result. Estimates from KDB at the time were that DSME needed another USD 4.5 billion to continue operating. South Korea s Financial Services Commission is now leading an extensive restructuring of the sector with an estimated 30% reduction in headcount and 20% reduction in shipyard capacity come The combined costs of reorganising South Korea s shipping and shipbuilding sectors was estimated by the International Monetary Fund at USD 27 billion with job losses running to perhaps as much as 10,000. A consultant even went so far to suggest that Daewoo should be liquidated or merged with another shipyard. The shipping markets in general only made the situation worse as orders from South Korean yards in the first half of 2016, all vessel types, were the lowest ever recorded since such data was collected in As the year progressed, each yard announced a variety of plans to try and rescue the situation. Hyundai will spin-off five non-shipbuilding businesses and float them on the stock exchange. It was also looking at saving USD 780 million in staff costs and raising USD 950 million from asset sales including the stake it held in Hyundai Motor Group. Samsung HI was looking to raise USD 1.0 billion from a share sale late in the year and Daewoo (DSME) sold its headquarters building for USD 150 million. In 2017 DSME then decided to reduce its construction portfolio to LNG carriers and other specialist vessels. However, Daewoo was arguably behaving a little like Hanjin Shipping. DSME expressed faith in its self-rescue plan and blamed the USD 1 billion 2Q 2016 loss upon auditing methods (!). Alongside, its senior management was tied up in fraud investigations; Hanjin Shipping s Chair was suspected of insider trading in Net financial results South Korean shipbuilders Aggregate Ave TEU Daewoo SME -5, , , ,700 Samsung HI -1, , ,100 Hanjin HI ,700 Hyundai HI -1, , ,000 Total -8, , , ,000 Source: Shipbuilders/Morningstar. Figures in USD million as converted from original KRW at year-end exchange rates Shipowners Since 2009, the German KG sector has been struggling to improve its fortunes. The publicly-listed sector, in contrast, managed to weather the post-2008 storms for a while, but this could not go on forever without casualties, fatal or otherwise. This all mirrored the experience of the liner operators and it was the biggest casualty of all, that of Hanjin, that added extra pain on an already pressurised sector. When Hanjin entered administration (September 2016) it chartered in 60 ships totalling 335,000 TEU, all of which would need to find new employment. Germany s continued consolidation With the German ship financing market still accounting for around a quarter of the world s USD 400 billion shipping debt, it is not surprising that there is still so much attention paid to both German ship financing and the associated owning and management sectors. After near constant pressure post-2008, by September 2016 it was estimated that nearly 20% of the 1,800 containership KG funds, were insolvent. These funds controlled around 2,200 vessels and if all went bankrupt they would add to the at least 600 funds already estimated to have gone under since Slowly but surely, financiers have tried to reduce their exposure to or extricate themselves completely from the market. HSH Nordbank, once the largest ship financier in the world, is looking at limiting its shipping exposure to around USD 9 billion. It was, at one point, USD 36 billion but had shrunk to around USD 17 billion (from 1,300 vessels or various types) come end Ultimately, HSH is to be privatised with its main shareholders, the states of Hamburg and Schleswig-Holstein, controlling 85% of the lender, hoping to effect a sale in At the other end of the managing-owner scale, the situation is no better. In 2016, Reederei Hermann Wulff (three containerships in the 2,000-5,000 TEU range) was declared insolvent and over the course of the year, Hansa Treuhand filed for insolvency of at least fifteen container vessels ranging from 3,500 TEU to 5,000 TEU. This left it with 20 containerships in its portfolio. The problem for the non-operating owner/management sector is still one of fragmentation. For sure, there have been many moves towards combining marketing, chartering, commercial management functions for the last few years, but under current conditions it is still a charterer s not owner s market. Whilst the major shipping lines and routes have consolidated, one survey suggested there were around 300 non-operating owners. Still, slowly but surely, especially in the German market, smaller names are coming together or gravitating (or being gravitated) towards bigger ones. In 2016 GRS Rohden Shipping moved commercial management and some other functions to Liberty Blue, which itself was only established in 2015 following the takeover of Reederei Buss by Liberty One. For its part, HCI Capital had a busy At the start, its planned takeover of 80% of König & Cie was approved. Around May it then took over Ernst Russ, which was involved in six containerships and five RoRos and who counted Peter Döhle as one of its shareholders. Shortly afterwards HCI also took control of thirteen containerships of 800-1,800 TEU originally financed by

69 DYNALINERS TRADES REVIEW

70 70 GLASS HALF FULL Figure 35 CAPACITY EVOLUTION OF THE POST-PANAMAX CONTAINERSHIP (by year, since the launch of the first Post-Panamax unit in 1988) Ship Year of Capacity Dwt Draught Length over all Breadth Width Speed Launch TEU (t) (m) (m) (m) (boxes) Knots Design STX Design Open 22, , NewPostPanamax (by Length over all and/or Breadth) Coscon Shipping Taurus , , OOCL Hong Kong , , Madrid Maersk , , MOL Triumph , , Barzan , , MSC Oscar , , CSCL Globe , , Maersk McKinney Moller , , CMA CGM Benjamin Franklin , , CMA CGM Marco Polo , , Emma Maersk , , CSCL Star , , MSC Livorno , , CMA CGM Corte Real , , MSC Daniela , , NewPanamax IRISL tbn , , CMA CGM G. Washington , , Umm Salal , , Maersk Edinburgh , , MSC Filomena , , CMA CGM Andromeda , , ZIM Antwerp , , Cosco Europe , , PostPanamax CMA CGM Ivanhoe , , Maersk Altair , , CSCL Long Angeles , , Cosco Guangzhou , , CMA CGM Rigoletto , , CMA CGM Carmen , , MSC Pamela , , Gudrun Maersk , , Colombo Express , , Axel Maersk , , OOCL Shenzhen ,100 99, Long Beach Bridge ,600 69, Hamburg Express , , P&O Nedlloyd Houtman ,800 88, MSC Flaminia ,700 84, Hyundai Patriot ,500 80, MOL Vigilance ,900 67, Hanjin Amsterdam ,600 69, Svendborg Maersk , , NYK Sirius ,100 82, Cosco Qingdao ,400 69, Regina Maersk ,000 82, OOCL Hongkong ,300 68, President Truman ,500 53,

71 DYNALINERS TRADES REVIEW HSH Nordbank. Finally, after all this activity, HCI then took on the Ernst Russ AG name. The company now manages 96 ships that provide 205,300 TEU in capacity. If it were an operator, it would have been the 18th largest carrier by capacity at the end of In the first quarter of 2017, there was the news that CP Offen would take over compatriot Conti Group including the affiliated Bremer Bereederung. As a result, CP Offen would consolidate a boxship fleet of 95 units that could carry 631,000 TEU, enough to be the 7th largest carrier. Not all deals went through. The fraternally associated Rickmers Holding and E.R. Schiffahrt, controlled by Bertram and Erck Rickmers respectively, did sign a declaration of intent towards a potential merger of their ship management arms. This did not come about. It too would have helped in bulking up the owners as the new organisation would have been responsible for around 200 vessels capable of carrying 880,000 TEU. The reason for the failure to join up was not made public, although it is worth noting that Rickmers Holding later suffered financial difficulties of its own such that come the mid-point of 2017 it was forced to apply for insolvency under so-called self-administration with a view to restructuring. Consolidation in the KG sector Parties coming together New/succeeding party Year CP Offen/Conti Group CP Offen 2017 Liberty Blue GRS Rohden Liberty Blue 2016 HCI Capital HCI Capital, trading as Ernst Russ GmbH Ernst Russ 2016 HCI Capital König & Cie (80% of) HCI Capital 2016 Liberty One Shipmanagement Reederei Buss Liberty Blue 2015 Borealis Maritime Hanseatic Unity O&S Chartering Chartering 2015 Embarcadero Maritime took over Hanseatic Ship Embarcadero Maritime 2015 Asset Management MPC Group Thien & Heyenga took over Ahrenkiel group Ahrenkiel Steamship 2014 Peter Döhle Ernst Russ GmbH Stuwe & Co Ernst Russ Shipbrokers 2013 Conti Reederi0 H. Schuldt Shipbrokers* Norddeutsche Vermogen 2013 Bernhard Schulte Reederei Nord O&S Chartering 2013 F. Laeisz Leonhardt & Blumberg via Martini Chartering* 2013 E.R Schiffahrt Komrowksi Reederei Blue Star Blue Star Holding 2012 Ahrenkiel Management through MPC Steamship MPC Steamship 2012 GB Shipping & Chartering MPC Steamship Thien & Heyenga Contchart* 2012 Combined fleets can include other than containerships. * = pre-existing entity; ** All are marketing, shipbroking or ship management. Listed owners Having held out for a number of years, much like a number of the liner carriers, the listed non-operating sector had to make substantial adjustments in Goldenport Holdings delisted in mid-2016 and over-the-counter listed Box Ships Inc gradually sold off its own flotilla, in part due to agreements with banks. By the end of the year it was providing management services to two dry bulk ships only. It had started 2016 with nine container vessels totalling 44,000 TEU. Feeling the pressure on its share price, in mid-2016 Diana Containerships exercised a so called reverse split, i.e. merger of its shares, at the rate of eight into one. This was to stay within the US stock exchange listing requirements whereby, broadly, share prices need to be at least USD At the end of the year its share price was still less than USD 3.00, even after the reverse split. Then, in 1Q 2017, Diana announced a plan to raise around USD 150 million from the sale of 150,000 new designations of shares, something existing shareholders were not too happy about. Rickmers Maritime Trust (RMT) of Singapore had to sell off vessels in order to stay afloat for the short term whilst engaging in restructuring talks with lenders. These followed the missed interest payments of November 2016 that formally placed it in default. It failed to get approval for a debt repayment/ restructuring plan and, well into 2017, the decision was made to wind it up. At the start of 2016, RMT controlled a fleet of sixteen ships totalling 66,000 TEU. Their old Panamax capacity range of 3,500 TEU-5,100 TEU was the most depressed of the capacity segments. Amongst all this, new non-operating owners did emerge. One was Cosco Shipping Development. This is the new name for what was China Shipping Container Lines. Following the re-allocation of tasks within the new Cosco Shipping group, Cosco Shipping Development emerged as an asset owning and leasing company, its two major classes of assets being containerships and container boxes. Another new entrant was Ocean Yield ASA of Norway. Already involved in chemical, gas and car carriers, amongst others, in 2016 it started receiving a series of six 19,500 TEU containerships it had purchased 49.5% of. Ordered by Quantum Pacific, five were delivered by year s end, all with 15-year charters to MSC attached. Listed owners share price developments Non-operating Owner Currency Difference Box Ships USD -93% Capital Product Partners* USD -42% Cosco Shg Development CNY -42% Costamare USD -46% CIMC* HKD -21% Danaos USD -56% Diana Containerships USD -57% Ernst Russ EUR +146% Euroseas/Euromar USD -2% First Ship Lease SGD -1% Global Ship Lease USD -42% Goldenport Holdings* GBP -100% Navios Maritime Hldgs* USD -19% Ocean Yield* NOK -5% Rickmers Maritime SGD -74% Seaspan Corporation USD -42% Ship Finance Int'l* USD -10% Share prices are year-ends. Euroseas executed a 10-for-1 share swap in July 2015 and Diana an 8-for-1 in June The subsequent share prices reflected are as if these had not taken place. Box Ships delisted from NYSE in 2015 and listed on the Over-the-Counter exchange instead before leaving the (box) ownership sector completely by end-2016; Goldenport delisted in May 2016; Cosco Shipping Development became a non-operating owner in the course of Owners asterisked* are principally involved in other (shipping) sectors.

72 72 GLASS HALF FULL Listed owners fleets 2016 Non-operating Owner Nationality Vessels TEU Average Box Ships Greece --- Vessels sold off Capital Product Partners* Greece 10 69,500 7,000 Cosco Shg Development China ,000 7,200 Costamare Greece ,000 6,500 CIMC* China ,000 8,400 Danaos Greece ,000 6,000 Diana Containerships Greece 12 61,500 5,100 Ernst Russ Germany ,000 2,100 Euroseas/Euromar Greece 7 11,500 1,600 First Ship Lease Singapore 5 15,200 3,000 Global Ship Lease UK 18 82,300 4,600 Navios Group* Monaco 19 83,100 4,400 Goldenport Holdings* Greece --- Delisted Ocean Yield*/** Norway 5 48,300 9,700 Rickmers Maritime*** Singapore 15 62,200 4,100 Seaspan Corporation Hong Kong ,000 6,400 Ship Finance Int'l* Bermuda ,000 6,800 Ship Finance Int'l* Bermuda 18 91,400 5,100 Total 537 3,014,000 5,600 Share of global fleet 9% 15% - Source: Non-operating owners annual reports or announcements. Notes: Nationality based upon location of Head Office or Principal Executive Office (as per filings) or equivalent. Fleets are year-end where possible, if not early the following year. Shares based upon year-end situation. Asterisked* are principally involved in other (shipping) sectors. ** Capacity equity adjusted for ownership share. ***Subsequently wound-up Green Shipping At the start of 2015, the 0.1% maximum sulphur (SOx) content in marine fuel came into effect within the North America and North Europe Emissions Control Areas (ECAs or SECAs). Later that year, Hong Kong followed suit albeit with a limit of 0.5% and then only applied to vessels at berth in the port. A similar scheme was then applied to the Chinese ports of Shanghai, Nantong, Ningbo and Suzhou in April Shenzhen joined the list in October with Guangzhou, Huanghua, Qinhuangdao, Tangshan, Tianjin and Zuhai added as of January The initial application of this requirement in China is at the discretion of the individual ports, but ultimately, come 1 January 2019, it will have expanded to include all ships within the control areas, whether berthed or sailing. By the end of that year, the limits may even be lowered further to the Europe/North America 0.1% levels. Outside of the various SECAs, the global limit for sulphur in marine fuel is 3.5%. However, for a number of years, the International Maritime Organisation has been looking at a global standard of 0.5% with 2020 or 2025 as the proposed implementation dates. Late in 2016, the IMO opted for the earlier of the two. Whilst shipowners and operators realise the need to adjust to the environmental reality, there are, as always, concerns. These have already been played out, albeit at regional levels, for the North America/North Europe SECAs, so the detail of the arguments won t be repeated here. The only difference now is that the scale of the challenge facing owners and operators is global. The options open to owners and operators are, broadly: Move to a new fuel type (LNG or other) for newbuild vessels or retrofit existing ships Continue to burn Heavy Fuel Oil but use scrubbers, newbuild or retrofit Burn higher grade marine diesel oil or similar that complies with the emissions regulations. This is the easiest option of the three and will probably end up being the most popular, initially at least. Each option will ultimately have a cost implication with one estimate placing this at USD billion for the global shipping industry, all sectors, all trades. The suppliers, refiners and manufacturers will now have to respond globally, and therein lay the challenge. Opinion is divided on whether there will be enough refining capacity to produce the required volumes of higher grade fuel come It is also open to question if scrubber and LNG engine manufacturers (and LNG fuel suppliers) can meet a dramatic upsurge in demand if one or both become a favoured option. Conventional marine fuel types There are two principal conventional marine fuel types: residuals and distillates. Distillates as marine diesel or marine gasoil (MDO or MGO) are produced earlier in the crude oil refining process than residual fuels and which are closer to the end (just before asphalt or tar). Residuals are commonly known as Heavy Fuel Oil (HFO) and are graded in terms of viscosity as 380 centistokes (380cst) or 180cst. They are not SECA compliant without their exhaust emissions being scrubbed. Distillates are higher quality than HFO. Hoaever, they have the benefit of being SECA compliant and, as a consequence, are more expensive. How this will affect the price of marine fuel is difficult to say, even when referring to the experiences of the North America and North Europe Sulphur Emissions Control Areas (SECAs). The circumstantial evidence shows that after imposition of the new regulations in January 2015, bunker prices in Rotterdam and Long Beach for the more expensive distillate Marine Diesel Oil (MDO), became even more expensive, relatively speaking (in Long Beach up to more than twice the price of HFO). Other than this coincidence of events, it is not possible to draw a direct cause and effect link between the imposition of the SE- CAs and the increase in the (relative) price difference between the fuel types. In other words, the changes can t (entirely) be apportioned to the upsurge in demand for MDO and a drop in demand for HFO resulting from the SECAs. For example, the low base price of oil plays a role too. Whilst the relative (%) price differences between fuel types increased, the absolute (USD) differences reduced. Furthermore, a review of oil price changes in Singapore, which did not have any possible SECA influence, shows underlying changes in the price differences between the two fuel types (albeit not as pronounced, for whatever reason, as those seen at Rotterdam and Long Beach). Average relative difference, MDO against 380 cst HFO Post-SECA Pre-SECA Port Rotterdam +81% +81% +53% +51% Long Beach +116% +113% +72% +69% Singapore +72% +72% +55% +52% Average absolute USD difference, MDO against 380 cst HFO Post-SECA Pre-SECA Port Rotterdam Long Beach Singapore Figures how much more expensive MDO is compared with 380cst. Based upon prices in USD per ton measured at approximate mid-point of each month as published in DynaLiners Weekly and then averaged out across the year. Containers Global equipment fleet In 2016, the global container box fleet only grew by 1%, half the rate of container carrying capacity. Both rates were marginal, at best, following the 8% vessel capacity and 4% box fleet growths of The year-end 2016 ratio of ocean-going containers to vessel capacity reduced ever so slightly to 1.84.

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74 74 GLASS HALF FULL Figure 36 MAJOR LESSORS CONTAINER BOX FLEETS Container fleets, all types Total Boxes (All types) Share TEU TEU TEU Beacon 2.8% 1,060, , ,000 Blue Sky 0.9% 360, , ,000 CAI 2.8% 1,080,000 1,165,000 1,190,000 Florens 7.5% 2,850,000 2,900,000 2,650,000 SeaCo 6.4% 2,430,000 2,220,000 2,180,000 SeaCube 3.2% 1,220,000 1,320,000 1,240,000 Textainer 8.3% 3,150,000 3,150,000 3,230,000 Touax 1.7% 650, , ,000 Triton 13.0% 4,930,000 4,750,000 4,590,000 UES 0.6% 220, , ,000 Other lessors 2.7% 1,020,000 1,040,000 1,630,000 Lessors total 49.9% 18,970,000 18,570,000 18,500,000 Carriers 50.1% 19,050,000 19,030,000 17,850,000 Total fleet 100.0% 38,020,000 37,600,000 36,350,000 Share leased - 50% 49% 51% Fleet growth - 1.1% 3.4% - Container fleets, reefer boxes only Reefer Share TEU TEU TEU Beacon 2.5% 65,000 45,000 40,000 CAI 1.8% 47,000 45,000 39,000 Florens 1.9% 50,000 47,000 31,000 SeaCo 12.9% 340, , ,000 Seacube 6.6% 175, , ,000 Textainer 6.0% 158, , ,000 Triton 15.7% 415, , ,000 Other lessors 0.4% 10,000 11,000 27,000 Lessors total 47.7% 1,260,000 1,193,000 1,110,000 Carriers 52.3% 1,381,000 1,425,000 1,315,000 Total fleet 100.0% 2,641,000 2,618,000 2,425,000 Share leased - 48% 46% 46% Fleet growth - 0.9% 8.0% 5.4% Notes: Source: WorldCargo News Pre-2016, Cronos fleet consolidated into SeaCo fleet; ditto TAL into Triton Figure 38 MAJOR LESSORS CONTAINER PURCHASES Container fleets, all types Total Boxes (All types) Share TEU TEU TEU Beacon 10.5% 230,000 85, ,000 Blue Sky 1.1% 25,000 25,000 45,000 CAI 1.1% 25,000 75,000 95,000 Florens 2.0% 45, , ,000 SeaCo 11.8% 260, , ,000 SeaCube 1.1% 25,000 70,000 90,000 Textainer 9.3% 205, , ,000 Touax 1.1% 25,000 30,000 35,000 Triton 9.3% 205, , ,000 UES 0.9% 20,000 30,000 30,000 Other lessors 3.9% 85,000 70, ,000 Lessors total 52.3% 1,150,000 1,200,000 2,020,000 Carriers 47.7% 1,050,000 1,750,000 1,680,000 Total fleet 100.0% 2,200,000 2,950,000 3,700,000 Share leased - 52% 41% 55% Growth % -20.3% - Container fleets, reefer boxes only Reefer Share TEU TEU TEU Beacon 8.7% 13,500 4,500 4,000 CAI 1.6% 2,500 6,000 4,000 Florens 2.3% 3,500 6,000 0 SeaCo 22.6% 35,000 37,000 30,000 Seacube 4.2% 6,500 19,500 20,500 Textainer 13.5% 21,000 34,000 14,500 Triton 11.6% 18,000 31,000 54,500 Other lessors 0.0% Lessors total 64.5% 100, , ,500 Carriers 35.5% 55, ,000 97,500 Total fleet 100.0% 155, , ,000 Share leased 65% 51% 57% Growth -42.6% 20.0% - Notes: Source: WorldCargo News Pre-2016, Cronos fleet consolidated into SeaCo fleet; ditto TAL into Triton Figure 37 THE 15 LARGEST CARRIERS BY CONTAINER BOX FLEET (As at early 2017) Rank Main/Parent Total boxes Reefer box fleet Reefer share Company TEU TEU of total 2 CMA CGM 3,500, ,000 10% 7 Cosco SL 2,500,000 93,000 4% 9 Evergreen Line 1,601,000 64,000 4% 4 Hamburg Süd 940, ,000 17% 5 Hapag-Lloyd 1,576, ,000 9% 13 Hyundai 772,000 35,000 5% 10 "K" Line 633,000 54,000 9% 1 Maersk Line 4,538, ,000 11% 3 MSC 4,238, ,000 4% 6 MOL 822,000 96,000 12% 8 NYK Line 857,000 86,000 10% 11 OOCL 1,032,000 45,000 4% 14 PIL 639,000 22,000 3% 15 UASC 870,000 12,000 1% 12 Yang Ming 995,000 39,000 4% Top 15 25,513,000 1,883,000 7% Other carriers 12,507, ,000 6% Total 38,020,000 2,641,000 7% Notes: Figures in italics have been estimated Figure 39 THE 15 LARGEST CARRIERS BY REEFER PLUG CAPACITY (As at 1 July 2016) Rank Rank Main/Parent Number Total TEU Reefer plugs/ TEU Plugs Company of ships capacity plugs TEU 3 3 CMA CGM 512 2,324, , % 4 4 CoscoSL 282 1,563, , % 5 7 Evergreen , , % 7 5 Hamburg Süd , , % 6 6 Hapag-Lloyd , , % Hyundai ,300 32, % "K" Line ,000 32, % 1 1 Maersk Line 617 3,159, , % MOL ,600 50, % 2 2 MSC 488 2,757, , % NYK ,800 46, % 9 8 OOCL ,200 55, % PIL ,000 36, % UASC ,100 39, % Yang Ming ,000 51, % Top-15 2,914 16,189,000 1,682, % Other carriers 2,970 15,611,800 Total 3,074 16,188,800 Notes: One reefer plug fits two TEU

75 DYNALINERS TRADES REVIEW

76 76 GLASS HALF FULL Boxes and slots '16/' Change TEU TEU TEU Containership capacity 2% 20,680,000 20,258,000 18,822,000 Total container box fleet 1% 38,020,000 37,600,000 36,350,000 Global Box/Slot ratio -0.02pts Situations as at year ends. Analysis based upon data sourced from World Cargo News and Alphaliner. Manufacturing Having dropped by 17% in 2015, container newbuild sales fell by an even more dramatic 25% in The world s largest manufacturer, CIMC, was particularly impacted seeing its sales volume shrink by around half. In contrast, Singamas experienced a not unreasonable 4% sales growth. Even so, it was not enough to fully compensate for CIMC s drop and as a result, for the first time in a long time, the combined sales share of the two fell (well) below 60% when 65-70% is traditionally the norm. Container newbuild sales '16/' Manufacturer Change (%) TEU TEU TEU CIMC -49% 667,000 1,301,700 1,514,100 Singamas 4% 543, , ,500 Others -12% 989,300 1,127,600 1,319,400 Total -25% 2,200,000 2,950,000 3,520,000 Share CIMC - 30% 44% 43% Share Singamas - 25% 18% 20% Source: Manufacturers and World Cargo News Average selling price for CIMC and Singamas did not improve either as they failed to arrest the fall of For Singamas, the average selling price contracted by 19%, this coming on top of a 14% reduction in For CIMC, the situation was slightly better. Its drop in average selling price was 8%. In 2015, it was 18.5%. There was some better news towards the end of 2016 with reported prices for a 20 dry box recovering to exceed USD 2,000. Given other market developments, this should have set the manufacturers up for a better first half of 2017 at the least. Average selling price per 20' dry container, USD '16/' Manufacturer Change (%) TEU TEU TEU CIMC -8% 1,280 1,390 1,710 Singamas -19% 1,457 1,790 2,090 Source: manufacturers. CIMC figures are calculated from revenue and container box sales data and converted from original CNY. Competition in the reefer sector In 2016 there were two new arrivals in reefer container and machinery manufacturing. The first half of the year saw the launch of Guangdong Kingtec Denso Refrigeration Equipment Co. Ltd, a joint venture of Denso, a Japanese automotive component, systems and technology manufacturer, and Kingtec of China, a heating, air conditioning and refrigeration machinery manufacturer. The new venture is aimed at producing refrigeration machinery for containers, trucks, trailers and storage. Guangdong Kingtec Denso will have a difficult time against the established reefer machinery quartet of Carrier Transicold, Daikin, Star Cool (Maersk Container Industry) and Thermo King. In fact, and to date, apart from announcing its creation, the new joint venture has failed to garner further attention or make any noticeable impact upon the market. There also came the launch of a new reefer box manufacturer in 2016, Guangdong Equipment Manufacturing Co. Its portfolio is said to range from 20 up to 48 and 53 reefers for the North America market. It too will have to work hard to build a sustainable order base when set against the established names of Maersk Container Industry, Singamas and CIMC in particular. And alongside the competition is the existing overcapacity in the system. Annual reefer box manufacturing capacity stands at the equivalent of 400,000 TEU, at least; combined output (demand) for both 2015 and 2016 only came to around 425,000 TEU. Container orders Late 2016 finished with a large number of orders placed. This surge will have come as something of a welcome relief as the story up to then seemed to be of difficult financial conditions for both the container liner and leasing sectors. As a result, box owners and managers leant more towards repair than newbuilds. Further, it would seem that the orders placed late in 2016 were mainly by carriers as Hanjin s demise may well have influenced lease companies newbuild policy whilst they prioritised the recovery of equipment previously leased to Hanjin over the placing of new orders. Dry or special box orders in 2016 included Carrier Order Notes Crowley 1,873 TEU 600x 53' DV MacAndrews/OPDR 8,000 TEU Palletwide units, DV Pacific Direct Line (PIL) 600 TEU All 20', incl. 100 High Cubes DV Wan Hai 10,150 boxes 20', 40', 40' HC DV Abbreviations: DV = Dry Van [i.e. standard container]; HC = High Cube; FR = Flat Rack Another issue into early 2017 was regulatory with Chinese requirements due to come into force whereby water based paints have to be used on containers instead of solvent-based ones. With manufacturers having to close plants down for months at a time in order to convert production lines to meet the new requirements, this also induced something of an ordering run by container operators and managers to secure supply. Despite the late 2016 trend, leasing orders for the whole year still exceeded those of liner operators by 100,000 TEU, this from a total orderbook of 2.2 million TEU. Container newbuild purchases '16/' Purchasers Change (%) TEU TEU TEU Lessors -4% 1,150,000 1,200,000 2,020,000 Carriers -40% 1,050,000 1,750,000 1,500,000 Total -25% 2,200,000 2,950,000 3,520,000 Share Lessors - 52% 41% 57% Share Carriers - 48% 59% 43% Source: World Cargo News Within those overall figures, ordering of refrigerated containers fell back somewhat to around 155,000 TEU (the below table approximates to 50,000 TEU). Reefer container orders in 2016 included Carrier Order Notes CMA CGM 6,000 - Crowley CMA CGM 5,000 1,000 with Daikin machinery NYK 4,700 2,000 with Daikin machinery Hapag-Lloyd 3,000 Carrier Transicold machinery Hapag-Lloyd 5, with Daikin machinery Maersk Line 14,800 - ZIM 1,900 - Seatrade 4,000 Star Cool boxes and machinery Samskip 400 All 40' HC Most often, reefer container orders will be for 40' high (HC) cube boxes.

77 DYNALINERS TRADES REVIEW Container Leasing Over the course of 2016, the leasing sector continued to increase its share of the global container box fleet. As a result, it all but matched that of the container liner carriers. This came from the leasing sector managing to increase its fleet size (purchasing 100,000 TEU more than the carriers helped) by 2% to just under 19 million TEU whilst that of the carriers stagnated at just above 19 million TEU. Container box fleet '16/' Year start 3% 37,600 36,350 34,350 +Purchases -25% 2,200 2,950 3,520 -Disposals 5% -1,780-1,700-1,520 =Year-end 1% 38,020 37,600 36,350 Fleet carriers 0% 19,050 19,030 18,500 Fleet lessors 2% 18,970 18,570 18,100 Share carriers -0.5pts 50.1% 50.6% 50.9% Share lessors 0.5pts 49.9% 49.4% 49.8% Fleet figures in TEU x 1,000. Analysis based upon data sourced from World Cargo News. Container leasing was particularly impacted by the collapse of Hanjin. Initial claims against Hanjin from eight major leasing companies exceeded USD 35 million. Over and above the financial exposure to Hanjin was an unseen logistical one as the leasing companies needed to recover those boxes. As of early 2017, around 150, ,000 TEU leased in by Hanjin, out of an original lease fleet estimated at 500,000 TEU, was yet to be recovered. Containers and their contents In 2016, there were a number of notable incidents involving container carrying ships and, specifically, the containers they were carrying. From out of the fifteen incidents summarised below, nine involved containers falling overboard and the rest involved fire or explosion. Vessel casualties involving container boxes in 2016 included: Vessel Where Circumstances Al Zubara West Mediterranean Encountered heavy storm losing at least three containers and shifting and damage to more Dolphin II off Kurile Islands Vessel hit by severe storm and lost at least 20 containers with others shifted Marmaui Off Scotland Six empty containers washed overboard Melbourne Strait La Guaira, Venezuela Fire broke out in a container in a cargo hold. At least five containers damaged Helgafell North Atlantic Unknown number of containers lost overboard Maersk Detroit Algeciras Two containers fell overboard whilst the vessel was being worked at port TS Taipei Shimen, Nth Taiwan Vessel lost engine power and ran aground, subsequently breaking into two pieces and losing some of its 617 containers of cargo overboard Cosco Hope Port Said Vessel struck gantry crane in port, parts of which fell onto stack of containers. There was an explosion and subsequent fire, this affecting at least 20 containers Safmarine Meru off Ningbo Collision with 8,800 TEU Northern Jasper led to fire on board. Vessel abandoned and ultimately declared total loss. 11 containers on board caught fire; 40 others reported damaged Shang Qing 3 Hoa Shanghai Developed a list in port losing 45 containers overboard CMA CGM Rossini Colombo, Sri Lanka Fire on board started in two containers with lithium ion battery scrap MSC Alexandra Singapore Strait Collided with VLCC resulting in 12 containers falling overboard, some onto the VLCC CCNI Arauco Hamburg Explosion and subsequent fire following welding work (on an empty container) whilst berthed at Hamburg. Other container(s) affected Wan Hai 307 Fire broke out in container stack forward and required extensive efforts En route Hong Kong ex Kaohsiung to extinguish Hanjin Seattle Nr Vancouver Island Lost around 35 boxes overboard in rough seas Bremen Express Atlantic Ocean Lost undisclosed number of containers, reason unknown

78 78 GLASS HALF FULL Figure 40 GDP/POPULATION DEVELOPMENT NAFTA MERCOSUR GDP (USD x billion) 17, , , , ,244.3 GDP (USD x billion) 3, , , , ,736.5 Population (millions) Population (millions) GDP per capita 38, , , , ,680.4 GDP per capita 11, , , , ,504.5 Share global GDP 23% 24% 25% 24% 25% Share global GDP 4% 4% 4% 3% 4% Share global population 6% 6% 6% 6% 6% Share global population 4% 4% 4% 4% 4% GDP p. cap/world ave 364% 371% 386% 402% 414% GDP p. cap/world ave 110% 106% 104% 89% 92% North America Free Trade Agreement (NAFTA) Members: Canada, Mexico, United States Mercado Comun del Sur (Mercosur) Members: Argentina, Brazil, Paraguay, Uruguay, Venezuela CARICOM EU GDP (USD x billion) GDP (USD x billion) 16, , , , ,020.8 Population (millions) Population (millions) GDP per capita 4, , , , ,397.3 GDP per capita 33, , , , ,594.0 Share global GDP 0.1% 0.1% 0.1% 0.1% 0.1% Share global GDP 22% 22% 21% 22% 22% Share global population 0.3% 0.3% 0.3% 0.2% 0.2% Share global population 7% 7% 7% 6% 6% GDP p. cap/world ave 39.6% 40.5% 41.0% 42.3% 42.6% GDP p. cap/world ave 315% 315% 310% 323% 326% Caribbean Community (CARICOM) Members: Antigua & Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat*, St. Kitts & Nevis, St. Lucia, St. Vincent & Grenadines, Suriname, Trinidad & Tobago. Countries asterisked* = figures not available. European Union (EU) Members: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom SAARC PIF GDP (USD x billion) 3, , , , ,664.0 GDP (USD x billion) 1, , , , ,459.1 Population (millions) 1, , , , ,720.7 Population (millions) GDP per capita 1, , , , ,548.2 GDP per capita 43, , , , ,047.1 Share global GDP 5% 4% 4% 4% 3% Share global GDP 2.2% 2.1% 2.1% 1.8% 1.8% Share global population 25% 24% 24% 22% 22% Share global population 0.5% 0.5% 0.5% 0.5% 0.5% GDP p. cap/world ave 19% 17% 17% 16% 15% GDP p. cap/world ave 408.9% 395.7% 387.4% 373.4% 368.7% South Asian Association for Regional Cooperation (SAARC) Members: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan*, Sri Lanka. Countries asterisked* = figures not available. Pacific Islands Forum (PIF) Members: Australia, Cook Islands*, Fiji, Kiribati, Marshall Islands, Micronesia, Nauru, New Zealand, Niue*, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu. Countries asterisked* = figures not available. GCC ASEAN GDP (USD x billion) 1, , , , ,639.4 GDP (USD x billion) 2, , , , ,492.6 Population (millions) Population (millions) GDP per capita 25, , , , ,946.2 GDP per capita 3, , , , ,985.3 Share global GDP 1% 2% 2% 2% 2% Share global GDP 3% 3% 3% 3% 3% Share global population 1% 1% 1% 1% 1% Share global population 9% 9% 9% 8% 8% GDP p. cap/world ave 240% 291% 313% 316% 310% GDP p. cap/world ave 37% 38% 39% 39% 39% Gulf Co-operation Council (GCC) Members: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE Association of Southeast Asia Nations (ASEAN) Members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam African Union SICA GDP GDP (USD x billion) 1, , , , ,305.1 GDP (USD x billion) Population (millions) 1, , , , ,096.9 Population (millions) GDP per capita 1, , , , ,101.4 GDP per capita 5, , , , ,337.6 Share global GDP 2% 3% 3% 3% 3% Share global GDP 0.4% 0.4% 0.4% 0.4% 0.4% Share global population 15% 15% 15% 14% 14% Share global population 0.8% 0.8% 0.8% 0.7% 0.7% GDP p. cap/world ave 16% 17% 17% 20% 20% GDP p. cap/world ave 53.4% 52.0% 51.9% 52.6% 51.7% African Union (AU) Members: Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cape Verde, Cameroon, Central Africa Republic, Chad, Comoros, Congo (Dem.Rep.), Congo (Rep), Djibouti, Egypt*, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome & Principe, Senegal, Seychelles, Sierra Leone, Somalia*, South Africa, South Sudan, Sudan, Swaziland, Tanzania, Togo, Tunisia, Uganda, Western Sahara*, Zambia, Zimbabwe. Countries asterisked* = figures not available. Notes: Based upon information sourced from IMF. GDP at current prices in USD x billion; population in millions Central America Integration System (SICA) members: Belize, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama

79 DYNALINERS TRADES REVIEW The only certainty, is uncertainty If there is one thing markets dislike, it is uncertainty. Unfortunately, 2016 delivered just that for the near to medium term with a landmark vote in the United Kingdom. Also uncertain is, perhaps, the viability of the East African Community, an organisation that has modelled itself on European Union. The exception to prove the uncertain rule though is Venezuela. Suspended from its own intra-regional organisation, Mercosur, one thing is certain: Venezuela is in a difficult place at the moment. The UK and the European Union The vote in the UK halfway through 2016 saw the establishment seriously shaken up at a national and regional level as the country voted, narrowly but still clearly, to leave the European Union of which it had been a member for more than 40 years. EU 27/UK GDP relationship EU 27 13, , , , ,632.8 UK 2, , , , ,655.5 Total 16, , , , ,288.3 EU 27 share 84% 82% 84% 85% 85% UK share 16% 18% 16% 15% 15% Based upon information sourced from IMF. GDP at current prices in USD x billion converted from local currencies, so exchange rate fluctuations will play a role in year-on-year changes Whilst it is certain that the UK will work towards leaving the EU following the triggering of Article 50, a phrase that has entered the common lexicon since June 2016, uncertainty surrounds the implications and complications of the UK s departure. In the space of just two years, the UK has to extricate itself from a range of EU regulations, legislation and agreements. Leaving the EU may end up being the easy bit, for the UK will also have to renegotiate its trading agreements, individually, with the rest of the world. Some see threats, others see opportunities. Those seeking to make long-term investment decisions can only wait or gamble. How the resultant UK/EU divorce settlement, and subsequent bilateral trade agreements, will affect the UK s trade flows can only be guessed at at the moment. The guesswork can become more calculated once the natures of the new relationships are known, but it will still be guesswork. How shipping will be affected is, by extension, also guesswork. Even analysing the latest available data doesn t help. According to the latest full-year figures (2015), the UK s ports handled very nearly 7.0 million TEU in containers, around twothirds of which were imports. Of that 7.0 million TEU total, just over 2.0 million TEU originated from or was sent to the European Union or Norway (a member of the European Economic Area (EEA) with access to the free trade area). That EU+Norway figure may include a significant proportion of transhipment cargoes, especially considering that The Netherlands and Belgium combined, with their hub ports of Rotterdam and Antwerp, contributed 1.1 million TEU of the EU+Norway sub-total. UK containerised trade Total UK 6,985,400 6,802,700 6,015,900 15, ,632.8 of which EU + NO 2,014,900 1,822,000 1,706,300 2, ,655.5 Share EU + NO 29% 27% 28% 18, ,288.3 Figures are loaded TEU. Based upon data sourced from Eurostat. COUNTRIES East African Community and discord Opposition to free trade blocs or agreements was not limited to the North Atlantic either. After years of negotiation, the East African Community (EAC) and EU presented their Economic Partnership Agreement (EPA) in 2016, a free-trade agreement between the two. However, for it to come into full force, ratification was required by the relevant national governments. Within the EAC, Kenya, who sees 32% of its exports sent to the EU, and Rwanda are the only members thus far approving the deal. With two deadlines having passed, the second one falling early in 2017, none of the other EAC members have yet agreed to the EPA. Uganda is believed to be predisposed towards doing so - although there is opposition within the country - but would rather the whole EAC bloc approves. Burundi has some specific concerns whilst Tanzania has many. Given the differences, implementation of the EPA seems a long way off. There could be concern for the whole future of the EAC. Given that it has (had) ambitions more akin to the EU, of which free movement of goods is a key tenet, mid-2016 witnessed the remarkable decision of Burundi to place a blanket ban on exports to fellow EAC member Rwanda. Venezuela The common market of South America, Mercosur, suspended Venezuela late in 2016 for not complying with certain standards, agreements and treaties. However, Mercosur has history here and is unlikely to be terminally unbalanced by this given that Paraguay was suspended over 2012 and As for Venezuela itself, a country pretty much dependent upon oil, it has had to contend with economic depression which in turn has affected cargo volumes as its port handlings reflect. Carriers serving the country have also responded to the lack of cargoes by downsizing the vessels deployed to Venezuela. Venezuela main port handlings Port El Guamache 12,900 19,800 35,900 34,700 28,900 Guanta 28,200 37,000 65,400 70,800 58,500 La Guaira 208, , , , ,300 Maracaibo 46,400 47,000 71,200 75,700 58,300 Puerto Cabello 438, , , , ,500 Total 734, ,400 1,441,700 1,569,800 1,343,500 Growth -21% -35% -8% +17% +25% Figures are loaded TEU. Based upon data sourced from Eurostat. Volumes have also been impacted by landside inefficiencies as containers are left ashore - and not necessarily in storage facilities designed for the purpose - for months, even years in some cases. This also extends to full containers with anecdotal evidence of perishable cargoes spoiling whilst waiting. In the course of 2016, the aggregate of the resulting demurrage, detention or similar charges was estimated to have exceeded USD 1 billion with the finger pointed, in particular, at the role of state-owned companies. These are now reported to control around half of the country s imports. Whether those levying the charges, especially shipping lines, will be able to recover even part of them, is uncertain. As a result, the risk of sending containers to Venezuela and perhaps not seeing them back again for an extended period has transferred itself to freight rates. In turn, these rates place an increasing strain upon an already struggling economy.

80 80 GLASS HALF FULL Breakbulk (Multipurpose/Heavy-Lift) As of January 2017, the ten largest operators of multipurpose/ project/heavy-lift tonnage deployed a combined fleet of 458 ships with a total deadweight of 8.0 million tons. Compared to start 2016 s assessment this was an 8% increase in both the number of ships and deadweight, these changes being the result of an unprecedented year of consolidation. BBC Chartering and Cosco Shipping Specialised Carriers, the new name for Coscol, continued their dance at the top of the table with BBC regaining the top spot from Cosco SP. One year previously it was Coscol regaining first place from BBC. Thorco is still the number three, effectively maintaining a 71-strong fleet although there have been changes underlying that. Top 10 Operators of general cargo/mpp ships by dwt capacity Dwt MPP Existing On order Rank Operator Ships Total dwt ØAge Ships Total dwt Share 6 AAL , BBC 159 1,783, ,000 4% 5 Chipolbrok , Cosco SP 58 1,567, ,000 11% 8 Intermarine , ,000 39% 7 MACS , Rickmers , Spliethoff , Swire , Thorco 71 1,041, ,000 2% Total Top ,973, ,000 5% The above analysis is based on the number of general cargo/multipurpose ships, operated by the 10 operators stated. The following vessel types have NOT been considered here: OHGC/OHJC, RoRo, Vehicle Carrier, Heavy Load and Open Deck Ship, and Semi-Submersible units. There will be at least one significant change come the 2018 table considering the acquisition of Rickmers-Linie by the Zeaborn Group, also of Germany, which was only established itself in Zeaborn had already experienced something of an expansion when it received commercial management of seventeen multipurpose vessels from UK owner and operator Carisbrooke Shipping. The orderbook of the current 10 operators numbered twenty-seven vessels totalling 435,000-dwt, down substantially from the forty-one ships and 756,000-dwt of a year earlier. On both occasions the lion s share of the orderbook came from Intermarine of Houston with sixteen of the twenty-seven and twenty-one of the forty-one on the stocks at the beginning of BBC Chartering (five ships/72,000-dwt) and Cosco SP (six ships/168,000-dwt) are the only other members of the Top-10 with an orderbook. For 2016, the dominant themes were withdrawal and/ or consolidation. In fact, since 2011, the pace of corporate change within the sector has been increasing. Prior to then there were only four or five significant deals. Multipurpose operator changes When Company Event 2012 Nordana Acquired by WECO group 2012 Scantrans Merged into Intermarine 2012 Fairstar Acquired by Dockwise 2013 Dockstar Acquired by Boskalis 2013 Clipper Projects Merged into Thorco Shipping 2014 Combi-Lift Remaining 50% acquired by Harren Partners 2014 Condock Merged into affiliate Combi-Lift 2015 Safmarine MPV Vessels sold to Thorco Although there was something of a pause for breath in 2015, the following year saw a renewed bout of activity. Included in that was the merger of United Heavy Lift (UHL) into Thorco non-container trades Shipping. UHL had only been established in 2015 by a former CEO of SAL Heavy Lift and Arkon Shipping. Multipurpose operator changes 2016 When Company Event Jan-16 OXL/Flamar Ceased operations Feb-16 Safmarine MPV S.Africa-W.Africa service sold to Fairseas Mar-16 Safmarine MPV N.Europe-W.Africa service sold to NileDutch Mar-16 Peruvian Amazon Line Ceased operations Jun-16 Nordana Projects Acquired by Rickmers-Linie Sep-16 United Heavy Lift Merged with Thorco Shipping Oct-16 Gearbulk + Grieg Star Create G2 Ocean to operate OHGC vessels Nov-16 Abis Shipping Ceased operations Nov-16 Flinter Shipping Ceased operations Nov-16 Transatlantic AB Ceased operations The demise of OXL and its parent Flamar, both of Zeebrugge, had been signposted by the end of 2015 when attempts to restructure had failed. The two companies were declared bankrupt early the following year. Also straddling was A.P. Moller-Maersk s staggered exit from the multipurpose business. Having tried, unsuccessfully, to sell subsidiary Safmarine MPV (West Africa oil and gas industry related multipurpose operator) since 2012, it required four separate actions to complete the withdrawal. Late in 2015 it sold five owned ships to Thorco and also withdrew its US Gulf- West Africa service to go alongside the sales of its North Europe and Southern Africa services. The departure of Transatlantic AB was also not a surprise, given the recent history of this Sweden based operator. It was originally the Industrial Shipping division of what was Rederi AB Transatlantic (RABT), the other division being Viking Supply Ships. Both were established in 2014 as continuations of previous divisions. Alongside, RABT altered the focus of its activities away from Industrial Shipping/Transatlantic towards the offshore sector so much so that in 2015 the group, which had been struggling financially for a long while, renamed itself to Viking Supply Ships AB and sold its container liner activities. The Baltic-North Europe breakbulk, forest products and Ro/ Ro elements were retained by Viking/Transatlantic until these too were discontinued. Three of Transatlantic AB s five vessels were taken on by compatriot Swedish Orient Lines. The Dutch multipurpose segment also had its share of changes, including casualties when the end of 2016 saw the demise of two significant names in Flinter and Abis Shipping. The latter saw seventeen of its twenty-one strong fleet repossessed by the banks, twelve of which were put up for auction. The pressure placed on struggling Flinter was already evident in October as banks refused to prolong the financing of nine of its thirty-five strong fleet. This led to a forced sale which, in turn, contributed to the solvency filing. Staying in The Netherlands, at the end of 2016, three parties brought their ship management activities together, these being Thorco Shipping Holland (part of Thorco Projects), Feederlines and Navigia. Alongside the Peak Shipping fleet already managed by Feederlines and Navigia, they consolidated a fleet of sixty-five vessels under the House of Shipping brand. Finally, and continuing the theme into (first quarter) 2017, Weco RoRo s multipurpose-ro/ro service between the Mediterranean and United States, ensured by two vessels only, was closed down. Weco RoRo was previously known as Nordana Line but adopted the new form in mid Since 2012 Weco had been the sole owner of Nordana, which also included breakbulk/project shipping.

81 DYNALINERS TRADES REVIEW

82 82 GLASS HALF FULL This particular aspect, Nordana Projects, was sold to Rickmers-Linie in mid But this is not the end of the malaise.. Also occurring in 1Q 2017, that same Rickmers-Linie was acquired by the still relative newcomer, Zeaborn, also of Germany (established 2013). One other corporate change saw the establishment of Cosco Shipping Specialised Carriers (Cosco SP). With the various swapping and combinations of Cosco and China Shipping activities, Cosco SP was the effective continuation of what was Cosco Shipping Limited, Coscol. Alongside the reorganisation, it set up Guangzhou Cosco Shipping RoRo Transportation for its Ro/ Ro activities. The ranking by heavy-lift capacity of the same 10 breakbulk operators looks slightly different albeit with BBC Chartering still first with its fleet being able to lift nearly 52,000 tons in total at an average of 330 tons per ship. The aggregate on board lifting capability of the Top-10 as a whole came to 144,000 tons at an average of 300 tons per ship. Second after BBC was Intermarine whose forty ships have an average crane capacity of 530 tons to total 21,200 tons. Third was Cosco SP (15,500 tons total/ 270 tons average). The highest average per ship was the 580 posted by Chipolbrok, operator of twenty-one vessels. Top 10 Operators of general cargo/mpp ships by heavy lift capacity Dwt MPP Existing On order Rank Operator Ships Total HL ØHL Ships Total HL Share 6 AAL 18 10, BBC , ,700 7% 5 Chipolbrok 21 12, Cosco SP 58 15, ,200 27% 2 Intermarine 40 21, ,900 47% 9 MACS 14 1, Rickmers 16 7, Spliethoff 45 8, Swire 16 1, Thorco 71 13, % Total Top , % The above analysis is based on the number of general cargo/multipurpose ships, operated by the 10 operators stated. The following vessel types have NOT been considered here: OHGC/OHJC, RoRo, Vehicle Carrier, Heavy Load and Open Deck Ship, and Semi-Submersible units. Heavy-Load The specialist Heavy-Load segment as opposed to multipurpose/breakbulk carriers whose vessels also happen to have heavy-lift capable cranes - is a small but fascinating one, if only because of the often huge structures and modules of all kinds carried. These are loaded or discharged in various modes: hoisted, float-on/off, roll-on/off or skid-on/off. The segment is made up of three main kinds of ships: Additionally strengthened multipurpose/project/heavyload carriers of minimum 500 tons crane capacity Semi-submersible vessels coming in different sub-types Open deck ships, both non-geared/non-submersible, also referred to as Module Carriers. The Heavy Load operators are influenced, to varying degrees, by the state of the oil and gas markets. Hence, and albeit with exceptions in certain LNG fields and renewable energy projects, companies operating in this segment have enjoyed better times. The hope being expressed by some is that the breakbulk, projects and heavy lift markets will be up for recovery by late That is still a fair way away. The 10 largest Heavy Load specialist operators by deadweight deploy 114 vessels with total 3.4 million tons deadweight. This is virtually unchanged from Netherlands based Dockwise with its 19 semi-submersible vessels (four fewer), remains the largest operator at 937,000-dwt. Zhen Hua, the in-house carrier of terminal crane and equipment-builder ZPMC, remains a close second with twenty-two ships (four more) for a total of 915,000-dwt. European operators dominate the Heavy Load segment with seventy-four vessels spread around six companies. Four Asian carriers contribute the remaining forty ships. Only two of the Top-10 possess an orderbook, these being ZP- MC-Red Box (two ships totalling 54,000-dwt) and BigLift (one at 18,000-dwt). ZPMC-Red Box of The Netherlands is a relative newcomer managed by former Fairstar Heavy Transport people. The company manages a young, five unit fleet consisting of two Open Deck Ships plus three semi-submersibles, all 2015/2016-built. The two newbuilds under construction are semi-submersibles due for delivery in 2017 and The core of Red Box s activity is the huge Yamal LNG project situated near the Russian port of Sabetta in Siberia on the Arctic Ocean along the Northern Sea Route, which requires Polar Ice Class ships. Top 10 Operators of heavy load vessels Dwt Heavy Load Existing Rank Operator Ships Total dwt ØAge 4 BigLift , CoscoHT 8 374, Dockwise , Hansa Heavy Lift , Jumbo Shipping , OHT 5 207, SAL , TPI Mega Line 5 113, Zhen Hua , ZPMC-Red Box 5 209, Total Top ,433, The above analysis is based on the number of heavy load multipurpose, semi-submersible and open deck ships, operated by the 10 operators stated. Other types of ships are not included. Non-submersible open deck ships come in two types: open-stern or closed-stern. The latter type, comprising converted former tankers or dry-bulk vessels, is exclusively deployed by Zhen Hua. Semi-submersible vessels can be open or closed stern, or be dock-vessels, which may be geared and/or provided with a ramp. Early in 2016, RollDock of Rotterdam took delivery of its fifth and last heavy-lift/roro/semi-submersible dock ship. These vessels have a submerged draught over the tanktop of 6.6 metres and are equipped with two 350 tons board cranes, combinable to 700 tons safe working load (SWL). The stern ramp is adjustable in height, removable and can accommodate loads of up to 1,600 tons, making it one of the most capable in the industry. Deepsea Ro/Ro The total vehicle carrier fleet is estimated at nearly 800 units with a total deadweight capacity of 13.0 million tons. Sixty-five vehicle carriers totalling 1.2 million-dwt are on order, equivalent to nearly 9% of the current capacity. The ten largest operators, as identified, control 640 vessels for 11.2 million-dwt, equivalent to 85% of global capacity. They also account for the lion s share of the orderbook with seven of the Top 10 expecting thirty-nine newbuilds totalling 702,000-dwt, a somewhat smaller global share of 60% although much of the difference may be taken up by non-operating owners who charter out to the carriers. The largest carrier is Wallenius Wilhelmsen Logistics who also gave us the most significant corporate moment in the sector in 2016 this was the agreement of the separate Wallenius and Wilh. Wilhelmsen companies to merge the interests they had in Wallenius Wilhelmsen Logistics, Eukor and American Rollon Roll-off Carriers into a new holding: Wallenius Wilhelmsen Logistics. The merger went ahead the following April whereupon the new entity took over the Oslo listing held by Wallenius. Wilhelmsen held 38% and Wallenius 48% in the company. As well as its 119 vehicle carriers, WWL also operates another

83 DYNALINERS TRADES REVIEW some shareholders and as a result, the delisting took place early in 2017.

84 84 GLASS HALF FULL eight vessels which are formally considered conventional Ro/ Ro ships. The second largest carrier by deadweight is NYK Line with 127 ships, six more than WWL but actually some 538,000-dwt less at 2.2 million-dwt. Compatriots MOL and K Line are third and fourth respectively with Hyundai Glovis fifth and the last deadweight millionaire (1.1 million-dwt). Top 10 (by deadweight) operators of vehicle carriers Dwt MPP Existing On order Rank Operator Ships Total dwt ØAge Ships Total dwt Share 7 Cido Car Carrier , ,000 10% 9 Grimaldi Group , , % 6 Hoegh , Hyundai Glovis 58 1,056, ,000 8% 4 "K" Line 87 1,360, ,000 8% 3 MOL 114 1,855, ,000 4% 10 Neptune Lines , NYK Line 127 2,178, Toyofuji Shg , ,000 7% 1 WWL 119 2,716, ,000 5% Total Top ,185, ,000 6% Other 155 1,867, ,000 25% Grand Total ,052, ,169,000 9% As is known, in the container liner sector, K Line, MOL and NYK are forming a joint venture to pool their operations together. Based upon 2016 year-end capacities, the Ocean Network Express (ONE), as it has been branded, would have had a virtual capacity rank of fifth, controlling 238 ships and 1.37 million TEU in capacity. Still undergoing various regulatory scrutinies, interestingly it has already been bounced-back by South African authorities, one of whose concerns was that the creation of the ONE formed a template for a possible similar exercise involving the three car carrier divisions. Were this to happen, based upon the above table, the Car Ocean Network Express (CONE) as it could be termed, would be the undoubted market leader with a fleet of 328 vessels (41% of global fleet), 5.39 million-dwt (41% of global dwt capacity) and 1.67 million CEU (42%). Considering the stuttering progress that ONE is making when it would, at best, be the fifth largest, it is difficult to see any vehicle carrier equivalent making headway when it would hold a much more dominant position. In fact, a number of jurisdictions have been busying themselves with investigations into the car carrier business as it is. In the course of 2016, some of these saw developments. Anti-trust interest in Ro/Ro (PCTC) shipping Authority Status Carriers Japan (Fair Trade Closed 2014, carriers "K" Line, Nissan Motor Car Carriers, Commission) fined NYK, WWL China (National Closed 2015, operators fined varying Development and CSAV, Eastern Car Liner, Eukor, "K" Reform Commission, Line, MOL, NYK, WWL levels NDRC) South Africa (Competition Commission) Opened 2015, partially resolved against some of the carriers United States Closed 2015, operators fined varying (Federal Maritime Commission, FMC) levels Australia (Competition and Consumer Commission) Brazil (Council for Economic Defence, CADE) Ongoing 2016 (NYK fined) Opened 2016 Eukor, Hoegh Autoliners, "K" Line, MOL, NYK, WWL CSAV, Eukor, Hoegh Autoliners, "K" Line, MOL, NYUK, Nissan Motor Car Carriers, WWL "K" Line, NYK and others CSAV, Eukor, Grimaldi, Hoegh Autoliners, "K" Line, MOL, Nissan Motor Car Carriers, NYK, WWL Further to the above, in March 2017 The Competition Commission of South Africa announced that it had turned the investigation into alleged price-fixing by K Line over to the Competition Tribunal for prosecution. Global capacity expressed as Car Equivalent Units (CEU) showed that there was 3.95 million CEU. Of that, 3.45 million CEU, equivalent to 87%, was controlled by the ten largest operators. The sector also had another 444,000 CEU on order, which, if delivered all in one go would increase global capacity by 11.2%. The Top 10 had 282,000 CEU on order, equivalent to 8% of their existing fleet. Top 10 (by CEU) operators of vehicle carriers CEU Vehicle Carrier Existing On order Rank Operator Ships Total CEU ØAge Ships Total CEU Share 7 Cido Car Carrier , ,000 11% 9 Grimaldi Group 15 67, , % 6 Hoegh , Hyundai Glovis , ,000 9% 4 "K" Line , ,000 8% 3 MOL , ,000 5% 10 Neptune Lines 16 41, NYK Line , Toyofuji Shg 28 68, ,000 9% 1 WWL , ,000 6% Total Top ,454, ,000 8% Other , ,000 33% Grand Total 795 3,951, ,000 11% Although the overall 11.2% capacity share of the orderbook can t be considered overly excessive, in the context of a less than favourable 2016 car market with volumes estimated to have fallen 4% on year and no improvement expected until 2018, there are fears of overcapacity. Increased scrapping in combination with cancellations where possible should be the industry s answer to keep rates up. Thirty Car Carriers with a total space for 142,000 CEU were scrapped in 2016, equivalent to a paltry 3.6% of global capacity. Smaller volumes came in spite of 2016 global car production increasing by 3.2% to an estimated 19 million units. The factors behind the drop in shipping volumes included reduced imports into many emerging economies and the increasingly localised production of cars around the world negating the requirement for shipping overseas. These were actually trends that started in In their quest to carry cargoes, the vehicle carrier community will therefore continue to target the breakbulk/project cargo segment, which itself is pressurised. The breakbulk and project cargo sector is one which is more naturally aligned with conventional Ro/Ro carriers. Conventional Ro/Ro operators are true multipurpose operations. Depending on the capabilities of their ships and the routes served, they can carry cars, high-and-heavy, breakbulk parcels, projects, heavy lift and containers. Despite this flexibility, the conventional Ro/Ro sector is very much a struggling and, some might say, dying segment alike conventional reefers. It is a feeling not dissuaded by the early-2017 closure of one of the more recognisable operators, Weco Ro/Ro, previously Nordana Line. Going further, only ten deepsea operators have invested in Ro/Ro tonnage since the year These include the current five largest, each of them operating quite distinct units, varying from Car Carrier-like designs (WWL) to the more classic, ramp-dominated 1970s-looks (Messina), the simple general cargo vessel with an auxiliary ramp (Kyowa) and the somewhat revolutionary fourth generation of vessel that Grimaldi s Atlantic Container Line received over the course of 2015 and Together with Bahri, all those carriers named are dedicated to operating Ro/Ro vessels. Considering the specific, commercial deepsea sector (thus excluding shortsea, ferries and civilian units chartered by governments/militaries), the Grimaldi group of Italy is the largest op-

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86 86 GLASS HALF FULL erator with thirty-eight ships and a substantial 1.2 million-dwt. The number two carrier, Messina Line, also of Italy, is way behind with nine vessels and 376,000 TEU. The third largest is WWL although its conventional fleet is actually deployed on the car carrier trades. Top 10 (by total deadweight) conventional Ro/Ro operators Dwt Deepsea Ro/Ro Total Total Total Total Rank Operator Ships Dwt TEU Ramp Ø Age 5 Bahri 6 156,000 2,200 1, ECL 7 79, Grimaldi/ACL 38 1,182,000 58,700 9, Kyowa Shipping 5 50,000 2, Messina 9 376,000 24,500 3, Murmansk Ship. 3 56,000 1, Myanma 5 Star 4 37, NYK BPC ,000 10, Toko Kaiun 3 40, WWL 8 330,000 9,600 3, Total Top-10 deadweight 98 2,628, ,700 18, At present, only around forty-five Conventional Ro/Ro ships are on order, mostly for shortsea operators, including intra-europe ferry forces Cobelfret and DFDS, plus various Japanese domestic carriers. Only Kyowa Shipping from out of the deepsea Top 10 has an orderbook, this consisting of two ships of 11,800-dwt pencilled in for delivery in It is unlikely that there will be significant investment in deepsea tonnage anytime soon. Bahri, Grimaldi/ACL and Messina have all completed newbuild programmes over the past few years. For Messina, its eight-unit strong fleet renewal, which was completed in June 2015, seems to have weighed heavily. Early in 2017, container carrier MSC reportedly signed a MoU for a 49% stake in Messina in return for a sum of around USD 42 million. With the capability to load and discharge cargoes with either on-board cranes or via the ramp, the geared Conventional Ro/ Ro vessel is one of the most versatile cargo ships. They may not all be geared, but what unavoidably all Ro/Ro ships have is a ramp in common. The below table shows the average ramp capability of the Top 10 operators ships, as well as the average capacity of their (heavy-lift) on-board cranes, if installed. Top 10 (by ramp capability) conventional Ro/Ro operators Dwt Ro/Ro Total Average Average Ave Rank Operator Ships Dwt HL Ramp Ø Age 5 Bahri 6 25, ECL 7 11, Grimaldi/ACL 38 31, Kyowa Shipping 5 9, Messina 9 41, Murmansk Ship. 3 18, Myanma 5 Star 4 9, NYK BPC 15 21, Toko Kaiun 3 13, WWL 8 41, Total Top , Reefer In late 2016, the world fleet of conventional reefer ships numbered 619 units. All told they could carry million cubic feet (cu.ft) of cargo. Within that fleet, the world s ten largest operators controlled 233 vessels with a combined capacity of 107 million cu.ft. Their share of the world fleet was 38% by the number of ships and 54% of overall cubic capacity. With the exception of those employed by fruit traders, conventional (or specialist) reefer ships are often operated within a pool, with the commercial pool manager acting as operator. An owner may have ships distributed over more than one pool and ships may also switch between pools. Top 10 (by cu.ft.) conventional reefer operators Reefership Existing Rank Operator Ships Cu.ft. 8 Africa Express Line 8 4,470,400 2 Baltic/Cool 42 24,784, Boyang 14 3,225,600 3 Frigoship 33 11,580,600 7 Great White Fleet 9 4,924,700 4 GreenSea 36 10,537,400 9 Maestro 6 4,078,600 5 Network Shipping 19 8,760,300 1 Seatrade 56 29,537,700 6 Star Reefers 10 5,732,700 Top ,632,500 Other ,450,800 Grand Total ,083,300 The competitive struggle between the conventional and containerised forms of reefer shipping continues although the box is now dominant. This is seen in the capacity figures. The global conventional reefer capacity of 201 million cu.ft is roughly equivalent to 84,240x 40 high cube reefer containers. In 2016, the world s twenty-five largest container liner carriers had a fleet that disposed of 1.9 million reefer plugs, which, if all fitted with 40 high cube reefer containers would approximate to 4.5 billion cu.ft in capacity. That competing capacity is purely theoretical as the global reefer box fleet only comes to 1.4 million units, more than 95% of which are 40 high cubes or larger. The combined capacity of this reefer box fleet would come in at 3.1 billion cu.ft, still more than fifteen times larger than conventional capacity. Even conventional market leader Seatrade is shifting into the box direction. In 2016 it received the Seatrade Orange, a reefer-plug heavy container vessel. The first of six ships, it has a capacity of 2,600 TEU and 674 plugs, a theoretical capacity of 1.6 million cu.ft. Later numbers in the series will have higher reefer plug intakes. Seatrade continued its development towards being a reefer container liner operator with the late 2016 order for 4,000 boxes and the initiation, early in 2017, of its Meridian FDD service. This employs a total of eight containerships from North Europe to Australasia returning via the West Coast of South America and North America East Coast. The service replaced an existing conventional service, but just like that loop, also targeted general cargoes and cars for strings not carrying substantial amounts of perishable cargoes. Other main developments in the reefer sector were corporate. Late in 2015 Sumitomo Corporation made a bid to acquire fruit distributor Fyffes for around USD 800 million. The deal went through early the following year. Fyffes also had a 50% share in conventional reefer operator Geest Line. Also occurring late in 2015 was the agreement between the GF Group and Glenalta Food, both of Italy, to merge. The GF Group was once the owners of liner operator Costa Container Line (acquired by Hamburg Süd in 2007) and latterly conventional reefer operator Cosiarma. Glenalta was a special purpose company established for the purpose of investment/acquisition. This took place early in 2017 with Orsero S.p.A. the resulting entity and listed on the Italian alternative market. Orsero is the name of the familiy that controlled the GF Group. Finally, the last publicly-listed reefer shipping company, Siem Shipping, applied to delist from the Oslo Stock Exchange in However, this was postponed following objections from

87 DYNALINERS TRADES REVIEW The Irresistable Force Shipping is a people business, we often hear, yet, throughout history, new technology has always been applied to labour intensive tasks producing faster results with fewer errors, and, fewer people. Shipping is no exception here. Sometimes the encroachment of technology is gradual. The introduction of mainframes and then personal computers, and then laptops, and then mobile devices, and the range of work that these platforms now undertake, are examples of the gradual approach. Computers are now so much more than word processors. Sometimes there is the arrival of a new technology that completely alters the established order. Nowadays, that would be called disruptive technology. The impacts transcend the industry to which the new techniques are applied, they are socio-economic as well. Our industry, that of containerisation, is the prime example of disruptive technology within shipping. Nowadays an epoch altering technology is approaching that has the potential to be as disruptive to the established shipping (and socio-economic) order as containerisation was to conventional shipping. This is the application of remote and/ or autonomous technology (and techniques) to the sailing of ships. Some might say it is an irresistible force: it is coming, and maybe, as some believe or wish, nothing can stop it. Levels of automation Automation Where human labour is replaced by machines; vessels could still be controlled remotely by shore-based captains Augmentation Autonomous ships Where people and machines work together to provide a better service or operation Vessels able to act independently once given the command to sail Containerisation has already seen its fair share of automatic and autonomous processes shoreside in the port and terminals sector where computers now choreograph a ballet of exquisite complication in moving boxes between ship and stack with barely a human hand touching the containers. With automation now also established in distribution centres and warehouses (automatic order picking), the technology is now moving away from the terminal to transportion. In 2016 the European Truck Platooning Challenge saw six singletruck-brand platoons start from locations in Sweden, Germany and Belgium, all ending their journeys at APM Terminals facility on Rotterdam s Maasvlakte II. The ultimate aim is for multitruck-brand platoons to operationally enter the commercial market in Elsewhere, the port of Singapore has engaged two truck companies to develop truck platooning for port container movements, with tests planned for the period. Truck Platooning is... where a small number of trucks travel in close-knit convoy, connected wirelessly to a lead vehicle and, essentially, follow that leader. Although drivers may be present, the workload of the drivers in the trailing vehicles, is very much reduced, at the least. In the Singapore trial it is envisaged that only the lead vehicle houses a human driver. Further afield there are concepts for the last mile/ first mile movement of containers to be carried out by a drone as the Shango and The Modal. The latter is actually a quad-copter design whose capability to lift empty 20 and 40 containers would be provided by four turboshaft engines and enabled by the so-called ground effect which increases lift and reduces drag when wings are close to a fixed surface....and Finally Equally ambitious is the Hyperloop. This is where the vehicle moves through a reduced pressure tube without being in physical contact with the track. The application for shipping? Well, in 2016 DP World signed an evaluation agreement with, and became a key investor of, Hyperloop One of the United States. The evaluation is with regards to the potential of this concept to move containers between its Jebel Ali marine terminal and a new Inland Container Terminal in Dubai. Hyperloop One, if the concept is proven, will be fully autonomous and could offer speeds of up to 1,200 kilometres per hour, fast enough to link the US West Coast with East Coast in around three hours. On the water, the concept stage is moving towards the gradual introduction of (semi-) autonomous shipping. For the last couple of years, the main driver behind this and related systems has been Rolls-Royce. It foresees a shipping world populated with continuous data links, artificial intelligence and shorebased control centres, amongst others. Norwegian ferry operator Fjord1 has purchased Rolls Royce s automatic crossing system. It will be deployed on a ferry plying the less than two kilometre Anda-Lote link on opposite sides of the Nordfjord in western Norway. Admittedly a short distance, it will still be an excellent test bed. Whilst there will be a crew on board, only final berthing will be carried out by the boat s master. All other operations will be fully automatic. Norway seems to be taking a lead in at least trialling out various levels of automation. In May 2017, Yara and Kongsberg announced plans to commission a fully electric and autonomous container feeder ship to carry cargoes from its production plant in Porsgrunn, Norway, to nearby Brevik and Larvik. The distance to Brevik is around thirteen kilometres by road and sixteen or so by water. The ship is planned to cut out around 40,000 local truck trips per year. Starting in the second half of 2018 as a manned vessel, the following year it plans to move to remote operations with the ship going to fully autonomous mode come Yet it is not just a Norwegian and Rolls-Royce area of interest now. Shipping major MOL, together with variety of Japanese partners, is conducting research into autonomous shipping and the world s largest miner, BHP Billiton is casting an eye towards the autonomous concept.

88 88 GLASS HALF FULL There is a natural fear when the established way of working is presented with new technology. Whether remotely monitored and controlled or fully automated, the concern is understandably centred around the human impact, in other words, the loss of employment opportunities. Autonomous shipping, in whatever form, even if only semi-autonomous, will clearly have a major impact. One estimate sees a reduction of crew sizes by half as a result of the new technology. This impacts will be seen most of all in those countries who have traditionally provided manpower. Around 500,000 Filipinos, helping remit some of the USD 5.2 billion shipping sends back to their home country, are employed as seafarers. The other major fear, in today s increasingly wireless and remotely controlled world, surrounds the resilience of the information technology systems backing this all up. These fears were brought to the fore in May 2017 when two IT related events headlined domestic, business and international news. They were the 75,000 Ransomware Cyber-attacks that afflicted some 100 countries, and the catastrophic IT failure suffered by British Airways. Although this latter, it was emphasised, was not an attack by outside malignant forces, it still had extensive operational consequences. The not unreasonable question then, is what would happen if one (semi-) autonomous ship were subject to one of those events? What would happen to a fleet? In fact, pirates would no longer need to actually go to sea to steal a ship and/or its cargo. We have seen something similar already in 2011 when the port of Antwerp was subject to hacking whereby criminals routed containers through the port and remove evidence of their interference. The immovable object Quite clearly, alongside the considerable intellectual and practical investment needed to prove the concept of automated shipping, there needs to be commensurate investment in systems resilience. But it s not these fears that will slow, much less halt, the advance of automation. What might is the immovable object of regulation, which, inadvertently (?) could end up being the guardian of human interests. Although seen as a restrictive element by many, regulation already is, to a degree, the protection of (human) interests throug various safety and environmental requirements. Much thought will need to go into how the new dawn of remote semi- or fully-automated shipping will need to be regulated. Remote control and autonomous vessels will have an impact upon naval architecture for example. The accommodation and bridge superstructure would at the least be much reduced. How will the flag state system be affected is another question? In many jurisdictions, one of the requirements is that a certain proportion, and positions, within the crew are filled by the nationality of the Flag issuing state. Regulations also state how these crews should perform their duties. How to regulate or set flag state requirements if no crew is present? How will the new technology dovetail with port requirements regarding pilotage for example? Will regulators have to evolve to include minimum standards of systems resilience? There are and will be many other questions requiring study and decision. Tentative steps Lloyds Register IMO Has developed a system to classify levels of autonomous operation. AL1 is the lowest level with AL6 being a fully autonomous vessel. Has started discussions with a view to drafting safety rules for Maritime Autonomous Surface Ships The devil, as always, is in the detail, and the detail as to how the new technology will interact with the myriad of legislative and regulatory requirements is still to be worked out. Arguably, it will cost a lot more effort and input to arrive at a solution here than that needed to produce the viable technology. Estimates vary as to the depth and speed of the penetration of automation on board vessels. DNV believes fully unmanned vessels are still at least a decade away. If any, small boats will most likely be fully automated first as the distinctly local Norwegian examples show. In fact, the first tests of remote controlled and fully automated boats have already been made. The future, it seems, is closer that we think. First tests Remote control Autonomous operation Early in 2017, Rolls-Royce and Svitzer tested a remotely controlled tug (28 metres long) in Copenhagen harbour. Controlled by the ship s captain from remote location, the boat completed docking, undocking and sailing manoeuvres. In April 2016 the United States Navy commissioned the "Sea Hunter, a 40 metres long, fully unmanned surface vessel (USV) designed to search for submarines and mines and patrol for days. The software and sensors were tested earlier on another vessel to fulfil collision regulations. Initial performance trials of the "Sea Hunter" were completed in 2016 and it will continue to be tested well into The vessel navigates by a combination of the current tools available to any crewed ship, namely GPS, radar, sonar and cameras. For larger and true ocean-going vessels, there will more likely be a gradual increase in automation especially as regulations and solutions to issues as architecture, minimum crewing, collision avoidance, route-planning have to be developed. Unless somebody can develop a self-repairing vessel, there will surely still be a (regulatory) requirement for some form of engineering presence at least. Maybe, what we will end up with, once the regulators have had their say, is a situation whereby crews will reduce but become top heavy, a higher officer to ratings ratio and an increase of systems and data engineers, be they ashore or afloat. This would point to a similarly greater emphasis upon a knowledge-based economy and workforce, which will be to the benefit, most of all, of the entrepreneur and the post-industrialised societies.

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90 90 GLASS HALF FULL Figure 41 DYNALINERS REGIONAL DEFINITIONS Trade Coastline Coastal (littoral) countries North Europe Clockwise from northeast: Iceland, Faroer, Norway, Sweden, Finland, Russia (Baltic), Estonia, Latvia, Lithuania, Poland, Germany, Denmark, Netherlands, Belgium, France (Channel/Atlantic), United Kingdom, Ireland, Spain (Bay of Biscay/Atlantic), Portugal Europe Mediterranean Clockwise from northeast: Spain (Mediterranean), Gibraltar, France (Mediterranean), Monaco, Italy, Slovenia, Croatia, Bosnia Herzegovina, Albania, Greece, Turkey (Aegean), Bulgaria, Romania, Moldova, Ukraine, Russia (Black Sea), Turkey (Black Sea/Aegean/Levant, Cyprus, Syria, Lebanon, Israel, Egypt, Libya, Malta, Tunisia, Algeria, Morocco (Mediterranean/Tangier) North America North America East Coast From north to south: Canada, United States, Mexico North America West Coast From north to south: Canada, United States, Mexico Far East Northeast Asia Clockwise from northwest: Russia (Pacific/Far East), Japan, Taiwan, Hong Kong (SAR, China), China, North Korea, South Korea Southeast Asia Clockwise from northwest: Philippines, Indonesia, Malaysia, Myanmar (Burma), Thailand, Cambodia, Vietnam, Brunei Indian Subcontinent Clockwise from northwest: Pakistan, India, Bangladesh, Sri Lanka, Maldives Gulf (Persian Gulf plus Arabian Sea), clockwise from northwest: Iraq, Iran, Middle East/Indian Subcontinent Oman, United Arab Emirates, Qatar, Bahrain, Saudi Arabia, Kuwait Middle East Red Sea (Red Sea plus Gulf of Aden), clockwise from northwest: Egypt (Red Sea), Israel, Jordan (both Gulf of Aqaba), Saudi Arabia (Red Sea), Yemen, Somalia (Red Sea), Djibouti, Eritrea, Sudan East Africa Clockwise from northwest: Somalia (Indian Ocean), Indian Ocean Islands (Seychelles, Mauritius, Reunion, Madagascar, Mayotte, Comoros), Tanzania, Kenya Southern Africa From east to west: Mozambique, South Africa, Namibia Africa From north to south: Mauritania, Cape Verde, Senegal, Gambia, Guinea-Bissau, West Africa Guinea, Sierra Leone, Liberia, Ivory Coast, Ghana, Togo, Benin, Nigeria, Cameroon, Sao Tome and Principe, Equatorial Guinea, Gabon, Congo (Republic of), Democratic Republic of Congo, Angola Clockwise from northwest [main islands receiving deepsea services only]: Cuba, Bahamas, Jamaica, Haiti, Dominican Republic, Puerto Rico, US Virgin Islands, Caribbean British Virgin Islands, St. Martin/St. Maarten, Guadeloupe, Dominica, Martinique, St. Lucia, St. Vincent and Grenadines, Barbados, Trinidad and Tobago, French Guiana, Suriname, Guyana, Venezuela, Colombia (Caribbean), Panama, Latin America Costa Rica, Nicaragua, Honduras, Guatemala, (all Caribbean coasts), Belize East Coast South America From north to south: Brazil, Uruguay, Argentina West Coast South America From north to south: Colombia (Pacific), Ecuador, Peru, Chile West Coast Central America From north to south: Guatemala (Pacific), El Salvador, Honduras (Pacific), Nicaragua, Costa Rica, Panama (all Pacific coasts) Australia/New Zealand Australia, Papua New Guinea, New Zealand Australasia Clockwise from northwest: Guam, Mariana Islands, Marshall Islands, Kiribati, Pacific Islands French Polynesia, Cook Islands, American Samoa, Samoa, Tonga, Wallis and Futuna, Tuvalu, Fiji, Vanuatu, New Caledonia, Solomon Islands, Micronesia

91 DYNALINERS TRADES REVIEW Liner Shipping Summary CONTAINER TRADES January StreamLines, the container operator of conventional reefer specialist Seatrade Chartering, starts a full container service linking North Europe to Central America and Florida, named Blue Stream Service. Atlantic Container Line (ACL), part of the Grimaldi group, starts operating its first G4 Container-Ro/Ro (ConRo) newbuilding in its Transatlantic service. SeaLand, the regional subsidiary of Maersk Line, introduces a new weekly service between the Gulf of Mexico and the US East Coast, with perishable goods as its main focus, styled Atlantico. X-Press Feeders launches a twice-weekly shuttle dubbed Jebel Alia Umm Qasr Express (JUX). X-Press Feeders merges its intra-central America CPX1 service into its partly-overlapping Panama-Central America-Colombia service (PCX). CMA CGM commences a weekly shuttle between Kingston and Turbo, dubbed Uraba. NileDutch offers a new connection between the US East Coast and West Africa, using space on the USA Container Service of Turkon Line and transhipment at Tangier onto its own West Europe-West Africa WEWA. Wan Hai/Interasia Lines, MOL and PIL commence a new weekly service dubbed China-India Service (CI2), between the two countries from which it derives its name. Coscon and MOL on the one hand and Gold Star Line and Hapag-Lloyd on the other combine their respective Far East- West Africa FWAS/WA1 and FAX/WSX services into a single loop. Former partner Evergreen withdraws from the trade. Trade sanctions against Iran are lifted. Although initially hesitant, eventually global carriers start serving the country again. Arkas and Hapag-Lloyd introduce a joint high reefer capacity service in the Mediterranean-Black Sea trade. It connects to Egypt, Israel and Turkey. WEC Lines expand its North Europe Portugal service (SPM II) by adding a Portugal-Liverpool loop. February With the lifting of sanctions on the country, Islamic Republic of Iran Shipping Lines (IRISL) offshoot HDS Lines announces, after five years, its return to the Europe-Middle East-Indian Sub Continent trade. Taicang Container Lines expands its services portfolio beyond the currently served Central China-Japan range, with a new service between China, Thailand and Vietnam. Dubai-based Simatech starts a Colombo-India connection also catering for India domestic cargoes. With the phasing in of its first of three full reefer capacity newbuilds, Dole Ocean Cargo Express starts the upgrade of its Ecuador-San Diego service. MOL will end its longstanding Far East- East Coast South America CSW service, which it coordinates with Maersk Line and MSC and instead, it becomes a ton- nage provider to the latter s ASAS/Ipanema. Regional Container Lines (RCL) teams up with Yang Ming on a new intra-far East connection, dubbed Haiphong-Yangon (RHY) service. Following a recently-signed Coast Shipping Agreement between India and Bangladesh, two 170 TEU multi-purpose vessels, coordinated by Ben Line Agencies, start providing regular connections between Kolkata and Chittagong. Iran-based Khedri Jahan Darya Shipping finally launches its April 2015-announced shuttle between Bandar Abbas and Sohar. MSC restyles its Indian Sub Continent-Europe Service (ISES), operated in conjunction with SCI, to the more appealing Himalaya Express. CMA CGM merges its US East Coast-North Coast South America Cagema Main Liner service with its recently-launched Uraba, and terminates its involvement in Carifeed, operated jointly with Caribbean Feeder Services. Instead, it starts two new feeder loops centred on Kingston, (new) Carifeed (to Haiti) and Eldorado (to Suriname and Guyana). Unifeeder commences a dedicated weekly connection between Gdynia and St. Petersburg. March China Shipping, CMA CGM (trade name Amerigo Express), Hanjin and UASC (MINA) terminate their joint Middle East/Indian Sub Continent-Mediterranean-US East Coast service. It is replaced by a new Mediterranean-USEC and a new Mediterranean-ISC connection. LINER SHIPPING SUMMARY

92 92 GLASS HALF FULL LINER SHIPPING SUMMARY Melfi Marine splits its Mediterranean-Caribbean MedCan service into two separate loops operating out of Mariel (Cuba), one covers the Cuba-Mediterranean stretch, and the other connects Cuba to Mexico. ZIM commences a new feeder loop dubbed Guyana & Suriname Express (GSE) between Kingston, Georgetown and Paramaribo. Seago Line (Maersk Line) launches a new service between Algeciras, UK and Ireland, styled Irish Sea Service. CHKYE Alliance (Coscon, Hanjin, K Line, Yang Ming and Evergreen) terminate the Evergreen-operated CES/NE8 service. Between the Adriatic and the Far East, the CHKYE Alliance drops the Evergreen-operated Adriatic-Far East (ADR) link, which is replaced by a West Mediterranean loop, coded MD3, in the form of a Mediterranean-Far East-US West Coast pendulum. APL hopes to mint a weekly 100% on-time arrival performance in the first month of the year of its standalone (outside the G6 Alliance) US-flag Eagle Express (EX1) service, by offering customers its new Eagle Stow concept. Against a premium rate, the carrier promises to unload Eagle Stow cargo and mount it on a chassis within a maximum of twelve hours. NileDutch and PIL terminate their fortnightly Far East-West Africa FEWA service. Hyundai launches a new North East Asia- South East Asia connection dubbed China Thailand Express (CTX Singapore-based Far Shipping, operating in the Bay of Bengal to and from Colombo and Straits ports, starts a new link between Sri Lanka, Myanmar and East India. Rates in the Far East-Europe/Mediterranean trades fall to new lows. According to the spot rate-based Shanghai Containerised Freight Index (SCFI), from Shanghai to North Europe the price per TEU (all inclusive) dropped to USD 211, to the Mediterranean it fell to USD 203 MSC announces a seasonal feeder loop from Uruguay to and from South Argentina and Paraná River ports, catering for refrigerated pear and apple exports. Hanjin and Sinokor start a new service between South Korea and Hai Phong, coded KH1. Continental Shipping Line (CSL) commences a new feeder link from Colombo to Yangon and Chennai. CMA CGM launches a Malta-centred intra-mediterranean loop, dubbed West East Med (WEMED). Pacific Direct Line (PDL), a subsidiary of PIL, starts using Matson s South Pacific network to carry containers between New Zealand and the Cook Islands, thereby replacing its own ships. CMA CGM, FESCo and Hyundai launch a new connection between China and Russia Far East, coded RUFEX/FCDL-South/ CRS, replacing their respective current arrangements. April The 2M alliance of Maersk Line and MSC operates a new sling between the Far East and US Gulf advertised as TP18/ Lone Star Express. Wan Hai Lines and its Japan-based subsidiary Interasia Lines launch the new China Manila Thailand Service (CMT). Admiral Feeders launches a new weekly service between Dubai and Basra. King Ocean starts a weekly link between Port Everglades and the British Virgin Islands, calling at the islands of Tortola (Road Town) and Virgin Gorda (The Valley). SITC starts China-Philippines Express 2 (CPX2), a new service connecting the countries from which it derives its name plus South Korea and Japan. It incorporate SNS, partly covering the same route. Maersk Line starts a new service between Algeciras/Tangier and West Africa, coded WAF3. The CHKYE Alliance reveals its 2016 Far East-US East coast network, valid until its dissolution in April At five slings, there is one loop fewer than before, but, taking advantage of the enlarged Panama Canal locks, weekly capacity increases to 40,000 TEU. Yang Ming joins OOCL on its Far East-Middle East Gulf MAX service, replacing outgoing partner Coscon. The latter continues the same operation standalone under the MEX denomination. KMTC and T.S. Lines will commence a new connection between Thailand, Vietnam and Philippines (TVP). CMA CGM initiate a shuttle between Pointe Noire, Libreville and Douala, advertised as West Feeder 2 Arkas Line and Seago Line (Maersk Line) combine their respective Aegean Spain Service (ASA) and Marmara Sea loop into a new joint operation. Transbulk Shipping launches an intra-west Med loop, dubbed Trans Med Express Container (TMECL), between Spain and Algeria. Hapag-Lloyd revises its Baltic network with the addition of the new Poland Express (PEX) replacing the Finland Express (FIX). May Following the withdrawal of Coscon from Calco-C, partners K Line, PIL and Wan Hai combine this Transpacific service with Calco-D into a new style Calco-C. On top, K Line start another loop under the Calco-E denomination. The six carriers operating Far East-ECSA 2-loop SEAS, CMA CGM, Hamburg Süd, Hapag-Lloyd, Hyundai, NYK and UASC, join forces with those four running ESA (Coscon, Evergreen, Hanjin and ZIM). Their existing three loops are reduced to two. CMA CGM starts a new direct service between the Baltic and the East Mediterranean, called Baltic Levant Express (BLX). MOL combines its Straits-India/Pakistan NKX (provided together with Samudera) and Japan-Straits CHS3 (provided with Wan Hai) into a new operation coded HSX operated by all three carriers. Pan Ocean expands its South Korea-China/Japan network to South East Asia through slots on the Korea Haiphong Express (KHS) of Sinokor. Compatriots Heung-A, KMTC and Sinokor launch a second Korea-Ho Chi Minh Service (KHS2). Great Southern Shipping Australia, a new partnership between Australian and Chinese interests, plans a service between Rizhao and Australia using five Australian-flagged ships. Only shortly after its launch, the company collapses with its ships stranded at sea. Eimskip of Iceland and Nuuk/Greenland-based Royal Arctic Line sign a letter of intent to cooperate on the Greenland trade through a capacity sharing agreement. Taking advantage of the imminent opening of the new, larger Panama Canal locks, MSC announces the merger of its US East Coast-West Coast South America service into its Europe-Caribbean-WCSA (ECW) operation, using substantially larger ships. Maersk Line re-arranges its Far East- West Coast South America network by introducing a new loop, AC1, whilst reducing capacity on the existing AC2 and AC3 operations. Unimed Feeder Services (UFS), a branch of Unifeeder, enters the Middle East-In-

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94 94 GLASS HALF FULL LINER SHIPPING SUMMARY dian Sub Continent trade through space from UASC. Non-operating owner TVL of Taipei enters container shipping via a twice-weekly service to and from China. June The G6 Alliance (APL, Hapag-Lloyd, Hyundai, MOL, NYK, OOCL) officially suspends its Loop 6 service until further notice after a period with many cancelled sailings. IRISL/HDS launches Singapore-Chittagong-Yangon (SCY) and IIX, the continuation of a Valfajre-8 service between the Middle East and India. FESCo commences a seasonal loop between Vladivostok and the Arctic Far East ports of Anadyr and Egvekninot, advertised as FESCO Anadyr Direct Line (FADL). Unimed Feeder Services (UFS), a branch of Unifeeder, extends its Middle East coverage through slots from IRISL-affiliated Valfajr Eight Shipping. One service links Iran with Dubai and India, the other one is an Iran domestic loop. Swire Shipping defects from the AUSPAC consortium, also comprising PIL s Pacific Direct Line (PDL), Neptune Shipping and Sofrana Unilines, which provides a service between Australia and South Pacific. Instead, it commences a standalone multipurpose loop in the same trade, dubbed Pacific Islands Service (PIS). OOCL and Wan Hai dissolve their joint China-Vietnam-Thailand (CVT) service and start similar operations of their own. July Wan Hai Lines launches the Mindanao-Malaysia-Belawan Service (MMS), connecting the three areas in its name to Port Kelang. Evergreen and SeaLand (Maersk Line) launch a new link connecting Puerto Rico with Panama and the Dominican Republic. Hyundai expands its Far East-Middle East offering by restructuring and upscaling its current Korea-Middle East Express (KMS) and adding the new China-Middle East Express (CMS). Admiral Container Lines and Turkon Line enter into an intra-east Mediterranean vessel sharing agreement, replacing standalone links. Arkas, Marguisa and ZIM dissolve their current partnership on the Mediterranean-West Africa route and opt for alternative solutions. Arkas and ZIM team up with Coscon (CoscoCS) and Messina, whilst, Marguisa partners CMA CGM s revised EURAF4. CMA CGM and UASC end their joint North Europe-ISC EPIC service and become partners to two existing loops, IOS of Hamburg Süd and Hapag-Lloyd and IPAK of MSC. Evergreen and Maersk Line s local brand SeaLand amalgamate their respective CAN and Caribbean Feeder services, both working out of Colon, into a single loop. CMA CGM, Hamburg Süd and UASC put a stop to their joint Transpacific/Transatlantic Vespucci pendulum and operate a dedicated Transatlantic loop instead. Linea Peninsular commences a third service within the Gulf of Mexico, this one linking Altamira and Progreso with Tampa. MCC Transport (Maersk Line) starts a new intra-far East loop using the IA9 code, linking Taiwan with Vietnam and Cambodia. OOCL splits its China-Ho Chi Minh-Laem Chabang (CHL) service in two separate loops, one covering North China and South Korea, the other one Central and South China. August A new company, Pilbara Express Line, commences a direct multipurpose connection between Singapore and Dampier. Cheng Lie, Coscon, RCL and Yang Ming terminate their joint China-Vietnam Express (CVX). Instead, RCL and Yang Ming work together with OOCL on a revised CHL, whilst Cheng Lie, Gold Star Line and -again- Yang Ming commence a new-style CVX. Matson starts a new monthly loop between Hawaii and various Pacific Islands dubbed South Pacific Express (SPX), with the specific aim to serve as a transhipment connection from the US West Coast. Following the recent takeover of APL, CMA CGM consolidates all Transpacific activities of wholly-owned ANL and US Lines under its new subsidiary. Coscon, Evergreen, K Line, PIL and Wan Hai team up in two new Far East-Indian Sub Continent loops styled PMX/ PIX, replacing existing operations. Maersk Line adds a westbound call at Tauranga to its Far East-WCSA AC3 service. In combination with an eastbound stop at the same port by AC1, the Danes now have two-way connections both from New Zealand to and from Latin America and the Far East. MSC starts a new connection between West India and East Africa, named Cheetah. Cheng Lie (CMA CGM) commences a new butterfly-pattern service between China, Thailand and Vietnam (CTV), centred on Qingdao. Hapag-Lloyd offers a new feeder link between Caucedo (Dominican Republic) and Port of Spain (Trinidad & Tobago). September ANL (CMA CGM), Coscon (CoscoCS) and OOCL reorganise their existing North East Asia-Australia services into a new threeloop network, styled Asia Australia Consortium (A3). Following the collapse of Hanjin, CKHYE Alliance, partners Coscon, Evergreen, K Line and Yang Ming make adjustments to their East-West network. Hoping to take advantage, 2M (Maersk Line and MSC) commences a new Transpacific loop advertised as TP1 and Maple respectively. To ensure the intra-asian connectivity with South Korea now, severely affected by the demise of Hanjin, compatriots Heung-A, Hyundai, KMTC and Sinokor found a consortium dubbed Mini Alliance. K Line (Swaco-B) and Samudera (CGX) form a new joint service connecting Port Kelang and Singapore to Chittagong. MSC starts Adriakia, a new intra-mediterranean service between Italy and Turkey. October Hyundai turns ad-hoc sailings between South Korea and Long Beach, which it started almost straight after the administration of compatriot Hanjin, into a permanent connection. Evergreen launch a new Japan-Philippines-Indonesia (JPI) butterfly connection centred on Taiwan with one wing focussed on Japan and the other on China. KMTC commences two new South Korea-Japan operations coded KJKW7 and KJES5. Dongjin Shipping replaces Hanjin as partner on the Inchon-Hai Phong (IHP) service of Sinokor. ZIM teams up with MSC on a new seasonal Black Sea service rather than, as in the two years before, joining Seago Line (Maersk Line) on its equally seasonal Black Sea service. CMA CGM starts the new East Med Express (EMED), connecting Port Said

95 DYNALINERS TRADES REVIEW with Cyprus, Lebanon, Syria, Turkey and Greece. Ocean Three (China Shipping/CoscoCS, CMA CGM and UASC) and its partner for this operation Evergreen terminate their joint Phoenician Express (PHEX), which connects the Far East with the Adriatic. MSR (Maritime Silk Route) International Shipping starts a regular liner service between Busan and the Russian port of Zarubino, the country s southern-most Far East outlet, close to the North Korean border. MSC puts a stop to its North Europe-US West Coast (USWC) service. Instead, it offers a transhipment solution using its Mediterranean-USWC California Express. A new Malaysian carrier, BMS Line, operates a service between the Malaysian mainland (West Malaysia) and Borneo (East Malaysia). It combines a domestic cabotage loop with a foreign connection to Muara (Brunei, also on Borneo). Simatech launches a new shuttle between Colombo and Chittagong, coded CCS. November Conventional reefer specialist Seatrade offers its seasonal connection between Agadir and St. Petersburg with cellular tonnage this year, rather than use its usual breakbulk reefer ships. Norwegian logistics service provider ColliCare, through its new-established subsidiary Viasea, initiates a weekly liner service between the Dutch port of Moerdijk and the Norwegian ports of Moss and Oslo. In January 2017, Hamburg-based Deco Line plans to (re)enter container shipping with a new weekly container service between North West Europe and West Africa, combined with a local feeder service operating out of Abidjan. Taking advantage of the new, larger Panama Canal locks, CMA CGM, Hamburg Süd and Hapag-Lloyd reveal that they will combine their two-loop Eurosal connection, operated with oldpanamax tonnage, into a single sling (Eurosal XL). CMA CGM and Seago/Maersk Line come together with Hamburg Süd on a new service between North West Europe and the Mediterranean, replacing their existing arrangements and effectively reducing capacity. Hamburg Süd, Maersk Line, MOL and MSC announce that in May 2017 they will join forces on a new service between North East Asia and Australia, depending on the carrier advertised as YoYo, CAE or Panda. The new loop replaces current (slot) arrangements. CMA CGM s Cheng Lie and Hyundai will launch a new North East Asia-Vietnam connection abbreviated HDX. State-owned Tunisian Ro/Ro operator CoTuNav (short for Compagnie Tunisienne de Navigation) starts a fortnightly container service between its home country and the Black Sea. In addition to TP9/Maple (to Canada), 2M carriers MSC and Maersk Line will start yet another Transpacific loop, this one focusing on Long Beach. It will be operated under the Sequoya/TP3 style. Evergreen commences a new service between China, the Philippines and East Malaysia, coded CPM2. CMA CGM and its subsidiary APL launch the India East Coast Express (IEX), connecting the Far East with the East Coast of India. Evergreen launches Korea-Taiwan-Philippines (KTP), between the three countries mentioned in its name. Mexican agency and logistics group Navemar de Mexico teams up with local Multimodal Maritima to establish a Mexico (Pacific Coast) domestic service between Manzanillo and Salina Cruz. December CMA CGM launches NAF Adriatic Med Express (Adrimed) between Egypt and the Adriatic. THE Alliance of Hapag-Lloyd, K Line, MOL, NYK and Yang Ming, starting in April 2017, reaches an agreement with ZIM to cooperate in the Mediterranean-North America corridor. Del Monte s logistics arm, Network Shipping, replaces the two conventional reefer ships deployed between Costa Rica and the US East Coast port of Philadelphia, with two cellular vessels. In cooperation with its subsidiaries Mariana Express Lines (MELL) and Pacific Direct Lines (PDL), PIL starts a fortnightly loop between North East Asia and the Pacific islands dubbed South Pacific Express (SPEX). PIL overhauls coverage of the Far East- East Africa and Mozambique/Indian Ocean Islands trade with three revised loops now all extending to North East Asia. The realigned EAS is now operated in conjunction with Coscon. K Line and SITC commence a new service between China, Vietnam and Indonesia coded CSI (China Saigon Indonesia). CMA CGM initiates a new intra-red Sea connection, dubbed Mona Express. COMPANIES Mergers and Takeovers February The Chinese government confirms that China Shipping (Group) Company (CSG) and China Ocean Shipping (Group) Co (Cosco) will be merged to form the China Cosco Shipping Group (CCSG). This takes place in the course of The Chinese government approves the acquisition of Sinotrans & CSC Holding by China Merchants Group (CMG) although it is not completed until the first half of February Neptune Pacific Line merges its subsidiary Pacific Forum Line with Polynesian Line, in which it holds a 50% controlling interest. The other half is owned by the government of Samoa. With 98% of the company already in its hands, Grimaldi Group exercises its right to purchase the remaining shares in Ro/ Ro operator Finnlines. Madeira-based Via Maritima, a company of the Sousa group, becomes the owner of Portuguese Portline Containers International, operating a single service between its home country, Gran Canaria, Cape Verde and West Africa. March Yildirim converts its redeemable bonds in CMA CGM, equivalent to a shareholding of 24%, into preferred shares which will be valid up to December 2017, after which it will either have to sell or become an ordinary shareholder. NileDutch acquires what is left of Safmarine MPV from the A.P. Møller-Maersk group. It continues as NileDutch MPV. April Hapag-Lloyd and UASC confirm discussing cooperation, not excluding a possible merger. King Ocean Services of Miami, Florida, acquires similarly Florida based Interocean Lines and Trinity Shipping Line. June CMA CGM launches its offer to purchase Neptune Orient Lines (NOL). Temasek, owner of 66.8% of NOL, accepts. July Hapag-Lloyd and UASC decide to merge their two companies. Shareholders of the Arab carrier will obtain 28% in the LINER SHIPPING SUMMARY

96 96 GLASS HALF FULL LINER SHIPPING SUMMARY German company, with Qatar and Saudi Arabia as the main owners. The deal will ultimately be concluded in September Samskip acquires Bergen-based Euro Container Lines A.S. (ECL) from Wilson ASA for USD 2.8 million. ECL operates three ships connecting Rotterdam, Hamburg and Bremerhaven with Norway. Grimaldi increases its holding to 100% of Finnlines Plc which is then deleted from the Nasdaq Helsinki stock exchange. After obtaining all the shares in the company, CMA CGM delists NOL/APL from the Singapore Exchange. November Eimskip agrees to purchase North Sea operator Nor Lines, but the deal is blocked (in 2017) by the Norwegian competition authorities. K Line, MOL and NYK announce their intention to establish a joint company in April 2017, which will combine the three carrier s container operations. Effective April 2018, the new venture should actually start operations. December A.P. Møller-Maersk A/S, parent of the Maersk group, confirms it will purchase Hamburg Süd, part of Germany s Oetker Group. The Maersk Group expects the whole process, regulatory approval in particular, to take until the end of Carriers January The Chinese Ministry of Transport (MoT) fines eight container shipping lines for failing to meet its freight rate guidelines: Coscon, Hang Lee Shipping, Hanjin, Maersk Line, PIL, Southern Star Shipping, Venus Ferries Limited and ZIM. South Korea establishes USD 1.2 billion worth of vessel-owning funds to help its struggling shipping industry to obtain ships. Hanjin and Hyundai are not able to benefit from it, as one of the conditions is that relevant carriers sustain a debt-to-equity ratio maximum of 400%. Hyundai denies speculation that it considers filing for court receivership. Heavily-indebted Hyundai lost USD 2.58 billion since 2008 and sold off assets worth USD 1.8 billion since February With bonds about to mature and lenders no longer willing to provide extra cash Hyundai presents a self-rescue plan. ZIM changes its organisational structure to focus on profitable trade areas in which it claims a competitive advantage. It is structured upon three business units: Pacific, Intra-Asia and Cross Suez Atlantic. While still mourning the passing of founder and chairman Dr Chang, Yun- Fa, a painful feud emerges over his succession as Chairman of the Evergreen Group. The nomination of his fourth and youngest son, Chang Kuo-wei, to the role, is contested by the four half-siblings who successfully scrap the position of group Chairman. Hyundai Merchant Marine starts negotiations with non-operating owners, mostly Greek ones, on a substantial reduction of the current charter prices of up to around forty chartered ships. March Hyundai s largest shareholder Hyun Jeong Eun resigns from her position as chairwoman of the company. To refinance its debts, Hanjin aims at raising USD 1 billion through the sale of assets and costs savings. April In reaction to the continuing crises in shipping, MOL outlines structural reforms of its dry bulk and container shipping businesses. For its container shipping activities this results in an impairment on fixed assets of USD 548 million. Effective April 2017, CMA CGM/APL, Coscon (CoscoCS), Evergreen and OOCL will form a new consortium, dubbed Ocean Alliance. Facing mounting financial problems, Hanjin asks its main creditor, stateowned Korea Development (KDB), to take over the management of the company. It is hoped a financial restructuring, the sale of properties and a reduction of charter rates will help the carrier survive. May Six former partners of the CKHYE Alliance and the G6 Alliance, these being Hapag-Lloyd, Hanjin, K Line, MOL, NYK and Yang Ming, announce the formation of a new East-West consortium, known as THE Alliance. UASC s involvement is covered through the presumed successful completion of the merger with Hapag-Lloyd. June Hyundai completes negotiations with shipowners that will see charter rate discounts saving around USD 450 million. Owners will be repaid by Hyundai issuing new shares and bonds to them, coming on top of agreements to reschedule some existing bonds. Processes are also embarked upon that see Korea Development Bank (KDB) emerge as largest shareholder. Maersk Line CEO (since 2012) Søren Skou, additionally becomes his own boss as CEO of A.P. Møller-Maersk A/S, replacing Nils S. Andersen. Robert Uggla, grandson of late Maersk supremo Arnold Mærsk Mc-Kinney Møller and former CEO of A.P. Moller-Maersk company Svitzer (towage and salvage) takes control of the A.P. Moller Holding, the investment vehicle of the family s A.P. Møller Foundation. July Following the South Korean carrier s completion of its financial restructuring, Hyundai Merchant Marine and 2M partners Maersk Line and MSC sign a memorandum of understanding regarding the Koreans joining the alliance effective April Hyundai Merchant Marine (HMM) officially becomes a subsidiary of the Korea Development Bank whilst Hyundai Group sees its interest in HMM go down to 3.64%. August The Transworld Group changes the name of its Dubai-based feeder subsidiary Orient Express Lines (OEL) into Transworld Feeders. September As creditors disapproved of its-rescue plan, and banks refuse to give more financial help, Hanjin s board decides to apply for receivership. Now that Hanjin is effectively paralysed, the first problem is on how to get around 500,000 TEU of cargo on board the ninety-seven stranded container ships to the consignees, or at least on the quay. To mitigate costs, CMA CGM decides to outsource (some of its) feeder connections to specialised feeder operators such as BG Freight, SITC, Unifeeder/Unimed and X-Press Feeders, replacing its own operations. The A.P. Møller-Maersk group decides to split the company in two independent divisions: Transport and Logistics (Maersk Line, APM Terminals, Damco, Svitser and Maersk Container Industry) and Energy (Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tanker). October The Seoul Central District Court decides to sell Hanjin s Transpacific business, including the relevant offices, staff, service contracts, IT systems and five unspecified container ships. Its modest intra-far East network is also put up for sale. The company gets the chance to come up with a

97 DYNALINERS TRADES REVIEW

98 98 GLASS HALF FULL LINER SHIPPING SUMMARY rehabilitation plan, but before it is completed the company essentially ceases to exist. December Korea s SM Line emerges as the new owner of Hanjin s Transpacific activities for which it has big plans. The company intends to eventually deploy twenty-one ships on the route. For the first year, it targets a turnover of around USD 550 million, to be doubled the year after. Rather than becoming a full member of the 2M consortium of Maersk Line and MSC, Hyundai has to settle for a threeyear contract involving slot purchases and slot exchanges on the East-West routes. Additionally, Maersk Line and MSC will take over the charter and operations of a number of ships currently on hire. Regulations July Contrary to expectation, the 1 July implementation of the Verified Gross Mass (VGM) requirement to be provided to carriers prior to loading goes off without too much disruption. As from 1 October, the regulation will actually be enforced. The European Commission (EC) arrives at a decision following an investigation into the behaviour of container liner carriers when announcing General Rate Increases (GRI). The EC was concerned that GRI s only announced the increase, not the final rate, were non-binding and were flexible in both magnitude (USD) and adoption (date). Thus, and as per commitments offered by the carriers, from 7 December 2016, and for an initial period of three years, price carriers can only announce full prices. PORTS/TERMINALS Global Terminal operators January DP World forms an 80/20 joint venture with the Russian Direct Investment Fund to invest USD 2 billion in the development of seaports, dry ports and logistics in Russia. February APM Terminals enters into a commercial agreement with its sister Maersk Line, who will receive dedicated capacity at what is referred to as strategically important terminals. March APM Terminals assumes full ownership of Spain s Grup Maritime TCB, operating container and multipurpose terminals in Spain, Turkey (not included in the approved deal) and Latin America. June China Merchant Holdings (International) Company Limited (CMHI) changes its name to China Merchants Port Holdings Company Limited. July Bolloré Africa Logistics is rebranded to Bolloré Transport & Logistics. It is now organised into four so-called business lines of ports, logistics, energy and railways. December Hutchison Ports, becomes the new global brand for what was Hutchison Port Holdings. DP World establishes, together with Canadian pension fund Caisse de Depot et Placement du Quebec (CDPQ), a USD 3.7 billion fund that will invest in ports and terminals outside the United Arab Emirates. Europe January The MMPK Bronka Terminal at St Petersburg handles its first test call. The European Commission (EC) instructs the Netherlands to scrap its corporate tax exemption for ports. At the same time, it orders Belgium and France to synchronise their taxation systems with the EU s state aid rules. February Yilport finalises the acquisition of Portuguese terminal operator Tertir from the Mota-Engil Group and Nova Banco. In total, this will add ten terminals, not all of them handling containers, to the portfolio of the ambitious Turkish stevedore. March Gothenburg receives permission to build a new terminal on reclaimed land in the outer port area. Its purpose has not yet been decided, but may include intra-europe containers, rolling stock and/or passengers. Subject to regulatory approval, DP World will purchase a 49% stake in the NUTEP Terminal at Novorossiysk from its current owner Delo Group. May ECT, which has Hutchison (93.5%) and NYK (4.5%) as its main shareholders, sells a 35% shareholding in Rotterdam s Euromax terminal to Cosco Pacific, thereby reducing its own stake to 65%. June The port of Antwerp inaugurates the largest ship locks in the world, the USD 430 million Kieldrecht Lock. Situated at the back of Deurganckdok, it gives access to the Waasland Harbour behind it and supplements the existing and smaller Kallo Lock. July APM Terminals agrees to buy out the 40% held in APM Terminals-Aarhus by its joint venture partner, Aarhus Service Holding A/S. September Copenhagen Malmö Port sets up a subsidiary responsible for all Ro/Ro, container and multipurpose operations in Malmö s Northern Harbour. It is seen as a step towards privatisation of these facilities. The relevant German Federal Administrative Court rejects a plan to deepen the River Weser. The court now requires separate environmental impact studies for each of the three sections, rather than one study for the entire length. October The Danish port of Kalundborg plans to build a new container terminal at Ny Vesthaven, on the southwest side of the existing facilities, to replace its current container terminal on the northern end of the basin. MSC PSA European Terminal (MPET) at Antwerp, a joint venture between PSA and MSC s TIL, moves the last StS gantry cranes from MSC Home Terminal at Delwaide Dock to their new location along Deurganckdok Dock. SCA Logistics, a subsidiary of paper producer Svenska Cellulosa Aktibolaget, extends the concession for its terminal along Rotterdam s Eemhaven until As part of the agreement, the stevedore will lengthen its quay line by 208 metres on land previously used by ECT s now closed City Terminal. Sea-Invest purchases Independent Marine Terminal in Antwerp (previously) an affiliate of its main client Independent Container Line (ICL) and intends to move it from its current location to land soon to be vacated by PSA and MSC along Delwaide Dock. November After a substantial delay, the new Liverpool2 terminal at the eponymous British port finally opens it gates. Gdansk cuts the ribbon of its new Terminal 2 at Gdansk s Deepwater Container Terminal (DCT), doubling capacity to 3.0 million TEU.

99 DYNALINERS TRADES REVIEW December Hamburg s Ministry of Economic Affairs gives the nod for Eurogate s much-delayed Westward Expansion Project, which will see Container Terminal Hamburg at Waltershof being expanded by 49 ha and 1,050 metres of quay line. Mediterranean January Algeria signs a USD 3.3 billion contract with China Harbour Engineering Company (CHEC) and China State Construction Engineering Corporation (CSCEC) to develop the El Hamdania Central Port Project at Cherchell. Cosco Pacific receives the green light from Greece s Hellenic Republic Asset Development Fund to acquire a 67% share in the Piraeus Port Authority. February The Suez Canal Authority completes the dredging of Port Said s new eastern approach channel. This allows container ships to visit the APM Terminals-operated Suez Canal Container Terminal independently of convoys transiting the Suez Canal. March APM Terminals plans to build a second, fully-automated, container terminal at Tangier, this one with an eventual capacity of 5 million TEU. It will open its gates in Cosco-PSA Terminals Pte Ltd, a joint venture of PSA (51%) and Cosco Pacific (49%), will move its operations in Singapore from Pasir Panjang Terminal 1 to the new Pasir Panjang Terminal 4, currently under construction. April The European Bank for Reconstruction and Development (EBRD) agrees to provide USD 225 million to finance the basic infrastructure, including the construction of a breakwater, quays, dredging and related works, of Morocco s Nador West Med Port. May The Cypriot Transport Ministry and a consortium of Eurogate (60%), Interorient Navigation Company (20%) and East Med Holdings (20%) sign the contract to run the Limassol Container Terminal. July The government of Morocco places a 40% stake in stevedore Marsa Maroc on the Casablanca Stock Exchange and raises close to USD 200 million in doing so. Cosco Pacific sells its 50% stake in Conateco in Naples to its partner, MSC-related Marinvest. August The Italian Government approves a bill to reform port authorities. As part of the plan, the number of port authorities overseeing the country s fifty-seven ports will be reduced from twenty-four to fifteen. October The Government of Georgia and Anaklia Development Consortium sign an investment agreement to develop Anaklia Deep Sea Port. The first phase of 800,000 TEU is scheduled for completion in The Port of Damietta Authority and China Harbour Engineering Company (CHEC) sign a memorandum of understanding to develop a second container terminal at the eponymous Egyptian Nile River delta port. APM Terminals reaches an agreement to sell 40% in Vado Ligure Reefer Terminal and Vado Ligure Container Terminal to Cosco Shipping Ports and 9.9% to Qingdao Port International Development (Hong Kong) Co. November The French port of Sète completes the construction of its new Quay H, which is to be used for the handling of container and Ro/Ro cargoes. December APM Terminals Izmir at Aliaga, part of the Petkim Petrochemical complex, starts operations. It will initially run one 350-metre berth with three 22-wide gantry cranes. Hutchison Ports signs a memorandum of understanding with the Ukrainian government to develop new container terminal facilities at the Ukrainian Black Sea port of Chornomorsk, previously known as Illichevsk. Africa February Due to many irregularities in the process, the Kenya Ports Authority cancels the tender to find an operator to run Mombasa s new 1.5 million TEU container terminal. China s Eximbank approves the funding for phase II of the new port of Kribi (Cameroon), which includes a second container terminal. June Mozambique starts dredging the access channel to Maputo to a draught of 14.2 metres, up from the current 11 metres. July Due to stagnating volumes, Transnet National Ports Authority (TNPA) decides to put the development of a new container basin at Durban, known as Durban digout Port, on ice. Instead, it considers integrating Salisbury Island, currently in use as a naval base, into Pier 1 of Durban Container Terminal. August Port Reunion, also known as Pointe des Galets, completes the modernisation of its container terminal. The quay was stretched by 160 metres to 640 metres and depth alongside increased by 1 metre to 15.5 metres. September DP World obtains a 30-year concession for the management and development of Berbera in Somaliland. October As part of its modernisation project, the Mauritius Port Authority is to dredge the port of Port Louis to 16.5 metres. The work should be completed in June MSC and United Arab Emirates-based Bilal Group will invest in excess of USD 500 million in a new container terminal for the port of San Pedro, in Ivory Coast. A combination of Hamburg Port Consulting, a subsidiary of HHLA, Selhorn Engineering and KS Consultants carry out a feasibility study for the master plan of a USD 1.9 billion new port at Chittagong, referred to as Bay Terminal. November Ghana Ports and Harbours Authority (GPHA) commissions the new Takoradi Container Terminal. The single-berth facility will offer capacity for 300,000 TEU and a 7,500 TEU container yard. Emirates Global Aluminium (EGA) opens a container terminal at its port in Kamsar. The modest infrastructure will primarily be used to support its own businesses, but will also be available to third-party clients China Harbour Engineering Company (CHEC) starts with the construction of a new 3.5 million TEU container terminal in Tema to be located outside the current port area. Middle East February DP World signs a contract for phase I of Terminal 4 at Dubai s Jebel Ali, which will be developed on reclaimed land opposite Terminal 2. It will have an initial capacity of 3.1 million TEU and a quay length of 1,200 metres. LINER SHIPPING SUMMARY

100 100 GLASS HALF FULL LINER SHIPPING SUMMARY March Red Sea Gateway Container Terminal at Jeddah will extend its total quay line by 255 metres to 1,325 metres. Capacity will then become 2.5 million TEU. May The governments of India and Iran sign a Memorandum of Understanding to refurbish and operate container and multipurpose terminals in Chabahar, Iran. September Abu Dhabi Ports will develop another 1,000 metres of quay line at Khalifa Port for box handling while adding a 60 ha container yard. Simultaneously, the main channel and basin will be dredged to 18 metres from the current 16 metres. It will be operated by Cosco Shipping Ports. October The first phase of ICTSI s new Basra Gate Terminal along berth 27 at Umm Qasr is officially inaugurated. With a quay length of 200 metres, it is equipped with two gantry cranes. November Iran s Ports and Maritime Organisation (PMO) issues a general pre-qualification invitation for the existing container facilities at Bandar Abbas Shahid Rajaee port as well as the 3.5 million TEU future terminal under construction there. December The new 2.0 million TEU Qatari port of Hamad (Mesaieed) takes over all container handling activities previously covered by the Port of Doha. Indian Sub Continent January Adani International Container Terminal (AICT), a 50/50 joint venture between APSEZ and MSC s TIL, reveals that it will extend its quay line at Mundra by 650 metres to 1,460 metres, which the Swiss carrier also intends to use for transhipment to the Middle East and other ISC countries. Mumbai-based J.M. Baxi Group, through its subsidiary International Cargo Terminals and Infrastructure, is the winner of the concession to upgrade and operate the container terminal at Kandla. The Chennai Port Trust once again suspends, by two years this time, its plan to build a 4.8 million TEU mega terminal. February The Sri Lanka Ports Authority (SLPA) calls for expressions of interest for the new East Container Terminal at Colombo s Southport. March DP World finally obtains permission to consolidate its Indian properties in a single holding company named Hindustan Port Private Ltd (HPPL). Jawaharlal Nehru Port Trust, overseeing the port of Nhava Sheva, approves a USD 300 million plan to deepen the 33.5-kilometre navigation channel to 15 metres from its current 14 metres. April Adani Ports and Special Economic Zone (APSEZ) wins approval from the Tamil Nadu government for its plan to acquire the underused 1.2 million TEU Kattupalli Container Terminal from L&T Shipbuilding June Multipurpose Gujarat Pipavav Port, 43% owned by APM Terminals, completes a USD 60 million expansion, increasing box handling capacity from 850,000 to 1.35 million TEU. July India s government approves the development of the proposed Enayam International Container Transhipment Terminal (EICTT) on the southern tip of the country. September Sri Lanka announces a plan to build a container terminal in the north eastern port of Trincomalee. October China Oversees Port Holding handles its first container ship at the refurbished Gwadar International Terminal in the eponymous Pakistani port. November After a period of trial operations, the Pakistani Prime Minister opens China Overseas Port Holding s Gwadar International Terminal. December India s government approves the new Major Port Authorities Bill, which will replace the Major Ports Trust Act of The new legislation will transform eleven of the twelve major and public ports under central government into independent authorities with greater operational and financial autonomy. Pakistan Deepwater Container Port, a new terminal at Karachi run by Hutchison s South Asia Pakistan Terminals (SAPT), starts test operations. Far East January Toyo Construction Co and JFE Engineering Corp win the contract to build a new container terminal at the Thilawa Special Economic Zone, around 15 kilometres south of Yangon, the capital of Myanmar. February Sapangar Bay Container Port at Kota Kinabalu (Borneo, East Malaysia), operated by Suria Capital Holdings-owned Sabah ports, will stretch its current 500 metre offshore pier to 1,200 metres and increase yard area from 15 to 60 ha. April Inchon s new Hanjin Incheon Container Terminal in the New Port area opens its gates. It stretches along an 800-metre quay line. The Malaysian port of Kuantan is developing a new deepwater container terminal in two phases of 1,000 metres each. Vietnam gives Nha Trang Port JSC permission to resurrect the stalled Van Phong Bay container terminal project. May Construction starts on the massive Tuas container complex on the western side of Singapore island, which, in four phases over a period of thirty years, will be developed to an ultimate capacity of 65 million TEU. The Indonesian government decides in favour of building a large container terminal at Patimban, approximately 110 kilometres east of Jakarta. June PSA Singapore Terminals and CMA CGM establish a 51/49 joint venture to operate four berths in Singapore with a handling capacity of around 3.0 million TEU per annum. Bolloré and the government of East Timor sign the 30-year build and operate concession for the new container terminal at Tibar Bay near Dili (East Timor). July PTP (Pelubahan Tanjung Pelepas) in Malaysia, a 70/30 joint venture of local MMC Corp and APM Terminals, reveals that it will upgrade and refurbish StS cranes and other yard equipment and add 2.7 million TEU to the current 10.5 million TEU capacity. DP World signs a Memorandum of Understanding (MoU) with the Taiwan International Port Corporation (TIPC) to develop a new container terminal at Kaohsiung, referred to as CT7.

101 DYNALINERS TRADES REVIEW August MMC Corp, agrees to acquire a 49% stake in Penang Port from Seaport Terminal (Johore). In April 2017 it agrees to buy the remaining shares. Jurong Port inaugurates its new Combi terminal in Singapore, specifically designed to handle multipurpose ships. Jakarta s Tanjung Priok commissions its new 1.5 million Priok Container Terminal One at the new Kalibaru port area. Pelindo II, Mitsui, PSA and NYK are its shareholders. The Vietnamese port of Da Nang starts construction of a new container terminal at Tien Sa Port. The new 800,000 TEU facility built on 9 ha of reclaimed land will comprise two piers of 310 and 210 metres respectively. Bintulu Port Holdings, overseeing the eponymous port, puts on ice its plan to expand the Bintulu International Container Terminal by converting 300 metres of general cargo pier to dedicated container operations. September International Transportation and Trading Company (ITC) commissions a new container terminal at Ho Chi Minh City, located along the Nhà Bè River approximately three kilometres upstream of the Tang Cang - Cat Lai Container Terminal. Davao International Container Terminal, situated north of Davao near Panabo, completes the conversion of berth 2 for container handling and equips it with two Post Panamax gantry cranes. October Guangzhou spends USD 415 million on widening the (deepwater) Guangzhou Port Channel to 345 metres to allow for larger vessels visiting Nansha Container Terminal to pass each other in opposite directions. The new Philippine government decides to downsize, or even cancel, the Davao Sasa Port Modernisation Project. In the latest iteration, the originally envisioned investment of USD 392 million will reduce to just USD 83 million. November As part of the ambitious Melaka Gateway Project in Malaysia, involving the construction of an offshore city on the island of Pulau Melaka in combination with reclaimed land, China International, Yantian Port Group and Rizhao Port Group will help developer KAJ Development to build a USD 1.9 billion deepwater seaport in the Strait of Malacca. The proposed USD 190 million and 12-ha container port in Cebu receives the necessary Presidential approval to proceed. Commissioning is planned for December Global stevedores Cosco Shipping Ports and Hutchison Ports agree to jointly manage the sixteen berths of three container terminals in Hong Kong s Kwai Tsing area. Australasia March Days after the Victoria state parliament in Australia passes legislation that allows privatisation of the port of Melbourne, a tender is issued for a 50-year concession. April A consortium led by logistic company Qube and Canadian group Brookfield agrees to acquire the Australian rail and port operator Asciano. The company will be split up into parts, with Qube and Brookfield becoming the owners of Patrick Container Terminals. Port Otago completed the first stage of its deepening programme, according to which maximum draught has increased to 13.5 metres. August As it is not allowed to expand its surface by reclaiming land, Auckland decides to partially automate the Fergusson Container Terminal. This way, capacity will almost double to 1.6/1.7 million TEU. Tauranga completes dredging, increasing depth inside the harbour from 12.8 to 14.5 metres and outside to 15.8 metres. September Port Otago prepares a tender for a 140-metre quay line extension of its 300-metre container terminal at Port Chalmers. The Lonsdale Consortium, comprising the Federal Government s Future Fund, QIC, GIP and OMERS (Ontario Municipal Employees Retirement System) signs a 50-year lease of the port of Melbourne. North America January Seattle starts the design phase of its to-be-refurbished Terminal 5. After completion, foreseen for 2019, the facility will be able to handle two 18,000 TEU vessels simultaneously. Outer Harbor Terminal LLC a joint venture between Ports America and MSC s TIL, decides to give up the concession for its 1.5 million TEU terminal in Oakland and wind down operations. March OOCL s new Long Beach Container Terminal - Pier E starts trial operations. The facility is part of Long Beach s 3.3 million TEU Middle Harbor Redevelopment project, which includes piers D, E and F. At Los Angeles, APM Terminals announces it will raise five of its cranes to make them capable of handling fully-laden vessels of up to 20,000 TEU. Yilport sets an eye on purchasing US terminal operator Ports America, running thirty-six box facilities in twenty-four US ports. April The Northwest Seaport Alliance (covering Seattle and Tacoma) spends USD 118 million on infrastructure improvements and USD 22 million on four 24-wide Shipto-Shore cranes for the Husky Terminal in Tacoma. Deutsche Bank s RREEF Alternative Investment sells 2.4 million TEU Maher Terminals in Port Elizabeth (New York/ New Jersey) to Macquarie Infrastructure Partners III, a private fund managed by Macquarie Infrastructure and Real Assets. June With the departure of the monthly Transpacific service of multipurpose operator Westwood Shipping and an ongoing conflict between terminal operator ICTSI and port workers union ILWU, Portland loses its last remaining box carrying customer. July SSA Marine emerges as the prospective terminal operator for the equally prospective yet longstanding Greenfield Melford port development on the Strait of Canso, Nova Scotia, Canada. August DP World wins the 30-year concession to develop and operate the Rodney Container Terminal at Saint John, New Brunswick, Canada East Coast. September APM Terminals invests USD 70 million in a capacity increase of its Port Elizabeth Terminal at New York/NJ from 1.5 million TEU to 2.3 million TEU. The Port of New York/NJ finalises the USD 2.1 billion dredging scheme of its navigation channel to a depth of 15.2 metres. October MOL s Trapac Container Terminal at Oakland will expand by two berths and LINER SHIPPING SUMMARY

102 102 GLASS HALF FULL LINER SHIPPING SUMMARY 23 ha of land previously occupied by adjacent Outer Harbor Terminal, which went out of business earlier in the year. November The US State of Pennsylvania will provide USD 200 million to upgrade the multipurpose Packer Avenue Marine Terminal in Philadelphia. This is instead of the earlier and delayed Southport project on the site of a former naval yard. The Port of Virginia places a substantial USD 220 million order for 86 automated stacking cranes intended for its Norfolk International Terminals (60 units) and Virginia International Gateway (26). The new Viau Terminal in Montreal, Canada, is inaugurated. It is the first new facility in the port for nearly 30 years and is a joint venture between the Port of Montreal, Termont Montreal and MSC. December Ports America signs an agreement with Sydney Harbour Investment Partners to promote, develop and manage the planned Novaporte at the port of Sydney, Nova Scotia/Canada. The Seoul bankruptcy court approves the sale of Hanjin s share in Total Terminal International at Long Beach s Pier T to co-owner MSC s Terminal Investment Limited (TIL). A 20% stake is subsequently sold on to Hyundai. Latin America February The Brazilian government signs a USD 51 million contract with Van Oord and Boskalis to dredge the access route to Rio de Janeiro, through the Guanabara Bay, from 12.5 to 14.0 metres. Peru s National Port Authority (APN) approves the technical report for the construction of the new Terminal Portuario General San Martin in Pisco, handling containers and dry bulk. It will be operated by Terminal Portuario Paracas S.A. February Yilport signs a framework agreement to invest USD 750 million in a new container terminal for the Ecuadorian port of Puerto Bolivar. The Turkish stevedore will develop the project in five phases of 500,000 TEU each. Terminal Puerto Rosario, a joint venture of Aotsa Group and Ultramar, intends to raise handling capacity at the eponymous Argentine multipurpose port located along the Rio Parana from 35,000 TEU to 350,000 TEU. April Terminal de Conteneires de Paranagua (TCP) obtains a 25-year concession extension on the condition that it will lengthen the quay line by 220 metres to 1,100 metres to allow for three large ships to berth simultaneously. May Four terminal operators pre-qualify for the concession to run the planned Corozal terminal in Balboa at the Pacific entrance of the Panama Canal, but eventually none of them places a final offer. The Guatemalan government threatens to revoke the concession for Puerto Quetzal Container Terminal, which is under construction by Grup TCB, a subsidiary of APM Terminals, on allegations of corruption. It results in APM Terminals having to pay a fine in order to have its concession renewed. The Panama Maritime Authority (AMP) signs a concession with Shandong Landbridge Group-led Panama Colon Container Port (PCCP) to develop a 2.5 million TEU container terminal, plus multipurpose facilities including LNG, at Colon. June DP World is awarded a 50-year concession to develop a Greenfield port at Posorja in Ecuador. Located 65 kilometres away from Guayaquil, the first phase includes a 400 metre berth with 15 metre draught and 750,000 TEU capacity. July CMA CGM s Kingston Freeport Terminal Ltd, takes on the 30-year operations concession for Kingston Container Terminal and starts upgrading the facility. August Tote Marine and Intership agree to merge their adjacent terminals in San Juan s (Puerto Rico) Puerto Nuevo port area to offer a combined quay line of 1,190 metres covering an area of 49 ha. September Chile based SAAM acquires the 51% held by Sociedad Portuaria Regional de Buenaventura (Colombia) in two concessions in Puerto Caldera, Costa Rica s Pacific coast. October JV Porto Central S.A., a joint venture including Brazilian logistics company TPK (Terminal Presidente Kennedy) Logistica and the Port of Rotterdam, signs an agreement with dredging company Van Oord to develop Porto Central, a greenfield multipurpose port in between Vitoria and Rio de Janeiro. Chilean terminal operator Agunsa is the only bidder for a 40-year concession to operate the Ecuadorian port of Manta, with a plan to invest USD 175 million during the lifetime of the concession Terminal Portuario Guayaquil (TPG), operated by SAAM, will extend its quay line by 120 metres to 480 metres and purchases two super postpanamax cranes which will be the largest ones in Ecuador. November The government of Mexico plans a substantial expansion of the port of Veracruz (Gulf of Mexico). A new 305-metre berth will be constructed and a tender for five new terminals in total, one being a container facility, will be floated. As a condition for a 25-year concession extension to 2050, Wilson Sons Tecon Salvador (Brazil) will stretch its quay line by 150 metres to 800 metres to allow for two 10,000 TEU ships to be berthed simultaneously. Despite the tender period being extended at least once, the El Salvador port of La Union has not received any bids for a private operator, despite the port being opened seven years ago. December Sociedad Puerto Industrial Aguadulce (SPIA), a joint venture including ICTSI and PSA, is about to open the gates of its new container terminal in Colombia s Buenaventura. Puerto Antioquia Company (SPA) chooses the Cotema consortium, consisting of French-Italian Saipen and Colombia s Termotecnica Coindustrial, to build the eponymous port in Bay of Urabe (location), near Turbo. Arteries April Nicaragua s legislature decides it is unable to debate a bill, backed by a 28,000 strong petition, which could have effectively prevented the proposed and delayed Nicaragua Interoceanic Grand Canal being built. Congress reasons that a 2013 ruling made by the country s Supreme Court against objections to the project was final. June On 26 June 2016, the transit of the CO- SCO Shipping Panama from the new Agua Clara locks on the Atlantic to the equally new Cocoli Locks at the Pacific end, marks the formal inauguration of the expanded Panama Canal.

103 DYNALINERS TRADES REVIEW

104 104 GLASS HALF FULL LINER SHIPPING SUMMARY SHIPS/CONTAINERS General March The Bay of Plenty Regional Council decides that, subject to conditions, the wreck of 3,400 TEU Rena can be left on the Astrolabe Reef. During a heavy storm, stranded T.S. lines-owned, 2006-built, 1,600 TEU T.S. Taipei breaks into two pieces off the Taiwanese coast near Keelung. April China establishes its first fuel sulphur emission control areas (SECAs) in the Yangtze River Delta. Vessels at berth in the Shanghai-Nantong-Suzhou-Ningbo range will be subject to a 0.5% fuel sulphur cap, but are encouraged to use fuel with a maximum 0.1% sulphur content. September A Chinese court discharges MOL from liability over the loss of 8,100 TEU MOL Comfort, which broke into two parts in high seas 200 nautical miles of Yemen, blaming the ship s design and construction. November The IMO s Marine Environmental Protection Committee (MEPC) votes in favour of the introduction of the worldwide 0.5% Global Sulphur Cap for shipping, down from the current 3.5% maximum outside SECA zones. This will take in effect in 2020 rather than the alternative Shipowners January With the acquisition of the remaining 4%, family-owned Saverco takes control of Belgian dry bulk shipping company CMB, also owning a fleet of container ships and controlling feeder operator Delphis/Team Lines. HCI Capital AG, part of the Hamburg-based HCI Group, acquires the 80% share in KG house König & Cie held by US private equity firms Delos Shipping and Tennenbaum Capital Partners since April In a further sign of consolidation in the German KG sector, two of the major players, Rickmers Holding and E.R. Schiffahrt, controlled by brothers Bertram and Erck Rickmers respectively, sign a declaration of intent with a view to a potential merger of their ship management arms, but fail to come to an agreement. May Hamburg-based finance house HCI Capital AG acquires non-operating owner Ernst Russ from Peter Döhle and MS Cordula Schiffahrtsgesellschaft in return for a stake in itself. It also changes name to Ernst Russ AG. Asset manager MPC Capital buys the remaining 33% it did not yet own in ship manager Ahrenkiel Steamship from GB Shipping and Chartering. August Family-owned German non-operating owner Reederei Hermann Wulff is declared insolvent. The company is the owner of three box ships in the 2,000-5,000 TEU range and three bulkers. September As part of a debt restructuring, non-operating Rickmers Maritime Trust unveils plans to exchange USD 74 million worth of bonds maturing in 2017 into perpetual convertible securities. It is a first step in trying the save the company, but nevertheless it goes bankrupt in April Royal Bank of Scotland agrees to amend a USD 148 million loan agreement with Diana Containerships to reduce repayment obligations over the next two years. In return, the Greek shipowner is prohibited from acquiring extra vessels or incurring additional debt and is not allowed to pay dividends. December The South Korean government establishes a new ship finance vehicle to purchase containerships from distressed shipping companies and lease them back to those same carriers. With the sale of its last two container ships for scrap, the Box Kingfisher and Box Marlin, Greek, US-listed Box Ships, despite what its name suggests, is no longer a non-operating container ship owner. Shipyards January Zhejian Shipping Group-owned Wuzhou Shipyard is declared bankrupt after suspending operations in July 2015 after the delivery of a 2,500 TEU ship to Zongghu Shipping. Hanjin Heavy Industries & Construction (HHIC) seeks a voluntary debt restructuring with creditors March Troubled South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DMSE) posts a massive 2015 loss of more than KRW 3.5 trillion (around USD 3.0 billion). June In the light of its financial difficulties, Hyundai Heavy Industries is to save USD 780 million on staff costs and hopes to raise USD 950 million from asset sales, including shares in Hyundai Motor. For its part, the also financially distressed Daewoo Shipbuilding & Marine Engineering receives a visit from prosecutors investigating allegations of accounting fraud and poor management. September South Korea s Financial Services Commission announces that it will carry out a large-scale restructuring of the country s main shipyards, Daewoo Shipbuilding & Marine Engineering, Hyundai Heavy Industries and Samsung Heavy Industries. The aim is to minimise government support, reduce overcapacity and ban lowpriced orders. November As part of its rehabilitation plan, Hyundai Heavy Industries will spin off five non-shipbuilding businesses and float them on the stock exchange. Design January Through a number of technical modifications, Maersk Line is increasing the TEU carrying capacity of its 2006/8-built 15,600 TEU E-class ( Emma Maersk ) vessels to approximately 16,500 TEU. September The ratification of the IMO s Ballast Water Management (BMW) convention by Finland pushes the treaty passes the minimum 35% threshold of the world fleet by gross tonnage so that it will come into force on 8 September Containers January Dutch container lessor CARU Containers acquires container leasing and trading compatriots ECB Group of Rotterdam and Amsterdam-based CCA, both active in the local market. April Denso Corporation and Kingtec Technologies (Heyuan) Co. Ltd. establish a 50/50 joint venture, Guangdong Kingtec Denso Refrigeration Equipment Co. Ltd, which will manufacture refrigeration machinery for containers, trucks, trailers and storage.

105 DYNALINERS TRADES REVIEW June The intended merger of terminal equipment manufacturers Konecranes and Terex is called off. Instead, Konecranes will purchase from Terex its Material Handling & Port Solutions (MHPS) business unit. July As per 1 July 2016, the weighing of containers becomes mandatory prior to loading on board vessel. Despite expected problems surrounding its introduction, the process actually goes quite smoothly. Container lessors TAL International and Triton Container International complete the merger of their businesses into Triton International Limited (TIL). China Shipping Container Lines, now an asset owning vehicle of CoscoCS, sells 269,800 TEU (195,000 containers) to its box-leasing subsidiary Florens for USD million. NON-CONTAINER TRADES Breakbulk January As attempts to restructure Belgian multipurpose/heavy-lift operator OXL and its parent Flamar BVBA failed, the company files for bankruptcy. Safmarine MPV, the multipurpose branch of the A.P. Moller-Maersk Group, closes down its US Gulf-West Africa multipurpose service, which depended largely on oil-related business. February Safmarine MPV sells its conventional Southern Africa-West Africa SAFWAF service to Fairseas International of Cape Town. After the return of container carrier HDS Shipping to the Middle East-Europe box trade, IRISL offshoot, multipurpose operator SAPID restarts breakbulk operations between the two regions. Replacing its previous arrangement with GMB Maritime under the name GMB Condor Liner Service, Volans Logistics teams up with NSC Schiffahrt to provide a monthly connection between North Europe and the West Coast of South America. March Breakbulk operator Peruvian Amazon Line, specialised in carrying timber from the Amazon region to Mexico, goes out of operation facing bankruptcy. AAL (Schöller Holdings) and Peter Döhle initiate what is referred to as a joint semi-liner breakbulk/heavy-lift service between the Far East, Middle East and Europe. CNAN Med, a member of the Algerian CNAN Group, starts a new fortnightly Ro/Ro-general cargo service between its home country and the Adriatic. June Rickmers-Linie acquires Nordana Project & Chartering A/S, the worldwide tramping division of Nordana A/S, part of the Danish Weco Group. China s Landbridge Group will invest USD 19 million in upgrading facilities at the multipurpose port of Darwin. July MACS Maritime Carrier Shipping of Germany renames its Galborg affiliates in the United States and Singapore under the full MACS ( etc.) name. August Kloosterboer subsidiary BOW replaces Verbrugge International as partner in a new terminal at Rotterdam s Maasvlakte 2. October Ports America and Cooper/T. Smith merge their Houston breakbulk operations into a new joint venture called Cooper/Ports America, LLC. Following the integration of China Cosco and China Shipping, Cosco Shipping Co, also known as Coscol, changes its name into Cosco Shipping Specialized Carriers Co. Dutch ship operator Flinter files for insolvency. This came from a combination of its debt burden and banks refusing to prolong the financing of nine of its thirty-five ship strong (2,500-11,000 dwt) multipurpose fleet, triggering a forced sale. Non-containerised dry cargo operators Gearbulk and Grieg Star form a joint venture to operate their combined fleets. November Hartmann Group acquires a 50% share in Schulte and Bruns Chartering, a subsidiary of Schulte & Bruns. The bank of Dutch shortsea multipurpose and heavy-lift operator Abis Shipping seizes seventeen of its twenty-one strong fleet and puts twelve ships up for auction. Singapore-based AAL, part of the Schöller group, launches a new semi-liner service between the Middle East Gulf and Far East/Australia. Multipurpose/Heavy-lift operator Zeaborn cancels the first three of a six-ship order for 12,500-dwt vessels 500 tons crane capacity to be built by Taizhou Sanfu Ship Engineering. December Viking Supply Ships winds up the remnants of its TransAtlantic breakbulk and Ro/Ro operations. These were left behind after X-Press Feeder s acquisition of the container activities at the end of last year (2015). BBC Chartering launches a monthly South East Asia-Australasia breakbulk service, sailing between ports in Thailand, Australia and New Zealand. Heavy-load September Thorco Shipping and United Heavy Lift (UHL) team up to form Thorco Projects to operate the two companies fleets. German multi-purpose/heavy-lift shipowner Briese Schiffahrt (parent of BBC Chartering) becomes a shareholder in Auerbach Schifffahrt, which employs a number of heavy-lift ships with lifting capacities of up to 1,400 tons. Reefer January Siem Shipping, operating reefer services under the brand name of Star Reefers, reveals that it has reached an agreement to charter two conventional reefer ships of 650,000 cu.ft./300 TEU, currently being built by Shikoku Shipyard. As trading volume of its shares is very low, listed Siem Shipping, trading as Star Reefers, launches a buyback offer for the remaining shocks with the intention to delist the company. July Hongwei Aquatic of Fujian orders a 160,000-cft conventional reefer vessel from Fujian Funing for delivery in Chiquita vessels return to Gulfport (Mississippi) after defecting to New Orleans (Louisiana) in August To make itself less dependent on the shrinking reefer market, Star Reefer/ Siem Shipping continues its diversification into the car carrying sector. In addition to five 7,000 CEU PCTC s already under construction, it acquires Auto Marine Transport Inc. from affiliated Siem Investments Inc. LINER SHIPPING SUMMARY

106 106 GLASS HALF FULL October Following the recent takeover by Samskip of the 50% held by Green Reefers in SilverGreen, this conventional reefer ships pool changes its name to SilverSea AS. November Shikoku Dockyard launches the first of two 650,000 cu.ft/300 TEU newbuilds, to be taken on charter by Star Reefers Nissen Kaiun. December Tokyo-headquartered Sumitomo Corporation acquires Irish fruit distributor Fyffes for USD 800 million. GF Group, owner of conventional reefership operator Cosiarma, announces that it will merge with Glenalta Food, also of Italy. The resulting company will be renamed Orsero S.p.A. and will be controlled, at board level, by the current GF Group. Ro/Ro March Brazil s Administrative Council for Economic Defence (CADE) launches formal proceedings to investigate nine car carrier operators on the suspicion of price fixing. April Eukor Car Carriers (80% WWL) starts a direct connection between Inchon and Yangon to cater for the exports of South Korean second-hand cars to Myanmar. Following actions from the Federal Maritime Commission, thirty-nine American car buyers file class action lawsuits against Ro/Ro operators found guilty of price fixing and collusion. June Spliethoff purchases non-operating owner Bore of Finland from the Rettig Group established Bore is the owner of six Ro/Ro cargo ships and three vehicle carriers ranging from 6,000-dwt to 14,000- dwt. Carrier MOL, classification society Class NK, shipyard Minaminippon Shipbuilding, repair yard Sanwa Dock and engine manufacturer Wärtsilä, come together to study the application of exhaust scrubber systems for car carriers. July Automar Logistics SpA, a joint venture of Grimaldi, Bertani and Mercurio acquires a 50% stake in Autoterminal Gioia Tauro from BLG Autologistics. Wallenius Wilhelmsen Logistics (WWL) agrees to pay a hefty USD 98.8 million fine for price-fixing in the US trade in the period. So far, eight companies have been charged, four of which have pleaded guilty. September Ro/Ro operators Wallenius and Wilh Wilhelmsen signs a letter of intent to merge their ownership in three jointly controlled companies, Wallenius Wilhelmsen Logistics, Eukor Car Carriers and American Roll-on Roll-off Carriers, into a single entity under the Wallenius Wilhelmsen Logistics brand. Associated British Ports (ABP) invests USD 65 million in new infrastructure to double the car handling capacity of Southampton. October Zeebrugge is to develop three port areas, totalling 156 hectares, to expand its car handling activities, in addition to the 390 ha it currently has. United European Car Carriers (UECC), a joint venture between NYK and Wallenius Lines, takes delivery of the world s first LNG-powered Pure Car and Truck Carrier (PCTC). NYK launches a new car carrier service between Vietnam and Thailand under the Ruffles Ao Dai RORO Express (REX) style. Volkswagen Group is to charter two LNG-powered 4,500 CEU PCTC newbuilds from Siem Shipping, starting from The vessels will sail between Europe and Mexico/US/Canada. December Australian authorities submit criminal charges against K Line over alleged cartel behaviour in shipping cars, trucks and busses to Australia from 2009 to On the back of a buoyant and growing Australian car market, K Line launches an anti-clockwise Ro/Ro service connecting with Thailand to complement its existing clockwise rotation. Greek Ro/Ro specialist Neptune Lines initiates a new car carrier service between ports in the Middle East Gulf. Swedish Orient Line (SOL) purchases three iceclass Ro/Ro vessels from Viking Supply Ships previously used for the breakbulk and Ro/Ro operations of Rederi Transatlantic AB, which is winding down its business. LINER SHIPPING SUMMARY

107 DYNALINERS TRADES REVIEW

108 108 GLASS HALF FULL Index of Tables Content Pag Content Pag LINER INDEX TRADE OF TABLES AN OVERVIEW Carriers Ocean Network Express combination 36 Alliances structure April Alliances structure start Alliances structure start Carrier-carrier consolidation post Carriers entering the liner shipping scene Carriers leaving the liner shipping scene Containership lay-up development by month, Global Carriers Hanjin and Hyundai net results 12 Hanjin share price development 39 Hapag-Lloyd and UASC combination 35 Leading container carriers, combined annual results 9 Liner operators and their subsidiaries 42 Maersk Line and Hamburg Süd combination 32 Major container carrier performance figures without Maersk 10 Major container carriers, performance 1Q Major container carriers, performance 1Q 2017, without Maersk 13 Major container carriers, summary performance figures 10 Major Cosco/China Shipping reorganisation name changes 35 Mergers and takeovers 34 Other carrier changes Owned and chartered capacity by liner operators 64 Top 20 carriers operated fleet versus orderbook 62 Top-20 operators by capacity 34 Top-20 operators by full container carryings 34 Top-20 operators by operating profit and turnover 34 Top-20 operators operating profit per teu 34 Carryings Annual Trade Capacity: North Europe-Southern Africa 24 Europe/Mediterranean-Far East container trade, in TEU 15 Europe/Mediterranean-Far East container trade, TEU 16 Europe-Africa container trade, in TEU 22 Europe-Australasia container trade, in TEU 22 Europe-East Africa container trade, in TEU 24 Europe-East Coast South America container trade, in TEU 26 Europe-Latin America container trade, in TEU 25 Europe-Middle East/ISC container trade, in TEU 25 Europe-Southern Africa container trade, in TEU 24 Europe-West Africa container trade, in TEU 24 Far East - Latin America container trade, in TEU 25 Far East-Africa container trade, in TEU 22 Far East-Australasia container trade, in TEU 20 Far East-East Africa container trade, in TEU 24 Far East-East Coast South America container trade, in TEU 26 Far East-Middle East/ISC container trade, in TEU 25 Far East-Southern Africa container trade, in TEU 24 Far East-WCSA trade, in TEU 28 Far East-West Africa container trade, in TEU 22 Global container carryings development, 1Q Global container volumes according to CTS 15 Intra-regional container trades, in TEU 28 Main Africa container trades, in TEU 22 Main Australasia container trades, in TEU 20 Main ECSA Container Trades, in TEU 26 Main Latin America container trades, in TEU 25 Main Middle East/Indian Sub Continent container trades, in TEU 24 Mediterranean-Far East container trade, in TEU 15 North America - Latin America container trade, in TEU 25 North America-Africa container trade, in TEU 22 North America-Australasia container trade, in TEU 22 North America-East Coast South America container trade, TEU 28 North America-Middle East/ISC container trade, in TEU 25 North Europe-Far East container trade, in TEU 15 North Europe-WCSA container trade, in TEU 28 North Europe-West Africa container trade, in TEU 24 North-South container trades 2016, in TEU 20 Transatlantic container trade, in TEU 17 Transpacific container trade, in TEU 20 UK containerised trade 79 Containers Average selling price per 20' dry container, USD 76 Average selling price per 20' dry container, USD 76 Boxes and slots 76 Container box fleet 77 Container newbuild purchases 76 Container newbuild sales 76 Major lessors container box fleets 74 Major lessors container purchases 74 Reefer container orders in 2016 included 77 The 15 largest carriers by container box fleet 74 The 15 largest carriers by reefer plug capacity 74 Vessel casualties involving container boxes in 2016 included: 77 Containerships Capacity evolution of the post-panamax containership 70 Capacity of +14,000 TEU vessels, by capacity class and year 60 Cellular fleet composition forecast 62 China newbuilding price index, containerships 65 Container capable fleet available to liner operators 60 Container shipping capacity development, 1Q Containership casualties in 2016 included 68 Containership orderbook development 66 Containership orders by non-operating owners 65 Containership orders by/for carriers 65 Containership total losses 66 Containerships delivered 61 Containerships ordered 61 Containerships sold for demolition 61 Delivery of +14,000 TEU vessels by capacity class and year 60 Delivery of largest ships 60 Forecast of cellular containership deliveries 65 Growth of worldwide full container capacity and trade 13 Indicative vessel orders usd/teu 65 Net financial results South Korean shipbuilders 68 Notable vessel deliveries in 2016 included 61 Vessel sales by capacity Economy EU 27/UK GDP relationship 79 Gdp/population development 78 Non-container trades Anti-trust interest in Ro/Ro (PCTC) shipping 84 Multipurpose operator changes Multipurpose operator changes Top 10 (by CEU) operators of vehicle carriers 84 Top 10 (by cu.ft.) conventional reefer operators 86 Top 10 (by deadweight) Operators of vehicle carriers 84 Top 10 (by ramp capability) conventional Ro/Ro operators 86 Top 10 (by total deadweight) conventional Ro/Ro operators 86 Top 10 Operators of general cargo/mpp ships by dwt capacity 80 Top 10 Operators of general cargo/mpp ships by HL capacity 82 Top 10 Operators of heavy load vessels 82

109 DYNALINERS TRADES REVIEW Content Pag Content Pag Ports and terminals Canada East Coast, main ports throughput, TEU 46 Closed facilities/cancelled projects in Concessions awarded in Existing terminal developments in Global terminal operator statistics 55 Grouped terminal sales in 2016 included 51 Individual terminal sales in 2016 included 51 Millionaire container ports 58 Landside Modal Split at main North West Europe ports 2016, TEU 29 Landside Modal Split at main North West Europe ports 2016, shares 29 New tenders/projects developments in New terminals commissioned in Other terminal operator changes 51 Patrick Terminals 51 Summary of Panama Canal maximum dimensions 52 Terminals upgraded in Venezuela main port handlings 79 Vessel transits Bosporous Strait 52 Vessel transits Kiel Canal 52 Vessel transits main global arteries 52 Vessel transits Panama Canal 52 Vessel transits Strait of Malacca 52 Vessel transits Suez Canal 52 Prices and rates 10-year bunker/crude ratios year development rotterdam bunker prices 14 Actual charter rates reported 64 Average absolute USD difference, MDO against 380 cst HFO 72 Average relative difference, MDO against 380 cst HFO 72 Bunker market price for 380 cst 14 CTS - Europe/Mediterranean-Far East rate indices 16 CTS - Europe-North America rate indices 18 Development of annual average bunker prices 10 Development of annual average bunker prices, 1Q Freight rate developments Far East-East Coast South America 26 Freight rate developments Far East-West Africa 22 Indicative charter rates Rate Indices developments 10 Rate Indices developments Q SCFI - All-inclusive 20' westbound spot rates Shanghai to Europe 17 SCFI - All-inclusive 40' spot rates from Shanghai to United States 20 WCI - 20' westbound spot rates Shanghai to Rotterdam/Genoa 17 Shipowners Consolidation in the KG sector 71 Listed owners fleets Listed owners share price developments 71 Trades Development of global containership fleet capacity 10 Alliances fleet and capacity summary 31 Annual Trade Capacity: Europe/Mediterranean-Far East 16 Annual Trade capacity: Far East-East Coast South America 26 Annual Trade Capacity: Far East-North America East Coast 18 Annual Trade Capacity: Far East-North America West Coast 18 Annual Trade Capacity: Far East-West Africa 22 Annual Trade Capacity: Mediterranean-Far East 16 Annual Trade Capacity: Mediterranean-North America 17 Annual Trade Capacity: North Europe-Caribbean 28 Annual Trade Capacity: North Europe-East Coast South America 26 Annual Trade Capacity: North Europe-Far East 16 Annual Trade Capacity: North Europe-Indian Sub Continent 25 Annual Trade Capacity: North Europe-North America 17 Annual Trade Capacity: North Europe-West Africa 24 Annual Trade Capacity: US East/Gulf Coast-East Coast South America 28 Anti-trust interest in liner shipping 44 Broad global trade lanes 15 Carrier groupings 43 Common carrier e-platforms 43 Conferences and discussion agreements 43 Dynaliners regional definitions 90 Growth of worldwide full container trade 9 Named alliances, consortia and joint services 31 New container services launched in LINER TRADE 2016 INDEX - AN OVERVIEW OF TABLES

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112 Dynamar B.V. Robijnstraat 74 P.O. Box AK Alkmaar The Netherlands Phone: Website

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