1. Container Shipping Market Outlook BLANK SLIDE
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2. One year after Hanjin Did we learn any lessons? Immediate aftermath
Start of new Alliances
Idle fleet reached record high
Post-Hanjin era
Hanjin capacity was not immediately replaced
Capacity discipline did not last long
All of the ex-Hanjin ships returned to service by Sep.
Only 6 out of 102 ships scrapped
New round of vessel orders?
End of
capacity
discipline?
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3. Post-Hanjin era has only just begun
And we are right back where we started
Immediate aftermath
Start of new Alliances
Post-Hanjin era
Rates recover on capacity constraint
Carriers unable to raise rates despite strong peak season demand
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4. Strong demand growth has reduced surplus capacity
Demand growth has exceeded supply growth in 2016 and 2017
But still need to clear 2018 hurdle before supply overhang is fully cleared
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5. While capacity overhang remains
Excess demand growth has been met through reduction in idle fleet
Growth in active fleet has exceeded growth in overall fleet in 2017
Effective capacity is growing at twice the pace of nominal fleet growth (9% vs 4%)
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6. 2018 supply growth remains a concern
1.30 million TEU due in 2017 (1.02 m TEU delivered YTD)
1.70 million TEU due for delivery in 2018
Deferrals will be limited, with 80% of deliveries > 10,000 TEU
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7. Fight for market share has not ended
Pressure on the smaller carriers who will struggle to maintain market share
Hapag-Lloyd
ONE
Yang Ming
How will Maersk react?
While independents continue to struggle
HMM
Zim
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8. Low orderbook ratio has already started to reverse
Orderbook reached a low of 2.50 million TEU in August
12.1% of total fleet – the lowest ratio in industry’s history
But 0.50 million TEU has been added since September
Orderbook could rise again – owners eyeing 2020 emissions rule
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9. Debunking the myth of capacity discipline
Hanjin Shipping
Carrier consolidation
Low orderbook
Balance of supply and demand
But despite all these ‘positive’ developments …
spot rates are down 52% to USEC and 38% to USWC since January
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10. Discipline does not last in presence of surplus capacity
Void sailings have been replaced by extra loaders
Total capacity on Transpacific route is up 7% year-on-year
No winter withdrawals announced so far …
Rapid introduction of > 10,000 teu ships set to continue (from 0% to 26% in 5 years)
Total capacity deployed on FE-North America route
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11. Transpacific Trade – 2 year cycles
Rate cycle expected to persist as long as over-capacity remains
Capacity additions will impede further rate recovery
2014
USWC port labour
Port congestion
2012
Capacity constraint
Departure of the niche carriers
2010
Restocking led recovery
Capacity & equipment shortage
2016
Hanjin bankruptcy
Flight to safety
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12. Failure to curb capacity increases will pull down 2018 rates
New ships due in next 15 months
5,000-10, TEU
10,000-15,000 TEU
18,000-22,000 TEU 12 19 13 2 5 3 6 7 11 9* 10
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13. What have we learnt since Hanjin?
Positive developments
consolidation moves have reduced number of global carriers
freight rates have been more stable
upturn in trade growth
slowdown in new vessel orders
But have we really learnt the lessons from Hanjin?
Hanjin bankruptcy did not mark turning point for industry
Continued government support for under-performing carriers
Price competition remains intense
Carriers still eyeing market share gains
Scrapping activity slowed
New vessel ordering has returned
2018 hurdle needs to be cleared
Over 1.5 million TEU to be delivered
Idle fleet – supply overhang of at least 0.35 million TEU to be carried over
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14. End Please send any queries to hjtan@liner-research.com
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- Shipping lines Investment Banks - Ports
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