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Confidential – not for third party distribution © Accenture 2017
European demand trends and
changing commodity patterns
Is consumer demand driving growth?
16.May.17
1Confidential – not for third party distribution © Accenture 2017
Healthy but contrasting demand growth on key trade lanes Rapid growth on Asian import trades have helped demand growth recover in recent months,
while European and American import trades still remain largely flat
1) 2015-2016 grow th in terms of TEUs; thickness of arrows is representative Jan-Dec 2016 trade lane size in TEUs
Source: Seabury Global Ocean Trade Database & Seabury Ocean Dashboard, excluding UN Comtrade; Seabury analysis (March 2017)
Containerized ocean trade growth, Dec’16 – Feb’17YoY growth, %1
Global containerized trade growth: 5.2%
Intra-Asia and back-haul trades drive most of the recent growth spurt
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Recent demand growth is on a path of clear recoveryGlobal demand growth has some unusual beneficiaries, like double-digit growth of European
exports to Asia; while Intra-Asia’s steady growth continues
Growth trends on selected trade lanes, 2014 – 2017YoY growth, %1
1) Smoothened for enhanced clearness
Source: Seabury Global Ocean Trade Database, excluding UN Comtrade; Seabury analysis (May 2017)
Current recovery of demand growth is almost reminiscent of the ‘good old days’
20172015 2016
5%
15%
-5%
10%
0
-10%
Europe to Asia
World
Asia to Europe
N DOSA J F MJ F M J JM JA S OAA FDJJ
Intra-Asia
M N
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The long term growth trend is still on a declining pathAfter sustained double digit growth early in the century; growth rates in the container
industry have continuously dropped since 2008 to the current low single-digit levels
Global TEU growth rate, 2000 – 20165-year CAGR (%)
Source: Seabury Global Ocean Trade Database, Seabury analysis (May 2017)
0%
5%
10%
15%
’14’12’10’08’06’04’02’00 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’16
The container industry has grown below 3% on average in recent years
+2.5%+8.1%
Declining industry
growth rates
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Drop in TEU growth cannot be explained by economy aloneAlthough GDP growth has also declined over the past years, containerized trade has seen a
much faster decline in growth, and now grows at similar levels as the overall economy
5-year average GDP multiplier1 ,2000 – 2016TEU / GDP growth
Notes: (1) The 2.4 ratio on 1990 means that TEU on average grew 2.4 times faster than GDP over the period 1985-1990
Source: Seabury Global Ocean Trade Database, EIU, World Bank; Seabury analysis, (May 2017)
0
1
2
3
4
’05 ’10 ’14’13’12’07 ’11’04’03 15 ’16’06 ’09’08’00 ’02’01
> 3.5
< 1.5
TEU: 8% 2%
GDP: 3% 2%
2000 2016
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Economies have changed:
GDP growth is slowing down
China and other emerging markets are transitioning towards service
based economies
“New” emerging markets like Vietnam and Bangladesh lack scale
Trade has changed as well:
The boom of “supply chain globalization” after China entered the WTO is
coming to an end
Production and final assembly location sites of some industries are
moving back towards end-consumer markets
Finished goods no longer drive TEU growth, and intermediate goods and
raw materials are growing in importance
What has caused trade growth to drop so rapidly? Both the nature of the global economy and international container trade have changed
significantly since the 2008 financial crisis
The impact of finished goods declining in importance is often overlooked
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Top trade-lanes were dominated by US imports back in 2000In 2000, container trade was mostly driven by finished goods exports from emerging to
developed markets, and trade of intermediate goods between mature economies
Top-10 global container trades, 2000Million TEU
Source: Seabury Global Ocean Trade Database (May 2017)
Intermediate goods were only of secundairy importance on top-3 trade lanes
China USA
China Japan
USA Japan
Japan USA
Taiwan USA
Italy USA
Germany USA
Taiwan Hong Kong
China S. Korea
USA China
Importer Exporter Annual volume by commodity type
1
2
3 32%
33%
0.6
0.5
1.0
1.0
0.9
0.6
0.5
24%
0.6
3.3
0.5
Intermediate goods
Raw materials
Finished goods
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China has taken over the role of container empire by 2016Container trade has become much less dependent on the US consumer market, and now
relies strongly on China as an exporter & importer of a wide range of commodities
Top-10 global container trades, 2016Million TEU
Source: Seabury Global Ocean Trade Database (May 2017)
Intermediate goods are now even more important on world’s largest trades
China USA
USA China
China Japan
China S. Korea
China UK
China India
Thailand China
China Germany
China Vietnam
Japan China
1
2
3
Importer Exporter Annual volume by commodity type
57%
43%
1.1
1.2
1.1
1.1
1.1
2.3
2.5
1.1
2.2
9.5
Finished goods
Raw materials
Intermediate goods
23%
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Intermediate goods drive global container trade growthIntermediate goods have consistently outgrown the market, first at the expense of raw
materials, and for the last 8 years at the expense of finished goods
Container trade growth by commodity type, 2000-2016Absolute growth in million TEU
Source: Seabury Global Ocean Trade Database; Seabury analysis (May 2017)
110
Finished
9
Intermediate
30
Raw
8
Raw
14
Intermediate
2
Finished
133
2016
59
2000
11
2008
6% 9% 8% 8% 3% 3% 1% 2%
Finished goods have grown by only 1% on average in the last 8 years
8-year CAGR:
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The fashion industry’s characteristics have changedFashion made of textiles has a relatively straight forward supply chain; cotton > thread >
fabric > clothes, but the importance of each segment changed over time
Global containerized trade of fashion goodsMillion tonnes
Source: Seabury Global Ocean Trade Database (May 2017)
Clothing Inputs
35
Inputs
48
Clothing
15
Inputs
21
Clothing
8
14
Less finished goods were shipped, even though overall fashion-related trade grew
7% 8% 1% 5%8-year CAGR, %:
Clothing
Fabrics
Thread & yarns
Fibers
2000 2008 2016
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European imports of fashion goods are a case in pointWhile European fashion import growth relied mainly on finished clothing until 2008, imports of
clothing stalled since 2008, while imports of fabrics and other fashion inputs continued to grow
European fashion imports by commodity type, 2000-2016Index (2000=100)
Source: Seabury Global Ocean Trade Database, Seabury analysis (May 2017)
231222
78
97
153
200
50
100
150
200
250
’07’06’05’04’03’02’01’00 ’16’15’14’13’12’11’10’09’08
Relative strong growth of “fashion intermediates” suggests near-sourcing in Europe
2008-2016 CAGR:
0%
3%
2%
3%
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The changes are clearly visible in the European marketThe center of growth shifts from consumer markets such as the UK, Germany and France,
to more production heavy markets like Italy, Spain and Poland
Top-8 clothing importers Europe, 2016Thousand TEU 8-year CAGR
Top-8 fashion-inputs importers Europe, 2016Thousand TEU 8-year CAGR
Source: Seabury Global Ocean Trade Database, Seabury analysis (May 2017)
-2%
1%
2%
5%
4%
7%
11%
3%
2%
-1%
9%
2%
1%
-2%
-1%
2%
57Italy
76France
85Spain
94Netherlands
133Germany
44
158UK
18
Belgium
Denmark 18
38
44
48Belgium
45UK
Portugal
Poland
Netherlands
61Germany
63
29
Spain
Italy
2008 2016 increment
Intermediate goods grow faster, and to different markets than finished goods
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Cargo weight per TEU varies considerably by commodity typeFinished clothes are light-weight, with intermediate goods and raw materials coming in
heavier containers
Average stuffing factor per commodity typeTons per laden container (TEU)
Impact stuffing factor on TEU growthIncremental TEU’s per 1,000 tons growth
Source: Seabury Global Ocean Trade Database, Seabury analysis (May 2017)
5.2 tons
x
x
x
x
5.2 t
8.6 t
10.4 t
11.5 t
Any increase in cargo weight of heavier cargo translates into fewer additional TEU
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Market outlookDemand trends and developments we see in container shipping today are not all positive,
but certainly also not all negative!
Trade patterns
TEU growth
Container-ization
Emerging markets
Market outlook
Less additional outsourcing to Asia-Pacific
Different commodities driving growth
East-West trades not catering for the majority of growth anymore
Structurally lower
More on short-distance (‘Intra’ trades) and N-S trades
Non-dominant legs currently growing faster than dominant legs
China becoming less export oriented
Consumer demand from developed markets less of a driving force for emerging
markets
No ‘New China’ on the horizon as ‘new’ emerging markets are relatively small-scale
Most commodities that can be containerized have been containerized
Reefer market offers some potential for additional containerization
Breakbulk and OOG potentially less attractive due to back-haul growing fast
Current lower growth cycle is likely to continue in the short term
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Contact detailsFor more information, please contact…
Ronald Veldman
Senior Maritime Business AnalystSeabury Consulting
E-mail: rveldman@seaburygroup.comCell: +31 62 129 0489Phone: +31 20 880 4258
Website: www.seaburygroup.com
Michel Looten
Director MaritimeSeabury Consulting
E-mail: mlooten@seaburygroup.comCell: +31 62 139 1196Phone: +31 20 880 4265
Website: www.seaburygroup.com
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Introduction Seabury ConsultingAs part of Accenture and with over 200 dedicated professionals, Seabury is the largest global
advisory practice in aviation and logistics, and the leading advisor to the global cargo industry
ForwardersIntegrators
Port
Authorities
Terminal
OperatorsAirlines
Seabury
CargoAdvisory
Shipping lines
Founded in 1995, Seabury provides management
consulting and business intelligence, originally for the aviation industry, but also for other logistics industries
Seabury Cargo Advisory provides services to many of
the world’s leading shipping lines, ports, forwarders, integrators, airlines and airports
Seabury Cargo Advisory has an unparalleled range of expertise in:
- Strategy consulting and business planning
- Operational improvement (e.g. cost reduction, revenue
boosting, contract negotiations and outsourcing)
- Network and alliance optimization; fleet selection, acquisition
and financing
- Business intelligence, market research and forecasting
The practice is led by a combination of former cargo airline and maritime experts, and consultants from leading cargo consulting firms
Seabury’s proprietary suite of software tools are considered the industry’s best with a depth of
analytics necessary to support rapid decision making
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Exports from South China to Europe
TEU (‘000s)
2013
Global Ocean Trade DatabaseSeabury provides the industry's most comprehensive, reliable and up-to-date set of ocean
trade data with extensive historical time series and forecasts
200 countries
Covering ~99% of global ocean
trade
Country-to-country trade lanes
City-level detail for China, Brazil,
India & USA
Example: from Nanjing to Germany
Ocean trade
Measured in TEU, weight and value
Split by Containerized, Non-
Containerized and Oil, Fuel & LNG
Specific stuffing factors, supplied by
participating carriers, used to
convert container weights into TEU
Example: TEU
High update
frequency
Up-to-date customs data processed
and delivered every month
Lean and efficient processing times
allow to supply datasets with
minimum time lags
Example: year-to-date
Monthly
& yearly data Yearly data from 2000 onwards
provide insights on long-term trends
Quarterly data from 2000 and
monthly data from 2005 onwards
provide insights on seasonality
patterns
Example: monthly data
~2000 commodities
Using an in-house classification in
12 sectors and 70 industries,
tailored to international trade
Input based on HS6 or lower
Allows to analyze key industries as
well as detailed products
Example: frozen bovine meat
Christmas articles
Air conditioners10
0
2
4
6
8
AJOJAJOJAJ OJAJOJ
2014 2015 2016
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Air, Ocean, Rail
& Road Modes
375,000 shippers
& manufacturers
14,000 Zip codes
2000 commodities
China Shipper Trade DatabaseSeabury’s China Shipper Trade Database allows analysis of shipments to and from Chinese
zip codes, capturing trade behavior of individual shippers by mode
7 IndustriesUpdated monthly
Database & Map Weight, value & shipments