Global container industry 2008/2009

Global container industry 2008/2009

Analysis Report of the markets' Crises

Preparation by The Egyptian center for Studies of Export & Import Legal & Economic Consultations

www.ecsei.com www.ecsei-eg.com Mr. Medhat Saad Eldin

General Manager November 2009

The Egyptian Center for Studies of Export & Import و ا��اد �� ا ��آ� ا ��ى �را��ت ا

www.ecsei.com www.ecsei-eg.com Email: [email protected] [email protected]

The Egyptian center for Studies of Export & Import Legal and Economic Analysis

IntroductionECSEI

Economic Analysis conducts analysis and research in order to understand and explain trends and the evolution of the different elements of the Global Transportation system.

The economic analyses support policymaking, program development and decision-making. The scope of analysis is all modes of transportation and all facets of socio-

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The work deals with matters such as taxation, financial performance of carriers, performance of the different elements of the transportation system, efficiency considerations, logistics considerations, infrastructure needs, costs, industry structure, competitiveness, competition issues, and Legal modal comparisons as

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transportation system in the context of the National Transportation Policy objectives. ECSEI forecasts function focuses on the development of traffic forecasts, which

allow the clients to identify possible upcoming issues in relation to the country’s transportation system. In order to efficiently carry out these data-related responsibilities, there is a requirement to develop complex, user-friendly applications.

The ECSEI forecasts function focuses on the development of traffic forecasts, which allow the shipping operator and the terminal plan to identify possible

upcoming issues in relation to the global transportation system. Our objective's is to develop credible forecasts of transportation activities and to link back the forecasts to analysis of performance and basic fundamental

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ECSEI have a variety Legal Studies and information related to its many maritime law and

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Our new legal studies in United Nations Convention on Contracts for the International

Carriage of Goods Wholly or Partly by Sea - the "Ro%erdam Rules" 2008

Mr. Medhat Saad Eldin



Our summary Report's include this Note

World economy on the decline Global Economy: Trade and Transportation Markets The Container Shipping Market:

� A long-lasting boom comes to a sudden end

� Supply will grow faster than demand

� Overcapacities are expected to increase

� Slow steaming becomes popular

� Long-term prospects for container shipping are favorable

� Major problem for shipping companies for now

World Container and General Cargo Fleet Development 2007/2008 � World cellular container fleet � Size dimensions of the world container fleet

� World fully cellular container fleet’s “genera2ons” un2l 2008 - � Ownership patterns of the world container fleet World container fleet by flag

� World container fleet by country of domicile

� Leading container operators 2008

World general cargo fleet

� General cargo fleet development 2007/2008 � Age profile of the general cargo fleet � Size dimensions of the general cargo fleet

Major world trade developments 2007/2008 � World total trade by commodity group 2007 (% share of value in US$) � World total trade of manufactured goods by product group 2007 (% share

of value in US$) World container port traffic – regional highlights 2007

� TEU-ranking of the top 20 world container ports in 2007 � Monthly container traffic of selected ports by region 2000-2008

The container market - rates and prices FUTURE CONTAINER AND GENERAL CARGO TONNAGE SUPPLY

� New building contracting prices for Container ships 2002 -2007 by TEU

size classes

� World container and general cargo fleet - share of the Ordered tonnage

(dwt) on the existing fleet as of January 1st, 1995-2008

� New orders and order book development

� Leading shipbuilding countries

Global Container Terminal Operators Ocean Carriers: Top 30 gaining share

� U.S. agricultural shippers rate carrier performance The global economic crisis is wreaking havoc on shipping 2009

� The Hapag-Lloyd group and the Financial Crisis Analysis � CMA CGM group and the Financial Crisis Analysis � The Leader Largest Container Shipping Company in the World

A.P. Moller-Maersk

� APM Terminals in 2008



Page (1)

many factors –A global slowdown

Weak economic environment Main reasons for global downturn: 1. US economic slowdown and its effect on the

global economy. 2. The subprime crisis turning into a full-fledged Financial crisis.

3. Surging commodity prices, in particular oil 4. The weakness of the USD (with negative effects Outside the US) 5. Lasting boom in many countries and sectors has led to

Excess capacities of course, all these factors are Related, but together they have created stormy Weather for the global economy!

Markets Global Economy: Trade and Transportation

International trade is crucial to the world economy. According to the OECD, total world trade reached almost $3 trillion (in 2000 U.S. dollars) in 2007.

Together with the flows of finance, information

and people, the flows of goods integrates the world's economies.

Trade in turn is underpinned by a global transportation and communication network.

Reviewing the data on global trade generally leads us to recognize that trade is growing not only in absolute terms but also as a portion of

both the global and U.S. economy. As demonstrated in Figures 1 and 2 below, the maritime domain comprises a large portion of this network, and is crucial to all participants in

global trade, as 90% of imports and exports by volume are at some point transported by water.

World economy on the decline



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About 90% of world trade is carried by the international shipping industry on some

50,000 merchant ships trading y, transporting every kind of internationall

cargo.

The Container Shipping Market

Growth in the liner shipping market has been relatively rapid in comparison to other major shipping sectors such as tankers and bulk carriers.

Demand for shipping was strong in the last few years, with world container trade grew at an annual rate of 10% from 1999 to 2008. Global container volume carried in 2008 was estimated at 138 million

TEU. In 2009, due to weak global economic conditions, world container trade is expected to contract by 6%-

8%.

A long-lasting boom comes to a sudden end

Globalization, international division of labour and

strong economic growth have boosted container handling: Average growth since the early 1990s: +10% p.a. Asia confirms its position as the most important region 5 of the world's 10 biggest container ports are located

in China We expect (at best) stagnation of world container

handling in 2009; only modest recovery in 2010

Supply will grow faster than demand

Available capacity will expand by 10% p.a. till 2013 and thus much faster than demand:

Only a few ships are scrapped; average age of existing container ship fleet is only 11 years (world merchant fleet: 19 years)

Pressure on freight and charter rates will remain high

due to excess capacities Forecast for new capacity may be too optimistic and for scrapping too cautious



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Overcapacities are expected to increase

Boom in container shipping led to an increase in orders for new ships

Demand for big container ships (>10,000 TEU)

skyrocketed during the last few years Time lag between orders and deliveries results in cyclicality

Ships on order account for 55% of existing fleet Significant cancellations of orders or longer production times due to economic downturn and weaker demand likely.

Slow steaming becomes popular

Significant potential to reduce energy

consumption by lowering speed Problem of overcapacities can be reduced However, longer travel times mean higher

costs of capital and labour.

Long-term prospects for container shipping are favorable

Despite current economic slowdown, container shipping will continue to be a growth sector (+7 to

8% p.a. till 2015).

We don't see the end of globalization and international division of

Labour. Advantages in terms of efficiency and productivity (e.g. short loading times, good opportunities for onward transport, larger vessels) favour container shipping.

Degree of containerization will continue to rise especially in Eastern Europe, Latin America and Asia.

� Short sea shipping in Europe is on the rise: Container ports and terminals have been one bottleneck for the expansion of the industry.

Capacity utilization will come down to “normal” levels. Current crisis probably affects shipping companies more than harbours. Need for expanding harbour capacities and hinterland connections still highly topical.

Huge amounts are to be invested in new container terminals in the next few years.

The crisis is severe, but there is no reason to panic. World economy slumps into a recession; risks are on the downside; world

trade declines. Shipping market is highly affected; boom of the container shipping industry will come to an end; only stagnation in world container handling

in 2009.

Major problem for shipping companies for now:

The Egyptian Center for Studies of Export & Import

www.ecsei.com www.ecsei

Overcapacities and low or even declining

freight and charter rates. Medium and long-container shipping market are intact.

Investment in container terminals and

intermodal infrastructure in the seaports

hinterland are a must Scarcity of public funds generally benefits private investors.

� During global recessions, world trade usually slows more than world GDP

World trade is expected to decline in China„s hunger for raw materials and US and European demand for consumer goods from China will be dampened

World Container and General Cargo Fleet Development

As of January 1st, ships with 144.6 mill dwt equal to fleet comprised 17,647

Together these fleet segments had, in terms of dwt tonnage, a share of 22.9 per cent of the total world merchant fleet

At the beginning of fleet was to 82.4 per cent attributable to the fully cellular container fleet

At the beginning of 2008types specified by LR/Fairplay, can be distinguished:

2008, the following “Special types "namely subLR/Fairplay, can be distinguished:


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s and low or even declining

freight and charter rates. -term prospects for the

container shipping market are intact. Investment in container terminals and

intermodal infrastructure in the seaports‟ hinterland are a must Scarcity of public nds generally benefits private investors.

During global recessions, world trade usually slows more than world GDP

World trade is expected to decline in 2009 for the first time since China„s hunger for raw materials and US and European demand for consumer goods from China will be dampened.

World Container and General Cargo Fleet Development

, 2008, the fully cellular container fleet stood at mill dwt equal to 10.8 mill TEU and the general cargo 17,647 ships with 102.8 mill dwt equal to 2.1

Together these fleet segments had, in terms of dwt tonnage, a share of per cent of the total world merchant fleet (ships of 300 gt and over

At the beginning of 2008, the total TEU-capacity of the world merchant per cent attributable to the fully cellular container fleet

2008, the following “Special types”, namely subtypes specified by LR/Fairplay, can be distinguished:

g “Special types "namely sub-types specified by LR/Fairplay, can be distinguished:

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for the first time since 2001. China„s hunger for raw materials and US and European demand for

World Container and General Cargo Fleet Development 2007/2008

the fully cellular container fleet stood at 4,259 mill TEU and the general cargo

2.1 mill TEU.

Together these fleet segments had, in terms of dwt tonnage, a share of gt and over).

capacity of the world merchant per cent attributable to the fully cellular container fleet.

namely sub-

types specified by



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World cellular container fleet

� Compared with last year’s figures the TEU-capacity increased again by 13.7 per

cent – about 1.3 mill TEU of new cellular container ships were delivered in 2007.

� At the beginning of 2008 the fully cellular

container fleet comprised of 4,259 ships with 144 mill dwt and 10.8 mill TEU. As in previous years, the container tonnage

balance between additions and reductions showed a much higher level of additions. Fleet development trends can be summarized as follows:

Ships added to the world container fleet during 2007 represent 9.6 per cent of all fully cellular container ships, 11.4 per cent of the deadweight tonnage and 12.1 per cent of the TEU-capacity of the active container fleet

at the beginning of 2008.

World container fleet – annual tonnage changes as of January 1st, 1994 - 2008 (TEU- per cent Between the beginning of 2004 and 2008, the container fleet expanded on average by 13.8 per cent per year in terms of TEU and

the number of Container ships by 8.8 per cent.

World container fleet – tonnage additions and reductions 1995 – 2007 (mill dwt)

During the years 2003-2007, 1,385

container ships with 4.8 mill TEU and 61.1 mill dwt were added to the trading fleet.

In the same period, only 113 container

ships with 2.2 mill dwt were reported to be broken-up.

World container fleet development as of January 1st, 1986 – 2008 (Index 1986 = 100)

As in 2006, only very few container ships were sold to breakers. Their number increased only slightly from 19 ships with

26,000 TEU to 24 units totaling 26,400 TEU.



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World fully cellular container fleet –TEU-size structure January 1st, 1999 - 2008 (1000 TEU)

d container fleetSize dimensions of the worl

Fully cellular container ships become bigger. The average size of cellular container ships increased from 20,600 dwt or 1,180 TEU (1987) to 34,000 dwt or 2,500 TEU at the beginning of

2008. 142 container ships entering the fleet in the past five years were attributable to size classes above 8,000 TEU.

The ordered tonnage concentrates increasingly on container ship sizes

above 10,000 TEU. As of January 1st, 2008, 159 container ships had sizes above 10,000 TEU, thereof 108 large ships of the new Super Panamax generation with

capacities of 12,000 TEU and above.

World fully cellular container fleet’s “generations” until 2008

Ownership patterns of the world container fleet World container fleet by flag

Nearly 40 per cent (TEU-based) of the world container fleet is registered under the major open registry flags Panama and Liberia.

Panama is the world’s leading flag.

At the beginning of 2008, 735 container ships with 2.2 mill TEU were registered in Panama, which is equal to 20.9 per cent of the total TEU capacity of the world fully cellular container fleet.



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World container fleet by country of domicile The “country of domicile” analysis (including container ships of 1,000 gt and over) shows that at the beginning of 2008, 66.2 per cent of the container capacity was

not registered in the country of domicile of the owner, but flagged out.

TEU-capacity of top ranking containership operators as of 2005 – 2008 (February)

Leading container operators 2008

According to MDS Transmodal, as of February 2008, 15 container operators

controlled approx. 72 per cent of all fully cellular container ships (above 1,000 TEU) which account for 84 per cent of the “global” TEU capacity.

The largest is Maersk-Line, operating a fleet with a capacity of 1.7 mill TEU equal to 17.1 per cent of the total world container fleet capacity, followed

by the Swiss operator MSC with 1.2 mill TEU and the French operator CMACGM with 0.9 mill TEU.

World general cargo fleet General cargo fleet development 2007/2008

As of January 1st, 2008, the total general cargo fleet consisted of 17,185 ships with 100.3 mill dwt.

Comparing tonnage figures for January 1st, 2007 and 2008 the general

cargo fleet increased by 2.5 per cent. In 2007, fleet additions exceeded demolitions by 3.2 mill dwt. During the period 2003-2007, 2,013 general cargo ships with 14.5 mill dwt (newbuildings and other entries) were added to the fleet and 1,428

ships with 9.3 mill dwt were reported to be broken-up. In terms of tonnage the fleet additions were attributable to multi-purpose ships/singledeckers (68.8 per cent), special ships/car carriers (21.4 per cent) and Ro-Ro cargo ships (5.8 per cent).

World general cargo fleet – annual tonnage changes as of January 1st, 1992- 2008 (dwt- per cent)



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World general cargo fleet – tonnage additions and

2007 (mill –reductions 1995 dwt)

Age profile of the general cargo fleet

At the beginning of 2008, general cargo ships had an average age of 22.4

years. About 43 per cent of all general cargo ships representing 36 per cent of the total deadweight tonnage were already built before 1983 (25 years and older).

2,013 general cargo ships equal to 14.1 per cent of the total general cargo tonnage came into service within the last five years.

Size dimensions of the general cargo fleet

The world general cargo fleet is largely composed of ships in smaller size classes.

Only 337 ships were larger than 30,000 dwt (compare also table 10). At the beginning of 2008, the average size of general cargo ships stood at 5,830 dwt (2004: 5,770 dwt).

Major world trade developments 2007/2008

The World Trade Organization (WTO, Press Release 520/2008) has just published assumptions for the world trade development in 2007 and prospects for 2008.

In the following an extract of the report to highlight the current world trade development:

World total trade by commodity group 2007 (% share of value in US$)

World trade growth decreased from 8.5 per

cent in 2006 to 5.5 per cent in 2007 and is forecasted to slow down to 4.5 per cent in 2008.

Referring to the WTO this development is

due to the fact that the sustaining strong economic growth in emerging countries was not able to compensate the deceleration in key developed countries.

The growth in gross domestic product (GDP) – a measure of the size of the economy – slowed down in Europe and the United States.

The Chinese and Indian economies continued their record growth.



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World total trade of manufactured goods by product group 2007 (% share of value in US$)

World container port traffic – regional highlights 2007

The world container port traffic clearly reflects the world trade patterns, namely the growing dominance of Asia in world container traffic.

Compared with other traffic regions the container traffic in Asia shows

significantly higher growth tendencies.

World trade (value related) and world container port traffic (TEU-based) 1986- 2007 (Index 1986=100)

This is especially true for the period 2001-2007, an exceptional period for container traffic.

Due to the increasing importance of transshipment movements, the number of containers handled in the world’s container ports grew at an even faster rate than the international trade

TEU-ranking of the top 20 world container ports in 2007

Today the top 20 container ports in the world comprise 12 ports which are located in

Asia, including all top 5 ports. The total container traffic volume of the 50 top ranking

world container ports reached 323.9 mill TEU in 2007.

Tables 18 and 19 indicate that container traffic from and to

Asian ports grew more rapidly than in other world ports.

According to latest data from the “ISL Monthly Container Port Monitor”, which compares regional traffic growth patterns of the leading world container ports, this

phenomenal development continues in 2008.



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Thus, Chinese trade increasingly impacts on the ranking of the port traffic league and thus determines the development of the worldwide container

port traffic. This is also true for the North Range ports. In 2007, the five largest North Range ports handled 36.4 mill TEU

representing an increase of 13.1 per cent compared with 2006.

All North Range hub ports except Antwerp expanded their share of Asian

traffic during the last five years (compare table 22).

In total, container traffic to and from Asia grew by 14.8 per cent on average during the period 2002-2007, reaching 15.5 mill TEU in 2007

equal to a share of 42.7 per cent of the total TEU traffic in 2007.

Monthly container traffic of selected ports by region 2000-2008 (TEU - Index 2000=100)

A large portion of deep-sea container

traffic in the North Range ports is actually transshipped to or from shortsea destinations and thus enters and leaves the port by sea.

According to estimates from the ISL Shortsea Traffic Model, the five largest North European container ports handled

a total of 11.9 mill TEU of transshipment traffic in 2006 (counted both incoming and outgoing), 13.7 per cent more than

in 2005.

More than half of this traffic had its origin or destination in the Baltic Sea,

for which the port of Hamburg was the major hub. Rotterdam, on the other hand, was the major port for serving Great Britain.

As for the deepsea-hinterland traffic, a large portion of transshipment has its long haul origin or destination in Asia.

Latest figures from the ISL Monthly Container Port Monitor for the first quarter of 2008 reveal a mixed picture

regarding container traffic growth in the world’s different port ranges. While China continues its exceptional growth, last year’s crisis at the US real estate market now shows its full effect.

Chinese ports: +15.3 per cent East Asia (excl. China): + 5.7 per cent

European North Range ports: +7.5 per cent North American West Coast: -4.0 per cent North American East Coast: +3.5 per cent



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The container market - rates and prices

Container charter rates

Monthly HARPEX container charter rate index 2005 up to April 2008

During the last years the container shipping market had absorbed, as already pointed

out, a lot more container ships with ever increasing TEU-capacities (compare also table 8).

At February 2008, 1,525 container ships representing approximately 49 per cent of the total TEU capacity of the world container fleet were chartered in.

Thus, the charter rates are an important indicator for container shipping.

The development of charter rates, illustrated in figure showed the strength of the container market, which is determined by a permanent high tonnage demand resulting from increasing container trade volumes

especially in trade relations with Asia (China). Moreover port congestion was and is an issue for additional demand.

German sea freight indices - Liner trade indices 2005 up to March 2008

Second hand prices for 5 years old container ships 2002 -2007 by TEU size classes (mill US$ at year end)



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FUTURE CONTAINER AND GENERAL CARGO TONNAGE SUPPLY During the period 2003-2007, demolitions and new orders for container and general cargo ships showed the following development:

Broken-up tonnage is currently mostly an issue for general cargo ships.

In 2007, 191 general cargo ships with 1.1 mill/dwt and 24 container ships

with 26,360 TEU have been removed from fleet. Consequently, the scrapping level for general cargo and container ships comprise only the oldest vessels and was extremely low.

New building contracting prices for Container ships 2002 -2007 by TEU size classes (mill US$ at year end)

As of January 1st, 2008 1,421 general cargo ships with 18.7 mill dwt and 1,518 container ships

with 82.5 mill dwt and 6.85 mill TEU were ordered.

At least 314 container ships on order have capacities of 8,000 TEU and

above, of which 159 ships with a capacity of over 10,000 TEU.

The largest container ships on order concern a series of five

ships with a rated TEU-capacity of 14,000 TEU, to be built in South Korea for a German ship owner.

The container ship order book as of January 1st, 2008 represented a TEU-share of 63.7 per cent related to the existing container fleet.

Altogether, the order book for general cargo vessels increased by 50.0 per cent comparing dwt figures as of January 1st, 2007 and 2008.

With view to general cargo ships, it is worth mentioning that there is a strong increase in the fleet segment of multi-purpose ships (single and

multi deck ships are not separated in the order book entries). The order book as of January 1st, 2007 comprised 1,057 multi-purpose ships with a capacity of 13.8 mill dwt.

This is an increase of 55.1 per cent compared to previous year’s figures. 1057 ships representing 73.5 per cent of the general cargo tonnage (dwt) on order will be delivered until end of 2009.

World container and general cargo fleet - share of the Ordered tonnage (dwt) on the existing fleet as of January 1st, 1995-2008

Looking at the future container tonnage supply, the container fleet expansion will significantly accelerate in the short term.

Based on the order book as of January 1st, 2008 and the assumption that scrapping is still low, the container fleet will reach a capacity of approx.



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World container fleet - new orders and broken-up tonnage, quarterly 2001 – 2008 (mill dwt)

12.4 mill (+15.4 per cent) and 14.0 mill TEU (+ 13.0 per cent) at the beginning of 2009 and 2010, respectively.

An important issue is whether the strong increase of new tonnage will be absorbed at adequate charter and freight rates.

The delivery schedule shows that already until end-2010, 1,330 container ships with 65.0 mill dwt (5.3 mill/TEU) will be delivered.

THE SHIPBUILDING MARKET FOR CONTAINER AND GENERAL CARGO SHIPS New orders and order book development Container ships on order

The capacity of vessels on order as of January 1, 2008 was 63.7 per cent

of the existing fleet, compared to 46.3 per cent one year earlier. During 2007, the amount of new orders surpassed the ship deliveries. While 410 container ships with 1.3 mill/TEU (8.9 mill cgt) left the order book after completion, 777 container ships with 3.9 mill TEU (23.0 mill

cgt) were added. At the beginning of 2008, the total order book stood at 1,518 container ships equal to 6.9 mill TEU or 41.5 mill cgt respectivley.

Looking at the estimated delivery date, 1.7 mill TEU is due for delivery before 2009, 1.7 mill /TEU will be available in 2009, but the largest part (3.4 mill/TEU) will be delivered after 2009.

108 new orders had capacities of 12,000 TEU+, the delivery date for these

giants is scheduled for 2010 and later. World container and general cargo order book, quarterly 2001 – 2008 (mill cgt)



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General cargo ships on order

During 2007, 800 orders for new general cargo ships were placed on shipbuilding yards.

In terms of cgt these new orders had a volume of 9.5 mill cgt.

During the same period, 631 general cargo ships with 4.5 mill cgt left the order book after completion.

At the beginning of 2008, 1,421 general cargo ships equal to 17.5 mill cgt

were on order. According to the delivery schedule, two thirds of the ordered tonnage will be delivered within the next two years.

During the first quarter 2008, new orders amounted to 88 fully cellular

container ships with 0.3 mill TEU and 3.8 mill dwt (1.9 mill cgt), respectively.

As of April 1st, 2008 the order book for container ships stood at 1,486

ships with 6.8 mill TEU and 81.4 mill dwt (40.7 mill cgt). During the first quarter 2008, 294 new orders for general cargo ships were placed with 2.9 mill dwt (3.0 mill cgt).

As of April 1st, 2008, the order book for general cargo ships stood at

1,602 ships with 20.8 mill dwt (19.3 mill cgt). Looking at special general cargo ships order activities during the first quarter, 2008 were concentrating on multipurpose vessels (72.4 per cent), special ships (20.0 per cent) and ro-ro vessels (7.1 per cent).

Leading shipbuilding countries

At the beginning of 2008, 37.5 mill cgt of the total container tonnage and 17.5 mill cgt of the total general cargo tonnage on order were attributable

to yards in Asia. Their cgt market share for container tonnage and general cargo tonnage stood at 90.5 and 81.9 per cent, respectively.

The European shipyards, organized in CESA, had, in terms of cgt, a market share of 9.3 per cent in container shipbuilding and 13.7 per cent with respect to general cargo ships.

The massive predominance of Asian yards is not only reflected in the order

book at the beginning of 2008, but also for the existing container and general cargo fleets.

Only a deadweight tonnage share of about 26 per cent of the existing

container fleet was built on European yards.

Today container shipbuilding is largely a domain of Korean yards.

Looking at the order book, Korean yards were in the lead with 21.5 mill cgt equal to 51.9 per cent of the total container order book, followed by China with 9.5 mill cgt (22.9 per cent),

Japan with 2.7 mill cgt (6.4 percent) and Taiwan with 2.1 mill cgt (5.2 per cent).

All other shipbuilding countries had a cgt-share of less than 5 per cent. It is worth mentioning that Chinese yards increased their cgt-share in the world container shipbuilding continuously.



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Global Container Terminal Operators

The release of Drewry’s latest Annual Review of Global Container Terminal Operators report comes at a time of continuing uncertainty in the world

economy. The contraction in global container port throughput in 2009 is likely to be in excess of 10%. In 2010,

Drewry expects to see little or no growth, and anticipates that it will be 2011 before a modest recovery in demand growth will return and 2012-2013 before most regions see their throughput

regain its 2008 level. As recently as a year ago, there were still widespread concerns over a growing shortage of

capacity in the container terminal sector relative to demand, causing periodic supply chain bottlenecks.

Now, container terminal capacity will come under much less pressure over the next few years as the world’s container trades shrink, or at least grow

much more slowly than originally forecast. Most of the leading global container terminal operators are forecast to add capacity to their networks by 2014.

However, this report makes clear that the changed economic situation means they have adopted a more cautious assessment of future

prospects. Capacity expansion projects are being shelved, deferred or cancelled on an unprecedented scale, although there is a lack of transparency about global operator plans which makes accurate assessment of capacity development

plans very difficult. The general economic slowdown may well result in some investors having to sell off terminal interests and this may create opportunities for those global terminal operators and financial investors with ready access to the

necessary funds. The most likely terminal portfolios which may become available are in Drewry’s view those owned by shipping lines. With all container lines

under severe financial pressure – and some bankruptcies expected – the sale of some terminal assets owned by carriers in the near future seems likely.

The impact of the global economic crisis is reflected to some extent in the

financial performance of the global terminal operators. Earnings were down for a number of companies and the rate of turnover and profit increase compared to 2007 was much lower than in the previous

12 months. However, in 2008, all of the global container terminal operators for which data is available made a positive EBITDA/net profit.

Given the sharp contraction in container volumes in 2009, a much weaker financial performance can be expected. However, Drewry notes that whilst

absolute profit levels will inevitably be down in 2009, many international terminal operators are likely to still be able to maintain a reasonably strong EBITDA margin in percentage terms.

This will be a remarkable achievement in the worst year the industry will

have ever experienced.



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Ocean Carriers: Top 30 gaining share

When ocean cargo shipping analysts spoke with us in 2008, all the talk was about cascading rates and “bottom-feeding” competitors. The major carriers were rightly worried, but a pricing shift has occurred that may find

them counting profits rather than losses in 2009. Rationalization of space and services over the past year still kept the smaller carriers in the game, but the Top 30 gained share by shedding capacity and concentrating on brand equity.

Drewry contends that the removal of capacity by carriers in the Asia to Europe trade has led to capacity shortages, roll-overs, and a complete shift in the bargaining power of spot shippers and carriers on this route.

Carriers are exploiting the potential to negotiate rate increases in return for peak-season capacity guarantees.

Rank Operator TEU Share

1 APM-Maersk 2,019,526 15.0% 2 Mediterranean Shg Co 1,517,200 11.3%

3 CMA CGM Group 1,023,208 7.6%

4 Evergreen Line 594,154 4.4%

5 APL 531,403 3.9%

6 Hapag-Lloyd 475,282 3.5%

7 COSCO Container L. 469,848 3.5% 8 CSCL 449,469 3.3%

9 NYK 412,711 3.1%

10 Hanjin Shipping 406,462 3.0%

11 MOL 350,647 2.6%

12 OOCL 326,035 2.4%

13 K Line 326,003 2.4% 14 Hamburg Süd Group 318,079 2.4%

15 Yang Ming Line 318,008 2.4%

16 Zim 284,148 2.1%

17 CSAV Group 278,616 2.1%

18 Hyundai M.M. 267,227 2.0%

19 PIL (Pacific Int. Line) 186,143 1.4% 20 UASC 160,985 1.2%

21 Wan Hai Lines 126,193 0.9%

22 IRIS Lines 101,802 0.8%

23 MISC Berhad 101,054 0.8%

24 Grimaldi (Napoli) 51,312 0.4%

25 RCL (Regional Container L.) 51,291 0.4% 26 Sea Consortium 50,614 0.4%

27 TS Lines 45,490 0.3%

28 CCNI 40,362 0.3%

29 Maruba + CLAN 38,305 0.3%

30 SITC 35,971 0.3% Alphaliner-Source: AXS



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U.S. agricultural shippers rate carrier performance

While our annual Top 30 carriers feature concentrates on total volume, many shipper organizations rate carriers on a different metric service.

The 3rd Annual AgTC Ocean Carrier Performance Survey, the national survey of agriculture shippers and forwarders to determine and rank ocean carriers' performance, is one such example. The top ranked carrier this year, announced at the AgTC's 22nd Annual Conference in San Francisco,

is APL. Dependable booking realization, smoothly functioning electronic data and web portals, and prompt and effective customer service has also become

increasingly important. In fact, the ocean carriers' performance in these areas frequently matches, and at times can prevail, over freight rates as the basis for an ag shipper's selection of carriers.

AgTC Annual Ocean Carrier Performance Survey 2009 Top 10 Results

1 APL

2 OOCL 3 MOL 4 Hanjin 5 K-Line 6 Hyundai 7 U.S. Line 8 Yang Ming 9 Evergreen 10 NYK



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:g 2009The global economic crisis is wreaking havoc on shippin

Demand and prices have collapsed and Ports are filling up with fleets of empty freighters, the crisis has fueled cut-throat competition and not all companies will survive.

Lloyd group and -The Hapag

Analysis the Financial Crisis

(The world's fifth-largest Container shipping group)

The Hapag-Lloyd group is first liner shipping service, between Hamburg and New York, went into operation in 1847, and in those early days there was no fixed departure date.

About 115 modern ships, 5.5 million containers (TEU) transported in a year, over 7,100 motivated staff at 320 Location in 130 countries that is the industry leader: Hapag-Lloyd is among the leading liner shipping companies of the world and a powerful partner for you in global logistics.

The Hapag-Lloyd group offer about 80 Liner Services between all continents, a Fleet with a total capacity of around 470,000 TEU as well as a Container Stock of more than one million

TEU including one of the world’s largest and most modern reefer container fleets.

There are 14 liner services per week between Europe and Asia;

Five between Europe and the Arabian Gulf/India;

Nine between Asia and the West Coast of

North America; Four more to the East Coast of the USA; Eight routes in the North Atlantic; Eight routes between Mediterranean ports and North America;

Five between Europe and Latin America; Four between North America and Latin America; Two liner services between Europe and Australia/New Zealand; Three between the continent “down under” and North America;

Three to Africa. This network is rounded out by services that connect ports within a region. The owners of Hapag-Lloyd are the Albert Ballin consortium (56.67%,

consisting of the City of Hamburg, Kühne Holding AG, Signal Iduna, HSH Nordbank, M.M.Warburg Bank and HanseMerkur) and the TUI AG (43.33%).

Lloyd group and The Grand Alliance-Hapag

Hapag-Lloyd group is a member of the Grand Alliance, the most important integrated consortium in the international liner shipping industry.

The Grand Alliance, formed in 1998, is the leading integrated consortium in global container shipping.

Its members are presently Hapag-Lloyd (Germany), MISC Berhad (Malaysia), NYK (Japan) and OOCL (Hong Kong). MISC Berhad does not

operate on this trade and therefore has not participated In May 2009 the Grand Alliance members had have agreed to merge the: SCX (South China Sea Express)

and the JCX (Japan China Express) into a single loop and effected from May 25, 2009, sailing from Thailand.



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The Grand Alliance customers will be offered the same port coverage options under the new

service. One additional vessel of 6,200 TEU will be added on the SCX service, and Japanese ports previously covered on the JCX will be covered by the upgraded SCX service.

11 October 2009 Singapore’s firm withdraws from

Hapag-Lloyd bid Singapore's Neptune Orient Lines (NOL) dropped out of the race to acquire TUI AG's Hapag-Lloyd container shipping unit on Friday, leaving just one bidder in the hunt this means that

a group of Hamburg-based investors led by Klaus-Michael Kuehne -- head of Swiss logistics company Kuehne & Nagel -- and M.M. Warburg partner Christian Olearius is the only remaining bidder for Hapag-Lloyd.

Lloyd in line for state rescue-Hapag

Hapag-Lloyd looks set to become the first big shipping line rescued with state help during the financial crisis after Germany’s transport secretary

said its application for €1.2bn ($1.7bn) in state-backed loan guarantees was justified.

The move is likely to increase the pressure on other European states to offer support for maritime industries hit by the global economic downturn

and the effects of excess shipping capacity during the industry’s long

boom.

German shipping group Hapag-Lloyd’s request for 1.2 billion euros ($1.77 billion) in state loan guarantees has merit, Economy Minister Karl-Theodor zu Guttenberg said on Thursday.

Hapag-Lloyd AG was cleared to receive German government loan guarantees as part of a 1.2 billion-euro ($1.7 billion) rescue package to help the country’s biggest container shipper counter the recession.

Lloyd alone needs 1.75 billion Euros to -Germany's HapagThe End stay afloat.



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CMA CGM group and the Financial Crisis Analysis The World's Third Largest Container Shipping Company

CMA CGM S.A., a container shipping company, offers transportation and

logistics solutions in France and internationally. The company provides shipping, vessel and container fleet, hazardous cargo, container fleet management, and supply-chain services.

It also offers solutions to shipping needs, door-to-door shipments, air

freight and supply chain management, and river shipping services. In addition, the company provides tours and travel, and cruise services, as well as offers logistics, container fleet management, and specialized transport services.

Ranking first in France and third worldwide, CMA CGM has become an

international operator serving maritime shipping routes around the world with door-to-door services that combine maritime shipping with rail, river and highway transport.

� 360 ships on more than 200 shipping routes

� 8.9 million TEU transported in 2008 � 403 ports of call in 150 countries � 650 agencies and offices around the world, including 65 in China

� 17,000 employees worldwide � Revenue in 2008: $15.1 billion

CGM sails in troubled waters-Shipping, CMA

� The world trade’s contraction has harshly hit the Mediterranean’s leading shipping company CMA-CGM: freight rates have

lowered on average by 75% in 2008, while the group has been enlarging the fleet with a significant number of new vessels – 18 in 2009, ordered when the sector was at its

peak – thus causing a huge debt estimated at 3.5 billion €, Econostrum.info reported.

� A support plan could play a major role on several levers, as CMA-CGM is

asking its creditors to freeze the repayments for one year.

CMA CGM has been trying to reduce its costs

� To resist the economic downturn. It has rationalized its capacity and is raising its shipping rates starting in April, By using a large ship, for

example, it can merge two services. � It also stopped leasing some ships. � The company currently operates a 370-vessel fleet, 90 of which are

company-owned.

� The company continues to operate its ships at slow speed to reduce fuel consumption. It also rerouted its Europe-Asia shipping, sending its fleet around the Cape of Good Hope in order to avoid paying high fees at the

Suez Canal.



)21Page (

MA CGM restructures amid industry crisisC

THIRD-ranking container shipping group CMA CGM has assured that it is

standing by its 77-vessel orderbook, which it says has so far emerged unscathed from the international financial crisis But in October 2009 CMA CGM Aims to Delay 49 Ship Deliveries.

It has ordered and is scheduled to receive within the next three years and first objective is to CMA CGM obtain the delay of the delivery of those ships and an agreement on a payment schedule because CMA CGM’s

revenue fell almost 30 percent in the first half of this 2009 as shipping

volume and tariffs fell during the global economic crisis.

The company plunged into the red with a net loss of $515 million dollars in the first six months.

In 2008, CMA CGM earned a profit of $123 million, down 87 percent from the prior year.

indebted French company now owes $5.6 billion.-The heavily

A steering committee including banks and financial institutions is drafting a plan to return the company to profitability next year and secure its long-term future.

The French carrier has 60 large new container ships on order that are scheduled for delivery through 2012. As part of an effort to conserve cash, CMA CGM will continue to try to renegotiate and in some cases cancel “certain ship deliveries.”

The End CMA CGM sends out SOS to banks, French government

CMA CGM met creditor banks and French finance ministry officials to

discuss its $5.6 billion debt and bleak prospects for 2009 talks was focused on how CMA CGM could tap the government's strategic investment fund which aims to help French companies through the global downturn, according to French press reports.

The French ship-owners association has lobbied the government to establish a $1.8 billion fund to help carriers meet banks' demands for extra collateral to cover the fall in value of ships on order.

Mærsk Group-A.P. Møller


www.ecsei.com www.ecsei

Largest Container Shipping Company in The Leader Maersk-A.P. Moller

Established in Denmark in commonly known as Maersk, is one of the biggest corporate

conglomerates in the world with business activities in different sectors.

Seaborne transportation and shipping logistics are the main business of

the group as the largest ship operator world.

The shipping units maintain a fleet of more than The company also does offshore drilling and transportation for gas

primarily in the North Sea. Other units of the company build shipsprovide air cargo service.

Maersk additionally owns one of Denmark's largest grocery and general merchandise chains

Number of employees worldwide: 2008 Global Fortune

Net Income: $3,275.3 Total revenue: $52,381 Present in around Operates more than

Container shipping and related activities

A Market leader in worldwide container services, agency, logistics and terminal activities etc. under Damco and Safe marine.

Maersk Line and Safe marine operate more than more than 250 owned. APM Terminals APM Terminals develops and operates container terminals and

related activities and is glterminals and terminal projects in

Tankers, offshore and other shipping activities offering solutions for the transport of crude oil, refined products and gas; various supply vessel activities

(including anchor-handling, platform supply and cable laying).



www.ecsei-eg.com Email: [email protected]

)22Page (

theLargest Container Shipping Company in

Established in Denmark in 1904, A.P. Moller-Maersk Group, more commonly known as Maersk, is one of the biggest corporate



the group as the largest ship operator and supply vessel operator in the

The shipping units maintain a fleet of more than 550 container shipsThe company also does offshore drilling and transportation for gas

primarily in the North Sea. Other units of the company build ships and shipping containersprovide air cargo service.

Maersk additionally owns one of Denmark's largest grocery and general merchandise chains

Number of employees worldwide: 120,000 people Global Fortune 500 rank: 131

$3,275.3 million $52,381 million

Present in around 130 countries Operates more than 550 container vessels

Container shipping and related activities

A Market leader in worldwide container services, agency, logistics and terminal activities etc. under the brand names Maersk Line,

Maersk Line and Safe marine operate more than 500 container vessels

APM Terminals develops and operates container terminals and

related activities and is globally engaged in more than 50 terminals and terminal projects in 34 countries.

Tankers, offshore and other shipping activities

offering solutions for the transport of crude oil, refined products and gas; various supply vessel activities

handling, platform supply and cable

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[email protected]

World the

roup, more commonly known as Maersk, is one of the biggest corporate



and supply vessel operator in the

container ships. The company also does offshore drilling and transportation for gas and oil,

and shipping containers and

Maersk additionally owns one of Denmark's largest grocery and general

container vessels, hereof

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)23Page (

Oil and gas activities .

Maersk Oil participates in production activities in Denmark, Qatar, United Kingdom, Algeria and Kazakhstan. In addition,

Maersk Oil participates in exploration activities in the North Sea (Denmark, United Kingdom, Norway and Germany), North Africa (Algeria and Morocco), West Africa (Angola), the Middle East (Qatar and Oman), Central Asia (Turkmenistan), South

America (Brazil, Suriname and Colombia) and the US Gulf of Mexico.

Retail activity,

comprising supermarkets and hypermarkets in Denmark, Germany, United Kingdom,Poland and Sweden. Dansk Supermarked incorporates, among others, the Føtex stores,

the Netto stores and the Bilka hypermarkets. Shipyards, other industrial companies, interest in Danske Bank, etc., include shipyards in Denmark and the Baltic countries, industrial production of plastic products, Star Air engaged in contract parcel flying in Europe. The segment also includes a 20% interest in Danske Bank.

APM Terminals in 2008

APM Terminals develops and operates container terminals

and related activities and is globally engaged in more than 50 terminals and terminal projects in 34 countries. APM Terminals provides services to around 60 customers. Revenue increased by 24% to USD 3.1 billion and the

EBITDA margin rose to 18.4% from 16.5% in 2007, in fleeced positively by cost efficiency measures, exchange rate effects and rate

increases. The volume of containers handled-measured in crane lifts and weighted with APM Terminals’ ownership share –increased by 8% to 34 million TEU in 2008.

The volume from customers other than Maersk Line rose to 38% of the total volume, compared to 34% in 2007.

The volume from other customers increased by 25%, while the volume from Maersk Line was by and large unchanged.

The growth in handled volumes was driven mainly by sound growth in Africa and Latin America, while volumes in North America were declining.

Disregarding the terminals in North America the increase in volumes was

12%. The profit before financial items rose to USD 314 million, including a gain of USD 60 million on the sale of a 20% ownership share in Port Qasim (Pakistan).

As a consequence of the expected development in volumes an impairment loss of USD 50 million has been recognized on terminal rights, etc.



)24Page (

While the total profit and margins are still influenced

negatively by the start up of new terminals, the profit for terminals in operation for more than one year rose by more than 25%

from 2007. During 2008 APM Terminals was involved in 26 projects

8% growth in the number of

containers handled by APM Terminals, against 4% growth in the global container terminal Market.

Increase in business volume with other customers than Maersk Line to 38% of the total volume, compared to 34% in 2007.

Cash flow from operating activities rose to

USD 501 million, compared to USD 260 million in 2007

The average remaining duration of APM

Terminals’ terminal concessions weighted by ownership share is just over 20 years for terminals in operation.

2009 Midyear Results - Financial Highlights

8% decline in the number of containers handled by APM Terminals, compared to 15% decline in the global market for terminal activities.

The segment result after tax was a profit of USD 172 million.

Excluding gains on sale of non-current assets, the profit was at the level of the same period in 2008.

Business with other customers than

Maersk Line and Safe marine constituted 38% of the total volume in the first half of 2009.

Cash flow from operating activities,

USD 171 million, was negatively affected by an increase in working capital.

In the first half of 2009,

The A.P. Moller - Maersk Group was significantly affected by the global economic crisis.

A 3% contraction in the total global economy in the first half of the year,

and resultant substantial declines in global trade, had a negative impact on the Group, primarily by way of declining volumes and rates for the container shipping activities and lower activity in a number of other business areas.

Although an increasing overall trend was seen in the first half of 2009, oil prices were considerably lower than in the same period of 2008.

For the first half of 2009, Group revenue was DKK 127,389 million

compared to DKK 148,365 million in the same period of 2008, corresponding to a decline of 14%, primarily reflecting lower freight rates



)25Page (

and volumes in the container shipping activities and the lower average oil prices.

Container Shipping and related activities 2009

Volume down 7% vs. 1H 2008 - down 3% in Q2 vs. Q2 2008.

Rates down 30% vs. 1H 2008 - down 34% in Q2 vs. Q2 2008.

Average fuel price 44% below 1H 2008 – Total spend USD 1.4 billion vs. USD 2.9 in 1H 2008.

Cost saving initiatives including reduction of 1,500 positions Unit cost per FFE for Maersk Line and Safmarine excluding fuel costs down 5%.

2% of the fleet taken out of service; 2% scrapped or planned for scrapping.

ummary SThe End of

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Global container industry 2008/2009

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