www.drewry.co.uk

Key trends in shipping markets

ESPO Conference, 2018

30th May, 2018

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Drewry Maritime Advisors – ESPO 2018

Content

• Trade patterns

‒ How US shale is transforming oil and gas markets

‒ Iron ore shifts East

‒ Brakes on for Thermal Coal

• Service patterns

‒ Alliances, ULCVs and liner network development

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US transforms gas and oil markets

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Drewry Maritime Advisors – ESPO 2018

Overview of global LNG trade (2012)

Qatar was the biggest LNG exporter, export volume stood at 78.0 million tonnes, 32% of total LNG

trade. LNG trade also gained momentum on the Russia to Asia trade lane

Source: Drewry Research Database, BP Statistics

Nigeria - Europe

8.6 Mt

Australia - Asia

20.7 Mt

Indonesia -

Asia,

18.5 Mt

Qatar - Asia

48.9 Mt

Algeria - Europe

11.2 Mt

Qatar - Europe

23.0 Mt Trinidad &

Tobago-S. and

central America

7.4 Mt

Russia-Asia

10.9 Mt

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Drewry Maritime Advisors – ESPO 2018

Overview of global LNG trade (2017)

Qatar remains the biggest LNG exporter , challenged by Australia. US emerging strongly and is

expected to be the third biggest exporter of LNG

Source: Drewry Research Database, GIGNL report

Nigeria - Europe

8.8 Mt

Australia - Asia

55.5 Mt

Indonesia -

Asia,

18.5 Mt

Qatar - Asia

52.1 Mt

Algeria - Europe

10.5 Mt

US-Europe

1.8 Mt

Qatar - Europe

17.7 Mt

US-Asia

4.8 Mt

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Drewry Maritime Advisors – ESPO 2018

US is expected to have total capacity of 105mtpa by 2022

Lake Charles 15mtpa

Corpus Christi T3 4.5mtpa

Dominion Cove Point 5.8mtpa

Elba Southern LNG 2.5mtpa

Cameron LNG (T1-T3) 10mtpa

Sabine Pass T1-T3 13.5mtpa (operational), T4-T5 10 mtpa (under const.)

Lousiana LNG 2mtpa

Texas LNG 2mtpa

Corpus Christi T1-T2 9mtpa

Freeport LNG 13,2mtpa

Golden Pass T1-T3 15.6mtpa

Magnolia T1-T4 8mtpa

Cameron LNG T4-T5 10mtpa

Global Venture 10mtpa

Operational Liquefaction Plants

Planned Liquefaction Plants

Under construction Liquefaction Plants

Kenai 1.6mtpa

Source: Drewry research database

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Drewry Maritime Advisors – ESPO 2018

Overview of global LNG trade (2022)

The US is expected to become the largest LNG exporter, followed by Australia. Meanwhile, China will rise as a

major LNG importer in the Asian market importing about 60 million tonnes of gas

Source: Drewry Research Database

25

105

2017 2022 (f)

USA liquefaction capacity (Mt)

22 49

2017 2022 (f)

Nigeria liquefaction capacity (Mt)

69 91

2017 2022 (f)

Australia Liquifaction capacity (Mt)

15 26

2017 2022(f)

Russia's liquefaction capacity

(Mt)

020406080

100120

mtp

a

Current 2022

Overview of Global Trade – Crude Oil

Cargo volumes based on 2016 trade data

The Middle East has been largest exporter of crude.

The Middle East is the largest exporter of crude oil; it and with West Africa have been main suppliers of crude oil to Asia.

The US is however becoming a prominent supplier of crude to the world amidst supply cuts enforced by the OPEC. The

US Gulf refineries, which account for most of the US’s refined products production, use heavy grade for their slate,

which is imported from the Latin Americas and Canada, by pipeline. The lighter crude from the US is exported to Asia

and Europe. Crude from Northern sea enters Europe via the Baltic Sea.

Cargo volumes based on 2016 trade data

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Drewry Maritime Advisors – ESPO 2018

US crude production taking off

9,243

12,133

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2007 2009 2011 2013 2015 2017 2022

US crude oil production (kbpd)

45.6%

2.0%

41.3%

7.2%

-5.0%

5.0%

15.0%

25.0%

35.0%

45.0%

55.0%

2007 2012 2017 2022

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Drewry Maritime Advisors – ESPO 2018

Crude oil trade on major routes

xxxx

Source: Drewry Research Database, BP Statistics

29% 33% 34%

20%

30%

40%

2007 2012 2017

ME-Asia

5% 5% 4%

0%

10%

2007 2012 2017

ME-USA

12% 12%

11%

10%

11%

12%

13%

2007 2012 2017

FSU-Europe

1% 2%

4%

0%

5%

2007 2012 2017

FSU-Asia 6% 5% 6%

0%

10%

2007 2012 2017

ME-Europe

*NE Asia: Japan, South Korea, China

6% 7%

5%

0%

5%

10%

2007 2012 2017

Africa-Europe

1%

3% 4%

0%

5%

2007 2012 2017

Latin America-Asia

4% 4% 3%

0%

5%

2007 2012 2017

Latin America-USA

5% 6% 7%

0%

5%

10%

2007 2012 2017

Africa-Asia Pacific

0% 0%

0.6%

0%

1%

2007 2012 2017

USA-Asia Pacific

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Iron ore shifts East

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Drewry Maritime Advisors – ESPO 2018

Iron ore trade overview

771

1,099

1,511

2007 2012 2017

Global iron ore trade (Million Tonnes) Global iron ore imports (% share)

71% 84% 85%

20% 9% 7%

2007 2012 2017

Asia EU Other

China 84% Japan

9%

South Korea

5%

Taiwan 2%

China accounted more than four-fifths of Asian imports in 2017

Europe imports widespread

Netherlands 25%

Germany 16%

France 15%

UK

Italy 7%

Spain 6%

Others 24%

Demand is growing fast and shifting East

CAGR-

7.3%

CAGR-

6.6%

Asia

imports by

country,

2017

EU

imports by

country,

2017

Source: GTIS, Drewry

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Drewry Maritime Advisors – ESPO 2018

Iron ore exports (million tonnes)

Australia and Brazil are the top iron ore exporters and contribute 80% of

global trade. Very rapid growth.

24 32 42

0

500

1,000

2007 2012 2017

Canada

269 327 373

0

500

1,000

2007 2012 2017

Brazil

30 54 66

0

500

1,000

2007 2012 2017

74 30 33

0

500

1,000

2007 2012 2017

India

267

492

828

0

500

1,000

2007 2012 2017

Australia 55%

Brazil 25%

South Africa 4%

Canada 3%

other 11%

Share in

2017

exports

Australia

South Africa

Source: GTIS, Drewry

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Brakes on for Thermal Coal

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Drewry Maritime Advisors – ESPO 2018

Thermal coal trade overview

Global coal trade (million tonnes)

Sharp slowdown in coal volume growth

562

786

829

2007 2012 2017

Global coal imports (% share)

Share of the EU in coal imports is declining steeply.

During 2007-12 the share was taken by the rising

imports of major Asian importers, However, 2012

onwards minor Asian importers and Turkey is taking

up the share

CAGR-

6.9%

CAGR-

1.1%

India 27%

Japan 25%

South Korea 20%

China 18%

Taiwan 10%

Malaysia 32%

Thailand 24%

Philippines

22%

Pakistan 12%

Vietnam 10%

Asia coal imports, 2017 (% share)

Major Asian

importers,

2017

Minor Asian

importers,

2017

Source: GTIS, Drewry

23%

16% 12%

52%

66% 63%

10% 10% 15% 15%

9% 10%

2007 2012 2017

EU Major Asian importers Minor Asian importers Other

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Drewry Maritime Advisors – ESPO 2018

Thermal coal imports (million tonnes)

Major importers decline or slow; minor players grow

131 122

96

2007 2012 2017

15

21

32

2007 2012 2017

294

519 526

2007 2012 2017

40 57

91

2007 2012 2017

EU

Major Asian importers

Minor Asian importers Turkey

-1.4% -4.7%

12.0% 0.3%

7.7%

8.3%

7.3%

9.9%

Coal imports (million tonnes), CAGR (in %)

__ : CAGR below world’s average

__ : CAGR above world’s average

Source: GTIS, Drewry

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Drewry Maritime Advisors – ESPO 2018

41

12 7

2007 2012 2017

EU thermal coal imports sources

Colombia and Russia are the EU’s major sources of coal

Share in

EU imports,

2017

US

Colombia

South Africa

Russia

Intra- EU

8

25

13

2007 2012 2017

7 9

7

2007 2012 2017

24

26

27

2007 2012 2017

31 38 36

2007 2012 2017

Colombia 38%

Russia 28%

United States 13%

EU 7%

South Africa

7%

Others 7%

Source: GTIS, Drewry

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Alliances, ULCVs and liner networks

19 www.drewry.co.uk Drewry Maritime Advisors – GIC

Containership sizes double on most trades

• · ·

Evolution of average ship sizes on major trade routes

Source : Drewry Maritime Research

Source : Drewry Maritime Research

Trade Route (TEU) 1Q09 1Q12 1Q15 1Q18

Far East/N Europe 7,779 9,552 12,235 15,291

Far East/Mediterranean (direct) 5,488 6,848 8,625 10,998

Transpacific headhaul 5,079 5,869 6,740 7,828

Transatlantic headhaul 3,609 3,872 4,458 4,703

ECSA/Far East 5,074 3,240 8,314 9,236

WCSA/F East 5,100 2,681 7,207 7,751

Eur/S Africa 3,301 3,116 7,657 8,096

Far East/S Africa (direct) 5,255 3,651 7,061 5,068

Eur/W Africa (direct) 1,965 1,636 2,578 2,965

Far East/W Africa (Direct) 2,755 2,220 4,846 5,490

Asia/Mid-East and South Asia (direct)

2,926 3,692 5,594 5,409

20 www.drewry.co.uk Drewry Maritime Advisors – GIC

Consolidation and alliances

Major industry consolidation among companies and alliances

2017

Hapag-Lloyd

UASC HL merges

with UASC

MOL NYK K-Line

Ocean

Network

Express

2018 (Container Operations Only)

Maersk Hamburg-

Sud

Maersk

acquires

Hamburg

Sud

2016

CMA-CGM APL

CMA-CGM

acquires

APL

COSCO CSCL

COSCO

merges

with CSCL

OOCL

2017

2M

Ocean

THE

21 www.drewry.co.uk Drewry Maritime Advisors – GIC

Vessel sizes and service frequency

Vessel sizes rise and service frequency declines. Volume is being

concentrated…

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

Average vessel size (TEU)

Asia-North Europe Asia-Med

0

5

10

15

20

25

30

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

Number of services (per week)

Asia-North Europe Asia-Med

22 www.drewry.co.uk Drewry Maritime Advisors – GIC

Port coverage: Asia – North Europe

…but extended port coverage is being maintained…

Poland

Sweden Denmark

Germany

Netherlands

Belgium

France

UK

Le Havre

Southampton

Felixstowe

London Gateway

Dunkirk

Hamburg

Aarhus

Gdansk

Gothenburg

2M

Alliance:

Ocean THE

Rotterdam

Antwerp

Zeebrugge

Wilhelmshaven

Bremerhaven

23 www.drewry.co.uk Drewry Maritime Advisors – GIC

Direct calls: Asia – North Europe

…with direct calls; received wisdom about large vessels = transhipment was

wrong

2M

Ocean

THE

5 6 7 8 9 10 11 12 13 14 15 16 17 18

AE10

AE2

AE1

AE7

AE5

AE6

FAL5

FAL6 FAL2 FAL3 FAL7 FAL1

FE4

FE5 FE1 FE3 FE2

24 www.drewry.co.uk Drewry Maritime Advisors – GIC

Volatility

Concentration of volume creates new risks

40.0%

45.0%

50.0%

55.0%

60.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Antwerp and Rotterdam volume share (%)

Antwerp Rotterdam Linear (Antwerp) Linear (Rotterdam)

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