DHL GLOBAL FORWARDING Ocean Freight Market Update April 2017
2
Topic Of The Month
Summary: Ocean Freight Market
High Level Market Development
Market Outlook: Capacity And Rate Development
General Market Information: Did You Know?
Backup: Carrier Alliances overview
Global Container Trade 2016
Acronyms and Explanations
Content
DHL Global Forwarding | OFR Market Update | April 2017
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Topic of the month – DGF moves three million TEUs in 2016!
Source: DHL
DHL Global Forwarding | OFR Market Update | April 2017
Over the years, DGF has been able to leverage its volumes to provide
customers with extremely competitive rates.
With the largest LCL network of all its forwarding peers, DGF moves
over 2 million cubic meters of freight annually. Customers have access
to some 2,580 weekly direct and bilateral consolidation services,
and some 45,000 point pair combinations.
DGF has also added innovative products like DHL Ocean Secure, DHL
Ocean Thermonet and Ocean View, which are all particularly attractive
for customers looking to optimize their supply chains and obtain a
degree of transparency previously not available with Ocean Freight.
Above all else, the secret to DGF’s 3 million milestone is its employees.
With over 4,000 ocean freight specialists around the world, DGF
serves customers from over 330 locations worldwide.
2000 2005 2010
500
1’240
2’700
2016
3’000
TEU in mio.
Last year, for the first time in its history, DHL Global Forwarding handled three million TEU’s of freight across its
international network. This outstanding achievement is the result of many years of steady growth, the hard work
of employees around the world, and DGF’s innovative products and solutions.
4
Ocean Freight market in a nutshell (1/4)
Source: IHS, IHS Markit, Alphaliner, DGF team
Ocean Freight Rates Outlook
ASPA – EURO uncertainty about phase-in/phase-out of vessel into the new alliance, thus expect utilization to remain at high 90%. Carriers are
pushing for a GRI in April 2017.
EURO – ASPA extremely tight space situation continues. Capacity reductions heavily impacting the already tight space situation. Further rate
increases are expected.
ASPA – AMLA several carriers have started blank sailings already and as of April 1st, 2017 space will be reduced by 12-15%. As a result an
increase of rates is expected.
TP EB : Strong utilization particularly into USEC. Next GRI announced for Apr 1st, 2017.
WB : March GRI was mostly implemented. Vessels continue to be overbooked 3-4 weeks ahead. Pre-booking is
strongly recommended. Service/Vessel/Terminal changes are already taking place in view of new carrier alliance agreements.
TA drastic capacity reductions from USEC to EURO NC will be initiated by carriers in April and will continue until May (forecasted
total reduction 7’000 TEU on average). Rate increases are expected on trades ex USEC and Gulf. Rates ex USWC are
expected to remain stable.
ASPA-MENAT expect a volume increase starting mid April due to pre-Ramadan rush. GRI announced as of Apr 1st, 2017.
ASPA-ASPA space continues to be extremely tight for all IPBC destination lanes. Rates increases, particularly for Pakistan and India are
expected. Surcharges (in view of operational delays/issues) are being maintained and further implemented on IPBC inbound
sectors. Pure Intra Asia Services are affected by the service reorganizations due to the new carrier alliances. Space/equipment
levels are tightening on various Intra Asia lanes and carriers have already started to push for rate increases – particularly for ex
TH export lanes.
DHL Global Forwarding | OFR Market Update | April 2017
Many regions are facing capacity reduction and tight space situations.
5
Ocean Freight market in a nutshell (2/4)
Source: IHS, IHS Markit, Alphaliner, DGF team
Economic Outlook
DHL Global Forwarding | OFR Market Update | April 2017
EU political risks elevated, with elections due in NL, FR, DE & possibly IT. With
1.6%, EU growth expected to stay on moderate path during this year
Increased capital spending, improved housing market & strong momentum in
employment growth, US economy is enjoying multiple tailwinds as long as
there are no big policy mistakes, bringing AMNO GDP growth to 2.3% in 2017
With 1.4% AMLA regional GDP is expected to come out of recession in 2017,
but MX’s perspectives became uncertain after the new US administration took
office
GDP growth for AP as a whole remains unchanged at 4.6% in 2017. Negative
ramifications of the US presidential election on Asia mostly relate to the
potential of rising trade tensions
GDP forecast for MEA was set up to 2.5 for 2016 in the end of last year. More
stable oil & commodities prices in 2017 will lead to pickup around 3.1%
Demand Development
EU PMI signaled manufacturing activity improvement for a
6th month running, reaching a 70-month high in Feb
US Manufacturing PMI signals rapid expansion since Oct
’16
BR Manufacturing PMI still within contracting zone,
although with highest reading within past 13 months. MX
PMI remained inside positive territory for 41st successive
month, but latest reading signals subdued business
conditions
Both CN PMIs (Caixin and CN Government Manufacturing
PMI) signal expansion. IN’s Manufacturing PMI expanding
again, after a dip in Dec16. JP Manufacturing PMI signaled
continuous expansion.
Regulations
India: Charging of fees for late collection of Delivery Order are being introduced with effect from 1 Apr ’17
i) mandatory to file the import entry before the end of the next day, following the day (excluding holidays) on which the vessel or aircraft arrives in
India, failing which there would be imposition of charges for late presentation of the entry
ii) Importers to pay the import duty on the date of presentation of the bill of entry and if he fails to pay the duty within the time so specified, he shall
pay interest on the duty.
Given above changes, a late collection fee would be charged by DHL IN in respect of OFR shipments when DOs are collected beyond the fifth
day of arrival of the vessel.
Conflict in the Spanish stowage remains unsolved. No agreement has been reached between the ANESCO employers and stevedores’
unions.
EU, AM, MEA had a moderate, AP had the strongest growth. PMI improvement in EU, US, IN and JP.
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Ocean Freight market in a nutshell (3/4)
Source: IHS, IHS Markit, Alphaliner, DGF team
DHL Global Forwarding | OFR Market Update | April 2017
New alliance networks show capacity additions across the board on the main Asia-Europe & Asia-North America routes from April. Most
hotly contested route will be the Asia-West Coast North America trade where 6 independent carriers will be competing against the 3 rival
alliances. On the Asia-Europe route capacity increases by 9.6% as the new alliances will provide one more weekly string than currently offered
by the existing alliances. The Asia-Med route will also see an increase in weekly capacity of 6.9% as the Ocean Alliance launches 5 and THE
Alliance 3 new services, with Zim also operating a single Asia-East Med loop on its own.
CMA CGM to hire 350 TEU per weekly sailing from THE Alliance on North Europe-USWC trade.
HMM will continue to offer TA services after the dissolution of the G6 partnership through slots on two 2M North Atlantic services offered within
the ‘2M+HMM’ agreement, effective from April
ZIM to add in April a second Asia-Pacific North West string through slots on the ‘PNW’ Service that HMM is to launch.
CMA CGM and APL are to launch a new intra-Asia service connecting directly Japan with Singapore and Port Kelang, without any wayport
call.
COSCO will launch a new North Europe-Turkey service branded ‘North Europe Turkey Express’ (NET) in April 2017. The ‘NET’ will turn in 4
weeks with 4 ships of around 1,700 teu, calling at Felixtowe, Hamburg, Antwerp, Piraeus, Istanbul-Ambarli (Kumport) Gebze (Yilport), Izmir,
Salerno, Felixtowe. The new service will cater for Europe-Turkey volumes that are so far covered with the current Europe–Far East service
wayporting in the Med, where containers are transshipped to/from Turkey.
MSC has taken in charge the MSC LEANNE (19,462 teu), the last unit on its 20-strong newbuilding program of Korean-built 19,000+ teu
ULCS. MSC LEANNE follows the MSC RIFAYA, delivered in February. After a bunkering trip from Korea to Russia it is to join the Maersk-MSC
Far East-Europe ‘AE-1/Shogun’loop, offered within the context of the 2M agreement.
MOL TRIUMPH (20,150 TEU), first of four 20,150 teu containerships ordered by MOL, will be delivered to MOL on 27th March 2017. The MOL
TRIUMPH is the first containership to pass the 20,000 mark and is the world’s largest containership by nominal container intake. It is
scheduled to join the Asia-North Europe ‘FE2’ loop as of April 2017, one of five THE Alliance loops focusing on the Fare East-North Europe
trade.
Capacity Development
New services are expected to be launched by carriers in the coming month.
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On 15 Mar 2017, the 2M partners (Maersk and MSC) and HMM signed an agreement that officially launches their strategic cooperation on
East-West trades. The agreement covers a series of slot exchanges and slot purchases on the main East-West routes that will be implemented from
01 Apr 2017 and is valid for an initial period of 3 years until 01 Apr 2020.
Hapag Lloyd has reported a net loss of EUR 97M for 2016. The positive earnings led by rate gains mainly on its key Latin American routes during
the 2nd half of the year were insufficient to reverse the losses incurred in the 1st half. Hapag Lloyd is pushing ahead with its planned merger with
UASC, however had to defer the completion of the merger from the end of March 2017 to May 2017 due to delays in securing creditors’ consent.
According to pro-forma financial statements released by Hapag Lloyd in Jan 2017, UASC recorded a net loss of EUR 216 M YTD Sep 2016 (FY 2016
figures not released yet). However this will not have any impact on the launch of THE Alliance which will start operations on 1 Apr 2017.
THE Alliance members set up a contingency plan in case of a partner insolvency to act as a safeguard against risks of cargo remaining
blocked at sea. The 5 members of THE Alliance will establish an independent trustee to mange funds to be used in case of insolvency of one of the
partners.
SM Line is making a bold entry into the container shipping trades, with an initial suite of six services covering the North East Asia – South East
Asia, Far East – India and TP routes, which will be launched over the months of Mar and Apr 2017. The Total capacity operated by SM Line will
exceed 40,000 TEU by the end of Apr – making it the fastest growing new carrier in container shipping history. This will place SM Line as the 37th
largest container carrier in the World. The company aims to gain a competitive advantage and attract customers through its competitive cost
structure, while developing a niche market strategy that concentrates on : East Asia and Far East-US West Coast routes.
CMA CGM reversed its loss making streak in the 4th Q of 2016, posting a net profit of $45 M after 4 consecutive quarters of negative results. The
improved performance is attributed to higher freight rates and its global cost reduction plan. However the 4th Q improvement was insufficient to
prevent a FY net loss of $452 M in 2016. posts $452 M net loss in 2016.
OOCL reported a net loss of $274 M in 2016, first negative year since 2009. The results in the 2nd half of 2016 deteriorated compared to the 1st half
despite higher freight rates and revenue gains, with the company citing higher fuel costs for the weak earnings performance.
All of the 97 containerships operated by Hanjin on 31 Aug ’16 haven been sold or returned to their owners. 44 ships with a total capacity of 202’700
TEU have secured new employment since then. 5 ships have been sold for scrap, including the vessel Hanjin Rome, that was sold in a sheriff’s sale
in Singapore on 1 Mar. 48 ships with a total capacity of 389’300 TEU, are currently unemployed. However, a significant number of these idle ships
will be re-activated over the next 2 months & the count is expected to drop to <20 units by mid May.
U.S investigation into possible price-fixing by the world’s largest container carriers, including Hapag-Lloyd, Maersk, OOCL.
Carriers
Ocean Freight market in a nutshell (4/4)
Source: Alphaliner, carriers, Handelsblatt DHL Global Forwarding | OFR Market Update | April 2017
Carriers have been facing considerable changes with strategic alliances, fast growth and also losses.
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High level market development
GDP Growth by Region1)
Economic Outlook
World Container Index (WCI)2)
Ocean Freight Spot Rate Index
Source: 1)real GDP, Global Insight, Copyright © IHS, Q4 2016 . All rights reserved; 2)Drewry, in USD/40ft container, including BAF & THC both ends, 42 individual routes, excluding
intra-Asia routes; 3) Shanghai Shipping Exchange, in USD/20ft container and USD/40ft container for US routes, 15 routes from Shanghai, 4) Global Insight, Drewry: 5) Bunker Index, in
USD/metric ton, Bunker Index MGO (BIX MGO) is the Average Global Bunker Price for all marine gasoil (MGO) port prices published on the Bunker Index website, Bunker Index 380
CST (BIX 380) is the Average Global Bunker Price for all 380 centistoke (cSt) port prices published on the Bunker Index website
Supply vs. Demand Growth4)
Shanghai Containerized Freight Index (SCFI)3)
DHL Global Forwarding | OFR Market Update | April 2017
Bunker Price Index5)
0
500
1'000
1'500
Q1
17
Q4 Q3 Q2 Q1
16
Q4 Q3 Q2 Q1
15
2015 2016 F 2017 F 2018 F 2019 F 2020 F
Europe 1.6% 1.6% 1.4% 1.6% 1.7% 1.8%
MEA 3.8% 2.7% 3.4% 3.7% 3.9% 3.9%
AMERICAS 1.9% 1.1% 2.1% 2.2% 2.4% 2.3%
ASPA 4.7% 4.6% 4.6% 4.7% 4.8% 4.7%
Total DGF World 2.8% 2.5% 2.8% 3.0% 3.1% 3.1%
0
1'000
2'000
3'000
Q1
17
Q4 Q3 Q2 Q1
16
Q4 Q3 Q2 Q1
15
0
200
400
600
800
Q1
17
Q4 Q3 Q2 Q2 Q4 Q3 Q1
16
Q1
15
BIX MGO
BIX 380
-2
0
2
4
6
8
10
Q3 Q1'15
Q3 Q1'16
Q2 Q1'17
Q2
Demand
Supply
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Market Outlook: Ocean Freight, Trade Lanes
Ocean Freight Development, Major Regions1
North America
- Europe
North
America–
Latin
America Europe –
Latin America
Asia –
Latin
America
0% Growth 2016
1% Growth 2017
-2% Growth 2016
3% Growth 2017
Europe - Asia
Growth 2016
Growth 2017
0% Growth 2016
2% Growth 2017
3%
1%
5% Growth 2016
1 % Growth 2017
Growth 2016
Growth 2017
0%
1%
-7% Growth 2016
3% Growth 2017
8% Growth 2016
0% Growth 2017
Exports from North America
to Asia grew strongly by 5%
in 2016, whereas North
American imports from Asia
were flat
Imports into Latin America
have declined on all lanes,
although exports from Latin
America are growing fast,
especially into Europe and
Asia
1 Mio. TEU
5 Mio. TEU
10 Mio. TEU
Intra Asia
Growth 2016
Growth 2017
4%
2%
Only modest 1.3% growth is expected for 2016 in Ocean Freight market (prev. 1.7%), as HY1 has shown less growth
than expected and the demand in HY2 is unlikely to fully compensate for a low start
8% Growth %016
1% Growth 2017
-7% Growth 2016
4% Growth 2017
Asia –
North America
IN %, BASED ON TEU
Source: Seabury; 1) Regional split according to back-up
2% Growth 2016
3% Growth 2017
-3% Growth 2016
2% Growth 2017
DHL Global Forwarding | OFR Market Update | April 2017
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Moderate Increase
Moderate Decline
No Change
Strong Decline
Strong Increase
++ -- - + =
Source: DGF internal analysis 2017
Market Outlook April 2017 – Major Trades
Export Region Import Region Capacity Rate
EURO AMNO - +
AMLA =/- =/+
ASPA -- ++
MENAT -- ++
SSA = =
AMNO AMLA = +
ASPA = +
EURO -- +
MENAT = +
SSA = =
Export Region Import Region Capacity Rate
AMLA AMNO - +
ASPA = +
EURO = =
MENAT = =
SSA = +
ASPA ASPA = +/=
AMNO + +
AMLA - +
EURO - =
MENAT = +
OCEANIA = =/-
Space situation from Europe to Asia still very tight with a important backlog. Situation is not expected to ease
before May/June 2017.
DHL Global Forwarding | OFR Market Update | April 2017
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Did You Know?
Source: Alphaline Volume 2017 Issue 12, *) preliminary estimate
Global container volumes recovered in 2nd half of 2016
Global container volumes grew by an estimated 1.8% in 2016, up from 1.4% in the year 2015
Preliminary throughput data for the Top 100 container ports is in line with global growth estimates
Several ports reported double digit gains, among the top 30 these are Port Kelang and Colombo
Port Mteu
2016
Mteu
2015
Growth
%
Port Mteu
2016
Mteu
2015
Growth
%
1 Shanghai 37.1 36.5 1.6% 16 Xiamen 9.6 9.2 4.7%
2 Singapore 30.9 30.9 -0.1% 17 Dalian 9.6 9.4 1.5%
3 Shenzhen 24.0 24.2 -0.9% 18 Hamburg 8.9 8.9 0.9%
4 Ningbo 21.6 20.6 4.6% 19 Tanjung Pelepas 8.3 9.1 -9.2%
5 Hong Kong 19.8 20.1 -1.3% 20 Laem Chabang 7.2 6.8 6.0%
6 Busan 19.4 19.5 -0.2% 21 New York/Newark 6.3 6.4 -1.9%
7 Guangzhou 18.8 17.6 6.8% 22 Yingkou 6.0 5.9 1.6%
8 Qingdao 18. 17.4 3.3% 23 Colombo 5.7 5.2 10.6%
9 Los Angeles/Long Beach 15.6 15.4 1.8% 24 Ho Chi Minh City 5.6 5.4 3.2%
10 Dubai 14.8 15.6 -5.2% 25 Bremerhaven 5.5 5.5 -1.0%
11 Tianjin 14.5 14.1 2.9% 26 Jakarta 5.5 5.8 -6.1%
12 Port Kelang 13.2 11.9 10.8% 27 Suzhou 5.4 5.2 3.1%
13 Rotterdam 12.4 12.2 1.2% 28 Algeciras 4.8 4.5 5.4%
14 Kaohsiung 10.5 10.3 2.0% 29 Valencia 4.7 4.6 2.3%
15 Antwerp 10.0 9.7 4.0% 30 Tokyo* 4.7 4.6 1.6%
DHL Global Forwarding | OFR Market Update | April 2017
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BACKUP
DHL Global Forwarding | OFR Market Update | April 2017
13
Carrier Alliances
With the latest mergers & acquisitions amongst container lines the G6, O3 and CHKYE alliances will terminate by Mar 2017 and the new
“Ocean Alliance” and “THE Alliance” be formed
Source: DHL, * strategic cooperation between HMM & 2M, ** as of Apr18
New
Maersk Line (incl. Hamburg Sud) 2M
MSC
Hyundai Merchant Marine*
Hapag-Lloyd/UASC
THE
Alliance
NYK & MOL & K Line**
Yang Ming
Hanjin Shipping
OOCL
Ocean
Alliance
CMA CGM (incl. APL)
China Cosco Shipping
Evergreen
Old
2M Maersk Line
MSC
G6
Hapag-Lloyd
MOL
NYK
Hyundai Merchant Marine
OOCL
APL
Ocean 3
CMA CGM
China Shipping
United Arab Shipping
CKYHE
Cosco
Evergreen
Hanjin Shipping
K Line
Yang Ming Status 1 Dec 2016
Hamburg Sud
DHL Global Forwarding | OFR Market Update | April 2017
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Mid-Term Growth is mainly driven by Asian Tradelanes
Fa
r E
ast
Fa
r E
ast
North America (incl Mexico)
Latin America
Europe (incl Med)
Far East
Intra Asia (excl Oceania)
40.0mTEU (+2.7%)
Global Container Trade 2016
135.8mTEU (+2.3%)
Source: Seabury Dec16 update
Volume Development of main Tradelanes (mTEU 2017e; in brackets Ø CAGR 2017e–2020e)
12.0mTEU (+1.7%)
6.8mTEU (+2.4%)
1.7mTEU (+3.3%)
2.1mTEU (+2.3%)
2.6mTEU (+1.8%) 2.1mTEU (+2.1%)
7.0mTEU (-0.4%)
1.8mTEU (+3.4%)
1.7mTEU (+4.3%)
3.5mTEU (-0.2%)
15.6mTEU (+1.2%)
4.4mTEU (+1.3%)
DHL Global Forwarding | OFR Market Update | April 2017
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Acronyms and Explanations
DHL Global Forwarding | OFR Market Update | April 2017
2M - Carrier Alliance: Maersk / MSC
AMLA - Latin America
AMNO - North America
AR - Argentina
ASPA - AsiaPacific
ATL4/NEUATL4- Transatlantic service between North Europe and North America
AX4 - Atlantic Express 4 (AX4). Service between North Europe and USEC
BKK - Bangkok
bn - Billions
BNSF - Burlington Northern Santa Fe Railway
BR - Brazil
CAGR - Compound Annual Growth Rate
CKYHE - Carrier Alliance: Cosco, K-Line, YangMing, Hanjin and Evergreen
CNC - CNC Line (Cheng Lie Navigation Co. Ltd.)
CSX - Changsha
DG - Dangerous Goods
DWT - Dead Weight Tonnage
EB - Eastbound
ECSA - East Coast South America
EURO - Europe
FAN - Fangcheng
FOC - Foshan
G6 - Carrier Alliance: APL, Hapag Lloyd, Hyundai, MOL, NYK and OOCL
HJS - Hanjin Shipping
HMM - Hyundai
HSUD - Hamburg Süd
HWS - Heavy Weight Surcharge
IA - Intra Asia
IPBC - India Pakistan Bangladesh Colombo
IPI - Inland Point Intermodal
ISC - Indian Sub Continent
JIU - Jiujiang
KHN - Nanchang
MENAT - Middle East and North Africa
mn - Millions
MoM - Month-on-Month
Ocean 3 - Carrier Alliance: CMA, UASC, China Shipping
OCRS - OCRSOperational Cost Recovery surcharge
PH - Philippines
PNW - Pacific North West
Ppt. - Percentage points
PSW - Pacific South West
RR - Rate Restoration
SOLAS - Safety of Life at Sea
SPRC - South People’s Republic of China – South China
SSA - Sub-Saharan Africa
T - Thousands
TEU - Twenty foot equivalent unit (20‘ container)
TP - Trans Pacific
TSA - Trans Pacific Stabilation Agreement
ULCS - Ultra Large Container Ship
US FMC - US Federal Maritime Commission
USEC - US East Coast
USWC - US West Coast
VGM - Verified Gross Mass
VLCS - Very Large Container Ship
VSA - Vessel Sharing Agreement
WB - Westbound
WCSA - West Coast South America
WUH - Wuhan
XMN - Xiamen
YML - Yang Ming Line
YoY - Year-on-Year
YTD - Year-to-Date