Shipping & Offshore Research
Global Economy, World Trade & Shipping
Capital Link Shanghai
May 2017
Slide 2Capital Link Shanghai – DVB Shipping and Offshore Research
The shipping market cycle
All shipping sectors are highly cyclical… but different sectors have different
cycles…
Ship
prices drop
Over ordering by specu-
lators / bargain hunters
Over tonnaging
Freight
rates drop
Demolition
increases
Demand for
newbuildings drops
Excess of shipbuilding
capacity
Yards reopened or new
yards created
Demand for
newbuildings increases
Fleets shrink
Freight rates recover
Slide 3Capital Link Shanghai – DVB Shipping and Offshore Research
Shipbuilding Capacity Development
• “Deleveraging” process in Chinese shipbuilding industry
• Korea’s “Big Three” are better off
• Japanese yards are protected by conservative yard capacity management
0.00
10.00
20.00
30.00
40.00
50.00
60.00
197
0
197
2
197
4
197
6
197
8
198
0
198
2
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
201
0
201
2
201
4
201
6
201
8 (
f)
Mil
lio
n C
GT
Nominal Capacity - China
Nominal Capacity - South Korea
Nominal Capacity - Japan
Delivery
Source: Clarksons, DVB Shipping and Offshore Research
Slide 4Capital Link Shanghai – DVB Shipping and Offshore Research
Shipping – average time to delivery at contracting
0
50
100
150
200
250
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
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Q4
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Q4
Q1
Q2
Q3
Q4
03 04 05 06 07 08 09 10 11 12 13 14 15 16
15
20
25
30
35
40
45
50
55
No
. o
f V
esse
ls
Ave
. Mon
ths to
De
live
ry
Containership Contracting
Ave. Months to Delivery
Source: Clarksons, DVB Shipping and Offshore Research
0
20
40
60
80
100
120
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
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Q2
Q3
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Q2
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Q4
03 04 05 06 07 08 09 10 11 12 13 14 15 16
10
15
20
25
30
35
40
45
50
No
. o
f V
esse
ls
Ave
. Mon
ths to
De
live
ry
Crude Tanker
Ave. Months to Delivery
0
50
100
150
200
250
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
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Q3
Q4
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Q4
Q1
Q2
Q3
Q4
03 04 05 06 07 08 09 10 11 12 13 14 15 16
10
15
20
25
30
35
40
45
50
No.
of V
essels
Ave
. Mon
ths to
De
live
ry
Products Tanker
Ave. Months to Delivery
*Excluding vessels < 10,000 DWT
0
50
100
150
200
250
300
350
400
450
500
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
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Q4
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Q2
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Q4
Q1
Q2
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Q4
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Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
03 04 05 06 07 08 09 10 11 12 13 14 15 16
20
25
30
35
40
45
50
No
. o
f V
esse
ls
Ave
. Mon
ths to
De
live
ry
Bulk Carrier Contracting
Ave. Months to Delivery
Slide 5Capital Link Shanghai – DVB Shipping and Offshore Research
Seaborne trade
Seaborne trade 2002-2016Sectors not equally exposed to future over-
capacity
[CAGR import volume growth, 2002-2008 ] [Fleet renewal, Orderbook / Fleet (20+)]
Crude oil
Oil products
Container
Dry Bulk
Cars
Total seaborne trade
0%
5%
10%
15%
0% 5% 10% 15%
[CAGR import volume growth, 2010-2016]
Trade growth higher
in 2010-16
than in 2002-08
Trade growth lower
in 2010-16
than in 2002-08
Container
Dry Bulk
Chemical Tankers
LPG
LNG
Car Carriers
Product Tankers
Crude Tankers
0
1
2
3
4
0% 5% 10% 15% 20% 25% 30%
[Orderbook / Fleet]
Sources: IHS Global, MSI and DVB Shipping & Offshore Research Sources: IHS Global and DVB Shipping & Offshore Research
Slide 6Capital Link Shanghai – DVB Shipping and Offshore Research
Freight rates are low in most shipping sectors
ClarkSea Index
[USD/Day]
0
10,000
20,000
30,000
40,000
50,000
60,000
ClarkSea Index
Sources: Clarksons SIN and DVB Shipping & Offshore Research
Average 2000-2008
USD 23,444/Day (volatility 11%)
Average 1990-1999
USD 12,016/Day (volatility 6%)
Average 2009-2017
USD 11,768/Day (volatility 13%)
Slide 7Capital Link Shanghai – DVB Shipping and Offshore Research
Dry Bulk – Freight rates
Baltic Dry Index
[Index] [Index]
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
3,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Avg 2000-2016 (LHS) 2017 (RHS) 2016 (RHS)
Sources: Clarksons SIN and DVB Shipping & Offshore Research
Slide 8Capital Link Shanghai – DVB Shipping and Offshore Research
Dry Bulk – Supply
Orderbook delivery schedule Supply growth expected to slowdown
[Mn dwt]
0
10
20
30
40
2017 2018 2019 2020
Capesize Panamax Supramax Handysize
0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
17.5%
0
100
200
300
400
500
600
700
800
900
Total Fleet Fleet growth (RHS)
[Mn dwt] [Pct.]
Sources: IHS Global and DVB Shipping & Offshore Research Sources: IHS Global and DVB Shipping & Offshore Research
Slide 9Capital Link Shanghai – DVB Shipping and Offshore Research
Dry Bulk – Demand
Chinese import demand for major bulk commodities, 2016
Breakdown of Chinese GDP
[Pct. of seaborne imports] [pct. of GDP]
0%
10%
20%
30%
40%
50%
60%
69%
19%
5%
41%
31%
81%
95%
59%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Iron ore Coal Grains Total majorDry Bulk
Sources: MSI and DVB Shipping & Offshore Research Sources: IMF and DVB Shipping & Offshore Research
Slide 10Capital Link Shanghai – DVB Shipping and Offshore Research
Dry Bulk – Outlook
Seaborne tradeThe demand-supply gap is expected to narrow
over the next years
-10.0%
-7.5%
-5.0%
-2.5%
0.0%
2.5%
5.0%
7.5%
10.0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Demand-Supply (RHS)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
[Demand – Supply, annual chg.] [Mn tonnes]
Sources: MSI and DVB Shipping & Offshore Research Sources: IHS Global, MSI and DVB Shipping & Offshore Research
Slide 11Capital Link Shanghai – DVB Shipping and Offshore Research
Container – Freight rates
Quarterly supply and demand growth Freight rates and time charter rates
[y-o-y, pct.]
30
35
40
45
50
55
60
65
600
800
1,000
1,200
1,400
2013 2014 2015 2016 2017
CCFI (LHS) Clarkson Timecharter Rate Index (RHS)
[Index] [Index]
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Supply growth Demand growth
Sources: IHS Global, Maersk, Alphaliner and DVB Shipping & Offshore Research Sources: Clarksons SIN and DVB Shipping & Offshore Research
Slide 12Capital Link Shanghai – DVB Shipping and Offshore Research
Container – Demand
The relationship between GDP growth and container trade growth is changing
[2000 = indexed to 100]
100
150
200
250
300
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Transport volume in TEU Global GDP
2010-2015
1.2x2000-2008
2.0x
Sources: IHS Global, IMF and DVB Shipping & Offshore Research
Slide 13Capital Link Shanghai – DVB Shipping and Offshore Research
Container – Supply
Orderbook delivery schedule Supply growth
[Mn teu]
0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
17.5%
0
5
10
15
20
25
Mill
ions
Total Fleet Fleet growth (RHS)
[Mn teu] [Pct.]
0.0
0.5
1.0
1.5
2.0
2017 2018 2019 2020+
New Post-Panamax New Panamax7,000-9,999 teu 3,000-6,999 teuOld Panamax Feeder (0-3000 teu)
Sources: IHS Global and DVB Shipping & Offshore Research Sources: IHS Global and DVB Shipping & Offshore Research
Slide 14Capital Link Shanghai – DVB Shipping and Offshore Research
Container – Outlook
Global economic growthIn aggregate, no major improvement in the supply-
demand balance is expected in 2017 and 2018
0%
5%
10%
15%
20%
2010 2011 2012 2013 2014 2015 2016 2017 2018
Supply growth Demand growth
0.0%
2.5%
5.0%
2011 2012 2013 2014 2015 2016 2017 2018
World GDP growth, 2011-2018
0.0%
2.5%
5.0%
2011 2012 2013 2014 2015 2016 2017 2018
Advanced Economies growth, 2011-2018
0.0%
5.0%
10.0%
2011 2012 2013 2014 2015 2016 2017 2018
Emerging Markets GDP growth, 2011-2018
0.0%
5.0%
10.0%
2011 2012 2013 2014 2015 2016 2017 2018
China GDP growth, 2011-2018
Sources: IMF and DVB Shipping & Offshore Research Sources: IHS Global and DVB Shipping & Offshore Research
Slide 15Capital Link Shanghai – DVB Shipping and Offshore Research
398
2147
241
117
39
86
949
0
100
200
300
400
500
600
700
800
900
Tonnage ProviderLiner
Liner operated
Idle FleetIdle Fleet
Long-term charters and
charter contracts expiring
2019 and later
Charter contracts
expiring 2017
Charter contracts
expiring 2018
Intransparent
contracts*
* Charter contracts reported valid but not disclosing durations, or disclosing expiration dates lying in the past
Total
5,100 – 9,999 TEU – employment breakdown
Sources: Alphaliner and DVB Shipping & Offshore Research
Slide 16Capital Link Shanghai – DVB Shipping and Offshore Research
Structural Trends of Global Energy Market
Market Environment
Source: DVB Shipping and Offshore Research,
Middle East North East Asia
Western EuropeNorth America
Latin America
Shale Gas & Oil Development
Leads to Excess Supply of
Crude Oil, Oil Products,
Chemical Products, LPG and
LNG
Petrochemical
projects may get
reassessed,
delayed or
curtailed
South East Asia & Australia
China’s Slow Down and
China’s Plan to Increase
Self-Sufficiency of
Chemical Products
Petrochemical Capacity
Rationalization is
Delaying Lifting sanction of Iran add
more oil into the market
Increased long-haul trade
of products from new
Middle East refineries
Oil exports to be squeezed
by Middle East exports
towards Far East
Decline of oil production
OECD Europe remains the
main market
China remains to be
the largest buyer for
Crude oil
New Liquefaction Plants
Come on Stream and Start to
Supply LNG
Petrochemical Industry to
Expand to Downstream
Sectors
West Africa
FSU
Slide 17Capital Link Shanghai – DVB Shipping and Offshore Research
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