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Dr Martin Stopford, President, Clarkson Research, London The New Dynamic Face of Greek Shipping 4 th Hydra Shipping Conference 15th September 2012 Many.

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Presentation on theme: "Dr Martin Stopford, President, Clarkson Research, London The New Dynamic Face of Greek Shipping 4 th Hydra Shipping Conference 15th September 2012 Many."— Presentation transcript:

1 Dr Martin Stopford, President, Clarkson Research, London The New Dynamic Face of Greek Shipping 4 th Hydra Shipping Conference 15th September 2012 Many Faces, Many Futures

2 1.The 7 Faces of Shipping 2.Dynamics of Globalization 3.Greek Shipping Evolution 4.Six Challenges 5.Conclusions How do you play this hand?

3 4. PRIVATE PARTNERSHIP KG etc 3. PUBLIC COMPANY 2. PRIVATE COMPANY 5. SHIP OPERATOR 6. MANAGEMENT COMPANY 7. LEASING COMPANY 1. Shipowner

4 US Treasury Secretary Henry Morgenthau at Bretton Woods in 1944 We must build a dynamic world economy Before the 2nd World War the world the world (and shipping) was dominated by European Empires In 1944 at the Bretton Woods conference in USA set the scene to change the system The aim was to “globalize” of the world economy

5 18/04/2015 2nd April Global Free Trade Policy At Bretton Woods in 1944 US Treasury Secretary Henry Morgenthau outlined the objective of creating "a dynamic world economy ". The method was to establish a new, liberalized trade regime To assist in achieving this aim the World Bank, the IMF and GATT were founded. Delegates at the Bretton Woods Conference in 1944 “The objective, gentlemen, is to create a dynamic world economy” MEETING AT BRETTON WOODS IN USA

6 The Result – A “Flood” of Trade Index 1950= Sea trade 16 times as big as in 1950 Sea trade grew at 4.3% per annum World GDP Grew at average of 3.6% per annum 2012 World GDP 8 times as big as in 1950

7 FORECAST The Shipbuilding Cycle Deliveries 61 m dwt in 1976 Deliveries m dwt in 2012 Last phase of 1970s scrapping! Million Dwt Shipyards expand to replace the ships built in the 1970s boom

8 billion Non-OECD population want to consume at OECD levels OECD’s 1.3 billion population Globalization Part 1

9 BulkLiquidsManufacturesRefrigerated Container Shipping Unitized cargoes Bulk Shipping Homogeneous cargoes Bulk carrier, tankerSpecialised ship Specialised Shipping Specialized cargoes Unit Load Container ship Air Freight Urgent cargo Air freighter The mechanization of sea transport lies at the heart of globalisation – adding value takes place by inter-segment competition Sea Transport was mechanized:- A new Shipping Model developed in the 1950s

10 Business Model Maturing Low returns, chasing size High investment requirement Finance problems Increased energy costs Complexities of globalization Low High Low High 3. Specialised Transport Volume tonnes per year Value $ per tonne Figure 3 The Potential Cargo Matrix (PCM) 2. Air Freight 4. Bulk Transport 1. Liner Transport AB C

11 Built as Bellucia, 1937 renamed Leonidas M. Leonidas M SS was a Greek Cargo Steamer of 4,573 tons built in On the 19th July 1942 when on route from RIO DE JANEIRO for SYDNEY (N.S.) carrying a cargo of 6,700 tons of iron ore she was torpedoed by U-332 and sunk and finally sunk by gunfire see wreckwreck Globalization provided a massive opportunity for independents Control of the fleet moved from imperial owners to independents Greece led the way

12 Greek Owned Fleet & Globalization Shows Gross tonnage and growth rate Million GRT 1950s 18% pa 1960s 6% pa 1970s 7% pa 1980s -1.4% pa 1990s 7% pa 2000s 5% pa Greek owners used charter back $ loans to build the fleet in the 1960

13 Greek Finance1949 to 2012 Greece’s share of the fleet grew from 3% in 1949 to 18% in 2008 % World Fleet Euro$ market starts % cut back during 1970s/80s recession Steady at 15-17% Rapid growth based on time charters & Euro$ loans Equity Markets Bond Markets Charter backed finance

14 Greek Owned Fleet - Top 10 Owners in 1969 In 1969 the ten biggest international Greek companies owned 502 ships, accounting for 28% of Greek owned GRT

15 Greek Owned Fleet - Top 10 Owners in 2012 In 2012 the ten biggest international Greek companies owned 672 (much bigger) ships, accounting for 29% of Greek owned GRT.

16 Greek Owned Fleet 2012 Top 10 own 672 ships The core are the medium sized companies with 3-15 ships Top 10 Owners Big Owners Medium Small Number of ships owned 546 Greek companies owning ships over 5000 dwt

17 Greek Owned Fleet: Ship Value Greek companies owned ships worth $70.6 billion $14.8 billion owned by listed companies Medium companies have assets worth $32 billion (funding requirement of, say, $20 billion??) Top 10 Owners (23% value) Big Owners (27% value) Medium (45% value) Small (5% value) Values at 1 st May 2012 (over 5000 dwt)

18 Greek Owned Fleet By Type Broad portfolio, 80% tankers and bulkers Containers only 10% which is low for the third biggest world fleet segment (5,100 ships worth $100 billion). Tankers 37% Bulkers 42% Other 20%

19 1.Over-capacity 2.Energy costs 3.Regulatory focus 4.Globalization part 2 5.IT & Comms revolution 6.Container model How do you play this hand?

20 World Cargo Fleet Demand for sea transport runs ahead of supply Surplus shipping capacity (% right axis) From 2009 world fleet surges ahead of demand Challenge 1: Shipping Over-Capacity

21 Challenge 2: Energy Costs THE SHIP USED TO COST MUCH MORE THAN BUNKERS BUT. TODAY BUNKERS COST MORE THAN THE SHIP Ship costs 3x fuel 2012 Ship costs half fuel Based on Aframax tanker, 1 year TC rate and Rotterdam bunker price

22 Challenge 3: Regulation Requirement that new ships must comply with the EEDI, a clear attempt to drive efficiency improvements The focus on air emissions; ballast water; recycling; energy efficiency and the carbon footprint. The dilemma of gas oil versus scrubbers and the uncertainty over of which ballast water system. Many shipyards, after a decade when they were able to sell standard ships, are struggling to respond.

23 Eco-Ship Design – Complex Shows the effect on fuel cost (green lines) & ship cost (yellow line) of changing speed in 1 knot increments on 5000 mile voyage best speed at $1500/tonne bunkers best speed at $200/tonne bunkers Speed of ship (knots) 80% saving LNG wind NUCLEAR Hull form Engineering logistics Note 1: Just difficult decisions COATINGS EEDI scrubbers No ballast Fuel Cells Back haul Shipping lanes

24 Over the last 50 years the OECD countries dominated growth Asia started to grow in 1970s & China in the 1990s. Non OECD trade overtook OECD in 2006 The next phase of globalization will see more countries; more pressure on resources; and more geo-political tension (piracy a sign) Fleet Ownership Non OECD OECD Challenge 4: Globalization Part 2

25 Challenge 5: IT & Comms Fibre optic cable network Gordon Moore Invented “Moore’s Law”

26 Challenge 6: Container Business Model “Over the centuries technical developments in liner shipping has been not so much a continuous process as an occasional leap forward precipitated by a compelling call for change. In between there have been long periods of conservatism". Ronnie Swayne, Chairman OCL 1973 Billion tons This chart shows container cargo growing to 1.5 billion tonnes today. In 2009 the trade had its first serious “wobble”. Will the exponential trend of 8.8% trend continue? The container business will be at the heart of change

27 1.Lousy hand so aim 1 is to survive 2.Major revolution in fuel costs, technology, software and systems 3.Challenging regulatory focus which the industry is still struggling with 4.Globalization “Part 2” will change the pattern of trade & it’s geopolitics 5.IT Revolution will create “soft” opportunities 6.The container business is due for a “great leap forward” “fuel costs and environmental regulations are the Wild Cards”

28 Amarillo Slim’s Advice 1.“Play the players, not the cards. 2.Watch them from the minute you sit down. 3.Play fast in a slow game, slow in a fast game. 4.Never get out when you are winning. 5.Look for the sucker and, if you don’t see one, get up and leave because the sucker is you”

29 Oceanic Steam Navigation Company Ltd The company is better known as White Star Line which owned the Titanic 100 years ago the Chairman was Thomas Bruce Ismay In the film Titanic he is the arrogant man who ordered the Captain of the Titanic to go imprudently fast He looks bad, but he had a problem the film did not tell you about, which you will understand. Chairman Bruce Ismay Chairman 1912

30 Oceanic Steam Navigation Company Ltd 7 year average earnings (in arrears) Bruce Ismay, Chairman Titanic loss 2012 Collapse of earnings 1900 to 2010 Cut throat competition between Cunard and White Star

31 Seaborne Trade – 9 billion Tonnes Sea Trade in 2011

32 Seaborne Imports – 9 billion Tonnes Sea Trade in 2011 China Rest of the world

33 Greek Owned Fleet - Ship Type Prospects The “Ratio” is “orderbook as a % fleet” ÷ trade growth trend


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