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Insert department name via ‘View/Header and Footer…’ Slide no. 1 Beyond the Storm - the Industry Our Customers Should Ask For Trans-Pacific Maritime Conference.

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Presentation on theme: "Insert department name via ‘View/Header and Footer…’ Slide no. 1 Beyond the Storm - the Industry Our Customers Should Ask For Trans-Pacific Maritime Conference."— Presentation transcript:

1 Insert department name via ‘View/Header and Footer…’ Slide no. 1 Beyond the Storm - the Industry Our Customers Should Ask For Trans-Pacific Maritime Conference March 1, 2010 Eivind D. Kolding – CEO Maersk Line

2 Insert department name via ‘View/Header and Footer…’ Slide no. 2 Current situation – weathering the storm 2010 – uncertain and fragile Long term – the industry our customers should ask for Beyond the Storm - the Industry Our Customers Should Ask For

3 Insert department name via ‘View/Header and Footer…’ Slide no. 3 The worst crisis in the history of container shipping is not over GDP growth multiplier x 2.3x 2.9x 3.8 Trade growth Source: Annual and quarterly reports GDP growth

4 Insert department name via ‘View/Header and Footer…’ Slide no. 4 Rates have been significantly impacted Source: Drewry

5 Insert department name via ‘View/Header and Footer…’ Slide no. 5 Supply grows, but less than earlier expected Source: AXS Alphaliner CAGR 11% CAGR 8%

6 Insert department name via ‘View/Header and Footer…’ Slide no. 6 Supply and demand balance deteriorates …and remains fragile due to the idle fleet readily available for injection Supply and demand balance developments Supply growth adjusted for cancellations, scrapping and delays -6% -8% Slow steaming +5% +2% Demand growth -13% +4% Idle fleet (Supply overhang) +11% ? Net developments -3% -2% Source: Maersk Line estimate

7 Insert department name via ‘View/Header and Footer…’ Slide no. 7 Current supply and demand balance remains fragile Balance net idle and slow steaming Slide no. 7 Source: Maersk Line estimate Strong Weak Strong Weak

8 Insert department name via ‘View/Header and Footer…’ Slide no. 8 Current situation – weathering the storm 2010 – uncertain and fragile Long term – the industry our customers should ask for Slide no. 8Department Beyond the Storm - the Industry Our Customers Deserve Slide no. 8

9 Insert department name via ‘View/Header and Footer…’ Slide no. 9 Recently, global volumes have picked up… Global Import Volumes Index (2000=100), seasonality adjusted Source: Reuters Ecowin

10 Insert department name via ‘View/Header and Footer…’ Slide no. 10 Driven mainly by US imports followed by the Euro Area… …but apparently restocking is the driver as underlying demand has not yet picked up Import Volumes Retail Sales +13% +3% +1% Source: Reuters Ecowin

11 Insert department name via ‘View/Header and Footer…’ Slide no. 11 Improving consumer confidence indicates some recovery in consumer spending Core Retail Sales (Volume year-on-year % change) >>>>>>>>>>>>>> Consumer Expectations (Index 1985=100) <<<<<<<<<<<<< Slide no. 11 Source: Reuters Ecowin

12 Insert department name via ‘View/Header and Footer…’ Slide no. 12 Full recovery in Asian import volumes is rebalancing trades … Slide no. 12 Source: Reuters Ecowin

13 Insert department name via ‘View/Header and Footer…’ Slide no. 13 Industry remains fragmented with no signs of consolidation OperatorControlling ownerMarket Share Maersk LineAPM Foundation 15.8% MSCAponte family 11.0% CMA CGM GroupSaade family 7.6% EvergreenChang family 4.8% COSCOChinese state 3.9% Hapag-LloydTUI 3.8% APLTemasek 3.7% China ShippingChinese state 3.4% NYK 3.2% HanjinHanjin Group 2.9% Total top % Source: AXS Alphaliner

14 Insert department name via ‘View/Header and Footer…’ Slide no. 14 Charter owners are faced with historically low rates Charter rates in USD 1,000/day Source: Clarckson Research Services

15 Insert department name via ‘View/Header and Footer…’ Slide no. 15 Charter owners have significant new build commitments Orderbook Source: Clarckson Research Services

16 Insert department name via ‘View/Header and Footer…’ Slide no. 16 Main trends for 2010 Managed supply side Slow demand recovery Rate increases remain fragile Break-even at best Continued financial distress Diminishing risk of defaults Reduced likelihood of consolidation Non-operating owners will be severely affected and casualties may happen

17 Insert department name via ‘View/Header and Footer…’ Slide no. 17 Current situation – weathering the storm 2010 – uncertain and fragile Long term – the industry our customers should ask for Beyond the Storm - the Industry Our Customers should ask for Slide no. 17

18 Insert department name via ‘View/Header and Footer…’ Slide no. 18 Logistics cost is only a small portion of the total cost structure for a typical retailer… Source: McKinsey Team analysis Percent Logistic 3.2 Sales 24.8 Store cost Cost of goods sold 12.0 Gross margin EBIT 5.0 Central cost 4.6 Slide no. 18

19 Insert department name via ‘View/Header and Footer…’ Slide no. 19 Transportation cost is insignificant part of the retail value Retail value shirt: USD 30 Ocean transport cost: USD 0.25 Transport cost is 0.85% of the retail price Retail value of flatscreen TV: USD 750 Ocean transport cost: USD 15 Transport cost is 2% of the retail price Commodity value of grain: USD 192/ton Ocean transport cost: USD 76/ton Transport cost is 40% of the value Source: Maersk Line esimate

20 Insert department name via ‘View/Header and Footer…’ Slide no. 20 Customers should ask for reduced volatility Why gamble by chasing short term savings instead of ensuring long term stability and partnerships? Slide no. 20 Source: Drewry Hong Kong – Los Angeles container rate benchmark for FCLs

21 Insert department name via ‘View/Header and Footer…’ Slide no. 21 Customers should ask for less waste in the industry and reduced uncertainty Slide no. 21 Downfall is evenly spread across customer segments, but forwarders tend to have a higher downfall ratio Source: Maersk Line

22 Insert department name via ‘View/Header and Footer…’ Slide no. 22 Customers should ask for higher reliability Slide no. 22 Source: Drewry Q schedule reliability In comparison, the parcel industry claims to deliver more than 90% reliability Reliability above 95% would allow our customers to reduce inventory buffer by 60%

23 Insert department name via ‘View/Header and Footer…’ Slide no. 23 Customers should ask for one-click-shipping - in an o ld industry and old habits Slide no. 23 WWW

24 Insert department name via ‘View/Header and Footer…’ Slide no. 24 Air (Boeing ) Truck (Global average) Rail Diesel Rail Electric (Global average) Ocean (Avg. ML vessels) Customers should ask for better environmental performance Slide no. 24 Source: NTM CO2 (g/ton km)

25 Insert department name via ‘View/Header and Footer…’ Slide no. 25 Ocean transport accounts for a very small portion of the carbon footprint of retail goods Rotterdam 370 g CO 2 20 km 3700 g CO 2 Home 18,600 km Store Shipping one pair of shoes Hong Kong Source: NTM

26 Insert department name via ‘View/Header and Footer…’ Slide no. 26 But we should set ambitious targets for ourselves and the industry… …which is why I believe that slow steaming is here to stay Maersk Line target

27 Insert department name via ‘View/Header and Footer…’ Slide no. 27 Time is right for customers to demand a new, efficient, less volatile and sustainable industry

28 Questions?


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