0. Container Shipping 2015 Market Outlook
2nd China Shipping Innovation Conference
9 January 2015
Shanghai
Container Shipping
2015 Market Outlook
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Web: 

1. Evolution of container ships – the first 60 years
Sixth & seventh
generation
Ultra Large containerships
& wide-beam eco-ships
Fifth
generation
Very Large containerships
Fourth generation
Post Panamax containerships
Third generation
Panamax containerships
Second
generation
Cellular containerships
First
generation
Converted and semi-container ships
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2. New vessel deliveries expected to reach new record
2015 containership deliveries will be at a record high
2014 deliveries reached 1.465m TEU - almost a new record (6.3% growth)
But 2015 deliveries expected to exceed 1.80m TEU (7.9% growth net of scrapping)
>10,000 teu vessels make up over half (64%) of planned deliveries
Slippage will be minimal in 2015 (most slippage in < 5,100 teu size or 12% of planned deliveries)
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3. Scrapping rate slowing
Scrapping peaked in 1H 2014 (290,000 teu) but have slowed in 2H 2014 (98,000 teu)
Initial projection of 500,000 teu to be scrapped in 2014
Final scraps reached only 388,000 teu - lower than the 442,000 teu scrapped in 2013
2015 scrapping level expected to be lower than 2014
China’s scrapping subsidies will have limited impact in 2015
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4. Idle fleet Idle containership fleet at 3 year low at 200,000 teu
Lowest idle level since 2011 at 1.1% of total fleet
Driven by high scrapping rate & higher demand on E-W/Intra-Asia trades
Recent port congestion issues have also led to higher demand for ships
Low idle fleet will reduce scrap rate
But limited impact on charter rates
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5. Freight market link to charter market broken down
Pre-2009 : freight rate index closely correlated to charter index
Post-2009 : correlation has broken down due to supply overhang
Freight market recovery will precede charter market recovery
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6. Demand & Supply remain imbalanced
Demand growth recovering
2014 (f) at 4.9% vs 3.0% in 2013
(based on top 30 ports volume)
But recovery is also imbalanced with some sectors very weak (eg South America) and uncertain (eg Eurozone)
But supply growth continues to trend above demand
2014 gross supply growth at 6.3%
But active supply growth (adjusted for idle capacity) was 10.0%
Rates currently sustained partly due to port congestion issues especially in US West Coast
Impact of extra slow steaming is low since 2013, could be reversed with low bunker prices
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7. Slow steaming as capacity management tool
Total capacity absorbed by slow steaming is estimated at 1.3 million TEU or 7% of current fleet
With bunker prices at $300/ton, slow steaming is no longer a cost saving strategy
But reversal of slow steaming will take time
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8. Main issues in 2015 – Record supply growth/New Alliances & Impact of lower fuel price
CKYHE Alliance launched
G6 coverage extended
Impact of lower bunker price?
Supply overhang worsens
Freight rates crash
G6 formed by GA/NWA carriers
P3 Network announced
Fresh round of ULCS vessel orders
P3 Network rejected by China
2M Alliance announced
Ocean 3
announced
2M & O3 launched
FE-Europe services rationalised
Another round of ULCS vessel orders
New 18K vessels delivered
‘Daily Maersk’ launched
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Service rationalisation options limited
Maersk orders ‘Triple-E’ ships
What happens to freight and charter rates?
2011
2012
2013
2014
2015

9. No evidence that Alliances lead to market stability
2015 Global Alliances 2M
Maersk
MSC
CKYHE
COSCO
K Line
Yang Ming
Hanjin
Evergreen G6
APL
Hapag-Lloyd
HMM
MOL
NYK
OOCL O3
CMA CGM
CSCL
UASC
(Hamburg Sud)
Haven’t we seen these before?
Past Alliances proved to be fundamentally unstable. Can the new alliances last?
1985 Alliances/Consortiums
TRIO
OCL
Ben Line
Hapag-Lloyd
MOL
NYK
TRIO
OCL
Ben Line
Hapag-Lloyd
MOL
NYK
ScanDutch
Nedlloyd
CGM
EAC
Brostrom
MISC
ScanDutch
Nedlloyd
CGM
EAC
Brostrom
MISC
ACE
K Line
OOCL
NOL
FBS
KSC
Choyang
ACE
K Line
OOCL
NOL
FBS
KSC
Choyang
Independents
Maersk
Evergreen
COSCO
Yang Ming
Independents
Maersk
Evergreen
COSCO
Yang Ming
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Acquired by other carriers
Exit liner business

10. 2015 deliveries by carrier
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11. End Please send any queries to hjtan@liner-research.com
Alphaliner clients include the following top shipping lines :
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