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Roads to Recovery: Comparing and Contrasting the Outlook for Distressed Sectors
Niklas Carlén – Maritime Strategies International (MSI)
18th Annual Marine Money Greek Ship Finance Forum – 11th October 2016
Introduction
Peak to Trough Comparision:Peak 2006-08 Levels Vs Q2 2016
© Maritime Strategies International www.msiltd.com3
-100%
-90%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
Bu
lke
r
Gen
Carg
o
Oil T
an
ker
Ch
em
Ta
nk
er
LN
G
LP
G
Co
nta
ine
r
Ca
r C
arr
ier
Ro
Ro
T/C Rate 5-Yr Old Price
Demand
Iron Ore:Chinese Imports Growing Despite Stagnant Steel
© Maritime Strategies International www.msiltd.com5
Chinese Steel Production Chinese Iron Ore Imports
0
200
400
600
800
1000
1200
1400
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
MnT
Rest of World IndiaS Africa BrazilAustralia
Forecast
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
-100
0
100
200
300
400
500
600
700
800
900
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
MnT Steel Production Yoy% Ch
Forecast
Coal:Indian Outlook Shrouded in Uncertainty
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Chinese and Indian Coal Imports Coal Seaborne Trade
0
50
100
150
200
250
300
350
20
00
20
02
20
04
20
06
2008
20
10
20
12
20
14
20
16
20
18
20
20
MnT China India
Forecast
0
200
400
600
800
1000
1200
1400
2000
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
MnT Coking Coal Steam Coal
Forecast
Other Bulks:Short-Term Plateau, Medium-Term Growth
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Grains+Soya Seaborne Trade Minor Bulks Seaborne Trade
0
100
200
300
400
500
600
20
00
2002
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
MnT Soyabean+Meal Grains
Forecast
-15%
-10%
-5%
0%
5%
10%
15%
20%
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
YoY % Ch
TEU Trade and TEU Miles
© Maritime Strategies International www.msiltd.com8
Asia-Europe isn’t dominant in volume terms, but is in terms of capacity required
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0
10
20
30
40
50
60
70
As
ia-E
uro
pe
Tra
ns
pa
cif
ic
FE
-ME
/IS
C
FE
-La
t. A
m.
intr
a-A
sia
Mn TEU of shipping capacity
Th
ou
sa
nd
s
Mn TEU of trade
Th
ou
sa
nd
s
Trade volume
Shipping capacity required (RH Axis)
Container Demand:2016 Volume Weakness
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North-South trades have been the worst affected, but trade disappointing across the board
-8%
-6%
-4%
-2%
0%
2%
4%
6%
As
ia-E
uro
pe
Tra
ns
pa
cif
ic
Tra
ns
atl
an
tic
intr
a-A
sia
intr
a-E
uro
pe
As
ia-L
ati
n A
me
ric
a
As
ia-M
idd
le E
as
t/IS
C
Eu
rop
e-L
ati
n A
me
ric
a
Oth
er
2016 growth
Trade Growth is Key to Cascading
© Maritime Strategies International www.msiltd.com10
• The cascade has currently brokendown – four reasons:
Low fuel price
Slow trade growth
Service fragmentation
Alliance reshuffle
• In our view, trade growth is the mostimportant of these; lines upsized inanticipation of trade growth, whenthat disappointed then swiftlydownsized.
• Huge supply of spot ships puts linesunder no pressure to securetonnage – can keep flexibility (2-12month fixtures).
Non-Mainlane East/West Trade
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
0
100
200
300
400
500
600
700
800
900
Dec-13 Dec 14 Dec 15 Aug 16
Headhaul E/W Trade YoY % Ch
Vessel Deployment, k TEU
Th
ou
sa
nd
s
0.1-2.9k TEU 2.9-5.2k TEU
5.2-7.6k TEU 7.6-12k TEU
12k TEU+ Demand (RH Axis)
Container Cascade
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Evolution of Asia-Europe Deployment Intra-Asian Deployment
0
1
2
3
4
5
6
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Mn TEU
12k + TEU 7.6-12k TEU 5.2-7.6k TEU
3.9-5.2k TEU 2.9-3.9k TEU 1.3-2.9k TEU
0.0
0.5
1.0
1.5
2.0
2.5
End2011
End2012
End2013
End2014
End2015
Aug2016
Mn TEU
7.6-12k TEU 5.2-7.6k TEU 3.9-5.2k TEU
2.9-3.9k TEU 1.3-2.9k TEU 0.1-1.3k TEU
Seaborne Growth Prospects Compared:Dry Bulk Vs Container Trade
© Maritime Strategies International www.msiltd.com12
0%
2%
4%
6%
8%
10%
12%
1991-95 1996-00 2001-05 2006-10 2011-15 2016-20
YoY % Ch Container Dry Bulk
Average Annual Trade Growth
Over 5-Year Periods (CAGR)
Supply
Current Orderbook:Sectors Over-Exposed
© Maritime Strategies International www.msiltd.com14
Required Ships* Vs Orderbook YTD Capacity Adjustment
0
100
200
300
400
500
600
Bulker Container
# of Vessels
Ships Required
Ships on order
*Required ships to meet incremental demand, irrespective of current over-capacity
-15
-10
-5
0
5
10
Bulker Container
Mn GT
Contracting Scrapping
Old Tonnage versus Orderbook
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Bulk Carriers Containerships
0.0
0.5
1.0
1.5
2.0
2.5
0.1-2.9kTEU
2.9-5.2kTEU
5.2-7.6kTEU
7.6-12kTEU
12k+TEU
Mn TEU
Over 15 Years Orderbook
0
5
10
15
20
25
30
35
40
45
50
10-40k Dwt 40-65k Dwt 65-120k Dwt 120k+ Dwt
Mn Dwt
Over 15 Years Orderbook
© Maritime Strategies International www.msiltd.com
Help from Unusual Places?
Imminent Significant (3rd+) Special Surveys
© Maritime Strategies International www.msiltd.com17
Bulk Carriers Containerships
0%
1%
2%
3%
4%
5%
6%
0
10
20
30
40
50
60
2017 2018 2019
Mn Dwt
6th+5th4th3rd% of current fleet (RH Axis)
0%
1%
2%
3%
4%
5%
6%
7%
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2017 2018 2019
Mn TEU
6th+5th4th3rd% of current fleet (RH Axis)
0%
2%
4%
6%
8%
10%
12%
14%
1991-95 1996-00 2001-05 2006-10 2011-15 2016-20
YoY % Ch Container Dry Bulk
Fleet Growth Compared:Dry Bulk Vs Container Trade
© Maritime Strategies International www.msiltd.com18
Average Annual Fleet Growth
Over 5-Year Periods (CAGR)
Roads to Recovery
Roads to Recovery:Weighted Average Timecharter Indices Compared
© Maritime Strategies International www.msiltd.com20
0
20
40
60
80
100
120
140
160
18020
15
20
16
20
17
20
18
20
19
20
20
T/C Index (2015=100)
Bulker Container
MSI - FMV
© Maritime Strategies International www.msiltd.com21
• MSI Forecast Marine eValuator (FMV) is the first web-based tool to provide forecast and
historical price data covering virtually all of the deepsea shipping fleet.
• Data includes forecasts of newbuilding, second-hand prices, 1 year timecharter rates and
operating costs for specific vessels.
• MSI FMV draws on MSI’s proven, proprietary models and a consistent cross-sectional view
across all principal shipping sectors. It puts asset values in the context of the near term
market to enable reliable benchmarking with outputs based on annual averages.
• Coverage:
Crude Oil Tanker
Product Oil Tanker
Dry Bulk Carrier
Chemical Tanker
LPG Carrier
LNG Carrier
Multi Purpose
Containership
PCC/PCTC
www.msiltd.com/fmv
FMV Output
© Maritime Strategies International www.msiltd.com22
Quarterly Fair Market Value &1 Year Time Charter Rate (1Qhistory, current Q, 2Q forecast
Annual average:• Newbuilding contract price• Fair Market Value• 1 Year Time Charter Rate• Operating Cost5 years history and 15 yearsforecast
Price Development Chartdetailing forecast pricedevelopment in relation tohistorical metrics
www.msiltd.com/fmv
© Maritime Strategies International www.msiltd.com
Asset Play PrognosisBuy 5 year old today – sell in 5 years time
23
While this document has been prepared, and is presented, in good faith, MaritimeStrategies International assumes no responsibility for errors of fact, opinion ormarket changes, and cannot be held responsible for any losses incurred or actionarising as a result of information contained in this document.
The copyright and other intellectual property rights in data, information or advicecontained in this document are and will at all times remain the property ofMaritime Strategies International.
Disclaimer
© Maritime Strategies International www.msiltd.com24
For over 30 years, MSI has developed integrated relationships with a diverse clientbase of financial institutions, ship owners, shipyards, brokers, investors, insurersand equipment and service providers.
MSI’s expertise covers a broad range of shipping sectors, providing clients with acombination of sector reports, forecasting models, vessel valuations and bespokeconsultancy services.
MSI is staffed by economists and scientists offering a structured quantitativeperspective to shipping analysis combined with a wide range of industryexperience.
MSI balances analytical power with service flexibility, offering a comprehensivesupport structure and a sound foundation on which to build investment strategiesand monitor/assess exposure to market risks.
MSI Background
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