transportation outlook
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Transportation Outlook
March 1st, 2012
Breakbulk China 2012
Shanghai
Susan Oatway
Senior consultant
oatway@drewry.co.uk
© Drewry 2012
2 Drewry | Breakbulk China 2012
Agenda
Cargo Demand
Competitive Threat
Fleet Supply
Market outlook
© Drewry 2012
3 Drewry | Breakbulk China 2012
Estimated development of general cargo market
0
500
1,000
1,500
2,000
2,500
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12f
mill
ion
ton
ne
sGeneral cargo market share
Container market share
MPV market share
Total general cargo market
Source: Drewry Maritime Research, WTO
© Drewry 2012
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1. Cargo Demand
© Drewry 2012
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Dry cargo shipping markets
2011 trade of dry cargo
Source: Drewry Maritime Research
Primary cargo markets
for Multi-Purpose Ships
Major bulk (Multi-Purpose part)
Neo/Agri-bulk (Multi-Purpose part)
Containerised Gen
Cargo (Multi-Purpose part)
Other minor bulk (Multi-Purpose part)
Other Unitised General
Cargo
Specialised General
Cargo
Non-Specialised
Breakbulk General
Cargo
Competing vessel types
Bulk Carriers
Handy bulkers
Ro-Ro Ships
Containerships
Ro-Ro ships
Con-Bulkers
Handy bulkers
Ro-Ro ships
Ferries
Reeferships, car
carriers, Ro-Ro ships
Ro-Ro ships
Heavy lift ships
Major bulk, 2188
Minor bulk, 1,130 General cargo
in containers, 1,458
General cargo
in trailers, 421
Reefer,
vehicles, 62
Non-unitised
general & project,
518
© Drewry 2012
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Project cargo – the invisible break-bulk volume
1) Most difficult cargo to analyse as comprises of a multitude of cargoes – no manifest will
state “project cargo” but rather “oil pipes” or “railway locomotives” or “steel blades”.
2) There are four main areas for project cargo growth; Mining, Civil Engineering, Oil & Gas &
Chemicals and Power
3) Recent capital expenditure figures for these areas can be turned into potential volumes
with the following assumptions:
sea freight = 7.5% of value,
average freight rate of $120/rev ton,
average weight/measure ration is 2.5 cbm/tonne,
50% of project cargo is seaborne.
© Drewry 2012
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Potential growth in project cargo volumes
(million tonnes)
Source: Drewry Maritime Research, derived from PEG/BBA2011
0
50
100
150
200
250
300
350
400
2011 2012 2013 2014
Mining
Civil
Oil, gas, chemicals
Power
© Drewry 2012
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2. Competitive threat
© Drewry 2012
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Development of MPV market share
(million tonnes)
Source: Drewry Maritime Research
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2007 2008 2009 2010 2011 2012 2013 2014
MPV share of general cargo
General cargo
MPV share of minor bulk trade
Minor bulks
MPV share of major bulk trade
Major bulks
MPV share of container trade
Container trade
© Drewry 2012
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Competitive threat
Source: Drewry Maritime Research
0
20
40
60
80
100
120
<= 1980 1984 1988 1992 1996 2000 2004 2008
millio
n d
wt
0
200
400
600
800
1000
1200
1400
no
. v
sls
Handysize Handymax Panamax
Capesize Current Fleet (rt axis)
0
200
400
600
800
1000
1200
1400
1600
<= 1980 1983 1987 1991 1995 1999 2003 2007 2011
'00
0 T
eu
0
50
100
150
200
250
300
350
400
450
no
. v
sls
<1000 teu 1000-1999 teu 2000-2999 teu
3000-4999 teu 5000-7999 teu 8000-9999 teu
10000 teu+ Current Fleet (rt axis)
Handy bulk carrier age profile Containership age profile
© Drewry 2012
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Dry bulk and Container markets
Source: Drewry Maritime Research
Weighted freight rates and
supply/demand index comparison on East-West trades
80
85
90
95
100
105
110
2008 2009 2010 2011 2012
400
600
800
1,000
1,200
1,400
1,600
1,800
East-West supply/demand index
Weighted East/West freight rate
including fuel charges (US$ per teu, right axis)
Weighted East/West freight rate
excluding fuel charges (US$ per teu, right axis)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2007 2008 2009 2010 2011 2012
Handysize
Handymax
Panamax
Capesize
Forecast dry bulk period rates ($ per day)
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3. The Fleet
© Drewry 2012
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Drewry fleet definitions
Multipurpose vessel:
- dry cargo carrier
- between 1,000 and 54,000 dwt
- grain or bale AND container capacity
- lifting gear with minimum 25-tonne SWL
Project carrier
- multipurpose vessel built after 1989
- with increased lifting capacity as below
Gear SWL(mts) Standard PC Premium PC Premium + PC
Vsl < 5,000 dwt 60 120 145
Vsl 5-10,000 dwt 80 150 180
Vsl 10-14,999 dwt 120 175 210
Vsl 15-19,999 dwt 120 220 265
Vsl 20-24,999 dwt 140 220 265
Vsl 25,000 dwt + 170 250 300
Source: Drewry Maritime Research
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0
500
1,000
1,500
2,000
2,500
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
MPV fleet age profile as at January 1st, 2012
(‘000 dwt)
Source: Drewry Maritime Research
25,000 dwt+
20-24,999 dwt
15-19,999 dwt
10-14,999 dwt
5-9,999 dwt
< 5,000 dwt
© Drewry 2012
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MPV fleet age profile by vessel type as January 1st, 2012
(‘000 dwt)
0
500
1,000
1,500
2,000
2,500
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: Drewry Maritime Research
Premium Project Carrier+
Premium Project Carrier
Standard Project Carrier
Heavy Lift
MPV/HL
MPV
© Drewry 2012
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MPV fleet and orderbook as at January 1st, 2012
(million dwt)
Source: Drewry Maritime Research
0
1
2
3
4
5
6
7
8
9
10
<5,000 5,000-9,999 10,000-14,999 15,000-19,999 20,000-24,999 25,000+
Dwt
Orderbook
Fleet
© Drewry 2012
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Suggested development of the multi-purpose fleet
Source: Drewry Maritime Research
-2,500
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
2007 2008 2009 2010 2011 2012 2013 2014
'00
0 d
wt
20,000
22,000
24,000
26,000
28,000
30,000
32,000
'00
0 d
wt
Deliveries
Demolition
Fleet (right axis)
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4. Market Outlook
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World economic growth (% change)
Source: Drewry Maritime Research, from IMF
-15
-10
-5
0
5
10
15
2005 2006 2007 2008 2009 2010 2011 2012f 2013f
Real GDP Trade in goods
© Drewry 2012
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Future growth in multipurpose share of dry cargo market (million tonnes)
0
100
200
300
400
500
600
700
800
900
2007 2008 2009 2010 2011 2012 2013 2014
Container
Major Bulks
Minor Bulks
General Cargo
Source: Drewry Maritime Research
© Drewry 2012
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Suggested fleet development by vessel type
(‘000 dwt)
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
2007 2008 2009 2010 2011 2012 2013 2014
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
GC deliveries
PC deliveries**
MPV deliveries*
MPV demolitions*
HL demolitions
GC demolitions
MPV fleet* (right axis)
PC fleet** (right axis)
GC fleet (right axis)
* Not including PC. ** Including HL.
Source: Drewry Maritime Research
© Drewry 2012
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Growth in effective fleet versus growth in effective demand (%)
Source: Drewry Maritime Research
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
2008 2009 2010 2011 2012 2013 2014
Fleet Growth Demand Growth
© Drewry 2012
23 Drewry | Breakbulk China 2012
Future concerns
1)Competition from Handy bulk carriers due to the overfull orderbook with peak
deliveries in 2013 will lead to increased competition in the break bulk sector. And to a
lesser extent the competition for container cargo will effect the short term market as
carriers scrabble for cargo.
2) Although both global GDP and world trade have shown some recovery after the
crash in 2008/09, there is still some hesitation for new project start-ups. This inherent
time lag will continue to effect recovery in this sector but will it cushion the market
from the competition in the breakbulk sector?
3)The main growth area for the fleet is in project carriers and significant lift capability
increases. Through investment in new ships & methods, project carriers have created
a partially insulated niche within the break-bulk market, which theoretically should
result in higher rates, higher profits and differentiated products/services. Is this niche
sector really insulated from the competition seen in the general cargo market?
© Drewry 2012
24 Drewry | Breakbulk China 2012
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