Go for Rakhi Bazaar and Pick the Latest Bhaiya Bhabhi Rakhi.pptx
Iraklis Prokopakis-Container Market Outlook
1. DANAOS SHIPPING CO. LTDDanaos - Corporation
Container Market Outlook
presentation at
European Maritime Week
23rd May 2013
2. Container Market Outlook
• An industry only 50 – 60 years old.
“In April 1956, a refitted oil tanker carried fifty-eight shipping containers from
Newark to Houston. From that modest beginning, container shipping developed
into a huge industry that made the boom in global possible”
“The BOX” by Marc Levinson
• The demand for container trade is depending upon the demand on domestic
finished goods Vs the demand of Bulk commodities which is depending upon the
investment activity on infrastructure works and industrial manufacturing.
• In accordance with OECD household final consumption expenditure represents in
general around 60% of GDP. This figure is 56% for EU and 70% for USA, both being
the main destinations of consumer finished goods.
• Traditionally the growth in container trade has been a multiple of the world GDP
growth.
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4. The industry has been adversely affected by a heavy delivery schedule of container ships.
In 2012, a total of 207 vessels with an aggregate capacity of 1.25 million TEU were added to the market, reflecting an 8.2% increase
in capacity.
Heavy supply additions have persisted in 2013, however, supply growth is expected to decline in 2014 and beyond.
At present the order-book stands at 20% of existing fleet.
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Container Shipping - Supply
0
100
200
300
400
500
600
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
TEU (000's) Deliveries
Actual Deliveries Forecast Deliveries
Source: Alphaliner
5. 4
Container Shipping - Supply
0
100
200
300
400
500
600
Jan2009
Mar2009
May2009
Jul2009
Sep2009
Nov2009
Jan2010
Mar2010
Jun2010
Aug2010
Oct2010
Dec2010
Feb2011
May2011
Jul2011
Sept2011
Nov2011
Jan2012
Mar2012
May2012
Jul2012
Oct2012
Dec2012
Vessel count
Idle Vessels
22
23
24
25
26
27
28
29
30
31
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 YTD
AverageAge
TEU
Scrapping Scapped Other Deletions Average Age (Scrapped Units)
A significant number of vessels are idle with 5.0% of the
total fleet as of April 15.
Scrapping is increasing to mitigate the impact of
overcapacity in the market and to eliminate
inefficient vessels.
The average age of scrapped vessels has
decreased from 30 yrs in 2008 to 22 yrs in 2013.
Over 400,000 TEU expected to be scrapped in
2013 (~2.4% of fleet).
Source: Alphaliner
7. Freight Rates - SCFI
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Weekly Comprehensive index
0 $
200 $
400 $
600 $
800 $
1,000 $
1,200 $
1,400 $
1,600 $
1,800 $
15/1/2010
12/2/2010
12/3/2010
9/4/2010
7/5/2010
4/6/2010
2/7/2010
6/8/2010
3/9/2010
1/10/2010
29/10/2010
26/11/2010
24/12/2010
21/1/2011
25/2/2011
25/3/2011
22/4/2011
20/5/2011
17/6/2011
15/7/2011
19/8/2011
16/9/2011
21/10/2011
18/11/2011
16/12/2011
13/1/2012
17/2/2012
16/3/2012
13/4/2012
11/5/2012
8/6/2012
6/7/2012
10/8/2012
7/9/2012
12/10/2012
9/11/2012
7/12/2012
4/1/2013
1/2/2013
26/4/2013
USD/TEU
The cost to transport one TEU from the production to consumption (Freight Rate) continued to fall
into Q1 2013 . Shipping lines have been unable to achieve rates above break-even due to capacity
oversupply. They seem to engage again into a price war for market share.
8. The Margins in the Liner Industry
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Struggling to break even.
Source: Danaos Corporate Research
9. The Message
• “Container industry is like a bus service: an industry that allows pricing to be dictated by the
passenger may soon find itself with a few services left.”
Flemming Jacobs former NOL president and AP Moller-Maersk partner
– i.e. The Liner companies should restore pricing power.
• “Now with container trade growth of 4% - 5% there is no need to order new ships at this time
and there probably won’t be a need until 2015 or 2016.”
Soren Skou Maersk Line Chief Executive
• We can only but agree with both statements. They describe in a few words the depressed
present state and the gloomy outlook of the container industry. On the basis of the
fundamentals we are not optimistic that we shall see a meaningful improvement in charter
rates for the next 18 months.
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