ALPHALINER Volume 2013 Issue 37 Weekly Newsletter 03.09.2013 to 09.09.2013 Web: www.alphaliner.com | E-mail: [email protected] | Sales: [email protected] Unauthorized redistribution of the news- Alphaliner Weekly Newsletter is distributed every Monday. The newsletter is available upon subscription. Information is letter is prohibited and readers are requested to quote ‘Alphaliner’ as source given in good faith but without guarantee. Please send your feedback, comments and questions to editor @alphaliner.com for all data derived from the newsletter. Alphaliner does not accept any liability for any errors or omission or opinion. Please refer to full user terms and copyrights at www.alphaliner.com/terms_of_use.php Chart of the week • The containership order- Average Vessel Size of Operated Fleet by Carrier : 2013 vs 2008 book has risen to reach 3.67 Mteu or 21.5% of the current fleet. 18.0 90% • Although the orderbook to fleet ratio is still relatively 16.0 80% low, compared to the 2000- 2013 average of 37.7% , the 14.0 70% new orders will add to an already bloated fleet of large ships. 12.0 60% • The estimated capacity 10.0 50% growth rate for 2014 and Ratio Orderbook-to-Fleet 2015 has risen to 7.6% and 6.5% respectively, with new 8.0 40% deliveries expected to reach 1.59 Mteu in 2014 and 1.42 6.0 30% Mteu in 2015. TEUMillions in Orderbook and Fleet • The supply-demand gap is expected to widen in the 4.0 20% next two years, with nominal demand growth expected to 2.0 10% lag behind the increase in supply. ALPHALINER 0.0 0% • The imbalance created by the excess supply could impede the recovery in the liner sector, with no sustain- Jan-2000 Jan-2001 Jan-2002 Jan-2003 Jan-2004 Jan-2005 Jan-2006 Jan-2007 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012 Jan-2013 able recovery expected until Existing Fleet Orderbook Orderbook-to-Fleet Ratio after 2015. Surge in containership orderbook will impede sector recovery INSIDE THIS ISSUE: The containership orderbook has surged above 3.6 Mteu to reach a 14 month Over supply concerns 111 high of 3.67 Mteu, corresponding to 21.5% of the existing fleet. A series of Corporate Updates 333 fresh orders placed in the last two months for high-capacity ships has added Case study : How to run a shipping line with no equity over 600,000 teu to the orderbook in the third quarter alone. Maersk disposes DFDS stake Service Updates 555 The new orders are mostly focused on the larger sizes, led by UASC’s order for Carriers plan for a one week FE-Europe rate hike! five 18,000 teu and five 14,000 teu units last month at Hyundai H.I.. MSC has Maersk Line extends ME-3 to Novorossisk also secured six 18,000 teu units from Daewoo, under bareboat charter ar- Zim adds Ningbo to AME CCNI injects 8,500 teu ship for rangements with Chinese financial owners (Bank of Communications Leasing FE-ECSA service UASC teams up with CSL for and Minsheng Leasing). CMA CGM has also turned to Chinese financiers to new intra-Asia offer fund its three 16,000 teu orders at Jiangnan Changxing and Shanghai Waigao- Cheng Lie and KMTC in Intra- Asia slot swap qiao, with support from the CSSC yards’ leasing arm. Seaspan also booked ten Hapag-Lloyd maintains two loops in USEC-ECSA 14,000 teu units in two separate orders at HHI and CSBC, under a long term Corrective - Arkas and Tarros maintain full GPS service charter arrangement to Yang Ming. Delivery/New Order Updates 999 September Deliveries The latest round of new orders has been triggered by the Maersk’s 18,000 teu Terminal Updates 101010 DPW charters panamax for ‘EEE’ program initiated in in early 2011, which set the stage for other carriers crane ops trial at London to proceed with similar-sized orders in order to compete effectively with Gateway Maersk’s ’EEE’ leviathans. Although the orderbook at 21.5% of the current fleet is still relatively low com- pared to historical levels, these recent orders will add to a chronic oversupply of Page 1 © Copyright Alphaliner 1999-2013 Subscription copy for OHL Global Freight Management & Logistics. Sent to [email protected] Unauthorised re-distribution prohibited ALPHALINER Weekly 2013 Issue 37 The projected containership ca- large ships that creates ripples in smaller sizes through forced cas- pacity growth rate has risen in cading. Current idle capacity stands at 400,000 teu or 2.3% of the 2014 and 2015 with new vessel deliveries expected to reach 1.59 fleet and is expected to rise to over 600,000 by the end of the year, Mteu and 1.42 Mteu respectively with the 3,500-5,100 teu size bracket heavily affected by the forced over the next two years. cascading. Projected containership capacity growth rate : 2013-2015 Top 21 Carriers - Average size of operated fleet : Sep 2013 vs 2008 10.0% ALPHALINER Sep 2013 Sep 2008 % Change 9.0% 9.0% 6,000 90% 9.0% 80% 8.0% 7.6% 5,000 6.5% 6.5% 70% 7.0% 6.4% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 4,000 60% 5.0% 50% 3,000 4.0% 40% 3.0% 1.8% 1.8% 2,000 30% 2.0% 20% 1.0% 1,000 % to(2008Growth 2013) 0.0% Average Vessel Size in TEU 10% 2012 2013F 2014F 2015F 0 0% Jan-13 Sep-13 PIL Zim APL NYK MSC CSCL MOL CSAV UASC OOCL HMM K Line K COSCO Wan Hai Evergreen CMACGM YangMing Hanjin Shg Hapag-Lloyd ALPHALINER APM-Maersk Although the 2013 expected Hamburg Süd capacity growth has been ad- The average container vessel sizes have increased dramatically in justed downwards from 9.0% (Jan 2013 forecast) to 6.4%, due the last five years, as carriers continued to make vessel upsizing a to increased scrapping and de- key part of their efforts to reduce unit costs. The average container- livery deferrals, it is still insuffi- ship size has increased by 32% over the last five years, from 2,600 cient to clear the existing sup- ply over-hang. teu in 2008 to 3,430 teu currently. Demand growth is expected to For the main carriers, the increase in the average size has been even lag behind supply growth for each of the years 2013 to 2015, more pronounced. The average size of vessels operated by the Top based on latest Alphaliner fore- 21 carriers has risen by 36%, from 3,200 teu to 4,360 teu. The trend casts. will continue in the next three years, with several carriers having com- 25 mitted themselves with significant ULCS programs. 14.1% 13.2% Largest Ships Deployed by Carrier : 2008/2013/2016 9.1% 9.1% 20 7.9% 6.5% 6.5% 7.6% 7.6% 5.5% 5.5% 6.4% 6.4% 0 5,000 10,000 15,000 20,000 6.0% 6.0% 15 Maersk Millions 8.2% 8.2% CMA CGM 5.0% 5.0% 5.2% 5.2% CSCL 4.7% 4.7% 5.7% 5.7% 4.1% 4.1% APL TEU TEU 10 MSC MOL 5 COSCO NYK -8.4% OOCL ALPHALINER 0 Hapag-Lloyd Hanjin Shg UASC HMM Zim ALPHALINER Hamburg Sud Fleet Capacity K Line Largest vessel Forecast 2013-2015 Evergreen operated in TEU Yang Ming % Annual Capacity Growth CSAV 2008 CCNI % Global Throughput Growth 2013 Wan Hai PIL 2016 Page 2 © Copyright Alphaliner 1999-2013 Subscription copy for OHL Global Freight Management & Logistics. Sent to [email protected] Unauthorised re-distribution prohibited ALPHALINER Weekly 2013 Issue 37 CORPORATE UPDATES Israel Corp’s 99.7% stake in Zim Case study : How to run a shipping line with no equity has a negative net asset value, as its liabilities are more than the Zim has posted a net loss of -$97M in the second quarter, bringing value of its assets. the total net loss for the first six months of the year to -$209M. Cu- Although Zim had presented a mulative losses since 2008 has reached -$1.75 Bn, with all of the new business plan to its lending company’s equity now erased as its shareholders’ equity now stands banks on 30 April 2013, details of the restructuring plan were not at -$252M. made public. Zim remains in dis- cussions with its creditors to re- Zim shareholders’ equity : 2007-2013 structure its outstanding debt Israel Corp / Ofer injects with banks, bondholders, ship- 800 fresh capital of $342M yards and shipowners. + $72M in capital reserves from debt restructuring Israel Corp converts 600 Israel Corp $25 M loan into equity / Ofer injects $14M in Share Price 2009-2013 ILs 400 capital reserves 500,000 450,000 200 400,000 0 350,000 Shareholders' Zim equity US$M 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 300,000 -200 20071Q 20081Q 20091Q 20101Q 20111Q 20121Q 20131Q 250,000 200,000 Zim’s S&P credit rating now stands at CCC, as it seeks to restructure 150,000 its substantial debt which stands at $2.47 Bn. On July 9, 2013, S&P 100,000 52 week High/Low : Maalot retained Zim’s negative rating outlook, due to its “weak liquid- 50,000 286,000/148,700 ity, dependency on a debt reorganization and realization of assets in 0 order to meet repayments in 2014, and a very high level of leverage.” Zim’s precarious liquidity position would have bankrupted most other carriers, but several exceptional factors have allowed the company to survive:- Zim Net Profits by Quarter 2008-2013 ► Zim’s unique shareholding structure, with the Israel Corp.