Container: Overcapacity To Haunt Mid Term, Asia-Europe Most Exposed

Volumes Up, Rates Down

Although the volume of containers handled at global bellwether ports continues to increase, rate levels are still falling. BMI fears that this overcapacity will continue over the mid term, with a new slew of mega-vessels - including Maersk Line’s 18,000 20-foot equivalent unit (TEU) fleet - due online from 2013.

Our fear is that with 2012 set to be another year of record growth in the global box shipping fleet, the sector will not find any relief from overcapacity, and this is bad news for container lines’ bottom lines.

Drivers Key Views

• Throughput volumes up year-on-year (y-o-y), but weakening consumer sentiment is a threat to the recovery’s strength.
• Another downward revision from BMI on the US economy is on the cards.

Bellwethers Key Views

• Global volumes increasing y-o-y.
• Shanghai to remain the global number one container port.
• Decline in number of vessels through the Suez Canal, but increasing volumes is a trend set to continue in the mid term as more mega-vessels come online.

Rates Key Views

• Rates to continue ticking lower.
• BMI is more bullish on the transpacific, as lines have been decreasing capacity.
• Strategy of expansion to expand on Asia-Europe stems from the curse of the mega-vessels.

Capacity Key Views

• Overcapacity to continue plaguing Asia-Europe in particular, due to more mega-vessel orders.
• Emerging trade routes are the best protected from the rate decline.
• Companies set for a loss for 2011 as rates continue their downward trajectory.

Contents

Executive Summary
Overview
Volumes Up, Rates Down
Drivers
Key Views
Bellwethers
Key Views
Rates
Key Views
Capacity
Key Views
Container: Asia – Europe Most Exposed
Overcapacity To Plague Mid Term
Overview
Drivers
Key Views
US Consumer Sentiment In Decline
CHART: Confidence Waning
Reuters/ University of Michigan Index of Consumer Sentiment
European Consumer Market Strengthening
CHART: Tracking Up
European Consumer Sentiment ‘08-’10
Bellwethers
Key Views
Number Of Ships Drops, But Volumes Rise
CHART: Back On Course
Suez Canal Throughput Tonnes (000)
Shanghai Streaking Ahead, Singapore In Decline
CHART: Out In Front
Asian Bellwethers Jan-May 2011 % Change y-o-y
US Ports Getting Back To Pre-Downturn Levels
CHART: On Target
Port Of Los Angeles Container Throughput (TEU)
European Box Continues
Rates
Key Views
Big-Money Routes No Longer Raking In The Cash
CHART: Dropping Down
SCFI: USWC (Base Port) and Europe (Base Port)
Bailing Out Of The Transpacific
CHART: Abandon Ship
Shipping Lines Which Have Decreased Their Transpacific Exposure
The Curse Of Mega-Vessels
If Two Peak-Season Surcharges Fail, Try Again
Capacity
Key Views
When Will Supply and Demand Reach An Equilibrium?
CHART: Supply Drowning Out Demand
Newbuild Deliveries Vessel Capacity (TEU)
TABLE: Newbuilds Due Online In The Mid Term
indicators: OOCL, NOL, Evergreen , Hamburg Sud, Hamburg Sud, Hapag-Llo yd, CSAV ,
Maersk Line , Hanjin Shipping, Costamare- Long term charter for Evergreen
Shelter From The Storm
CHART: Intra-Asia A Safe Haven
SCFI Index % Change (US$ per TEU/FEU) (August 6 2010- July 22 2011)
Company Profiles
Maersk Line
Overview
Strategy
Routes
Fleet
SWOT: Maersk line company profile swot
Financials 2011
Q111
2010
Latest Activity
Expanding Further
ETR Focus
After Intra-Asia Comes Intra-Europe
West Africa Focus Intensifies
Russia Expansion On The Cards
CMA CGM
Overview
Strategy
SWOT: CMA CGM company profile swot
Financials 2010
Latest Activity
Selling Up To Meet Debt Restructuring Pledges
Wary Of Iran Connection
COSCO Container Lines Company Limited
Overview
Strategy
Routes
Fleet
Financial Results 2011
SWOT: Cosco company profile swot
Latest Activity
Seaspan Takes Delivery Of COSCO Glory
Containership
COSCON To Impose War-Risk Surcharge
Transpacific Upgrades
Hapag-Lloyd
Overview
Strategy
Routes
SWOT: Hapag-Lloyd company profile swot
Fleet
Financial Results 2011
2010
Latest Activity
Oman States Interest
Full Steam Ahead For Mega-Vessel Order
Global Assumptions
Global Outlook
Second Half Risks
TABLE: GLOBAL ASSUMPTIONS
indicators: Real GDP Growth (%) - US, Eu rozone, Japan, China, World
Consumer Inflation (ave) - US, Eurozone, Japan, China, World
Interest Rates (eop) - Fed Funds Rate, EC B Refinancing Rate, Japan Overnight Call Rate
Exchange Rates (ave) - US$/EUR, JPY /US$, CNY /US$
Oil Prices (ave) - OPEC Basket (US$/bb l), Brent Crude (US$/bb l)
Developed States
TABLE: EMERGING MARKETS AGGREGATE GROWTH
Indicators: Emerging Markets Aggregate Growth, Latin America - Argentina, Brazil,
Mexico Middle East - Saudi Arabia, UA E, Egypt Africa - South Africa, Nigeria
Emerging Asia - China, Hong Kong, India*, Indonesia, Malaysia, Singapore, South Korea,
Taiwan, Thailand Emerging Europe - Russia, Turkey, Czech Re public, Hungary, Poland
Emerging Markets
TABLE: DEVELOPED STATES REAL GDP GRO WTH FORECAST
indicators: Developed States Aggregate Growth - G7, Eurozone , EU-27
Selected Developed States - Australia, Austria, Belgium, Canada, Den mark, Finland,
France , Germany, Ire and, Italy, Japan, Netherlands, Norway, Portugal, Spain, Sweden ,
Switzerland, United Kingdom
TABLE: REAL GDP GRO WTH CONSENS US FORECASTS
Indicators: 2011 - Bloomberg Consensus, BMI 2012 - Bloomberg Consensus, BMI Skip to top