There are significant changes ahead for container lines, ports, and for importers / exporters

1. 1
Mega Ships, Ports,
Supply Chains, Chaos
by
Tom Craig
tomc@ltdmgmt.com

2. 2
First
ILWU Contract Expires June 30

3. 3
State of the Industry
Too many ships
Slow growth of global trade with
recession
Losses (esp. Asia-Europe)

4. 4
The Times—They Are A
Changing
Global Trade / Global Logistics

5. 5
Top 10 Container Carriers
1996
1) APM-Maersk
2) Evergreen
3) P&O Nedlloyd
4) Sea-Land
5) COSCO
6) Hanjin
7) MSC
8) NYK
9) Mitsui
10) Hyundai
2010
1) APM-Maersk
2) MSC
3) CMA-CGM
4) APL
5) Evergreen
6) Hapag-Lloyd
7) COSCO
8) CSAV
9) CSCL
10) Hanjin

6. 6
Top 10 Container Ports
1980
1) New York/New Jersey
2) Rotterdam
3) Hong Kong
4) Kaohsiung
5) Singapore
6) Hamburg
7) Oakland
8) Seattle
9) Kobe
10) Antwerp
2011
1) Shanghai
2) Singapore
3) Hong Kong
4) Shenzhen
5) Busan
6) Ningbo
7) Guangzhou
8) Qingdao
9) Dubai
10) Rotterdam

7. 7
Top 10 North America Ports
2000
1) Long Beach
2) Los Angeles
3) New York/New Jersey
4) Charleston
5) Oakland
6) Seattle
7) Norfolk
8) Houston
9) Savannah
10) Tacoma
2011
1) Los Angeles
2) Long Beach
3) New York/New Jersey
4) Savannah
5) Vancouver
6) Oakland
7) Seattle
8) Virginia
9) Houston
10) Manzanillo

8. 8
Ocean
Mega Ships

9. 9
Mega Ship
Mega Ship Aircraft Carrier

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Issues?
Megas (Triple E)—18,000+ TEU (vs 1000
TEU in 1970s)
Lower operating costs
How will ships be filled?
Which ports will handle them?
How will ports handle them? Investment?
Bottlenecks?

11. 11
P3
And More

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P3
Maersk, MSC, CMA-CGM– 3 largest
carriers--operating alliance
FMC, EU, China reviewed
Three issues–
market share
big ships
hubs/ports used

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P3 Market Share
44% Asia-to-Europe
24% in the trans-Pacific
42% in the trans-Atlantic trade

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P3 Vessel Size
Average vessel for Asia-Europe-- increase
from 9,300 TEU to 14,200 TEU by end of
2015
Maersk largest 100 vessels--surpass MSC
and CMA CGM when all Megas delivered

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G6
From New World and Grand Alliances
APL (#4)
Hapag-Lloyd (#6)
NYK
OOCL
Hyundai
Mitsui

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CKYH
Cosco (#7)
Hanjin (#10)
K Line
Yang Ming
Evergreen (#5)—may join

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Canals
Panama Canal—expansion— (2015 or
2016?)
updates at East Coast ports with bigger ships
with widening
$1.6bil overrun
construction was slowed during dispute
Suez Canal--congestion

18. 18
Pending Chaos!?

19. 19
Issues
Supply (of ships/container space) exceeds
demand
Pricing / rates – flat and somewhat low
Will Money People sit still?
Last time – carriers laid up significant
tonnage “coincidentally” at same time

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Singapore 2009

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Shake Out Ahead?
Financial
Much red ink for last 5 years
Hanjin—operating loss $225mil / net loss
$631mil for 2013
M&A
CSAV / Hapag-Lloyd (could this new carrier
join the P3?)

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Next few years
As big ships are spread around globally--
more rate volatility in more trade lanes
Schedule/service vagaries--dropped
weekly sailings
Fewer carriers

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And
Tier 1 and Tier 2 carriers
Tier 1 and Tier 2 ports
Financial shakeouts
Supply chain issues
Woe to those who buy rates and do not
understand service and supply chains

24. 24
Ocean Carriers &
Global Supply Chain
Erosion

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What Carriers Are Doing
Fewer carriers in business
Alliances, slot exchanges, and vessel
sharing--created and changed
Shipping routes--added and revised
Sailing schedules--made and reworked
“Slow steaming”--ongoing practice

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What Everything Means
Irregular performance
Lack of service reliability
Potential changes as to ports to handle
ships

27. 27
Which Means
Increased uncertainty for planning
Undermine inventory yield maximization
More inventories and more capital tied
up

28. 28
Impact

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