THE SHIPPING INDUSTRY IN A CHANGING
ENVIRONMENT
Jean Philippe Thenoz
PROPELLER CLUB BASEL
November 13th 2008
DRAFT
Page 2
SUMMARY
1. Change of ship size / Change of ship characteristics
2. Importance of terminal / Strategic approach
4. Impact of bunker in shipping operations
5. Change of legal environment
3. Role and importance of intermodal
6. Environment requirements
I. What have been the changes affecting the shipping industry during the past decade ?
II. CMA CGM snapshot
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1. Change of ship size / Change of ship characteristics
Page 4
A brief history
2001 : 6500 teu class
2004 : 8500 teu class
2006 : 9400 teu class
The following vessels already ordered, are under construction :
2008 / 2009 : 11 000 TEU class and 11 400 TEU
2009 / 2010 : 12 600 TEU + class
2008: 11 000 TEU class
Page 5
6 500’s 8 500’s 9 400’s 11 400’s
Length overall (m) 300 334 349 363
Width (m) 40,3 42,8 42,8 45,6
Depth (m) 24,1 24,6 27,3 29,7
Draft (m) 14,3 14,5 15,0 15,5
Deadweight (t) 80 000 100 000 115 000 130 000
Nominal capacity (teu) 6 621 8 488 9 415 11 356
Deck 3 614 4 653 4 742 5 512
Hold 3 007 3 835 4 673 5 844
Rows of containers :
Deck 16 17 17 18
Hold 14 15 15 16
Numbers of tiers :
Deck 7 8 8 8
Hold 9 9 10 11
Main characteristics
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Page 7
Principe de propulsion
Page 8
Propulsion principle
The easiest solution :One main engine slow speed (about 100 rpm), 2 stroke engine
- A shaft line
- A propeller
Page 9
2. Importance of terminal / Strategic approach
Page 10
Terminals networking
Shipping lines having a worldwide coverage were pushed to invest into terminals to secure berth windows and give a dedicated fully integrated service to customers
The shipping industry went into a vertical integration : terminals being a key element of their operation.
This strategy is especially valid in a hub port operation concept on East / West route
Malta Free Port, Malta
Page 11
Terminals networking
Let’s take as an example what CMA CGM group has been doing the past 7 years :
Terminal Link S.A.
• Subsidiary of CMA CGM group, incorporated in 2001
• MRS development team of 15 + CMA CGM support
• Terminal Link holds ports interests of CMA CGM
dating before 2001 and has now interests in 17 ports
with an estimated total throughput in 2006 of 4.7 millions TEUs.
Terminal Link’s Assignments :
• External growth:
• Invest in multi-user container terminals in appropriate locations
• Develop green sites or brown sites projects, buy stakes, tender for concessions
• Internal growth & development:
• Leverage on synergies with CMA CGM and market terminals world wide
• Optimize management of container terminals by using and developing modern state-of-the-art container handling equipment and IT systems
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Mobile
GuadeloupeMartinique
Guyane
MarseilleFos
AnversZeebruggeLe Havre
Um Q’sar
Montoir
Lomé
Dunkerque
HoustonCasablanca
Rotterdam
Xiamen
Caï Mep
Damiette
Odessa
Busan
31 DECEMBER 2006: 17 TERMINALS
31 OCTOBER 2008: 26 TERMINALS
Tianjin
Wenzhou
Miami
Page 13
3. Role and importance of intermodal
Intermodal strategy in Europe
Page 15
Priority loading in the port for containers under Rail C.H
Easier documentation and Customs formalities at sea port
Customs clearance at destination done by customer
Competitive combined tariff “door to door”
Storage facility at Rail terminal with free days
Empty pick up or drop off for merchant haulage from / to inland terminal without any extra cost
Door to door advantages
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HamburgHamburg
GdyniaGdynia
WarsawWarsaw
GliwiceGliwice
BucarestBucarest
ConstanzaConstanza
BudapestBudapest
MilanoMilano
MarseilleMarseille
LyonLyonBordeauxBordeaux
MontoirMontoir
Le HavreLe Havre
RotterdamRotterdam
LivornoLivorno
BaselBasel
StuttgartStuttgart
Poznan Poznan
BratislavaBratislava
ParisParis
GenoaGenoa
Clermont-Clermont-FerrandFerrand
StrasbourgStrasbourg
SopronSopron
ToulouseToulouse
MunchenMunchen
Triestes / Triestes / KoperKoper
PraguePrague
WienWien
Bradu De SusBradu De Sus
ManchesterManchester
LiverpoolLiverpool
CardiffCardiff
SouthamptonSouthamptonTilburyTilbury
FelixstoweFelixstowe
PadovaPadova
DourgesDourges
BremerhavenBremerhaven
Fos/MerFos/Mer
BargeRail Link shuttlesCombined Rail/barge ServicePartners’ rail servicesDevelopment Rail
SalzburgSalzburg
DuisburgDuisburg
KolnKolnAntwerpAntwerp
Mannheim / Mannheim / LudwigshafenLudwigshafen
ZeebruggeZeebrugge
Our rail & barge product today and coming plans
Intermodal strategy in China
Page 18
Office of ChinaDirect ports of call in ChinaPorts
Xian
Chongqing
Changsha
Kunming
Zhongshan
GuangzhouShunde
Dongguan
Yantian
Hong KongMacauShenzhen Kaohsiung
HuizhouKeelung
XiamenShantouQuanzhou
FuzhouYiwu
HangzhouNingbo
Lianyungang
SuzhouShanghai
Nantong
Zhengzhou
Wuhan
HeifeiNanjing
ZhenjiangJinanQingdao
ZhangjiagangXingang
Shijiazhuang TianjinBeijing
Shenyang
Harbin
Yantai
Dalian
A strategic lay out in China
2nd largest carrier from China to North Europe1st from China to Mediterranean seaEvery 6 hours, a CMA CGM ship leaves China.13 Ports of call in China.64 agencies throughout China (staff: 1515)
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Location of 18 terminals and double-deck block trains planned network
Page 20
Compared market share of rail container transport
As of total railway freight traffic percentage
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4. Impact of bunker in shipping operations
Page 22
Bunker impact on a voyage
September 2006 August 2008
Voyage cost % %
Hire 31,1 % 18,0%
Bunkers 313 USD / t 62,6 % 706 USD / t 78,5%
Canal costs 0,0 % 0,0%
Port costs 6,3 % 3,5%
Misc. 0,0 % 0,0%
Total 100,0 % 100,0%
September 2006 August 2008
Voyage cost % %
Hire 24,1 % 16,8%
Bunkers 314 USD / t 51,9 % 673 USD / t 68,4%
Canal costs 18,3 % 11,3%
Port costs 5,7 % 3,5%
Misc. 0,0 % 0,0%
Total 100,0 % 100,0%
8100 TEUS VESSEL – ASIA / USWC at 22.5 knots (35 days voyage)
5100 TEUS VESSEL – ASIA / USEC at 23.1 knots (56 days voyage)
Page 23
Bunker prices evolutions YTD 2008
350
400
450
500
550
600
650
700
750
03/0
1/20
08
17/0
1/20
08
31/0
1/20
08
14/0
2/20
08
28/0
2/20
08
13/0
3/20
08
27/0
3/20
08
10/0
4/20
08
24/0
4/20
08
08/0
5/20
08
22/0
5/20
08
05/0
6/20
08
19/0
6/20
08
03/0
7/20
08
17/0
7/20
08
31/0
7/20
08
14/0
8/20
08
28/0
8/20
08
11/0
9/20
08
25/0
9/20
08
09/1
0/20
08
US
D
Hkg
Rtm
Fos
Hou
Page 24
5. Change of legal environment
Page 25
The process
1986 – Regulation 4056/86 passed by European Council
March 2003 – repeal process initiated, ELAA set up
October 2006 – formal abolition of Regulation 4056/86 by European Council
September 2007 – publication of draft Guidelines
Summer 2008 – publication of final Guidelines
October 2008 – implementation of the new law – Guidelines in force
Page 26
Impact of repeal of regulation 4056/86
Liner conferences to and from Europe will become illegal
Liner conferences outside European trades remain legal
However, European solution will heavily impact the thought processes of other jurisdictions
Others may follow over time
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Impact of repeal of regulation 4056/86 on conference lines
No more :conference tariffsconference THCsconference surcharges such as CAF and BAFconference business plans
No :individual capacity discussionimmediate publication of individual market shares
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What is the new lines environment ? How will they act ?
All lines must have their own tariff and/or pricing policy
Individual negotiations with customers
All elements of the charge are potentially negotiable unless a line decides that certain charges are non-negotiable
Structure of charges, i.e. origin THC, ocean freight, destination THC, CAF, BAF is up to individual lines
Lines will have to decide their individual policies on THC’s BAF and CAF
Charges need not be related to costs – lines are free to charge what they like taking advantage of the market
Increases in charges will be subject to lines own discretion and subject to individual contracts – no need, unless the contract says, to give notice
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6. Environment requirements
Page 30
Prevent any risk of pollution and continuously improve the environmental performance of our operations
Develop eco-friendly services and solutions i.e. rail and barge transportation, eco-containers
Reinforce our environmental management system and corporate culture for our employees
Advanced Shipping, Environment Minded
CMA CGM is member of the Clean Cargo Group and adheres to « Charte Bleue » from Armateurs de France.
Our policy relies on 3 key axis :
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Our new buildings are equipped with the latest proven environmental technologies i.e. electronic injection, fast oil recovery, alternative maritime power, waste heat recovery, non toxic paints….
Reducing vessel’s ecological footprint
Ecospeed policy on major lines, weather and fuel routing, optimal trim, are additional operational measures to reduce vessels’ environmental impacts.
CMA CGM Fleet Navigation Center
New Buildings Green Technologies Overview
Page 32
Pioneer and leader in Eco-Containers with bamboo flooring with more than 72 000 TEUs, which represents so far average 10 % of our owned fleet.
Development of alternative and eco-friendly transports : Rail and Barge.
Investment in Rail Development in China, India, North Africa notably.
Developing eco-products and services
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Green Flag Award compliant for 100 % of our vessels for the 2nd consecutive year, for vessels speed reduction.
Clean Fuel Program participation since July 2008, using ultra-low sulphur fuel in main and aux engines
Developing environmental partnerships
Exhibition at Long Beach Green Port Fest : hundreds of people visited our eco-bamboo container as well as the Group environmental initiatives.
From the beginning, CMA CGM is actively participating to the Ports of Los Angeles and Long Beach environmental programs and initiatives, considered as the most leading and aggressive ports environmental policies worldwide.
Page 34CMA CGM MEDEA – 9400 evp
II. CMA CGM snapshot
Page 35Source: CMA CGM Data
CMA CGM: Number of containers carried(thousand of TEUs)
7000
6000
5000
4000
3000
2000
1000
0
16151900
2300
2800
3900
5200
6000
2000 2001 2002 2003 2004 2005 2006 2007
7700
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CMA CGM GROUP – EAST / WEST SERVICES
10 services
17 420 TEUs weekly 6 services 4 480 TEUs weekly
9 services 20 660 TEUs weekly
NB : Asia is including Indian Subcontinent
8 services 16 060 TEUs weekly 6 services 6 860 TEUs weekly
Europe
Africa
Asia
South America
North America
Oceania
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CMA CGM GROUP – NORTH / SOUTH SERVICES
NB : Asia is including Indian Subcontinent
Europe
Africa
Asia
South America
North America
Oceania
12 services 6 210 TEUs weekly
8 services 4 290 TEUs weekly
8 services 6 750 TEUs weekly
10 services 6 940 TEUs weekly
13 services 8 320 TEUs weekly
20 services 9 830 TEUs weekly
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CMA CGM 368 ships (280 chartered + 88 owned) for 972 393 TEUs
CHENG LIE 19 ships (15 chartered + 4 owned) for 25 934 TEUs
COMANAV 10 ships (1 chartered + 9 owned) for 2 923 TEUs
Fleet volume
GROUP TOTAL 397 ships for 1 001 250 TEUs (296 chartered and 101 owned) (396 ships for 986 196 on 02/10/08)
(17/10/2008)
TODAY
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78 ships on order for a total capacity of 648 679 TEUs (out of which 55 owned)
+ 2 cruise ships for CIP
2008 2009 2010 2011 2012
Ships 7 (3 owned) 32 (22 owned) 26 (21 owned) 11 (7 owned) 2 owned
Teu 54 989 259 906 239 571 90 813 3 400
Fleet volume
SHIPS TO BE DELIVERED
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TOP 10: Global carriers
1. Maersk Line – Denmark 2 034 000 15.8 %
2. MSC – Switzerland 1 421 600 11.0 %
3. CMA CGM – France 970 300 7.5 %
4. Evergreen – Taïwan 634 100 4.9 %
5. Hapag Lloyd – Germany 501 000 3.9 %
6. COSCO – China 497 300 3.9 %
7. APL – Singapore 482 300 3.7 %
8. CSCL – China 430 100 3.3 %
9. NYK – Japan 416 900 3.2 %
10. MOL – Japan 376 100 2.9 %
Source: AXS-Alphaliner dtd October 08
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Turnover 07
Teus carried 07
Vessels
Slots available
Services
Staff Worldwide
Staff France
Offices Worldwide
Ports of call
11.8 billion US Dollars
7,7 million TEUs
394
966,900 TEUs
more than 150
16 000
4 200
600
400
CMA CGM Group Key Figures
Page 42
Norfolk, USA
CMA CGMReal Estate Investments
A testimonial of the group’s soaring growth
Architect: Zaha Hadid
FEATURES147 meters tall / 33 stories high75 meters in its widest pointTotal capacity: 2,700 people15 elevators / 5 parking levels53,000 m² of total exterior glass surface areaGross floor area: 64,000 sq metersStart of construction: July 2006Building delivery : 3rd quarter of 2009
Page 43CMA CGM Orfeo – 9700 TEUs passing by Los Angeles break water