mega ships, alliances, ports, supply chains, chaos
DESCRIPTION
There are significant changes ahead for container lines, ports, and for importers / exportersTRANSCRIPT
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First
ILWU Contract Expires June 30
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State of the Industry
Too many shipsSlow growth of global trade with
recessionLosses (esp. Asia-Europe)
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The Times—They Are A Changing
Global Trade / Global Logistics
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Top 10 Container Carriers
19961) APM-Maersk2) Evergreen3) P&O Nedlloyd4) Sea-Land5) COSCO6) Hanjin7) MSC8) NYK9) Mitsui10) Hyundai
20101) APM-Maersk2) MSC3) CMA-CGM4) APL5) Evergreen6) Hapag-Lloyd7) COSCO8) CSAV9) CSCL10) Hanjin
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Top 10 Container Ports
19801) New York/New Jersey2) Rotterdam3) Hong Kong4) Kaohsiung5) Singapore6) Hamburg7) Oakland8) Seattle9) Kobe10) Antwerp
20111) Shanghai2) Singapore3) Hong Kong4) Shenzhen5) Busan6) Ningbo7) Guangzhou8) Qingdao9) Dubai10) Rotterdam
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Top 10 North America Ports
20001) Long Beach2) Los Angeles3) New York/New Jersey4) Charleston5) Oakland6) Seattle7) Norfolk8) Houston9) Savannah10) Tacoma
20111) Los Angeles2) Long Beach3) New York/New Jersey4) Savannah5) Vancouver6) Oakland7) Seattle8) Virginia9) Houston10) Manzanillo
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Ocean
Mega Ships
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Mega Ship
Mega Ship Aircraft Carrier
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Issues?
Megas (Triple E)—18,000+ TEU (vs 1000 TEU in 1970s)
Lower operating costsHow will ships be filled?Which ports will handle them?How will ports handle them? Investment?
Bottlenecks?
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P3 And More
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P3
Maersk, MSC, CMA-CGM– 3 largest carriers--operating alliance
FMC, EU, China reviewedThree issues–
market sharebig shipshubs/ports used
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P3 Market Share
44% Asia-to-Europe24% 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 AlliancesAPL (#4)Hapag-Lloyd (#6)NYK OOCLHyundai Mitsui
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CKYH
Cosco (#7)Hanjin (#10)K LineYang MingEvergreen (#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
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Pending Chaos!?
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Issues
Supply (of ships/container space) exceeds demand
Pricing / rates – flat and somewhat lowWill 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?
FinancialMuch red ink for last 5 yearsHanjin—operating loss $225mil / net loss $631mil
for 2013M&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 carriersTier 1 and Tier 2 portsFinancial shakeoutsSupply chain issuesWoe to those who buy rates and do not
understand service and supply chains
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Ocean Carriers & Global Supply Chain
Erosion
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What Carriers Are Doing
Fewer carriers in businessAlliances, slot exchanges, and vessel sharing--
created and changedShipping routes--added and revisedSailing schedules--made and reworked“Slow steaming”--ongoing practice
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What Everything Means
Irregular performanceLack of service reliabilityPotential changes as to ports to handle
ships
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Which Means
Increased uncertainty for planningUndermine inventory yield maximizationMore inventories and more capital tied
up
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Impact
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