the shipping industry in a changing environment jean philippe thenoz propeller club basel november...

THE SHIPPING INDUSTRY IN A CHANGING

ENVIRONMENT

Jean Philippe Thenoz

PROPELLER CLUB BASEL

November 13th 2008

DRAFT

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

1. Change of ship size / Change of ship characteristics

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

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

Principe de propulsion

Propulsion principle

The easiest solution :One main engine slow speed (about 100 rpm), 2 stroke engine

- A shaft line

- A propeller

2. Importance of terminal / Strategic approach

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

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

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

3. Role and importance of intermodal

Intermodal strategy in Europe

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

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

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)

Location of 18 terminals and double-deck block trains planned network

Compared market share of rail container transport

As of total railway freight traffic percentage

4. Impact of bunker in shipping operations

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)

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

5. Change of legal environment

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

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

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

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

6. Environment requirements

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 :

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

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

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.

CMA CGM MEDEA – 9400 evp

II. CMA CGM snapshot

Source: 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

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

CMA CGM GROUP – NORTH / SOUTH SERVICES

NB : Asia is including Indian Subcontinent

Europe

Africa

Asia

South America

North America

Oceania







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

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

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

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

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

CMA CGM Orfeo – 9700 TEUs passing by Los Angeles break water

the shipping industry in a changing environment jean philippe thenoz propeller club basel november...

Documents

teu class slide

malta slide

propulsion slide

propeller slide

draft slide

europe slide

importance of intermodal

cma cgm snapshot slide