cycle drivers in the shipping markets...tanker market outlook • orderbook currently at 24% of the...
TRANSCRIPT
Cycle Drivers In The Shipping Markets
Autumn 2003
2
Agenda
• Historical Overview• Analysis by Market• Summary
3
Cycles Across Market Sectors (1 Year TC Rates)
0
5,000
10,000
15,000
20,000
25,000
30,000
80.1 82.1 84.1 86.1 88.1 90.1 92.1 94.1 96.1 98.1 00.1 02.1
$/da
y
Panam ax Bulker (69,000 dw t) Afram ax Tanker (98,000 dw t)Geared Containership (1500 TEU)
4
Performance Over Cycles
-20%
-10%
0%
10%
20%
30%
40%
50%
% p
.a.
BulkerTankerFeeder
RoI by Market Cycle, 1980-2000
Strong Markets Weak Markets
5
What Drives The Cycle?
• Fleet Utilization Rate Is Key
• Fleet Utilization Rate = Dwt Demand/Fleet Size
• Fleet Size Easy To Measure
• Dwt Demand More Difficult– Closely Related To Tonne-Mile Demand– Fleet Productivity Also Plays A Role
6
Tanker Rates vs. Fleet Utilization
4,000
8,000
12,000
16,000
20,000
24,000
28,000
80.1 82.1 84.1 86.1 88.1 90.1 92.1 94.1 96.1 98.1 00.1 02.1
TC R
ates
, $/d
ay
70
75
80
85
90
95
100
Util
izat
ion
Rat
e, %
Aframax TC Rate Tanker Fleet Utilization Rate
7
Key Cycle Drivers, Part 1
• Trade Demand– Linked To Economic Activity
• Booms Often Followed By Busts– Other Exogenous Factors
• OPEC Policies In The Early 1980s
• Japanese Nuclear Power Problems In 2002
• Emergence Of China As Manufacturing Hub In 2003
• Shift From Long-Haul Middle East Oil To Short-Haul
Russian Supplies Likely In 2004
8
Key Cycle Drivers, Part 2
• Fleet Developments– Over-Ordering A Perpetual Problem
• Delivery Lag Of 2-3 Years Results In Delayed Feedback
– Scrapping Helps Balance Market• Low Freight Rates Lead To Increased Activity• Regulations Also Have Impact
9
World Economic Growth
0
1
2
3
4
5
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03
Ann
ual G
DP
Gro
wth
, %
Early 80s: G lobal
Recession
1991-92: O ECD
Recession1997-98:
Asian Crisis
2003: Chinese
Boom
10
Global GDP/Trade Link
Annual 1990-2002
Growth 2003 (Thru Sept)
Economic Growth 3.1% 3.1%
Oil Trade 2.8% 4.1%
Dry Bulk Trade 2.7% 5.1%
Container Trade 6.5% 10.5%
11
China Becomes Global Manufacturing Hub
• Takes In Large Amounts Of Raw Materials– Oil, Iron Ore, Steel Imports Soar
• Adds Cheap Labor
• Churns Out Huge Volume Of Finished Goods– Exports Up 34% In First Half Of 2003 (In $)
• Shipping Demand Skyrockets– Bulkers & Tankers Boosted By Import Activity– Containership Market Driven By Exports
12
China Spurs Shipping Boom: Growth From 02Q1-03Q1
50%
40%
2% 3%
9%
38%
0%
10%
20%
30%
40%
50%
60%
Dry Bulk Import Grow th Oil Import Grow th Container Export Grow th
China Rest of W orld
13
Agenda
• Historical Overview• Analysis by Market
– Tanker– Bulker– Containership
• Summary
14
Tanker Market Cycles
0
3,000
6,000
9,000
12,000
15,000
18,000
21,000
24,000
27,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
USD
/Day
Aframax TC Rate
Post Iranian Revolution Era:High Oil Prices
End 1985:OPEC Expands Output
Oil Prices Tumble
1991-1992: OECDRecession
1990: Tanker OrderbookExceeds 15% of Fleet
End 1997: OrderbookExceeds 15% of Fleet
1999: OPEC cutbacks
15
Tanker Demand
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Tonn
e-M
iles
(bill
ion)
Tanker Tonne-Miles Trend '80-86 Trend '86-93 Trend '93-00
1980-1986(8%) annual decline
1993-20002% annual growth
1986-19937% annual growth
16
Tanker Demand By Importing Region
North America30%
OECD Europe19%
Developing Asia27%
Japan15%
Other9%
17
Rates and Orderbook
0
3,000
6,000
9,000
12,000
15,000
18,000
21,000
24,000
27,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
USD
/Day
0%
3%
6%
9%
12%
15%
18%
21%
Rat
ios
Aframax TC Rate Orderbook / Fleet Ratio (right axis)
18
Scrapping Adjusts To Rates
0
3,000
6,000
9,000
12,000
15,000
18,000
21,000
24,000
27,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
USD
/Day
0%
3%
6%
9%
12%
15%
18%
21%
Scra
ppin
g
Aframax TC Rate Scrapping, as a % of Fleet (right axis)
19
Summary: Tanker Cycles
• Structural Changes Instrumental in Shaping the Cycles: – Single Commodity Increases Potential For Volatility– OPEC/non-OPEC Split An Important Factor
• Orderbook Provides Early Warning Signals• Scrapping as an Adjustment Mechanism
– Regulatory Changes Also Affect Scrapping
20
Tanker Market Outlook
• Orderbook Currently at 24% of the Fleet– Deliveries Likely to Be Very High Thru 2006
• Europe Accelerates Ban On Single-Hulls– IMO Likely To Follow Suit– High Scrapping As A Result
• Fleet Likely to Grow by 2.5%/Year thru ‘05• Can Demand Match this Pace?
– Not Likely, Due To Rising Short-Haul Supplies– But China Is A Wild Card
21
Agenda
• Historical Overview• Analysis by Market
– Tanker– Bulker– Containership
• Summary
22
Dry Bulk Market Cycles
0
3,000
6,000
9,000
12,000
15,000
18,000
80.1 82.1 84.1 86.1 88.1 90.1 92.1 94.1 96.1 98.1 00.1
USD
/Day
Panamax TC Rate
1995: Dry BulkOrderbook at 13%of Fleet Capacity
1983-1984Surge in Ordering
1986-1989Strong Economic Growth/
Limited Ordering
1998:Asian Crisis
23
Dry Bulk Trade
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Tonn
e-M
iles
(bill
ion)
Dry Bulk Tonne-Miles Trend 1980-1999
1980-19982% average annual growth
OECD Recession,Collapse of Russian
Grain Imports
Strong AsianImports
Low SovietGrain Imports
OECD Recession
Asian Crisis
24
Dry Bulk Demand By Importing Region
Developing Asia30%
Japan22%
OECD Europe26%
North America5%
Other17%
25
Dry Bulk Demand By Commodity
Steel-Related39%
Steel Products8%
Steam Coal18%
Grain15%
Other20%
26
Ordering Behavior
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
USD
/Day
0%
3%
6%
9%
12%
15%
18%
21%
24%
Ord
erin
g
Panamax TC Rate Orderbook / Fleet Ratio (right axis)
27
Scrapping Adjustments
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
USD
/Day
0%
2%
4%
6%
8%
10%
12%
14%
16%
Scra
ppin
g
Panamax TC Rate Scrapping, as a % of Fleet (right axis)
28
Summary: Dry Bulk Cycles
• Demand Forecasts Challenging Despite Steady Long-Term Trend: – Industrial Commodities (Steel Generates ~50% Of
Demand)– Energy Related Commodities (Steam Coal)– Grains and Foods
• Ordering Instrumental in Shaping the Cycles: – Ordering Anticipates Demand Growth
29
Dry Bulk Market Outlook
• Orderbook Currently At 14% Of Fleet Size• Fleet Growth Projected to Average 3%/Year
thru 2005• Trade Demand Projected To Grow More
Slowly• China Is The Key
– Slower Growth In Steel Production Expected– But Lots Of Upside Potential
30
Agenda
• Historical Overview• Analysis by Market
– Tanker– Bulker– Containership
• Summary
31
Containership Market Cycles
0
3,000
6,000
9,000
12,000
15,000
80.1 82.1 84.1 86.1 88.1 90.1 92.1 94.1 96.1 98.1 00.1
USD
/Day
TC Rate, Geared 1000 TEU Containership
1990-1995:Decline in Trade Barriers /Orderly Fleet Expansion
1980-1986:Fleet Growth OutpacesDemand by 2:1 Ratio
1986-1990:Limited Fleet Growth 1995-1998:
Surge of Fleet Capacity
1999-2000:Limited FleetExpansion
32
Containership Trade (TEUs)
0
10
20
30
40
50
60
70
80
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
TEU
s (m
illio
n)
0%
2%
4%
6%
8%
10%
12%
14%
16%
Ann
ual G
row
th
Total Trade (left axis, TEUs) 1980-2000 TrendAnnual Volatility (right axis)
1980-20007.2 % average annual growth
33
Container Demand By Region
Developing Asia25%
Japan 8%
Europe23%
North America23%
Other21%
34
Ordering Behavior
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
USD
/Day
0%
5%
10%
15%
20%
25%
30%
35%
40%
TC Rate, Geared 1000 TEU Feeder Orderbook / Fleet Ratio (right axis)
35
Scrapping remains Insignificant
0
100
200
300
400
500
600
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Thou
sand
TEU
s
Total Deliveries, Cellular Fleet Total Scrapping, Cellular Fleet
36
Containership Cycles: Summary
• Structural Changes Play Key Role: – Trade Deregulation and Globalization– Technology (Information Systems, Large Ships,
Terminals, Infrastructure)– Reshaping of Liner Industry (Deregulation/OSRA)
• Ordering Instrumental in Shaping the Cycles• Scrapping Has Had Very Limited Impact
37
Containership Charter Market Outlook
• Orderbook Has Risen To 30% Of Fleet Size• Fleet Growth Projected to Average 9%/Year
during next 2 Years • Demand Projected To Grow By Only
7.5%/Year
38
Agenda
• Historical Overview• Analysis by Market• Summary
39
Summary: Key Factors To Watch
• Global Economic Growth– Is Chinese Economy Overheating?
• Structural Changes– Will Protectionism Reverse Trade Gains?– OPEC vs. Russian Oil
• Always Pay Attention To Orderbook– Quite High Right Now– Scrapping Will Respond To Rates/Regulations
40
Looking Ahead: Marsoft Outlook As Of 03Q4
0
5,000
10,000
15,000
20,000
25,000
30,000
80.1 82.1 84.1 86.1 88.1 90.1 92.1 94.1 96.1 98.1 00.1 02.1 04.1
$/da
y
Panam ax Bulker Afram ax Tanker 1500 TEU Containership