sales and marketing of container shipping session 19.may
TRANSCRIPT
“Liner Shipping Revolution”
Sales and Marketing of Container Shipping Session 19.May.2014 Michael Lee
“Liner Revolution”
Sales and Marketing of Container Shipping
IFSPA 2014
Key Notes: 1. Liner History and Development 2. Liner Operation Model 3. Liner Operation – Characteristics 4. Liner Business Challenges 5. Market Today 6. Key to success 7. Utilization 8. Network Design 9. Capacity Management 10. Network Strategy 11. Long Term Clients Base 12. Opportunity
IFSPA 2014
Liner History and Development
IFSPA 2014
Liner Operation Before 50’
IFSPA 2014
Maritime Industry
IFSPA 2014
Bulk Business
IFSPA 2014
Vessel Position List Update on Date : 18-Apr-14
Vessel Name Open At Free : MM / DD DWT/MT
Draft/M BLT Flag LOA BEAM GrainM3 Gear
SINGAPORE 04/24 04/25
7067 7.429 98.17 18.8
13789.79 20T x 4 Drk JAKARTA 05/02 05/03
7067 7.429 1990 Panamanian 98.17 18.8 13789.79 20T x 4 Drk
++++++++++++++++++++++++++++++++++++++++++++++++++++++
Free/Open at SINGAPORE
Open Date From 2014/4/24 To 2014/4/25
Vessel Name
DWT_MT 7067
Draft_M 7.429
TPC 0
BLT 1990
Flag Panamanian
LOA 98.17
BEAM 18.8
GRT 5552
NRT 2351/Hold 2/ Hatch 2
GrainCub 13789.79
BaleCub 12611.69
VslType Handy Size (Bulk)
DeckType Tween Deck
Gear 20T x 4 Drk
IFSPA 2014
Open Vessel
-----Original Message----- From: [email protected] [mailto:[email protected]] Sent: Friday, February 10, 2012 12:08 AM To: chartering Subject: FM: xxxxx CHARTERING S.A. - PIRAEUS, HELLAS. TEL: +30 210 xxxxxxx Fax:+30 210 xxxxxxxx 09/02/12-18:07:57 / REF:427225-CNB A/c Acali Maritime 25,000mt 5% bagged rice SF abt 49 cft hcmc / 1-2 cuba 9.70m 17/28 February 2012 1500/1500 shex eiu 5 pus essential: max loa 186m - beam 26m (try 27m) geared min 10t cranes able 15 cycles per hour elec-mechanical vent max 25 years old no usa p&i club no marshall islands flag Cell 0030 xxxxxxxxxxx Best Regards/STC S.A. - As Brokers Only IFSPA 2014
Open Cargo
Liner Business
IFSPA 2014
IFSPA 2014
There is no system for Liner capacity management!
Rest of world……
IFSPA 2014
New Business Transaction Model
IFSPA 2014
Liner Operation Model
IFSPA 2014
Liner Operation Model
1. Vessel Available /Ship Owner 2. Cargo Origin /Shipper and Consignee 3. Sailing against weather / Fuel /Insurance 4. Loading and discharging / Cost 5. Freight
IFSPA 2014
There is need for innovation and revolution!
IFSPA 2014
Liner Operation - Characteristics
IFSPA 2014
IFSPA 2014
Liner Operation - Characteristics
• Product Invisible • space cannot be stored • Fix Cost higher than Variable Cost • Long business deal transaction • High Capital of investment • High Risk – Act of God • Low Return on investment • Tradition with Family oriented or government favor
IFSPA 2014
As a CEO what is your leading strategy to against All above down side?
IFSPA 2014
Liner Business Challenges
IFSPA 2014
Marco Issues Micro Issues
Liner Business Challenges
IFSPA 2014
Marco Issues
IFSPA 2014
Marco Issues 2010-2015
• Poor Forecasting on supply and demand
• Heavily Over Capacity
• Race to build and deploy the largest
• High bunker fuel price
• Financial Crisis – lack of founding
• Trade imbalance enlargement and Changing of global logistics model
Source: Alphaline TPM Asia Oct.2013
IFSPA 2014
Container Lines 1988-2014
Source: Alphaline Apr.2014
IFSPA 2014
IFSPA 2014
Will the super large container vessel which Can really bring cost down?
IFSPA 2014
Marco Issues 2010-2015
• Heavily Over Capacity
Base on Lloyd’s Intelligence* Feb.2014 Reported
“ there are total 5,031 vessels and 17 million TEU deployed.
“And there are additional 486 new vessel on order with 3.7 million TEU capacity
Which is going to inject into the market through to 2016. “
IFO380 Bunker Fuel USD per Ton 2001-2014
0
100
200
300
400
500
600
700
800 20
01
2002
2003
2004
2005
Q3
2005
Q4
2006
Q1
2006
Q2
2006
Q3
2006
Q4
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
2010
Q1
2010
Q2
2010
Q3
2010
Q4
2011
Q1
2011
Q2
2011
Q3
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
2013
Q1
2013
Q2
2013
Q3
2013
Q4
2014
Q1
IFSPA 2014
Source: Ministry of Transport New Zealand
IFSPA 2014
Is it possible to predict fuel price or demand of 2024?
IFSPA 2014
What is impact of high bunker fuel cost?
IFSPA 2014
What is impact of high bunker fuel cost?
IFSPA 2014
What is impact of high bunker fuel cost for operator? 1000 Teu Vessel Route Taiwan Kaohsiung and Hong Kong as example :
100% Actual full loading 750 TEU, Revenue $80USD Teu FIO/FIO
1. Daily charter hire rate:
2. 380Fuel consumption 35Tons/Day/$650USD/Tons:
3. Diesel Consumption Port Stay 1.5
Tons/Day/$1200USD
4. Port Charge x Origin/Dest.
5. Sailing time X 2 Days
6. Port stay time 1.5 Days
$7,000USD
$22,750USD
$1,800USD
$10,000USD
$10,000USD
(1+2)X 2 +3
$120,000USD/ round trips 50% Actual full loading 750 TEU, Revenue $80USD Teu FIO/FIO ?
IFSPA 2014
What is impact of high bunker fuel cost for ship owner?
A brand new 1000 Teu Vessel, cost aprox $18Million USD A 15 years old 1000 Teu vessel Cost aprox. $4 Million USD Cost of capital Interest Operation cost = aprox. $5,000USD per day $6000-7500USD income per day
IFSPA 2014
0 5000
10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000
100000 105000
500TEU 700TEU 1000TEU 2500TEU 4000TEU
USD
T/C Day Rate Vs. IFO380 Fuel Consumption/Day
T/C
Fuel 380
IFSPA 2014
Mirco Issues
IFSPA 2014
Commoditization Liner operator has difficulty to differentiate their products Customers is not willing to pay more for service There is no penalty when booking cancel or ship delayed
Pricing Oriented Industry consolidation is not happened.
IFSPA 2014
Market Today
Top 20 Container Lines
Source: Alphaline Mar.2014
IFSPA 2014
IFSPA 2014
Carriers post 2013 results
IFSPA 2014
Illusion? Or Magic?
IFSPA 2014
Illusion? Or Magic?
IFSPA 2014
Is there any key to success?
IFSPA 2014
IFSPA 2014
IFSPA 2014
Key to success
Slow Steam
Economic scale
Upgrade IT system
Carriers Alliance
Key to success
Lean organization
Good customer service
Excellent IT system
Excellent documentation service
Fast transit time
Schedule reliable
Lay up
scrapping
Improve vessel sharp
Find new fuel-LNG
Sale vessels and charter back
Concentrate on core business
Key clients program
Fast react market rate
Long term contract
Own hub terminal
Collect surcharge
Build more 18,000TEU ULCV
Reduced of bunker price
IFSPA 2014
Key to success
IFSPA 2014
Key to Success
Network Designed + Capacity Management = Utilization
Long term Clients Base
Detail Cargo Planning per origin and dest.
Yield Mix
Deployment Cost
Utilization
Connection/Window/Buffer
IFSPA 2014
Utilization
IFSPA 2014
0
50
100
150
200
250
300
350
400
Demand
Supply
Liner fix cost Vs. Demand
IFSPA 2014
Network Design
IFSPA 2014 Source : From Staistac.com 100 200 300 400 500 600 700
IFSPA 2014
Class Size TEU No.of Vessels Total Capacity
A Class 1068 13 13884 Regesburg Class 1118 8 8944 T Class 1367 8 10936 T Class US 1597 4 6388 C Class 1647 1647 2 3294 C Class II 1734 3 5202 Vilnius Class 1800 4 7200 Vermont Class 2023 3 6069 Nele Maersk Class 2320 5 11600 Pembroke Class 2902 7 20314 Japan Maersk Class 3003 3 9009 Batam Class 3078 9 27702 Olga Maersk 3267 4 13068 Inverness Class 3460 3 10380 G Class 4116 2 8232 L Calss 4258 6 25548 Conakry Class 4530 19 86070 M Class 4814 15 72210 K Class 5314 13 69082 Atlanta Class 6200 12 74400 Kiel Class 6690 4 26760 Klaipeda Class 6820 4 27280 Tanjong Class 8112 4 32448 S Class 8160 30 244800 Sovereign Maersk 8160 1 8160 Lima Class 8700 16 139200 G Class II 9418 6 56508 Altair Class 9640 4 38560 Stepbica Class 9643 5 48215 Ebba Maersk 15550 1 15550 PS Class 15550 8 124400 EEE Class 18340 1 18340
227 1269753
Maersk Fleet Structure
No.Ship TEU Ships% TEU% 1000-2000 50 73517 20% 5% 3000-3400 27 83476 11% 6% 4000-5000 60 266148 24% 20%
5300 13 69082 5% 5% 6000-6800 21 134968 9% 10% 8000-8700 51 424608 21% 32% 9400-9600 15 143283 6% 11%
15000 8 124400 3% 9% 18000 1 18340 0.4% 1%
246 1337822
IFSPA 2014
50
26
55
20
66
9
1
2000TEU
3000TEU
4000-5000TEU
6000TEU
8000-9000TEU
15000TEU
18340TEU
20%
24% 9% 11%
21% 3%
Maersk Line Own Fleet Structure-No. of vessels per type
IFSPA 2014
Capacity Management
IFSPA 2014
2000TEU
3000TEU
4000-5000TEU
6000TEU
8000-9000TEU
15000TEU
18340TEU
10% 43%
21%
6% 6% 11%
Maersk Line Own Fleet Structure – Capacity per vessel type
IFSPA 2014
COSCO Structure
IFSPA 2014
Cosco No. of Vessels TEU Post Panama 74 565951 Panama 39 153576 Sub Panama 5 13715 Handy 31 46890 Other 30 19647 Sub Total 179 799779 Scrap 71 166913
41% of COSCO vessels are going to scrap! Which counts 21% of total COSCO capacity
IFSPA 2014
COSCO Structure Name Year TEU JING CHENG HE 1983 1234 XING HE 1984 1328 XIN YIN HE 1984 1328 CHUN HE 1984 1322 XIN CHUN HE 1984 1322 XIN QIU HE 1984 1322 BIN HE 1985 1696 XIANG HE 1985 1686 ZHUANG HE 1985 1668 XIN XING HE 1985 1328 CHAO HE 1985 1322 XIN CHAO HE 1985 1322 SONG HE 1986 1699 YU HE 1986 1686 MIN HE 1989 2761 TAI HE 1989 2716
IFSPA 2014
COSCO Structure NORFOLD 1989 265 DONG HE 1990 2761 GAO HE 1990 2761 PU HE 1990 2716 弘泰28 1992 633 EMPRESS HEAVEN 1993 3494 DAINTY RIVER 1993 1932 PRETTY RIVER 1993 1932 DA HE 1994 4221 SHAN HE 1994 4221 ZHEN HE 1994 4221 FEI HE 1994 4215 TENG HE 1994 4215 YUAN HE 1994 4215 ZHONG HE 1994 4215 RIVER ELEGANCE 1994 4196 RIVER WISDOM 1994 4196
IFSPA 2014
COSCO Structure EMPRESS DRAGON 1994 3494 EMPRESS PHOENIX 1994 3494 EMPRESS SEA 1994 3494 LONG HE 1994 725 SHENG HE 1994 725 PAN HE 1995 725 XIAO YUN 1995 327 PROSPER 1996 1504 BAVARIA 1996 1203 HANSA GREIFSWALD 1996 1016 CHAO SHAN HE 1996 836 XIN HUI HE 1996 836 ZHAO QING HE 1996 836 DA QING HE 1996 764 YONG DING HE 1996 764 ZI YA HE 1996 764 YAN HE 1996 725 CHUAN HE 1997 5446 COSCO QINGDAO 1997 5446 JIN HE 1997 5446 LU HE 1997 5446 WAN HE 1997 5446 YUE HE 1997 5446 BU YI HE 1997 3400 HA NI HE 1997 3400 JING PO HE 1997 3400 NA XI HE 1997 3400 XI BO HE 1997 3400 YU GU HE 1997 3400
IFSPA 2014
上海
Shanghai
Yantian
18,000 Teu
Each Asia Ports needs to deliver avarage 4000TEU per weekly Voyage 平均每航次各港口必须承揽 4000TEU
Ningbo
Singapore
IFSPA 2014
上海
18,000 Teu
Each Asia Ports needs to deliver avarage 4000TEU per weekly Voyage 平均每航次各港口必须承揽 4000TEU
Singapore
G Type C Type
C Type
S Type
A Type
IFSPA 2014
Network Strategy
IFSPA 2014
+
Network Strategy
+ + =
+ + + + + = +
IFSPA 2014
MCC
IFSPA 2014
SEAGO
IFSPA 2014
SEALAND Maersk Line to Bring SeaLand Back Maersk Line announced today the revival of the SeaLand brand with formation of a new US-headquartered, intra-Americas container shipping firm of the same name. Maersk Line notes in an emailed statement, “this new affiliate will have a structure similar to Maersk’s other successful regional carriers including: intra-Asia carrier MCC Transport and intra-Europe carrier Seago Line,” and the new company will be built from Maersk Line’s existing regional service network. Maersk Line veteran Craig Mygatt has been appointed CEO of the new company, however the location of SeaLand’s head office is yet to be determined. Maersk Line notes that SeaLand will officially commence independent operations at the start of 2015 with a team of 240 employees.
IFSPA 2014
Long Term Client Base
IFSPA 2014
上海
Shanghai
Yantian
18,000 Teu
Each Asia Ports needs to deliver avarage 4000TEU per weekly Voyage 平均每航次各港口必须承揽 4000TEU
Ningbo
Singapore
IFSPA 2014
ZARA Key Clients’ Corporate Logos
Liner Pricing – Cost = Revenue?
Price Vs. Cost
Price Vs. Loading Factor
IFSPA 2014
Loading Factor=Ultilization
Loading Factor is the key Loading Factor Vs. Capacity Management Capacity Management Vs. Client Base
IFSPA 2014
Liner Complicate Operation and Commercial Issues
Liner Business involves long term planning with clear long term strategy and vision.
Network, ships building, containers customers base all involve long term planning.
There is almost no influence on industry supply and demand as individual operator.
hence manages operation in low cost is key.
Utilization is more important than high freight but sailed empty vessel. Vs. Time!
Long term planning requires long term customers base.
IFSPA 2014
IFSPA 2014
State of The Art
IFSPA 2014
Opportunity - Applied Sciences!
IFSPA 2014
Opportunity
Opportunity for Ports and terminal operators Hub selection
Shipping Lines Regional Feeder and consolidation
Ship Building New Build / IMO EEDI Qualified
Forwarder / NVOCC / Space to grow
Shipper/Consumers / lower logistics cost lower price at end
IFSPA 2014
Thanks Q & A