COOL CARGOES Market trends and issues for BCOs shipping - - PowerPoint PPT Presentation

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COOL CARGOES Market trends and issues for BCOs shipping refrigerated products

Philip Damas, Head of Logistics Practice, Drewry TransPacific Maritime conference February 27, 2017 PRIVATE & CONFIDENTIAL

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By 2020, seaborne refrigerated traffic will reach 120 million metric tonnes

A FEW TRENDS Drewry forecasts global perishable reefer trade (seaborne part) to reach 120 million metric tonnes by 2020 Slower growth in 2015/16 …but still growth Top 2 volume products: bananas and meat Banana trade still growing by 2% a year… High-growth products: exotic fruit, pharma Source: Drewry Reefer Shipping Market Review and Forecast – Annual Report 2016/17

TPM conference – cool cargoes trends and issues for BCOs

Why demand for seaborne refrigerated products keeps growing

• 1. Population growth – demand

for perishable food products

• 2. Changes in eating habits,

green credentials

• 3. Non-traditional seaborne

refrigerated products eg confectionery and pharma

• 4. Modal shift from air freight to

seafreight eg pharma

TPM conference – cool cargoes trends and issues for BCOs

Asia including Middle East is where big reefer container volumes go

Source: Drewry Reefer Shipping Market Review and Forecast – Annual Report 2016/17

TPM conference – cool cargoes trends and issues for BCOs

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As traffic volumes grow, the number of ocean carriers shrinks

Source: Drewry Supply Chain Advisors

Major structural change in carrier concentration; top 6 carriers to control 3/4 of global reefer box market 4 of the top 6 reefer carriers engaged in acquisitions/mergers; carrier base loses 7 major providers in just 2 years

TPM conference – cool cargoes trends and issues for BCOs 0% 10% 20% 30% Mitsui OSK & 3J Hapag-Lloyd & UASC CMA CGM & APL Maersk & Hamburg Sud Previous market share Additional market share Maersk & Hamburg Sud Mediterranean Shipping CMA CGM & APL Hapag-Lloyd & UASC 3J COSCO Others

CARRIERS' REEFER CONTAINER MARKET SHARES

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Key issues for BCOs shipping refrigerated products

Costs Freight rate increases Modal shift from air to sea Rate volatility; no benchmarking of freight rates Risk and performance Growing demand Risk mitigation with fewer alliances & avoiding another Hanjin – risk mitigation Securing capacity / fewer specialised reefer options Bigger ships and port delays & reliability (new alliance phasing) Supplier negotiation strategy Adapt supplier and negotiation strategy to more concentrated carrier base e-sourcing technology to identify optimisation of bids

“Due to gradual improvements in container rates, Maersk Line expects an improvement in excess of US$1 billion in underlying profit compared to 2016.” Asian Business News South Korea’s Hanjin Shipping Files for U.S. Bankruptcy Protection

TPM conference – cool cargoes trends and issues for BCOs

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Conclusions

 Demand for seaborne refrigerated products keeps growing  Some non-traditional products now using ocean reefer containers  Soon 120 million metric tonnes/year global traffic  Asia including Middle East - big market for reefer products  The number of major reefer container carriers more concentrated  Big issues for BCOs concerning… Costs… Risk and performance… Supplier negotiation strategy

TPM conference – cool cargoes trends and issues for BCOs

UK 15-17 Christopher Street London EC2A 2BS United Kingdom INDIA 209 Vipul Square Sushant Lok - 1 Gurgaon 122002 India SINGAPORE #13-02 Tower Fifteen 15 Hoe Chiang Road Singapore 089316 CHINA Office 555, 4th floor Standard Chartered Tower 201 Shi Ji Avenue Pudong District, Shanghai China, 200120

T +44 20 7538 0191 T +91 124 497 4979 T +65 6220 9890 T +86 (0) 21 6182 6759 damas@drewry.co.uk www.drewry.co.uk Philip Damas, Director – Head of Logistics Practice

Thank you