ASIA’S CHANGING TRADE PATTERNS –
COMPETE BEYOND PRICE
Michael Hansen | Global Head of Sales, Maersk Line | 12 October, 2016
1
Our topics
1 State of our industry
2 The impact to our customers
3 Predictability is king!
Our topics
1 State of our industry
2 The impact to our customers
3 Predictability is king!
Far East export growth to NAM and EUR moderated to
around 2% while imports have been stubbornly weak
FEA exports to NAM were backed by the US recovery while
volatile exports to EUR reflected Russia and EU inventories
Container market growth (%)
Container market growth (%)
4
10
8
2
7
6
6
2014-15 Asia Pacific imports fell due to lower Chinese
demand, but imports from NAM rebounded early 2016
2
6
1
5
1
0
4
3
1
2
0
2
-1
1
-1
-2
-2
0
-2
-4
-2
-4
-3
-4
-6
FEA to EUR
-6
EUR to FEA
FEA to NAM
NAM to FEA
FEA to EUR/NAM (combined)
2014
4
Source: Piers and CTS
EUR/NAM (combined) to FEA
-8
-8
2015
2016 YTD*
2014
2015
2016 YTD*
Container supply continued to outgrow demand in H1 2016,
and vast new orders last year suggest challenging outlook
Strong nominal capacity growth and weak demand
led to large widening of S/D-gap ...
Global nominal capacity
Global head haul container demand
Growth y/y, (%)
10
9
9
6
5
6
6
6
5
2.309
1.868
6
6
5
1.500
4-5 4-5 4-5 4-5 4-5 4-5
5
4
4
2
1.099
1.000
3
3
2-4 2-4 2-4 2-4 2-4
2
2
1
2
2
500
1-3
454
202
1
0
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014
2015
2016E
2017E
Note: Global nominal capacity is deliveries minus scrapping's, but excluding idling and slow steaming.
Source: Alphaliner, Maersk Line internal projections
5
2.500
2.000
7
7
7
New orders (1000 TEU)
9
8
8
... with record high new orders
in 2015 in spite of declining freight rates
2012
2013
2014
2015
2016H1
The vicious circle : The high cost of low price
6
•
Increased air freight
•
Increased buffer inventory
•
Increased inefficiencies
•
Delay/omissions
•
Misconnections
•
Roll overs
4. Increased
total supply
chain cost.
1. Low
freight rate &
transactional
behaviors
3. Reduced
service level
2. Cost
cutting
•
Shopping around for price
comparison
•
Contracts not honored
•
Bookings no-shows
•
Reduce schedule buffer time
•
Blank sailings/port omissions
•
Not willing to spend more on
service recovery
•
Over booking to compensate for
downfall and drive utilization
The current model is unsustainable for both shippers and
carriers with low predictability, poor delivery integrity and
high downfalls
Customers
7
VS
Carriers
Hard to predict cost of product
Hard to plan capacity
Hard to manage inventory
Hard to provide stable service
Our topics
1 State of our industry
2 The impact to our customers
3 Predictability is king!
Customers are asking for stability – but excess deployed
capacity leads to major supply chain disruptions …
Excess
deployed
capacity
9
Low
utilisation
Higher unit
costs
Service
disruptions
VSAs lead to product improvement and efficiencies, but
short term supply chain instability needs to be managed
Network
integration
10
Terminal
selection
Phase-in and
phase-out
Supply chain
instability
As with any industry, the industry must be profitable in order
to ensure stable supply chains for customers
Hanjin’s
customers
impacted
11
Residual impact for
VSA partner
customers due to
network disruption
Disrupted cargo
flows impacting
non-customers of
Hanjin
Disruption may
impact freight rates
in the short term
Our topics
1 State of our industry
2 The impact to our customers
3 Predictability is king!
HOW DO WE BEST WORK TOGETHER IN
SUCH UNCERTAIN TIMES?
13
IMAGINE THIS IN SHIPPING…
• High Transparency
• Low cost
• Better Service
• Price available on line
• What you see is what you pay
• What is booked is what gets
loaded.
• Service reliability transparent
to shippers
• Service quality gets rated on
line
• Shippers know how
much it cost to ship
• Shippers know which
vessels they will get
space on
• Shipping lines know
what to expect on their
ships
• Consignees know when
to expect their cargoes..
THE VIRTUOUS CIRCLE: HIGH TRANSPARECNY, LOW COST,
BETTER QUALITY
• Pay for service
• Longer-term contracts
• Reduce transaction cost
• Reduce inventory cost
• Better total cost
3. Reduced
total supply
chain cost
1.
Partnership,
long term &
Total cost
mindset
2. Improved
services
• Less time on managing rates, more time on
improving services -> improved efficiency and
services.
• Reduce/eliminated overbookings and rollings.
• More sustainable network & recovery plan
• More predictable and
transparent short term price
• Upfront payment to eliminate
dummy bookings
… enabling further investment in the future of our
industry
~45,000
+270,000
new reefers ordered
since January, 2015
reefers equipped with a
REMOTE CONTAINER
DEVICE AND ANTENNA
The RCM solution consists of:
1 GPS unit
tracks container
position on land/sea
high temperature
1 3G
SIM card
communicates reefer stats
and data through GSM to and
from central IT system
2
GSM antennae
communicate with the
RCD and the satellite
… providing customers with an increased ability to act, reach
new markets – and to save costs
Better supply chain
transparency
17
Improved product
management
Reduced claims and
insurance costs
THANK YOU