Upload
rachael-prevot
View
223
Download
4
Tags:
Embed Size (px)
Citation preview
SK 2005
Global Maritime Sector: A Review
Global Maritime Sector: A Review
Shashi Kumar, Ph.D., Master Mariner
OutlineOutline
1. Introduction 1. Introduction
2. Market Developments2. Market Developments
3. The U.S. Merchant Marine3. The U.S. Merchant Marine
4. Global Issues4. Global Issues
5. Outlook5. Outlook
IntroductionIntroduction
• “Not since the days of the Vikings”• Concurrent highs in all three major
shipping markets• Spectacular year for the industry• Major drivers
– PRC– India– U.S.A.– Other fast growing nations
Shipping Fleet Valuation: 2003 Vs. 2004Shipping Fleet Valuation: 2003 Vs. 2004
391
508
0 100 200 300 400 500 600
Source: R.S. Platou 2005
Market Developments—NewbuildingsMarket Developments—Newbuildings
020406080
100120140
1000
TE
U
2500
TE
U
4000
TE
U
7000
TE
U
Han
dysi
ze
Han
dym
ax
Pan
amax
Cap
esiz
e
Han
dym
ax
Pan
amax
Afr
amax
Sue
zmax
VLC
C
Container Dry Bulk Tanker
2003 2004Source: LSE
Source: LSE
Market Developments—2nd Hand Price, 5 Yr Old Ships
Market Developments—2nd Hand Price, 5 Yr Old Ships
0102030405060708090
100
1000 T
EU
2500 T
EU
4000 T
EU
5500 T
EU
Handysiz
e
Handym
ax
Panam
ax
Capesiz
e
Handym
ax
Panam
ax
Afr
am
ax
Suezm
ax
VLC
C
Container Dry Bulk Tankers
2003 2004
Source: LSE
Market Developments—Tankers Average Freight Rate in $1,000/day
Market Developments—Tankers Average Freight Rate in $1,000/day
22.7
21.8
17.7
21.4
12
50.6
39.9
32.1
33.3
18.5
88.7
65.2
47.5
42
32.4
VLCC
Suezmax
Aframax
LR2 Product
MR Product
2004
2003
2002
Source: R.S. Platou 2005
Market Developments—Dry BulkMarket Developments—Dry Bulk
• Capacity utilization -- 97% • Capesize tonnage--$100K/day
max, $62,500/day average• Average daily earnings doubled for
Capesize and Panamax size
Market Developments—Liners Market Developments—Liners
• Revenue per 20 foot container rose 6.4%
• Trans-Pacific trade grew at 13%• The Wal-Mart rumor• NVO Service Agreement approved
in 2004– Confidential contracts allowed for OTIs
from 2005
Market Developments—Cruise IndustryMarket Developments—Cruise Industry
145 150 155 160 165 170 175
2001
2003
2004
$/PAX/Day
Carnival Cruise Lines’ Net Revenue Yield Changes
Best ever operating year for CCL
175,000 people on CCL ships at any one time
Source: AP
Market Developments—ShipbuildingMarket Developments—Shipbuilding
• S. Korean yards are now the undisputed world leaders
• Record orders for new construction• All three S. Korean yards posted losses
– Increasing price of steel– Appreciation of the Won
• China State Shipbuilding Corp now is among the top five shipyards
The U.S. Merchant MarineThe U.S. Merchant Marine
• Some signs of life• International Shipholding Group to build
an undisclosed number of LASH vessels• New entrant eyeing the Hawaii trade
– Pasha Transport Hawaii– Ocean Blue Express– Matson’s aggressive response
• Puerto Rico trade– Trailer Bridge bought out K Corp.
• Capital market developments
Shipping-related IPOs in 2004Shipping-related IPOs in 2004
$ million
0 100 200 300 400
Top TankersU.S. Shipping Partners
Teekay LNG PartnersArlington Tankers, Ltd.
Hornbeck Offshore SvcsDrytank AS
Horizon Lines
$ million
Source: LSE
Developments in the U.S.Developments in the U.S.
• The American Jobs Creation Act– Subchapter R to the Internal Revenue Code
• Tonnage Tax option
• Also amends subpart F of the tax rules
• Marad, Ex-Im Bank joint initiative– Working capital loan for freight forwarders who could
extend credit to their export clients
• Security-related developments– ISPS and MTSA went into effect on 7/01/2004
• USCG approved 9200 VSPs, 3100 PFSPs, 43 RSPs
– CSI operational in 33 ports, 21 countries– C-TPAT has 8,200+ voluntary members
Developments in the U.S.Developments in the U.S.
• Security-related developments– Are our ports and facilities more secure
today?– More vessel detentions for safety
reasons– Highly vulnerable to nuclear threat
• Congressional Research Service Report
– Who should pay for the security costs?• U.S. Gulf ports model
Developments in the U.S.Developments in the U.S.
• Short-sea shipping– Marad’s “blue highways” SCOOP
• Expansion of Osprey Lines’ gulf coast container-on-barge service
• Columbia Coastal’s Albany Expressbarge service
• PoNY/NJ’s Port Inland Distribution Network
Developments in the U.S.Developments in the U.S.
• Maritime Security Program – Boost the nation’s military support capability– Assist the merchant marine and the shipbuilding sector– 60 ship fleet is now complete
• 47 ships approved in 2003
• 13 approved in 2004
– Have a balanced fleet• 1st five slots to be issued to U.S.-flag product tankers
owned by U.S. citizens
• Temporarily assigned to three Maersk tankers under charter to OSG and 2 heavy lift ships
• National Defense Tank Vessel Construction Assistance program is now in limbo!
Developments in the U.S.Developments in the U.S.
• Marad Ship Scrapping Program– Ghost Fleet to be scrapped by September 30,
2006– 121 ships still at anchor– Four ships sent to Hartlepool, U.K., have run
into legal problem– Marad’s leadership, management acumen, and
its contracting practices under criticism
Developments in the U.S.Developments in the U.S.
• East Coast Stevedoring Contract– Six year master contract ratified in June 2004– Considerable opposition from newer ILA
members– Baltimore, Charleston, and Hampton Roads
rejected master contract as well as supplementary local agreements
– Will cost employers $8.7 billion over the next six years
ILA & ILWU Base Hourly Wages ComparisonILA & ILWU Base Hourly Wages Comparison
0
5
10
15
20
25
30
35
1987 1990 1993 1996 1999 2002 2005 2007
0
5
10
15
20
25
30
35
ILA ILWU
Source: ILA
ILA Investigation ILA Investigation
• Investigation of mob influence within ILA– Several indictments in 2004
• Extortion• Conspiracy• Mail and wire fraud
– Many top ranking leaders behind the slammer!
• Exec VP of ILA• Member of the ILA Exec Council• ILA International VPs in Miami & New
York
Port and Terminal OperationsPort and Terminal Operations
• Massive bottlenecks at LA and LB– Increased automation did not help
• Unprecedented growth in volume• 80+ new Post-Panamax container ships
expected to enter the market in 2005• Resurgence of all-water services to the
East Coast– New distribution centers at East Coast ports
• Panama Canal wins in the short-run
Panama Canal Rate HikesPanama Canal Rate Hikes
42
4954
0 10 20 30 40 50 60
5/1/2005
1/1/2006
1/1/2007
Price/TEU($)
Source: PCA
The LNG EraThe LNG Era
4
-1
31
8
-5 0 5 10 15 20 25 30 35
U.S.
Japan
China
India
Annual growth rate% 1994-2004
Source: EIA
The LNG EraThe LNG Era
• Iran, Russia, and Qatar—dominant LNG fields
• $30 billion investment in the next 20 years
• World LNG consumption to double in the next 15 years
• LNG infrastructure controversy– Local– Regional– National
The Human ElementThe Human Element
• A two-year global collective bargaining agreement between ITF and the Joint Negotiations Group
• Significant increase in the cost of operating specialized vessels– Crew cost for VLCCs went up by 7.8% in
2004 and now comprises 40% of the total– Crew cost for Panamax bulk carriers—46%
• Very tight market for senior officers with special endorsements like LNG
• As a career, shipping has lost its charm
Maritime PiracyMaritime Piracy
445
325
21
30
0 100 200 300 400 500
2003
2004
Piracy Attacks Crew Deaths
Source: IMB
OutlookOutlook
• Will the brilliant market conditions continue?• Will the Chinese economic miracle run out of
steam?• The new Excelerate Energy Bridge terminal in
LA—harbinger of the future?• The sea is too unpredictable to be lulled into
complacency