The Maritime Transportation Services Market: Structural Characteristics

1. The Maritime Transportation Services Market: Structural Characteristics Matthias Plötzke 24 October 2005 Hanoi

2. Global trade developments Outlook World Seaborne trade Selected basic economic facts Maritime transport and fleet development Maritime transport - structural characteristics World Port development Contents

3. Global trade developments Outlook World Seaborne trade Selected basic economic facts Maritime transport and fleet development Maritime transport - structural characteristics World Port development Contents

4. Ocean transport as prerequisite for competitive economies Ongoing process of Liberalisation with manufacturing industry becoming global players 90 % of global merchandise is transported by sea Total international seaborne trade volume in 2003 increased by 4.5% to 5900 million tonnes, with a 6,0 % increase in tonne-miles In 2004 world wide container throughput 350 mill TEU (up 13 %) Europe: More than 70 % of Exports by ocean transport plus 25 % of intra-european trade by short sea shipping Global trade developments

5. OECD: Economic growth in south-east Asia very satisfactory Most dynamic regions 2003: Asia and transition economies with import/export expansion of between 10 and 12 % OECD states that growth will remain high Primarily due to China‘s integration into global economy Positive signs from WTO that integration continues at good pace Global trade developments

6. Global trade developments Outlook World Seaborne trade Selected basic economic facts Maritime transport and fleet development Maritime transport - structural characteristics World Port development Contents

7. Seaborne trade by loading category 1998 - 2022 Outlook World Seaborne trade ISL 2004 based on Global Insight; World Trade Service

8. Growth Rates of Containerized Exports by Region Outlook World Seaborne trade ISL 2003 based on Global Insight; World Trade Service

9. Global trade developments Outlook World Seaborne trade Selected basic economic facts Maritime transport and fleet development Maritime transport - structural characteristics World Port development Contents

10. EU-Commission; DG Trade Selected basic economic facts

11. EU-Commission; DG Trade Selected basic economic facts

12. EU-Commission; DG Trade (2004) Selected basic economic facts Structure of Imports (2004)

13. EU-Commission; DG Trade (2004) Selected basic economic facts Structure of Imports (2004)

14. EU-Commission; DG Trade (2004) Selected basic economic facts Structure of Imports (%)

15. EU-Commission; DG Trade (2004) Selected basic economic facts

16. EU-Commission; DG Trade (2004) Selected basic economic facts

17. EU-Commission; DG Trade (2004) Selected basic economic facts

18. Global trade developments Outlook World Seaborne trade Selected basic economic facts Maritime transport and fleet development Maritime transport - structural characteristics World Port development Contents

19. Major shipping countries Ownership pattern: Controlled fleet development of major shipping nations as of January 1st, 2001-2005 (dwt – yearly average growth rate )

20. Container and general cargo fleet development

21. Container and general cargo fleet development

22. Container and general cargo fleet development MSC Pamela 9200 TEU

23. Global trade developments Outlook World Seaborne trade Selected basic economic facts Maritime transport and fleet development Maritime transport - structural characteristics World Port development Contents

24. Three main categories (Passenger services) Liner services Non-liner services Liner Service Operating on a continuous basis along definite trade routes according to fixed, pre-announced schedules calling at specific ports ships may be owned or chartered, freight rates are tariff-based (total costs include various kinds of surcharges) Structural characteristics

25. Linerservices may be organised in Conference system Non-conference system (Alliances, consortia) Conference system Liners conferences: group of two or more vessel-operating carriers providing international transport service with an arrangement under which they operate under uniform freight rates and other agreed conditions (i.e. Determination of frequencies,Regulation of capacity, Allocation of cargo und revenues Structural characteristics

26. Conference members fix price rates and quote them to shippers – ensuring there is no competition Historically, there were the following advantages: Regular schedules for the benefit of shippers to plan their businesses Stable freight rates with 1 to 3 month notices when raised Non-discriminatory rates Greater degree of reliability Three main trades accounting for a major share: Transpacific-trade, EU-Asia trade, Transatlantic-trade Currently activities to abolish conference system Structural characteristics

27. Non-conference system (Consortia, Alliances)Consortia Arrangements between liner shipping companies providing coordinated services regarding economies scale (technical, operational, commercial) EU law denies consortia price-fixing Exemptions exist for certain cases (i.e. consortium with a market share of less than 35 % and lines are not conference members) Structural characteristics

28. Alliances The Alliance System is one of the most recent attempts (1995/96) to drive unit costs down Twelve of the top 20 container lines have opted to operate within global alliances, which smashes the specific trade-route nature of the previous attempts at rationalisation In doing so, they have moved beyond the simple idea of mere ship sharing and have entered into co-operation on land-side activities, total asset utilisation, and may possibly pool resources for asset acquisitions Structural characteristics

29. Alliances Cooperation between different shipping line operators to closely integrate each member‘s vessel operation and service network into one global system Alliances normally include two main trades (combined service each way or round-the-world service) While each alliance is unique the general aims are to... integrate services co-ordinate routing with improved vessel deployment improve intermodal services with the aim to lower land-side costs Structural characteristics

30. Alliances Central themes are to... pool routes pool resources pool marketing reduce unit costs Regards competition policy alliances are considered favourable EU-Asia: „Grand Alliances“ and „New World Alliance“ Structural characteristics

31. Container and general cargo fleet development

32. Global trade developments Outlook World Seaborne trade Selected basic economic facts Maritime transport and fleet development Maritime transport - structural characteristics World Port development Contents

33. World Port development • Globalisation has led to an tremendous increase in world trade • International trade expanded in the 1990s strongly with growth in world trade being twice as high in relation to the growth in world gross national product • dimension of trade largely reflected in volumen, composition and direction of seaborne trade • Consequently, its impact shows in the development of major world ports

34. World Port development • Containerports

35. World Port development • Ports gain importance as modern hubs serving global „supply chains“ • Fast growing sector: container handling and terminals • ports as hubs are not only influenced by interantional cargo flows but also by intra-regional pattern • In Europe and America the share of intra-regional traffic of major ports is generally around 45 % • Large Asian hub reach around 75 %

36. World Port development • increasing influence of intra-regional trading for three reasons: • Creation of multilateral agreement to promote free trade (EU, NAFTA, ASEAN) • High importance of transshipment volumes • relative proximity of trading areas • A successful development of hub ports needs • a dense feeder traffic network • an efficient hinterland infrastructure

37. World Port development Total cargo and container traffic development of major seaports by continent 1994-2003 (Tonnes and TEU Index 1994 = 100 respectively) ISL Market Analysis 2004 World Port Development

38. Containerthroughput (TEU) World trade (value, real) World Port development • Containertransport: intensity and range of international trade relations depend on cheap optimal logistics supply chains • Container as standardised transport unit has led to better door-to-door-transport and lower costs • increase in container handling significant higher dynamic in its growth rate Sources: ISL 2004 based upon IMF, World Economic Outlook and Containerisation International

39. World Port development • Containerports • 2003: 300 mill. TEU • 2004: 350 mill. TEU • Regional shares 2003: • 57% Asian ports • 16 % American ports • 23 % European ports ISL Port Data Base 2004

40. World Port development • 2003: 300 mill. TEU; 150 mill. TEU handled in Asian ports • remarkable growth of Near Eastern ports (Dubai + 20 %) • strong growth of China • less growth of Japanese and South Korean ports • ports in South East Asia show an average grothw rate of 4 % during the 1999-2004 ISL Market Analysis 2004 World Port Development

41. World Port development • Major stevedoring companies and terminal operators • Hutchinson Port Holdings • APM Terminals • Eurogate • P&O Ports • PSA International

42. Thank you very much for your attention!