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Dynamar: World’s largest carriers

Dynamar has issued the latest, 11th edition of its annual Top 25 Container Liner Operators publication. It offers an exclusive insight into world’s largest container shipping companies, their history, nature, characters, developments, strategies, relationships and performances. The publication opens with a summary of the Top 25 carriers looking at their operated vessel fleet, capacity, carryings, container box fleets and subsidiaries. Furthermore, this section includes financial results for the full year 2012 and the first 9 months of 2013. For the five-year period 2008/2012, a summary of main performance and financial parameters is also provided for the operators consistently forming the Top 20. It concludes with the shares of operated vessel capacity by region of control and by company type.

Turbulent waters
Three events caused container liner operators to sail through extremely turbulent waters:
-   the September 2008 collapse of Lehman Bros leading to worldwide economic disaster
-   the October 2008 abolition of the Conference system in the EU
-   the October 2009 creation of the Shanghai Containerised (Export) Freight Index (SCFI)

Although the 2009 10% drop in worldwide container trade was repaired by a growth of 11% in 2010, by then continuous volatility with respect to freight rates had taken hold of the liner trades. This was, not in the least, due to the SCFI spot rates out of Shanghai to selected destinations.

These were widely published and commented upon, creating a new transparency and therewith a different rate level awareness. Soon, the SCFI had become a benchmark to whose levels shippers/consignees expected their rates to be adjusted every week again. Therewith, indices based on spot rates had developed as a leading indicator for contract rates. The effects were further aggravated by seemingly ever shorter economic cycles.

The answer
Cost reduction, in the form of larger, less fuel consuming and more efficient ships has been the answer of many of the Top 25 container liner operators. Therewith they followed the example already set by Maersk Line’s 2006-launched 15,600 TEU E-class. With high volumes and an excellent relationship between time spent at sea (long) versus time in port (short) in combination with the presence of capable ports, the Europe-Far East trade is the ideal route to accommodate ULCS in order to reap the maximum from their economies of scale.

Seventeen of the Top 25 carriers serve the Europe-Far East trade and during 2013, the final two who had yet to do so, also ordered ULCS: “K” Line 5x 14,000 TEU and Yang Ming 15 similarly sized ships.

At the end of 2013, the eighteen Top 25 ULCS carriers controlled 100% of all ULCS capacity operating (196 ships/2.55 million TEU) and 95% of the orderbook (130 vessels/1.84 million TEU).

Where should all these ships go?
The question of course is whether all this capacity can be filled. Ships usually stay around for some 25 years and by definition they are too large for a trade when ordered. However, Dynamar’s Car/Cap Ratio, one of the many features of the new Top 25 report, shows that the relevant carriers’ indexed containership capacity has, since 2005, grown faster than their indexed full container volumes. The former is now exceeding the latter by 20%. The flood of big ships may well have contributed to this situation.

Boosted by its domestic volumes, China Shipping Container Lines is the only East-West carrier whose liftings increased faster than capacity. This has resulted in a positive Car/Cap Ratio of 1.10. The situation is the most severe at Hyundai Merchant Marine whose Ratio has fallen to 0.59 - a clear indication that the South Koreans’ liftings have not at all kept pace with the development of their operated space.

A matter of control
In the early 2000s it was often believed that Asian container carriers were to outstrip their Old Continent-contenders by capacity. However, at present just seven European Top 25 lines exceed the 6.6 million TEU capacity operated by fifteen North and South East Asian box operators by 21%. In other words, more than half (52%) of all Top 25 container ship capacity is deployed by European carriers against 43% by their Far East competitors. Combined, Middle East-domiciled HDS Lines and UASC, and South American CSAV operate the remainder 4%.

Perhaps more than commonly realised, container liner operators are either publicly listed, or are themselves owned by a publicly listed group. There are 16 such companies within the Top 25. Jointly, they are responsible for 61% of the operated capacity.

Concluding the study is a separate chapter on Alliances, Consortia or similar. This includes profiles on each of the three existing East-West Alliances and the two similar proposed arrangements, i.e. P3 Network and the extended G6 Alliance. There is also a comprehensive listing of all known North-South and regional consortia, as well as conferences and discussion agreements, and a glossary featuring all major, main and regional/feeder trade lanes along which the Top 25 are active (as vessel providers) listed by trade and country.

All this has been complemented by around 160 different tables and another 30 figures of supporting information.

Table: Top 20 five-year main Performance and Financial parameters

Five-year averages of the main performance and financial parameters of those carriers consistently forming the Top 20 operators (part of the larger Top 25). During the 5-year 2008-2012 period these 20 carriers enjoyed an aggregated net profit only twice (in 2008 and in 2010), altogether resulting in a five-year average net loss of USD 16 per TEU carried. Although their operating margin (Operating Profit as a percentage of Revenue) was only negative in annus horribilis 2009, whichever other industry would accept it to be so consistently low? Life is tough at the shipping top …

Parameters	5 years Ø	2012	2011	2010	2009	2008
Fleet Capacity (TEU)	12,844,000	14,690,000	14,047,000	12,991,000	11,350,000	11,144,000
Carryings (TEU)	122,032,000	115,448,000	123,896,000	112,947,000	99,560,000	108,312,000
Revenue (USD mn)	148,200	165,500	155,800	156,700	105,700	157,400
Oper, Profit (USD mn)	2,700	1,500	8,700	17,400	-16,400	2,500
Net Profit (USD mn)	-1,300	-6,100	-10,700	18,200	-14,900	7,100
Revenue USD/TEU	1,400	1,400	1,400	1,500	1,200	1,600
Oper, Result USD/TEU	-5	15	-50	163	-179	25
Net result USD/TEU	-16	-50	-87	162	-170	65
Operating margin %	1.8%	0.9%	5.6%	11.1%	-15.5%	1.6%

Note: Top 20 carriers are, in alphabetical order: APL, China Shipping, CMA CGM, Coscon, CSAV, Evergreen, Hamburg Süd, Hanjin, Hapag-Lloyd, Hyundai, "K" Line, Maersk Line, MOL, MSC, NYK, OOCL, PIL, UASC, Yang Ming and ZIM. Includes estimates where info may have been unavailable

Dynamar B.V., based in Alkmaar, the Netherlands was established in 1981 in response to a growing demand for professional credit and market reports in the maritime sector. Over the years, Dynamar has expanded its Shipping Information and Consultancy business considerably, establishing offices, agents and correspondents across the world.

Whilst Credit Risk Assessment has remained its core business, Dynamar nowadays also specialises in:
- Marine Intelligence, including Cargo and Vessel Tracking;
- Consultancy for the Liner, Container and Port industry, as well as on Dry and Liquid Bulk markets;
- Shipping Publications, spearheaded by the DynaLiners portfolio of daily, weekly, monthly and annual analytical news and commentary on the worldwide container trade. Dynamar Monthly Markets Monitor (MMM) is a 12x per year report on facts and trends in 5 main shipping segments.
Publications among others comprise analyses on World’s 50 Largest Container Operators, Container Liner Trades and Markets reports, Ports and Terminals studies, as well as a variety of insight topics such as Transhipment & Feedering, Breakbulk, Deepsea RoRo Shipping, Reefer Trades, Slow Steaming, Terminal Handling Charges, and others.

Source: Dynamar B.V.