Containerized Freight Rate Trends

Draft as of April 15, 2008

Prepared for: Internal use for the Containerized Ocean Freight Rate Experience Curve project Prepared by: The Center for Supply Chain Research Smeal College of Business Administration Pennsylvania State University

Containerized Freight Rate Trend: Years in Review

Year Page

Background on Containerized Freight Pricing ................................................................................ 2 19971998 ....................................................................................................................................... 5 1999 ................................................................................................................................................ 7 2000 ................................................................................................................................................ 8 2001 ................................................................................................................................................ 9 2002 .............................................................................................................................................. 10 2003 .............................................................................................................................................. 11 2004 .............................................................................................................................................. 16 2005 .............................................................................................................................................. 18 2006 .............................................................................................................................................. 20 2007 .............................................................................................................................................. 22 2008 .............................................................................................................................................. 24 Appendix 1: Background on Major Trade Lanes ........................................................................... 30 Appendix 2: Carrier Operated Fleets and Market Shares 20002007 .......................................... 32

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Background on Containerized Freight Pricing

In the container shipping business, rates are determined by a number of factors such as premium express services, the reputation of the carrier and the bundling of logistics service with ocean carriage. However, the most significant factor determining containerized freight rates is supply and demand for slot capacity (Tirschwell 2006b). Supply and demand for slot capacity in the liner industry can be described as cyclical. The cyclic pattern is a result of the industrys nature of high costs and long lead times associated with both adding and scrapping capacity. This characteristic leads to the industrys limited ability to react quickly to change in demand and a few shortterm solutions to manage supply and demand (Biederman 2004). This condition, in turn, makes gauging supplyanddemand situation a vital due diligence in the industry. On the demand side, business conditions and general economic activity are key indicators. The global container ship fleet dictates the available slot capacity. On the supply side, charter owners are also key players, for they have outspent carriers twotoone until the carriers recent aggressive buying spree. Charter owners also account for around 50 percent of the vessels operated by major carriers. This is a big change from a decade ago when charter owners, mainly composed of German investors in taxefficient shipping funds, were fringe players operating on the spot market, accounting for just ten percent of the global fleet (Barnard 2007b). The true slot capacity, however, needs to take into account a number of factors. First, the actual operating capacity of ships is always lower than the posted TEU capacity because factors such as vessel stowage, stability of the total weight of the cargo, and port rotations prevent ships from being loaded to full TEU capacity (Bonney 2005; Tirschwell 2006a). Furthermore, landside bottlenecks, such as rail congestion in North America, reduce the effective capacity of the endtoend container system. Added to the bottlenecks is the extended time it often takes to rotate new tonnage into the complex deployments of the multicarrier alliances that dominate the industry (Tirschwell 2006a). A case in point, the practical, or effective capacity of vessels in the eastbound Pacific is generally at least two to three percent less than the listed capacity, according to Albert A. Pierce, executive director of the Westbound Transpacific Stabilization Agreement (Mongelluzzo 2006a). A related factor that could affect container freight rates is the successive commission of bigger vessels and dedicated carrier terminals. The biggest vessel afloat as of 2007 is the Maersk Emma, with a 14,500 TEUs capacity. Most major lines will soon start operating container ships of about 9,00010,000 TEUs, and vessels of 18,000 TEUs are being blueprinted (Nevin 2007). Conventional wisdom suggests that the bigger the vessel, the lower the cost per TEU slot. Improved economies of scale can only be achieved if load factors are kept at high levels. Such a need will drive further alliance slotsharing arrangements and also soon likely revive major consolidation in the container shipping industry. Fewer players will be operating yet bigger Page 2

vessels. Between 1995 and 2000, there were some 20 mergers and acquisitions in the container sector (Ryan 2003). The carrier consolidations that have impacted shippers most in 2006 have been the HapagLloyd takeover of CP Ships and the Maersk purchase of P&O Nedlloyd (Ryan 2007) (See Appendix 2 for top carrier operated fleets and market shares). The industrys move towards much larger ships and dedicated carrier terminals can bring with it the rising barrier to entry that could contribute to future rate increases. This is because competing against carriers operating 8000TEU ships and more efficient terminals will prove daunting for smaller or new entrants (Smyrlis 2002b). Ocean containerized freight rates are also determined to a large extent by developments and competition on specific routes (Barnard 1999) (See Appendix 1 for background on major trade lanes). Competition in specific trade lanes can play important roles in determining rates. In the eastbound Pacific trade lane, for instance, service levels are basically the same among most major carriers. Therefore, individual lines increase their market share by taking volume away from competitors and all it takes to precipitate a decline in rates is for one or two carriers with an influx of new capacity to lower their rates (Mongelluzzo 2006a). A no less important factor is capacity on specific trade lanes. While information on how much capacity carriers plan to add to their global fleets each year is widely available, making accurate predictions on growth in capacity in individual trade lanes is difficult. As carriers demonstrate a focus on the bottom line through better management of their capacity, carriers adjust their total capacity in a given trade lane based on demandandsupply relationships and profitability (Smyrlis 2002a; Traffic World 2007a). For example, in 2007, Maersk moved several ships from unprofitable routes between Europe and the United States to fastgrowing services linking Asia and Europe (Traffic World 2007a). The capacity picture gets even murkier when carriers operate in vesselsharing alliances because several carriers must agree on how much capacity to add to a given trade lane (Mongelluzzo 2006a). The other factor to be considered when analyzing containerized freight rates is the possibility of port congestion. The congestion that has been experienced at many ports worldwide, particularly those in the United States and Europe, reduces the time ships are sailing and thus has the effect of reducing capacity (Viswanathan 2005). As Mark Page, director of research at Drewry Shipping Consultants, put it, the overriding importance of the vesselslottocargo relationship in setting the freightrate environment is likely to be modified in the coming months and years by the impact of congestion in the supply chain, which will reduce the effective capacity and productivity of mainline vessels by extending round voyage times or causing port calls to be dropped (Leach 2005). Finally, since the vast majority of freight moves under contract, availability of information about pricing can be paltry and inconsistent. Confidential contracts make gauging pricing difficult for both shippers and carriers. For carriers, the conference tariff can be viewed, at best, as a reference point for both conference and nonconference carriers (Ryan 2004). For shippers, research reports by industry analysts that comment generally on rate trendssuch as Drewry Shipping Consultants, UBS Investment Bank and The Journal of Commerces sister company, PIERS Global Intelligence Solutionscarry great weight in their decisions. Large shippers often Page 3

wait until the forecasts are released before locking in their annual service contracts (Mongelluzzo 2006a). The following section summarizes important trends in the container shipping industry and containerized freight rates during the time period 19972007, and projection for 2008.

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YEAR 19971998
Average global container freight Rates

CONTAINERIZED FREIGHT RATE AND INDUSTRY TRENDS

Key event Asias financial crisis (19971998) Trends The average global container freight rate fell steadily (Freudmann 2000) Shipping industry was moving towards mega ships and the merger trend became pronounced in the second half of the 1990s (Freudmann 2000)1 The share of chartered ships in the world fleet was growing (Barnard 1999) Widening trade imbalance and freight rate imbalance, particularly on transPacific lanesincrease in cargo eastbound to U.S., decrease westbound to Asia o Trade imbalance: Due to the financial crisis and the devaluation of Asian countries currencies, unprecedented yearonyear growth in trade volumes was spurred by Asian companies that tried to export their way out of trouble and filled the massive container ships plying trade between Europe and Asia and across the Pacific to the US (Van Marle 2002). According to figures produced by Journal of Commerce, the imbalance doubled from 1,378,000 TEUs in 1997 to 2,735,000 TEUs in 1998 in AsiaNorth America traffic. AsiaEurope had similar experiences. In 1998, Asian cargoes bound for Europe and the U.S. saw a significant increase of 20% from 1997. In contrast, Asia bound cargoes from these two markets suffered a decline of 10%20% (Abdullah 2000b).

In the second half of the 1990s, three major crossborder mergers were completed or announced. These include: (1) Britain's P&O Containers and the Dutch company Nedlloyd combined their container divisions into P&O Nedlloyd; (2) Singapore's Neptune Orient Lines merged with U.S.based APL Ltd.; and (3) Denmark's A.P. Moller Group acquired the international services of SeaLand Service Inc., creating a megacarrier called MaerskSeaLand (Freudmann 2000).

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o Rate imbalance: The average freight rate in the eastbound Pacific in the third quarter of 1998 was $1,561 per 20foot equivalent unit, vs. $999 per TEU on westbound shipments, according to figures released by Containerization International (Cottrill 1999). Steep fall in freight rates to record low levels and remaining low into 1999 in westbound transPacific lane for U.S. exports to Asia (Abdullah 2000b; Mongelluzzo 2000b), large volumes of which were less profitable, lowvalue U.S. exports to Asia, such as wastepaper and hay (Cottrill 1999).2 The freight rates were so weak that rates for some cargoes such as wastepaper were lower than the cost incurred by shipping lines to carry the cargo (Mongelluzzo 1999). Eastbound transPacific sailings of U.S. imports from Asia were booked solid, freight rates increased and importers were outbidding each other to get their cargo on ships leaving Asia (Mongelluzzo 1999). Heavy pressure on carriers profitabilitymany showed deficits even with the growing exports and increased rates from Asia o Gains made on routes where the demand for cargo space was high were canceled by the losses incurred on legs where there was a shortage of cargo (Cottrill 1999) o Increased cost of container repositioning as a result of widening transPacific imbalance (Abdullah 2000b) with increasing number of more costly transshipments and empty container moves (Cottrill 1999) No capacity growth in spite of traffic growth during the financial crisis (Abdullah 2000b)

Waterborne imports from Asia in 1997 averaged $5,259 per ton, while the average value of U.S. exports to Asia was only $855 per ton. Those figures include containerized cargo, automobiles and other dry cargoes. Liquid cargoes, such as petroleum, were not included (Mongelluzzo 1999).

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YEAR 1999
Average global container freight Rates

CONTAINERIZED FREIGHT RATE AND INDUSTRY TRENDS

Key event Ocean Shipping Reform Act of 1998 came into effect on May 1, 1999. Service contract negotiations, not only freight rates but also the content of service, become important for both carriers and shippers. Trends The average global container freight rates continued to fall (Freudmann 2000). Capacity started to grow in 1999 on each trade route to meet a sharp increase in cargo traffic stemming from the currency crisis (Abdullah 2000b). o The main reason for a twoyear time lapse between the start of cargo expansion and the increase supply of shipping capacity was that the growth of outbound Asian cargoes alone was not sufficient to make it viable to introduce new vessels into existing services. Fleet expansion as a mechanism in coping with rapid growth of outbound cargoes would only result in magnifying the adverse imbalance between outbound and inbound cargo flows because of a sharp decline in inbound cargoes. The expansion of space capacity in both the North American and European trades only began to materialize in second quarter of 1999, when substantial restoration of outbound freight rates become more certain (Abdullah 2000b). o A dozen new lines entered the transPacific trades, primarily to take advantage of increasing freight rates for U.S. imports from Asia (Mongelluzzo 2000a).

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YEAR 2000
Average global container freight Rates

CONTAINERIZED FREIGHT RATE AND INDUSTRY TRENDS

Trends Asia economic revival Trade continued to grow driven by electronics and highvalue consumer goods that make up much of the containerized commodities (Smyrlis 2002b). U.S. exports to Asia increased at a 10 percent rate in 2000, and export prices rose as the Asian economies returned to prosperity. Shipping lines responded to these good times with a flurry of freight rate increases (Mongelluzzo 2000b). About half of all container ships engaged in the principal European and North American trades in 2000 were of PostPanamax3 type (Abdullah 2000a). Orders of new vessels continued o Unprecedented yearonyear growth in trade volumes spurred by the Asia financial crisis resulted in the worlds major 20 container lines making the preemptive decision to order a huge amount of new vessels. New orders were made in a bid to return charter vessels to nonoperating owners and reduce operating costs in the long term. In fact so many orders were placed that until late 2001 it was impossible to find a single shipyard that had any spare slots (Van Marle 2002).

Until 1988, the biggest container ships carried 5,000 TEUs, which meant that they were small enough to fit through the Panama Canal. Ships must be no wider than 32.3 metres, no longer than 294.1 metres and have a draught no greater than 12 metres to cope with the locks along the 80kilometre journey between the Atlantic and Pacific. Ships that fit the canal are known as Panamax class. The huge new container ships are known as postPanamax, because they are far too big for the canal (The Economist 2007).

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YEAR 2001
Average global container freight Rates

CONTAINERIZED FREIGHT RATE AND INDUSTRY TRENDS

Key events China joined WTO Global economic slowdown, the September 11 attacks, and the war on terrorism (Simon 2001) Trends Throughout the world, the container shipping industry was in a deepening slump with freight rates dropping sharply and sailing schedules being trimmed as a result of the sagging global economy, the September 11 attacks, and the war on terrorism (Simon 2001). Global economic slowdown coincided with the first deliveries of new vessel capacity (Simon 2001; Van Marle 2002): o Poor financial results in recent decades had not stopped ocean carriers from investing in new ships (Dupin 2002a), ordering well over 100 container ships with capacities of more than 5,000 TEUs for delivery from 20012003 (Mongelluzzo 2002). o Plagued by overcapacity, carriers were forced to lower their freight rates on average in 2001 by 13%, according to John Fossey, executive consultant at Drewry Shipping Consultants (Mongelluzzo 2002). o The shipping lanes between the west coast of North America and Asia, the worlds busiest, have been hit particularly hard by the economic slowdown on both sides of the Pacific (Simon 2001). Charter rate at record low o Traditionally, freight rates and charter rates share the burden of oversupply. But in 2001, owners who chartered container ships to liner companies shouldered most of the flood of new ships. In the second half of 2001 the biggest part of the burden went on charterers and there was a more than proportional hit on charter rates, according to Paul Dowell, a consultant at Howe Robinson Shipbrokers in London (Dupin 2002b).

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Increased insurance cost: War risk surcharges on premiums were heaviest on routes in South Asia and the Middle East, including the Suez Canal, one of the worlds busiest waterways. Insurance, however, makes up less than one percent of total shipping costs (Simon 2001).

2002
Average global container freight Rates Key events Introduction of a General Rate Increase (GRI) by shipping lines operating in and out of the US from May 1, 2002 (Simhan 2002) A Suez Port Congestion Surcharge of $225 per TEU beginning June 1, 2002 (Simhan 2002) Trends The deep recession of the container shipping industry, a key indicator of global trade4 o The container shipping industry was deep in the worst recession it had ever experienced (Van Marle 2002) in the face of weak freight rates resulting from overcapacity (Tirschwell 2002). o Carriers were eliminating services, port calls and capacity on the major eastwest routes in a desperate bid to put a floor under sagging freight rates (Barnard 2003a). o TransAtlantic container trades hit bottom in 2002 (Biederman 2004) Widening trade imbalance in TransPacific continued to be an issue: o The ratio of import to export containers in the most imbalanced trade lane, namely the TransPacific, stood at about 2to1 in 2002 (Mongelluzzo 2002). o Carriers were asking their transPacific U.S. import customers to accept a 50 percent rate increase in 2003 (Tirschwell 2002).

With the equivalent of about 15 million 20foot containers, known as TEUs, crisscrossing the globe, the state of the container shipping industry has become a good barometer of the overall health of the world economy (Simon 2001).

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The trend towards larger containership lines operating within bigger partnerships. Almost 83% of cellular capacity in 2002 was operated by the 20 largest lines with further alliances among many of the top lines (Smyrlis 2002a). Capacity continued to increase both by new orders and charters: o The boomlet in vessel orders in 2002 was fueled by (Dupin 2002a): Strong demand for space in trades such as the eastbound transPacific and by optimism that volume would continue to grow (Dupin 2002a). Bargain pricing by shipyards, some of which were quoting prices 15 percent lower than they had in 2001. Many of the new ships being built were postPanamax vessels (Dupin 2002a; Smyrlis 2002a). o In addition to building new ships, many carriers had taken advantage of a soft charter market to lock in charters for large vessels (Dupin 2002a).

2003
Average global container freight Rates Key events The Middle Eastern Petrochemical industry stood on the verge of yet another period of expansion, the biggest so far (Sheikh 2003). o At least 15m tonne/year of ethylene capacity and a similar amount of ethylene derivatives were due on stream this decade, with the size of the industry expected to increase threefold over the next six years (Sheikh 2003). o Rapidly increasing Asian demand for bulk polymers and other major derivatives and access to advantaged feedstocks continued to remain the key drivers for these capacity additions (Sheikh 2003).

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Trends Due to unexpected cargo surges and tight supply of ships, carriers were ordering big, new vessels at a record pace; delaying the scrapping of older ships, and bidding up charter rates for secondhand vessels to levels not seen in years. The result is a surge in freight rates that was matched by an equally dramatic spike in containership charter rates (Barnard 2003a). Unexpected cargo surges, driven by the continuing shift in manufacturing to China (joined WTO in 2001) o Demand for cargo space soared, driven by growth in Asian exports, including a 35 percent surge in shipments from China, straining capacity in the transPacific and EuropeFar East trades. Demand was especially strong for ships of 1,500 to 2,000 TEUs in capacity (Barnard 2003a). TransAtlantic container trades bounced back, although rates remained weak and the trade imbalance widened: o The transAtlantic container trades bounced back in 2003 after hitting bottom in 2002 (Biederman 2004). o Container volumes between Europe and North America have been up 11% on the westbound trade and 13 percent on the eastbound over 2001 yeartodate, but new ship tonnage and the difficulty in forecasting supplydemand relationships in pricing strategy resulted in market freight rates falling by 15 percent on average (Coates 2003). o Transatlantic between Europe and North America eastboundwestbound imbalance increased dramatically during the time period 20002003, going from a nearly balanced situation (10% heavier westbound) to a staggering gap (62% heavier westbound) (Coates 2003). o The outcome of this was red ink for the carriers and a bargain in transportation costs for the shippers and consignees active on this trade lane (Coates 2003). Liner rates transPacific grew both westbound and eastbound: o In early 2003, major U.S. importers signed contracts incorporating freight rate increases on the eastbound transPacific ocean container trade of anywhere from 30% to 50% (Mongelluzzo 2003c). o Carriers in the westbound Pacific announced escalating general rate increases for the coming year depending upon the ability of the cargo to sustain a rate hike. The overcapacity situation in the Page 12

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westbound Pacific existed primarily for dry cargo. Refrigerated capacity was at a premium. Carriers were raising their rates $200 perFEU for the lowestrated commodities such as wastepaper,5 hay and scrap metal; $300 for frozen cargoes; $600 for chilled produce such as fruits and vegetables and $800 to $1,000 for beef, pork and poultry (Mongelluzzo 2003d). Charter rates boomed: Parallel to the surge in freight rates has been an equally dramatic spike in containership charter rates. The charter market hit a new high in late August, 20036 (Barnard 2003a). o The tight supply of ships prompted carriers and owners to delay scrapping older vessels and to bid up prices for secondhand ships (Barnard 2003a). o Liner operators, finding themselves short of space to handle surging cargo demand, were competing to charter a dwindling number of ships available on the spot market. The major players needed extra ships not simply to bolster sailing frequencies on the major trade routes but also to expand into smaller trades (Barnard 2003b). Evercloser relationship between container carriers and owners of chartered ships o The charter tonnage of the top 30 liner carriers had grown from 15 percent of their fleet in 1992 to 45 percent in 2003, according to Clarkson. The latest shipyard orders suggested the share would soon climb to over 50 percent (Barnard 2003b). Aggressive orders of new ships: Carriers and charter owners spent nearly $23 billion in 2003 ordering new ships including over 100 vessels of at least 8,000 TEUs and several that exceed 9,600 TEUs (Barnard 2004).

In 2002, wastepaper exports totaled 644,141 TEUs, accounting for 9.6 percent of all U.S. containerized exports, according to PIERS, the Port Import/Export Reporting Service, a sister company of The Journal of Commerce. China's dominance as the lead destination for U.S. wastepaper exports is fairly new. Until 2002, Canada was the largest U.S. export market. Chinas share of exports through May of 2003 is 2.4 million tons, close to half of all U.S. wastepaper exports (Mangat 2003b). 6 In late August, 2003, the weekly index of London container ship broker Howe Robinson reached 1072.8, more than 100 points above the previous high in the summer of 2000 and 450 points higher than at the beginning of 2003 (Barnard 2003a).

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Mounting box imbalances7 in the transpacific, Europe/Far East/Europe and transatlantic trades, raising operating costs considerably (Ryan 2003). o Repositioning a single container can cost as much as $500, according to Fossey of Drewry Shipping Consultants (Biederman 2003). o Moving a 40foot container from the East Coast to Asia can cost $1,000 (Mangat 2003a). o Drewry estimated that empty units represented one fifth of global containerhandling activity (Ryan 2003). o To deal with empty container and cost of relocating them, container lessors8 (Mangat 2003a): Increased dropoff charges for empties Restricted the number of locations where shipping lines could drop off empty containers Bound ocean carriers to longerterm leases, typically three to five years, and often required carriers to return leased containers to Asia at the end of the contract Introduction of Megaships with 8,000TEU capacity into services and resulting service capacity: o Megaships introduction means the major eastwest trade lanes will experience more of the growth in capacity than the smaller northsouth trade lanes (Mongelluzzo 2003c). o Carriers began introducing the megaships with 8,000TEU capacity into their longhaul AsiaEurope services in early 2003, and they were scheduled to launch three services with 8,000TEU ships into the transPacific in 2004. China Shipping Container Line would be the first carrier to use 8,000TEU ships in the transPacific in summer, followed in the fall by China Ocean Shipping Co. and a joint service operated by Mediterranean Shipping Co. and CMACGM. All of the services with 8,000 TEU ships would call in Long Beach (Mongelluzzo 2003b). o Although shipping lines will enter most of their new vessels into the longhaul AsiaEurope trade, those ships will bump vessels of 5,500 to 6,500 TEUs to the transPacific trades. They, in turn, will

Many carriers, such as HapagLloyd, prefer to own the majority of their containers. Others, such as Londonbased CP Ships, rely heavily on leased containers. The surge in exports from China is forcing many carriers to increase the number of containers they lease (Mangat 2003a). 8 Because about half of the worlds roughly 16 million TEUs worth of containers were leased, the shift by lessors could increase carriers' repositioning costs and place further pressure on already weak US and European export freight rates (Mangat 2003a).

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push vessels of 4,000TEU capacity, which were the largest that can fit through the Panama Canal, to allwater services from Asia to the U.S. East Coast and other routes (Mongelluzzo 2003b). This means that total capacity in the trades from Asia to the U.S. West and East coasts would increase in 2004 even if the carriers did not add new services. There were more than 50 weekly services from Asia to both U.S. coasts in 2003 (Mongelluzzo 2003b). The Middle Eastern Petrochemical industry expansion o Considering the sheer magnitude of the incremental polymer exports (around 9.7m tonne/ year by 2010), it is unlikely that sufficient imports would be undertaken in the countries to ensure ample availability of backhaul opportunities (see graph below). Thus, it can be expected that a large number of empty containers will head towards the Middle East from Asia to fulfill the requirements. This would imply the freight rates from Asia towards the Gulf could decrease, while rates from the region would increase (Sheikh 2003).

(Source: Sheikh 2003)

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YEAR 2004
Average global container freight Rates

CONTAINERIZED FREIGHT RATE AND INDUSTRY TRENDS

Trends Liner profits hit record levels (Leach 2005) with increased freight rates and charter rates (Ryan 2004) The impacts of the shift in manufacturing to China continued: The shift in manufacturing to China had a disproportionate impact on container traffic as companies shipped raw and semifinished materials for manufacturing and assembly in China and brought back finished products to Europe and North America (Barnard 2004). Sellers market, with focus on westbound transPacific lane o Vessel capacity tight and marine terminals straining to keep up with demand (Mongelluzzo 2004) o Some transPacific carriers were rejecting lowvalue cargo of U.S. exports. Theyd rather send the containers back to Asia empty so they could be quickly refilled with betterpaying shipments for the U.S. import market (Mongelluzzo 2005). o Eastbound rates are beginning to move up with the gradual recovery in Europe and the continuing strength of the euro, but they still are not at a level where carriers can resist the lure of the high rates and tighter capacity on the Pacific (Leach 2004b). Higher speed at sea becomes norm: Many container lines have maintained the higher speeds at sea which had become the norm in 2004, despite the increased fuel consumption. The faster speeds followed increased container port congestion and the introduction of new, bigger ships, both of which increased the time ships spent in port. Lines faced a choice between running faster at sea, or buying expensive new ships to maintain schedules (Wright 2005). Charter rates continue to increase, driven by charter rates for large ships, but longterm charters continued o Rates continued their upward trend as carriers seek additional ships to cope with rising cargo volumes on major longhaul routes, particularly from Asia to Europe and North America. In general, charter rates for vessels over 2,000 TEUs were more than double the rates of 2002, according to the Page 16

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December issue of the AMA Liner Report, published by American Marine Advisors Inc. of New York (Barnard 2004). o The charter rate increase driven by large ships: A 3,500TEU Panamax ship was fetching $29,000 a day, compared with an average of $14,275 in 2002 and $25,830 in the previous boom in 2000. Rates for 1,700 TEU ships, meanwhile, had dropped by $2,000 from their peak of $17,000 in September 2003, but were expected to recover as carriers sought mediumsized vessels for shorter regional trades, particularly within Asia (Barnard 2004). o Even with rates sky high, larger container carriers continue to scoop up new vessels on longterm charters, starting new services to meet demand on profitable routes, especially in the transPacific or Asiato Europe trades, whatever the cost of charters (Leach 2004a). Tight capacity of smaller, sub4,000 TEU ships, and impacts on future rates o The categories of sub4,000TEU vessels that carriers charter to fill out those routes and services were in short supply. The crunch is the direct result of massive underinvestment in container vessels smaller than 4,000TEUs during 20002004, according to Paul Dowell, head of research and consultancy for Howe Robinson Shipbrokers in London. Investment in smaller vessels has been slow because shippers have tried to keep freight rates low, so most investment in new builds had gone into larger vessels, which are cheaper to operate (Leach 2004c). o The crunch in the supply of smaller vessels was happening at a time when demand was brightening on the northsouth trade lanes that depended on these ships, according to Mike Fusillo, director of maritime research for the Port ImportExport Reporting Service, a sister company of The Journal of Commerce. He said northsouth trades would be robust, as the developing world started to increase its trade and the U.S. negotiated more freetrade agreements with Central and Latin America and Asia. The shortage of smaller charter vessels could even hit the transAtlantic trades because some North European ports don't yet have the capacity to handle postPanamax vessels. That means that sooner or later, shippers can expect higher freight rates on more than just the booming highvolume routes from Asia (Leach 2004c).

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Aggressive orders of new, large ships continued o The global order book for container ships in 2004 totals 650 container vessels (Leach 2004c) with 2.5 million TEUs, or approximately 40 percent of existing container ship capacity of 6.5 million TEUs. The increase in 8,000TEUplus ships alone represented about 12 percent of existing fleet capacity (Barnard 2004). Only 5.5 percent of these orders were below 2,000 TEUs in size, and 13 percent in the 2,000to4,000TEU range. Panamax vessels accounted for 24 percent of orders; postPanamax, 20 percent; and the superpostPanamax, 37.5 percent (Leach 2004c). o Demand would need to continue to grow at rates that parallel historic highs if the tonnage was to be easily absorbed, according to American Marine Advisors (Barnard 2004).

2005
Average global container freight Rates Trends Boom times for operators of container ships, as soaring demand and tight capacity combined to raise rates worldwide (Bonney 2005) o Freight rates rose by nearly onethird in the four years to the peak of the cycle in the third quarter of 2005 (The Economist 2007). Liner profits were hitting record levels (Leach 2005). o Spot rates for containers on major eastwest trade routes are up 30% from 2002 and are 3% above the last peak at the start of 2001, according to the index covering the TransPacific, AsiaEurope and transAtlantic trade lanes. Although the weighted index did not include negotiated contracts, which covered the vast majority of container shipments, UBS said it offered the most realtime rate tracker in the market. UBS had developed a separate index for the intraAsian trade (Bonney 2005). Widening trade imbalance in TransPacific lanes: U.S. containerized imports from Asia exceed exports by a ratio of 2.7to1 (Mongelluzzo 2005).

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Growing westbound TransAtlantic, yet carriers continued to concentrate assets on transPacific and Asia Europe o Westbound market from Europe to US continued to grow rapidly, despite the weaker dollar. During the first quarter of 2005, U.S. containerized imports from Europe were up about 7.2 percent, according to the Port Import/ Export Reporting Service, a sister company of The Journal of Commerce. As a result, ships were sailing full or close to full westbound. But instead of deploying more ships in the transAtlantic at a time when there was a global shortage of container capacity, carriers were concentrating their assets in more lucrative trades such as the transPacific and AsiaEurope, which carried exports from China (Journal of Commerce 2005b). Charter rates peaked in May 2005, then stalled and shifted into reverse in June 2005 as a wave of larger container ships entered the world's leading trade lanes (Barnard 2007b) o Lacking the capacity to carry the increased volume on AsiaEurope and transPacific routes, carriers were forced to charter ships. Carriers were willing to pay record charter rates daily hire for a 3,500 TEU ship surged to a peak of $43,125 in May, 2005, compared with an average of just over $35,600 in 2004 and $14,275 in 2002 (Barnard 2005). o Carriers could afford rising charter rates because they were able to pass on the higher costs to shippers, but they also stepped up their orders to avoid being held ransom by charter owners (Barnard 2005). Owners and carriers continued to order despite sharply rising shipyard prices (Barnard 2005) o As a huge scarcity of available ships was evident, owners and carriers placed orders at a fact pace despite sharply rising shipyard prices. A 3,500TEU ship was being quoted at $59 million, up from $53 million at the end of 2004 and $33 million at the end of 2003. Secondhand prices also had risen. A 10 yearold, 3,500TEU vessel was fetching $47.5 million, compared with $41.5 million at the end of 2004 and $22.5 million at the end of 2003, according to Clarkson (Barnard 2005).

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Demand for small and mediumsized ships expected to grow: o Orders for small and mediumsized vessels were expected to pick up in the fall because there was still a shortage of vessels of that size. Ships of around 700 TEUs were needed for feeder and niche trades, especially on Baltic Sea and intraAsian routes. Mediumsized ships also were needed for the Asia South America trades, which had been growing by around 30 percent annually (Barnard 2005). o Port congestion also was soaking up capacity. New allwater services through the Panama Canal had dried up the supply of vessels that could fit through the canal (Barnard 2005). Looming threats (Leach 2005): o Overcapacity and the possible collapse in freight rates o Port congestion o Inland road and intermodal bottlenecks (landside bottlenecks, such as rail congestion in North America (Tirschwell 2006a))

2006
Average global container freight Rates Key events The people of Panama voted their approval in a referendum in October 2006 for a controversial $5 billion scheme to expand the capacity of the 93yearold canal. The new locks will be big enough to accommodate the Maersk megaships with capacity of 11,000 20foot containers (TEUs) (The Economist 2007). Trends General overcapacity was pushing ocean rates down and rail rates and fuel costs were hitting ocean carriers (Cassidy 2006; Stanley 2007). General plunge in rates, especially on AsiaEurope routes and, to a lesser extent, on the transPacific (Leach 2006). In the last quarter of 2006, according to Containerization International, freight rates fell by 8% compared with 2005 (The Economist 2007).

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Capacity cut o Liner companies, stung by the sharp decline in freight rates created by shipper perception of oversupply, especially in the AsiaEurope trades, planned to cut capacity after the peak season came to an end. They were taking some ships out of service and eliminating some rotations by merging them with others, which would bring a net reduction in capacity on the main eastwest trade routes (Leach 2006). o The weakening market also led to shorter charter periods. Typical charter periods had fallen by half to 12 to 18 months at the end of the year, compared with the threeyear fixture that was the norm only a few months before (Barnard 2007b). The coming of large numbers of postPanamax ships set to enter service in 2007 and 2008 o Could inject excess capacity into the market and drive down rates (Tirschwell 2006a) o The introduction of new capacity, and therefore pressure on freight rates would be uneven, according to Paul Bingham, a principal at the economic research and consulting firm Global Insight (Mongelluzzo 2006b): The majority of the large postPanamax vessels would enter service in the AsiaEurope trade. That scenario already had started to develop, and freight rates had begun a freefall in the Asia Europe trade (Mongelluzzo 2006b). Conditions also varied within the AsiaU.S. trade. The porttoport services from Asia to the West Coast were experiencing the biggest increase in capacity, because that was where carriers directed their vessels of 6,000 to 8,000TEUs. Overcapacity would be felt first on the Asiato West Coast porttoport freight rates (Mongelluzzo 2006b).

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YEAR 2007
Average global container freight Rates

CONTAINERIZED FREIGHT RATE AND INDUSTRY TRENDS

Key events Panama Canal tolls had been sharply increased to pay for major canal expansion approved in October 2006 (Leach 2007c). March 2007, Suez Canal managers announced that they planned to offer discounts during the construction period of the enlarged Panama Canal (The Economist 2007). Trends In the container market, freight rates, as well as charter rates, showed steady improvement with both moving above 2006 highs in the third quarter of 2007. A common theme underpinning the growth had been the soaring volume in the AsiaEurope corridor. However, slowing of the US economy had been a matter of concern (Businessline 2007). Fast growing AsiaEurope and IntraAsia trade lanes o Shipping routes from Asia to Europe, the worlds secondbusiest for containerized trade after trans Pacific routes, were getting more crowded as European manufacturers took a cue from U.S. companies and outsourced much of their production to China. Freight rates from China to Europe were already rising (Stanley 2007). o Higher volumes and freight rates for European shipments absorbing impact from a slowing U.S. economy and overcapacity of ships deployed on ChinaU.S. routes (Stanley 2007). o Largely out of sight on the other side of the world from the U.S. and Europe, the intraAsia container market had become the worlds largest by volume and was growing even faster than the transPacific or AsiaEurope trades. Demand was so strong that carriers were shifting capacity to intraAsia routes from other regions (Leach 2007d). The intraAsia trades served as a supply chain for raw materials and semifinished goods shipped to China for assembly and then reshipped to the rest of Asia and to global markets.9 Also putting

The fastestgrowing intraAsian exporters by volume are China, Vietnam and South Korea. Japan's exports to China, though smaller by volume, are composed of highvalue computer and camera chips, LCD panels and memory cards that China assembles in electronics products (Leach 2007d).

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a supercharge into the intraAsia trades was the growth of the Middle East markets, especially Dubai, which served as a transshipment hub for East Asian goods funneled into Africa and Central Asia (Leach 2007d) Despite the high demand for cargo space on vessels plying the intraAsia market, freight rates in some individual trade lanes were soft, said Neil Dekker, editor of Container Market Quarterly, published by Drewry Shipping Consultants in London (Leach 2007d). For the first time since 2000, U.S. exports are growing faster than imports, though the imbalance in containers at U.S. ports is unlikely to go away (Leach 2007c) o Compounding the imbalance was the fact that container ships cannot carry as many export containers as imports, because export boxes tended to be filled with heavier commodities (Leach 2007c). o Although the weak dollar had affected the equation somewhat, there were still many more full containers coming into the country than there were going out (Nodar 2007) o The softness in container growth in 2007, especially on the U.S. import side, was due to a sluggish U.S. economy, past and continued dollar depreciation and the sharp rise in oil process (Dibenedetto 2007). Orders of new ships continued, particularly by charter owners o Charter owners were key players in the container shipping business, outspending carriers 2to1 until the recent buying binge and accounting for around 50 percent of the vessels operated by major carriers. This was a big change from a decade ago when charter owners account for just 10 percent of the global fleet (Barnard 2007b). o There was a feeling now that shipping was unlikely to face the kind of slumps experienced earlier. Shipowners today were, therefore, willing to pay skyrocketing prices to acquire the existing tonnage and the tremendous ordering frenzy had resulted in slots in all established shipyards being booked till almost the end of 2011. The year 2007 had been more or less an extension of this trend prevailing in shipping markets since 2003 (Businessline 2007).

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YEAR 2008 onward

Expected Average global container freight Rates

CONTAINERIZED FREIGHT RATE AND INDUSTRY TRENDS

Key events New International Maritime Organization (IMO) regulations, 10 requiring ship operators to switch from bunker fuel to distillates. 11 The changes will occur in stages through 2020, and come into force 16 months after October 2008 meeting. A tougher rule, thus stronger impacts on shipowners, is in the most sensitive coastal zonesthe socalled Sulfur Emission Control Areas, or SECAs (Barnard 2008b): o A tougher rule: The sulfur limits in SECAs will be cut from the current 1.5 percent to 1 percent by March 2010 and 0.1 percent by January 2015a level that California, the European Commission, the U.S. government and others had advocated for waters near population centers. o There are currently only two SECAs: (1) the North Sea, including the English Channel, and (2) the Baltic Sea. But many, including the International Chamber of Shipping, expect the Atlantic and Pacific coasts of the U.S. and Canada and most of the European coastline to become SECAs by the time the new rules take effect. Japan and Australia also are possible SECAs.

The plan, issued by the IMO's Marine Environmental Protection Committee, is scheduled for formal adoption at the committee's next meeting in October, 2008 and would come into force 16 months after that. The rules, which would amend the Marpol VI treaty, would be mandatory for all ships registered in IMO member nations (Barnard 2008b). The changes will occur in stages through 2020. The agreement calls for the sulfur limit on ships fuels to be reduced from the current 4.5 percent to 3.5 percent in January 2012 and to 0.5 percent by January 2020. The latter deadline will be assessed in 2018 to ensure the oil industry can make the required fuels, but 2025 will be the final deadline (Barnard 2008b). 11 Bunker fuel is the sludgelike material that remains after gasoline and other higherquality products are refined from crude oil; while distillate fuel is cleanerburning but more costly (Barnard 2008b).

10

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Economic outlook Strong IntraAsia trade lane continues, with significant shifts in China and other Asian Exporters from export dominant to consumer, domestic demanddriven economy o Export sectors that have dominated Asian economiesand the world logistics marketfor 25 years are diminishing in significance for the regions economies. The countries in Asia especially the big ones like China and, to a lesser extent, India, are fundamentally moving themselves into a consumer, domestic demanddriven economy to augment the export powerhouses, according to Daniel McHugh, chief executive for Asia Pacific of the express business of DHL, the logistics provider (Wright 2008a).12 Strong AsiaEurope trade lane continues and congestions at port heightened o Rapid container volume growth from Asia driven by (Wright 2008a): The recovering western European economies Fastgrowing economies in central Europe and the Baltic European companies late conversion to outsourcing of manufacturing to Asia o The main European ports, which are served by the worlds largest container ships, are causing worse delays than US ports previously did, according to Ron Widdows, chief executive of APL. The delays are attributed to (Wright 2008a): The surge in volume of cargoes The largest container ship size deployed Slow U.S. imports continue in early 2008, with U.S. exports stronger than imports

Global industrial slowdown o According to Anirvan Banerji, director of the Economic Cycle Research Institute (ECRI) in New York, it is
This shift in China and other Asia exporters is so significant that DHL, among several other logistics operators, is increasingly focusing on developing networks to move goods inside China, rather than focusing exclusively on exporting goods (Wright 2008a).
12

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expected that the first half of 2008 is going to have a global industrial slowdown, possibly through the summer, that spans not just the U.S., but all the developed economies. This is likely to lead to slowing demand for containerized imports by the developed economies of Europe and Japan, which had not been expected, in addition to the United States, where the slowdown is well under way (Leach 2007a). Industry speculation and trends Expected increase in average global container freight rates despite a global downturn due to rising cost issue o Operating cost is being pushed up globally by labor shortages, high fuel costs and rising steel prices. The cost issue highlights a reason for some companies to be hopeful, even in a global downturn (Wright 2008a). o Higher fuel cost issue expected to heighten when the new International Maritime Organization regulations (IMO) regulation for vessel fuel standard come into force, particularly in the most sensitive coastal zonesthe socalled Sulfur Emission Control Areas, or SECAs (See details in key event section above). Impacts of the new IMO regulation on the shipping industry are: Higher operating costs: Shipowners fuel costs are expected to rise under the new rulesa daunting prospect at a time when crude oil is trading well above $100 a barrel and bunker prices now account for as much as half the operating costs of container ships (Barnard 2008b).13 Less operating complication: As a result of the uniform global standard on environmental requirements for vessel fuels (Barnard 2008b): Shipowners have hard global targets and timetables. Shipowners are eased from being subjected to a hodgepodge of national, regional or even local regulations.

According to Nils Andersen, The chief executive of A.P. MollerMaersk, bunker costs account for half the cost of a ships operation, compared with 20 percent a decade ago. The cost of bunker fuel has more than doubled since early 2007 to $500 a metric ton (Bonney 2008).

13

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The possibility of vessel overcapacityNew ships focusing on 10,000 TEU to be delivered in 2010 and 2011 o Container fleet capacity increased 14.9 percent in 2007 and is expected to grow another 15 percent in 2008, according to AXS Alphaliner. Carriers were able to absorb the additional capacity in 2007 by deploying their large new ships on fastergrowing trade lanes than the transPacific, such as Asiato Europe and intraAsia (Leach 2008a). o In its recently issued Annual Container Market Review, Drewry Shipping Consultants argued the recent flurry of orders in the container shipping industry is hanging its hat entirely on the blistering pace of growth in the AsiaEurope trade. Ships this big can only be deployed in this market, and for the capacity to be absorbed at compensatory rates, growth in this trade must continue for several years at its current pace, which Drewry says is highly doubtful. According to Niel Dekker, editor of the report, by the time many of these vessels are delivered in 2010 and 2011, the Far EastEurope boom would have had to last for five to six years, and to continue to do so while the new ships bed in. Given the intended capacity increases in this one lane, this should be of concern looking forward to 201011 (Tirschwell 2007). o The transPacific could still be a factor in the longer term. If the recent weakness in the transPacific continues over the next few years, it means this market will not be available to pick up the slack if the AsiaEurope trade should falter (Tirschwell 2007). Clarksons, the Londonbased ship broker and shipping services provider, has two scenarios for the transPacific, a base case and a low case (Leach 2008a): Low case, in which the U.S. falls into recession import volumes would decrease one percent, and then rebound to growth of 3.5 percent in 2009. Base case, in which the U.S. does not enter a fullblown recession import volumes would increase 3.8 percent in 2008, compared with 0.6 percent in 2007, and then accelerate 7.8 percent in 2009. Still, the 3.8 percent growth is well below the average growth rate for the eastbound transPacific from 1997 to 2007, which fell between 11 and 12 percent.

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Coping with U.S. economic slowdown through redeployment and service cooperation o Vessel redeployment and expected rate increase in transPacific lane Due to U.S. economic slowdown, the container shipping lines have reduced transPacific services between Asia and North America and redeployed the ships to fastergrowing markets elsewhere, namely within Asia and between Asia and Europe (Wright 2008a, 2008b). Such redeployments were not always possible in previous slowdowns because U.S. demand fell in line with that elsewhere (Wright 2008b). Rates for carrying cargo across the Pacific expected to rise in 2008 as capacity shifts elsewhere, according to Ron Widdows, chief executive of APL, part of Singapores Neptune Orient Lines (Wright 2008a). o The unprecedented service cooperation in the face of U.S. economic slowdown On March 10, 2008, the three biggest container linesMaersk Line, MSC and CMA CGM announced they were to start cooperating on three new services between China, Taiwan, South Korea, Japan, and the U.S. west coast. The servicesfor which Maersk Line will provide nine vessels, MSC four and CMA CGM twoare intended to let the three lines withdraw some independently operated services suffering lowerthanexpected traffic as a result of the U.S. economic slowdown (Wright 2008b). Coping with rising fuel cost and congestion at ports in AsiaEurope services by adding ships and reducing sailing speed o Shipping lines are adding an extra, ninth vessel on AsiaEurope services previously operated by eight (Wright 2008a, 2008b). Additional vessel means: Operators can slow ships down to conserve fuel. Services that previously offered a weekly service with vessels completing return trips in 56 days have 63 days to travel from Asia to Europe and back when a ninth vessel joins (Wright 2008b). More scope to speed up when delayed at congested portsLines whose ships are delayed at congested ports also now have more scope to speed up their vessel to regain their schedule than when ships were running close to their maximum speed (Wright 2008b).

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Service contract negotiation: This year freight contract negotiations with major shippers in April and May will probably be the most difficult in the past 10 years, according to Philip Damas, director of Drewry Shipping Consultants. There are major complicating factors, including (Leach 2008a): o The contract renegotiation with the International Longshore and Warehouse Union (ILWU) on the bunker adjustment factor (Leach 2008a). Research from Drewry found that estimated annual marine bunker costs for the global container shipping industry nearly doubled in the past two years, from $16.6 billion in 2005 to about $27.8 billion in 2007. The negotiation of floating, fixed or capped bunker surcharges will be a key issue in service contract talks (Damas 2008). o The growth of carriers global capacity deployment o Decreased consumer demand on transPacific trade Carriers cut vessel capacity on the transPacific trade in 2007 because of spiraling costs and slumping demand. Maersk Line, the worlds largest carrier, cut its transPacific capacity by 30 percent, and the New World Alliance (APL, MOL and Hyundai Merchant Marine) announced it would cut capacity during these winter months by 15 to 25 percent (Leach 2008a).

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Appendix 1: Background on Major Trade Lanes

The three major eastwest trade lanes consist of: (1) the transPacific: the worlds busiest container trade lane (Stanley 2007); (2) AsiaEurope the world seconds busiest container trade lane (Stanley 2007), and (3) the transAtlantic. Overall, trade between China, India, the United States and Europe accounts for 65 percent of the 250 millionplus containers moved around the world each year (The Economist 2007). The TransPacific trade lane is not only the worlds busiest container trade lane, but also the most unbalanced trade lane in the world (Mongelluzzo 2002). U.S. imports from Asia (eastbound transPacific), are consistently strongat least twice the volume of exports to Asia (westbound transPacific). Carriers capacity utilization in the eastbound Pacific tops 80 percent most of the year, with vessels normally 90 to 100 percent full during the peak shipping season each fall (Mongelluzzo 2003a). That has caused carriers in the past to subsidize westbound trade of commoditybased exports (such as wastepaper, scrap metal and grain) with eastbound traffic of consumer goods that command about twice the freight rates (Mongelluzzo 2008b). In some cases westbound rates that do not even cover the costs of repositioning containers (Biederman 2003). And because shipping lines add Pacific capacity to attract higher eastbound rates, capacity utilization in the westbound direction is always depressed (Mongelluzzo 2003a). The TransAtlantic trade lane also has a splitpersonality. Container capacity exceeding demand is the case with the eastbound transAtlantic, where capacity utilization is only about 60 percent despite recent gains sparked by the weakening of the dollar against the euro (Journal of Commerce 2005b). On the other hand, in the historically strong westbound market from Europe to U.S., shippers are forced to use multiple carriers for a different reason tight space. Similar to transPacific trades, common westbound transAtlantic commodities are consumer products, while common eastbound commodities are synthetic resins, organic chemicals, paper and paperboard (Biederman 2004). The worlds second busiest container trade lane, AsiaEurope, is getting more crowded, as European manufacturers take a cue from U.S. companies and outsource much of their production to China. Freight rates from China to Europe are already rising. From the micro level, EuropeAsia trade is more profitable than the transPacific trade as of 2007 due mainly to issues and controversy surrounding China product safety from toys to pet food, empties going to other more lucrative routes such as EuropeAsia, and rail rate increases, according to Brendan J. Dugan, the Port of Tacomas senior director of container terminal businesses, during his annual container industry update for the Tacoma Port Commission (Dibenedetto 2007). In fact, the higher volumes and freight rates for European shipments offset impacts from a slowing U.S. economy and overcapacity of ships deployed on ChinaU.S. routes in 2007 (Stanley 2007). However, largely out of sight on the other side of the world from the U.S. and Europe, the intra Asia (including Australia and the Middle East) container market has become the worlds largest Page 30

by volume and is growing even faster than the transPacific or AsiaEurope trades. In fact, demand is so strong that carriers are shifting capacity to intraAsia routes from other regions. The vast intraAsia market, like most of the worlds container trade, is being fueled in the east by the growth of the Chinese market, which is both a major supplier to and consumer of goods from its Asian neighbors. In effect, the intraAsia trades serve as a supply chain for raw materials and semifinished goods shipped to China for assembly and then reshipped to the rest of Asia and to global markets. Chinas exports to the rest of Asia account for about 27 percent of the total intraAsian trades. Japans exports to the rest of Asia represent 19 percent, and South Koreas exports account for 11 percent. The fastestgrowing intraAsian exporters by volume are China, Vietnam and South Korea (Leach 2007d). Also putting a supercharge into the intraAsia trades is the growth of the Middle East markets, especially Dubai, which serves as a transshipment hub for East Asian goods funneled into Africa and Central Asia (Leach 2007d). Again, a significant factor is the emergence of China as a major exporter, according to Philip Damas, research director with Drewry Shipping Consultants. In fact, freight costs for containers from China to the Middle East have almost doubled during JuneJuly of 2007 because of increased demand and a supply crunch (Viswanathan, Wang and Hui 2007).

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Appendix 2: Carrier Operated Fleets and Market Shares 20002007

As shown in the table below, the four rising stars (based on growth of market share) of this decade so far are CMA CGM Group, CSCL, MSC, and HapagLloyd, note AXS analysts.
Jan 2000 rank
1 5 12 2 14 18 7 4 6 8 10 16 13 20 11 17 21 15 24 22 19 42 26 28 33 32 43 128 60 98

Carrier
A.P. MllerMaersk MSC CMA CGM Group Evergreen Group HapagLloyd CSCL COSCO Container L. Hanjin/Senator APL NYK MOL OOCL K Line CSAV Group Zim Yang Ming Line HamburgSd Group Hyundai Merchant Marine PIL (Pacific Intl Line) Wan Hai Lines UASC IRIS Lines MISC Bhd Grimaldi (Napoli) RCL (Regional Container L.) CCNI Sea Consortium SYMS China Navigation Co Costa Container Lines TOP 5 TOP 10 TOP 25 Carriers ranked 1125 Carriers ranked 2650 Carriers ranked 51100 LINER TOTAL

TEU
620, 324 224,620 122,848 317,292 102,769 86,335 198,841 244,636 207,992 166,206 136,075 101,044 112,884 69,745 132,618 93,348 68,119 102,314 60,505 63,525 74,989 19,920 41,738 35,283 26,355 26,710 17,562 2,954 11,377 4,914 1,687,666 2,538,199 3,843,612 1,305,413 576,316 397,895 5,150,000

share
12.0% 4.4% 2.4% 6.2% 2.0% 1.7% 3.9% 4.8% 4.0% 3.2% 2.6% 2.0% 2.2% 1.4% 2.6% 1.8% 1.3% 2.0% 1.2% 1.2% 1.5% 0.4% 0.8% 0.7% 0.5% 0.5% 0.3% 0.1% 0.2% 0.1% 32.8% 49.3% 74.6% 25.3% 11.2% 7.7% 100.0%

Jan 2007 rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

TEU
1,759,619 1,026,251 685,054 547,576 458,161 399,821 387,690 348,235 339,036 329,324 281,807 281,113 275,634 250,452 241,951 240,305 204,960 164,700 145,500 115,009 86,608 59,900 58,013 56,668 46,466 41,471 40,580 36,705 35,951 35,947 4,476,661 6,280,767 8,789,853 2,509,086 621,693 390,736 10,467,496

share
16.8% 9.8% 6.5% 5.2% 4.4% 3.8% 3.7% 3.3% 3.2% 3.1% 2.7% 2.7% 2.6% 2.4% 2.3% 2.3% 2.0% 1.6% 1.4% 1.1% 0.8% 0.6% 0.6% 0.5% 0.4% 0.4% 0.4% 0.4% 0.3% 0.3% 42.8% 60.0% 84.0% 24.0% 5.9% 3.7% 100.0%

growth
184% 357% 458% 73% 346% 363% 95% 42% 63% 98% 107% 178% 144% 259% 82% 157% 201% 61% 140% 81% 15% 201% 39% 61% 76% 55% 131% 1143% 216% 632% 165% 147% 129% 92% 8% 2% 103%

rise p.a.
16.1% 24.2% 27.8% 8.1% 23.8% 24.5% 10.0% 5.2% 7.2% 10.3% 11.0% 15.7% 13.6% 20.0% 9.0% 14.5% 17.0% 7.0% 13.4% 8.8% 2.1% 17.0% 4.8% 7.0% 8.4% 6.5% 12.7% 43.3% 17.9% 32.9% 17.7% 16.3% 14.8% 11.5% 1.3% 0,3% 12.5%

SOURCE: AXS ALPHALINER TOP 100, JANUARY 2000 AND JANUARY 2007 (cited in Burnson 2007) Page 32