Báo cáo ngành vận tải đường biển việt nam 2009, dự báo đến 2014.pdf

Báo cáo ngành vận tải đường biển việt nam 2009, dự báo đến 2014.

Published by BUSINESS MONITOR INTERNATIONAL LTD Vietnam Shipping Report Q4 2009 ISSN: 2040-9826 Including 5-year industry forecasts Business Monitor International Mermaid House, Puddle Dock London EC4V 3DS UK Tel: +44 (0)20 7248 0468 Fax: +44 (0)20 7248 0467 email: subs@businessmonitor.com web: http://www.businessmonitor.com © 2009 Business Monitor International All rights reserved All information, analysis, forecasts and data provided by Business Monitor International Ltd is for the exclusive use of subscribing persons or organisations (including those using the service on a trial basis) All such content is copyrighted in the name of Business Monitor International, and as such no part of this content may be reproduced, repackaged, copied or redistributed without the express consent of Business Monitor International Ltd All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing Business Monitor International Ltd makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content Vietnam Shipping Report Q4 2009 Including 5-year industry forecasts by BMI Part of BMI's Industry Report & Forecasts Series Published by: Business Monitor International Publication Date: October 2009 Business Monitor International Mermaid House, Puddle Dock, London, EC4V 3DS, UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@businessmonitor.com Web: http://www.businessmonitor.com © 2009 Business Monitor International All rights reserved All information contained in this publication is copyrighted in the name of Business Monitor International, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained Vietnam Shipping Report Q4 2009 © Business Monitor International Ltd Page Vietnam Shipping Report Q4 2009 CONTENTS Executive Summary SWOT Analysis .6 Vietnam Shipping SWOT Vietnam Political SWOT Vietnam Economic SWOT Vietnam Business Environment SWOT Sector Overview .10 Container Market Overview 10 Bulk Dry Overview 16 Liquid Bulk Sector Overview 20 Market Overview 24 Saigon New Port 24 Overview 24 Terminals, Storage And Equipment 25 Expansions And Developments 26 Multi-Modal Links 26 Port of Da Nang 26 Overview 26 Terminals, Storage And Equipment 27 Expansions And Developments 28 Multi-Modal Links 28 Industry Forecast 29 Table: Major Port Data 30 Table: Trade Overview 31 Table: Key Trade Indicators 31 Table: Main Import Partners 32 Table: Main Export Partners 33 Company Profiles 34 Maersk Line 34 Mediterranean Shipping Company 40 CMA CGM 45 Evergreen Line Overview 50 China Ocean Shipping (Group) Company (COSCO) 55 Hapag-Lloyd 60 Neptune Orient Lines (& APL) 64 China Shipping (CSCL) 70 Nippon Yusen Kabushiki Kaisha (NYK) 75 Hanjin Shipping Company 80 Mitsui OSK Lines 85 © Business Monitor International Ltd Page Vietnam Shipping Report Q4 2009 © Business Monitor International Ltd Page Vietnam Shipping Report Q4 2009 Executive Summary 2009 has been a tough year for the shipping sector - container freight rates have plunged with industry observers issuing profit warnings for container lines' full-year results The liquid bulk sector has remained afloat, as tankers have been used for oil storage purposes Dry bulk shipping fortunes have fluctuated from all-time lows, to showing a steady recovery, to dipping once more, as the sector's fortunes have become increasingly tied to China's raw material needs For the Q409 Vietnam Shipping Report we have reviewed our forecast data for total tonnage throughput and container volumes at the country's ports for 2009, taking into account, where available, the most recent monthly throughput data Using one of Vietnam's main ports, the port of Ho Chi Minh City (Saigon New Port), as an example, BMI has revised its 2009 throughput forecasts for this port We believe that for the whole of 2009 the port's total tonnage throughput will fall by 5.15%, y-o-y, with container throughput set to decline by 4.76% As 2009 draws to a close, BMI answers the question of what is next for the Vietnamese shipping sector We predict that a steady recovery in the country's ports throughput will begin in 2010 This is based upon the fact that our Country Risk desk is forecasting Vietnam's total trade to increase by 4.56% in 2010 Using the Saigon New Port as an example, BMI predicts that tonnage throughput at the port will grow by 5.73%, while container volumes will increase by 5.31% in 2010 This estimate will see the port handling a total of 20.2mn tonnes and 2.024mn TEUs in 2010 We have also calculated expected throughput volumes at the port for the rest of the mid term (20112013) For the country's main ports we predict average yearly changes in the total tonnage throughput and container volumes for the period This allows us to predict whether or not these changes will enable the ports to reclaim their pre-downturn levels of tonnage throughput and to reverse ports' 2009 container decline during our forecast period Vietnam's port recovery is reliant on a revival in Vietnam's trade volumes For the whole of 2009 BMI expects Vietnam's imports to decline by 15% and its exports to fall by 13% A gradual recovery is forecast to begin in 2010, with total trade forecast to grow by 4.56% Also in this report, BMI predicts average yearly change in the country's total trade over the rest of the mid term (2011-2013) BMI does not expect the country's current main trade partners of China, Japan, the US, Singapore, South Korea, Thailand, Australia and Germany to change dramatically over the mid term © Business Monitor International Ltd Page Vietnam Shipping Report Q4 2009 SWOT Analysis Vietnam Shipping SWOT Strengths A recovery from the 2009 downturn in throughput volumes at the nation's ports is expected to begin in 2010, with one of country's main ports, the port of Ho Chi Minh City (Saigon New Port), expected to recapture its pre-downturn container throughput level in 2010 Vietnam's location on the South China Sea gives the country access to the main inter-Asian shipping routes, allowing the country to meet its trading needs Vietnam's ports feature as ports of call on the Maersk Line, MOL, Hanjin Shipping and APL services Weaknesses The global economic downturn and the contraction in volumes of trade worldwide are predicted to decrease total tonnage and container throughput by 5.2% and 4.8%, respectively, at the country's main port of Ho Chi Minh City (New Saigon) Opportunities Vietnam's Ministry of Transport has plans to invest US$4.5bn in developing the country's port infrastructure by 2012 Recent port expansions have created direct shipping links with North America and are attracting major container lines to the country A gradual recovery in Vietnam's trade volumes forecast to begin in 2010 Threats The country's total trade is predicted to fall by 14.1% in 2009 © Business Monitor International Ltd Page Vietnam Shipping Report Q4 2009 Vietnam Political SWOT Strengths The Communist Party government appears committed to market-oriented reforms necessary to double 2000's GDP per capita by 2010, as targeted The one-party system is generally conducive to short-term political stability Relations with the US are generally improving, and Washington sees Hanoi as a potential geopolitical ally in South East Asia Weaknesses Corruption among government officials poses a major threat to the legitimacy of the ruling Communist Party There is increasing (albeit still limited) public dissatisfaction with the leadership's tight control over political dissent Opportunities The government recognises the threat that corruption poses to its legitimacy, and has acted to clamp down on graft among party officials Vietnam has allowed legislators to become more vocal in criticising government policies This is opening up opportunities for more checks and balances within the one-party system Threats The sharp slowdown in growth expected in 2009 is likely to weigh on public acceptance of the one-party system, and street demonstrations to protest economic conditions could easily develop into a full-on challenge of undemocractic rule Although strong domestic control will ensure little change to Vietnam's political scene in the next few years, over the longer term, the one-party-state will probably be unsustainable Relations with China have deteriorated over the past year due to Beijing's more assertive stance over disputed islands in the South China Sea and domestic criticism of a large Chinese investment into a bauxite mining project in the central highlands, which could potentially cause widescale environmental damage © Business Monitor International Ltd Page Vietnam Shipping Report Q4 2009 Vietnam Economic SWOT Strengths Vietnam has been one of the fastest-growing economies in Asia in recent years, with GDP growth averaging 7.6% annually between 2000 and 2007 The economic boom has lifted many Vietnamese out of poverty, with the official poverty rate in the country falling from 58% in 1993 to 20% in 2004 Weaknesses Vietnam still suffers from substantial trade, current account and fiscal deficits, leaving the economy vulnerable as the global economy enters into recession in 2009 The fiscal picture is clouded by considerable 'off-the-books' spending The heavily-managed and weak dong currency reduces incentives to improve quality of exports, and also serves to keep import costs high, thus contributing to inflationary pressures Opportunities WTO membership has given Vietnam access to both foreign markets and capital, while making Vietnamese enterprises stronger through increased competition The government will in spite of the current macroeconomic woes, continue to move forward with market reforms, including privatisation of state-owned enterprises, and liberalising the banking sector Urbanisation will continue to be a long-term growth driver The UN forecasts the urban population to rise from 29% of the population to more than 50% by the early 2040s Threats Inflation and deficit concerns have caused some investors to re-assess their hitherto upbeat view of Vietnam If the government focuses too much on stimulating growth and fails to root out inflationary pressure, it risks prolonging macroeconomic instability, which could lead to a potential crisis Prolonged macroeconomic instability could prompt the authorities to put reforms on hold, as they struggle to stabilise the economy © Business Monitor International Ltd Page Vietnam Shipping Report Q4 2009 Vietnam Business Environment SWOT Strengths Vietnam has a large, skilled and low-cost workforce, that has made the country attractive to foreign investors Vietnam's location - its proximity to China and South East Asia, and its good sea links - makes it a good base for foreign companies to export to the rest of Asia, and beyond Weaknesses Vietnam's infrastructure is still weak Roads, railways and ports are inadequate to cope with the country's economic growth and links with the outside world Vietnam remains one of the world's most corrupt countries Its score in Transparency International's 2008 Corruption Perceptions Index was 2.7, placing it in 20th place in the Asia-Pacific region Opportunities Vietnam is increasingly attracting investment from key Asian economies, such as Japan, South Korea and Taiwan This offers the possibility of the transfer of hightech skills and knowhow Vietnam is pressing ahead with the privatisation of state-owned enterprises and the liberalisation of the banking sector This should offer foreign investors new entry points Threats Ongoing trade disputes with the US, and the general threat of American protectionism, which will remain a concern Labour unrest remains a lingering threat A failure by the authorities to boost skills levels could leave Vietnam a second-rate economy for an indefinite period © Business Monitor International Ltd Page Vietnam Shipping Report Q4 2009 2002, NYK became the ninth largest terminal operator in the world, with 26 terminals in Asia, North America and Europe PERFORMANCE Q109 Q1 results for the 2009-2010 financial year were released in July, showing a marked decline in performance over the past few months The company sustained an operating loss of US$265.8mn across all divisions, compared with a US$547.8mn profit in the first quarter of its 2008 fiscal year Revenue fell 44% to US$3.96bn Poor earnings culminated in a net loss of US$197.1mn - a stark contrast from the US $417.8mn profit earned in the first quarter of FY2008 Following the disappointing results, NYK publicly revised down its earnings forecast for the 2009-2010 financial year by 10% from its original estimate The company expects continuing deterioration in the container and liquid bulk shipping markets despite the forecast of an improvement in operating conditions for the group's dry bulk division The company expects to report fullyear revenue of US$18bn, resulting in a net loss of US$52.7mn 2008 Full Year In April 2009, NYK released its results for the fiscal year ending March 31 2009, revealing net income of US$591.24mn, 50.8% lower than income for the previous fiscal year ending March 31 2008 Overall revenues for the year were US$ 25.59bn, a 6% decrease on revenue for the previous financial year Container Shipping NYK's container shipping division represented the company's worstperforming division over the fiscal year, recording a recurring loss of US$271.58mn, a decline of 37.3% on FY2007-2008 While the volume of containers transported increased by 2.65% y-o-y to 701,601TEUs, NYK's liner division was hit by a combination of a severe drop in freight rates, high bunker fuel prices and the rapid appreciation of the Japanese yen against other currencies, which drove down the company's overall nominal income Bulk Shipping Overall, NYK's bulk shipping division represented one the best performing areas of the company's core merchant shipping business, providing recurring profit of US$1.78bn, representing a y-o-y decrease of 5.1% Bulk shipping revenue was 4.6% higher than the previous fiscal year, and was the largest contributor to the company's total revenues by some margin, providing US$11.45bn Relatively strong performance was largely the result of consistent income from the company's tanker, or liquid bulk subdivision, whose operating rates remained fairly stable over the course of the fiscal year, allowing for a y-o-y profit increase Meanwhile, NYK's dry bulk and ro-ro © Business Monitor International Ltd Page 76 Vietnam Shipping Report Q4 2009 shipping sub-divisions both saw a marked deterioration in operating conditions in the second half of the fiscal year as the onset of the economic downturn was felt in rapidly falling global demand for raw materials and automobiles While the company has seen positive results from its expansion into land ro-ro transportation, NYK's ro-ro shipping division has proved considerable burden on the bulk division as a whole NYK's president, Yasumi Kudo, revealed that he expected Japanese car exports to fall by approximately 30% y-o-y in 2009 This estimate is likely to prove conservative, with indications from the first quarter of the year hinting at a much steeper decline if no major recovery is seen in the next few weeks COMPANY ANALYSIS Container Shipping As of July 11 2009, NKY is the ninth largest operator of container vessels, worldwide according to AXS-Alphaliner's rankings of the world's largest container fleets The company operates a fleet with a container capacity of 412,111TEUs and has a market share of 3.1% The company operates 111 vessels, of which 59 are owned and 52 are chartered However, these figures disguise the fact that in terms of capacity a far larger proportion of the company's fleet - 305,134TEUs, or 74% - is owned while chartered vessels account for 106,977TEUs or just 26% of total fleet capacity This relatively high ratio of owned to charted vessels allows NYK less flexibility than many of its rivals in reducing its fleet size in line with demand, an asset that may continue to prove to be a hindrance as the world's container fleet faces a period of high overcapacity during the next two years We also caution that problems are likely to arise as a result of the company's relatively large orderbook, with a total of 24 newbuilds due for delivery - equivalent to 148,760TEUs or 36.1% of its existing cargo capacity NYK has given assurances that it will not make cancellations to its existing orders in spite of potential overcapacity, though it is expected to rescind plans for further new deliveries going forward Bulk Shipping Bulk shipping remains NYK's core business division, and is the largest contributor to overall revenue, comprising 42% of total income in the 20082009 financial year The division is split into three sub-divisions: car carriers, dry bulk and tanker NYK is a strong market player in each of these sectors, operating the world's third largest bulk fleet and the world's third largest fleet of crude oil tankers as well as the largest ro-ro fleet NYK's ro-ro division presents perhaps the greatest risk to its performance going forward Operating a fleet of 116 designated automobile carriers, the world's largest, the company is acutely exposed to the downturn in the global automobile sector, particularly given its dependence on Japanese auto © Business Monitor International Ltd Page 77 Vietnam Shipping Report Q4 2009 exports, which have slumped so far in 2009 NYK revealed it expects to ship 38% fewer cars in 2009 than it did in 2008 STRATEGY NYK has pursued an aggressive strategy to combat the downturn in the global maritime sector, announcing an ambitious 'Emergency Structural Reform Project' Top priority is a significant reduction capital expenditure - by at least 10% between 2009 and 2010 - as the company looks to stabilise its falling profit margins So far, the initiative has reaped limited results, with the shipping line slumping to a US$197mn net loss in Q1 of the 2009-2010 financial year and, in August, the firm was forced to launch a US$630mn bond sale to raise funds to cover short-term loans and operating costs - the first of its kind since 2007 Reducing the current fleet size remains a major focus of NYK's cost-cutting strategy and the company has so far been one of the most aggressive advocates of this tactic among major shipping lines Overall fleet expansion plans are set to be scaled back over the short-mid term period as company president, Yasumi Kudo Kudo, has stated that the company will revise its previous core business strategy, whereby investment in fleet expansion was given 'top priority', and will move towards a 'more sustainable business model' Fleet expansion will be 10% lower than its original target of 940 vessels, with the group's total fleet instead expected to reach 850 ships by March 2011 The company currently operates 776 vessels across all divisions as of March 2008 according to Bloomberg The strategy includes removing 40 units from its ro-ro fleet by March 2010 while the company is also reported to be reconsidering a venture with the Port of Tacoma authority to operate a designated ro-ro terminal at the port from 2012 with demand expected to be weaker than originally forecast Meanwhile, particular attention will be paid to reversing the 'regrettable' overexpansion of the shipping line's container division in recent years While Kudo has reiterated NYK's commitment to the container shipping business, stating that the company has no plans to withdraw entirely from the market, he indicated the company will focus on streamlining its fleet and relying on charter vessels in order to better reciprocate towards demand fluctuations in future NKY has already cut capacity on its container fleet by 20% since mid 2008, having laid up several vessels In addition to limiting its box fleet expansion, NYK has joined a number of major shipping lines in attempting to reverse falling container freight rates by raising charges on a number of key routes The company is a member of the Transpacific Stabilisation Agreement (TSA) a group of 14 major liners that have agreed to raise rates on transpacific routes to sustainable levels and, as far as possible, refraining from offering lower rates to shippers in order to gain a competitive advantage Charges per TEU on US shipments were raised by US$400 in July while costs for FEU © Business Monitor International Ltd Page 78 Vietnam Shipping Report Q4 2009 shipments were increased by US$500 With the company looking to limit the expansion of its container and ro-ro shipping operations over the short-to mid term, we expect the company to place greater emphasis on of its better performing businesses, notably its dry bulk shipping line An upturn in fortunes in dry bulk rates over the past few months has led NYK to revise up profit forecasts for its Capesize fleet division for shipping iron ore for the financial year as China continues to import the commodity in high volume from Australian and Brazilian markets We expect further expansion of the company's dry bulk fleet in the next few years as demand for shipments continue to rise following the order of a very large ore carrier (VLOC) which was placed after the line signed a 20-year contract of affreightment with iron ore miner Vale in July RECENT ACTIVITY In August, NYK announced a US$630mn bond sale with the funds expected to pay for short-term loans, capital investment and operating cash In July, the company was reported to be set to sign a 20-year contract with Brazilian mining firm Vale to transport iron ore from Brazil to China The company is expected to order a very large ore carrier (VLOC) to fulfil the contract In the same month, the company released its Q1 financial earnings for the 2009-2010 financial year, revealing a 44% y-o-y fall in revenue, culiminating in a net loss of net loss of US$52.7mn Also in July, the shipping line joined rival operator K-Line in revising down its original earnings estimate for the 2009-2010 financial year NYK is forecasting a net loss of US$52mn, down from an original estimate of US$189mn In the same month, it was reported that NYK was reconsidering plans to operate a new ro-ro terminal at the US port of Tacoma, which was due to begin operating in 2012 due to falling demand June saw NYK launch the world's first solar-assisted car carrier vessel, the NYK Auriga, which docked at the Port of Long Beach The move was part of a company initiative to explore 'green' shipping technology © Business Monitor International Ltd Page 79 Vietnam Shipping Report Q4 2009 Hanjin Shipping Company SWOT Analysis Strengths Hanjin is South Korea's largest shipping line and has long-term contracts with several major Korean firms, including KOGAS, POSCO, and KEPCO The company is part of the world's biggest shipping alliance, the CKYH Alliance, which it formed with COSCO, K Line, and Yang Ming Co-operation on key long-haul trade lanes minimises costs and means rapid adjustments may be made in the case of market volatility Weaknesses The company's flagship services are Asia-orientated, with 13% of its operations Intra-Asia, 31% Asia-Europe, and 52% transpacific, leaving the line particularly susceptible to the slump in the region's trade volumes Hanjin's container line holds a large orderbook in relation to its competitors with an additional 270,448 twenty-foot equivalent units (TEUs) of capacity awaiting delivery Opportunities The South Korean government has launched an emergency shipping fund through state asset management firm KAMCO, which will buy ships of domestic lines and lease them back in order to provide cash flow to struggling companies Recent expansion into new, potentially high growth regions, notably Vietnam and South-east Asia, may prove lucrative and help protect revenues during the downturn Threats Further losses on the Baltic Dry Index may occur in Q4 as global demand for raw materials remains weak and China's stockpiling of commodities may draw to a close In the container market, sustained low demand, falls in freight rates and rising fuel prices are expected to continue to erode Hanjin's profits, particularly on transpacific and Asia-Europe trades Overview Hanjin was formed in 1977 and merged in 1988 with Korea Shipping Corporation, becoming Hanjin Shipping Company The company is part of the Hanjin Group and has several subsidiaries, including Keoyang Shipping Hanjin's previous German subsidiary, Senator Lines, discontinued its services in February 2009 as a result of deteriorating market conditions The company is South Korea's largest shipping line, and operates about 60 container line and bulk services It has a fleet of roughly 200 vessels, including containerships, bulk vessels and liquefied natural gas (LNG) carriers The company has three regional headquarters, 200 offices and 30 local corporations The group established its terminal operating division, Hanjin Pacific, soon after it was founded During the 1980s and the 1990s it opened terminals in Long Beach, Seattle, Kaohsiung, Kwangyang and Hamburg Today it has 11 dedicated terminals, including facilities at Long Beach, Tokyo, Kaohsiung and Busan The division will open a facility in Busan in 2009, and in Vietnam and Jacksonville in 2011 In 2001, the CKYH Alliance was formed with Hanjin joining COSCO, K-Line, and Yang Ming to share capacity on key trade lanes The alliance enables Hanjin to offer a broader coverage and express services, and the alliance has © Business Monitor International Ltd Page 80 Vietnam Shipping Report Q4 2009 plans to jointly develop new terminals in the future PERFORMANCE Q209 Hanjin's second quarter results were poor, with Hanjin slumping to a US$223mn operating loss despite the company recording a 2.5% quarter-onquarter increase in sales, which totalled US$1.3bn The deficit represented a marked deterioration on the US$177mn loss posted in Q1 The company's container line was again the worst performing arm, contributing US$200mn to the total deficit Although total container volumes increased by 22.7% q-o-q to 771,354TEUs, average revenue per TEU was considerably dented as freight rates continued to plummet with average income of just US$888 per TEU compared with US$1,043 in Q1 Meanwhile, Hanjin's bulk division also saw a decline from Q1, with sales falling by 4.2% to US$277mn, culminating in an operating loss of US$23mn Cargo volumes fell by 3.5% to 11,564 tonnes and revenue per tonne fell 8.6% to US$11.83 Full Year 2008 Hanjin released its 2008 financial results in March 2009, revealing a net profit of US$254.5mn despite adverse operating conditions in the second half of the year The results represented a y-o-y increase of 121.9% Total sales were US$7.43bn, a y-o-y increase of 34.9% while operating profit rose by 41.8% yo-y to US$265.6mn The strong results were largely due to an increase in total cargo volumes, with the company's total tonnage cargo increasing by 13.7% yo-y to 41,775,000 tonnes Container Shipping Hanjin saw a marked deterioration in the performance of its container division over the year, resulting in a 5.5% y-o-y reduction in cargo volumes with Hanjin's container line carrying 3,426,254TEUs The biggest decline was seen on the company's core transpacific routes, where volumes fell by 12.1% y-o-y to 1,776,681TEUs as US demand for consumer imports slumped Other routes performed better with Intra-Asia routes recording a 19.3% y-o-y increase in cargo volumes Despite the fall in volume, however, higher container rates during the first three quarters led to the container division recording a y-o-y sales growth of 26.7% Bulk Shipping Hanjin's bulk shipping division was one of the best performing areas across the company, boosted by a record boom in dry and liquid bulk rates during the first half of the year Dry bulk was the worst performing of the bulk subdivisions, as cargo volumes fell by 22.4% y-o-y to 8mn tonnes, though, despite the slump in volumes, total revenue rose by 21.6% y-o-y to US$345mn Meanwhile, Hanjin's tanker division saw cargo volumes climb by 24.2% to © Business Monitor International Ltd Page 81 Vietnam Shipping Report Q4 2009 12,246,000 tonnes, overtaking dry-bulk volumes in the process Liquid bulk revenue rose by 15.6% to US$274mn COMPANY ANALYSIS Container Shipping As of July 11 2009, Hanjin Shipping is the 10th largest operator of container vessels, according to AXS-Alphaliner's rankings of the world's largest container fleets The company operates a fleet with a container capacity of 373,995TEUs, equivalent to a market share of 2.8% The company operates 89 vessels, of which 31 are owned and 58 are chartered At 217,249TEUs or 58.1% of total fleet capacity, this represents the third highest proportion of chartered vessels to total fleet of the 10 largest global container lines, allowing Hanjin greater flexibility than many of its rivals to reduce its fleet size in line with demand; an asset that is likely to prove beneficial as the world's container fleet faces a period of high overcapacity during the next two years However, we caution that the company's sizeable orderbook is a concern According to AXS-Alpahaliner, the company has 30 ships totalling 270,448TEUs of capacity awaiting delivery, equivalent to 72.3% of the capacity of the company's existing container fleet, representing the second largest volume of orders relative to fleet size among the 10 largest container lines Bulk Shipping Hanjin operates a sizeable bulk fleet consisting of 92 vessels, including 20 Capesize ships - the largest class of dry bulk carriers Of these, the company owns 33 vessels and charters 59 The company's tanker division comprises two classes of DDP tankers - Very Large Crude Carriers (VLCC), Aframax and Very Large Gas Carriers (VLGC) - and LNG tanker divisions The latter operates four LNG carriers that transport LNG from Indonesia, Oman and Qatar to Korea under a long-term contract with KOGAS, the Korean stateowned LNG importer The division comprises 35% of Hanjin's total bulk freight volume The majority of Hanjin's bulk fleet is chartered to clients on long-term COA (contracts of affreightment) STRATEGY Despite its size, diversified business model and international presence, Hanjin has not escaped the effects of the severe downturn that has hit South Korea's shipping industry over the past months In July the Korean government launched a US$3.2bn shipping support fund managed by state asset manager Korea Asset Management Company (KAMCO), which will buy vessels from struggling firms and lease them back in order to free up capital for lines during the downturn Hanjin is reported to have sold 20 vessels to the fund at a cost of US$200mn, which will accentuate the company's existing strategies to raise capital These strategies included a US$651.3mn rights issue launched earlier in 2009 © Business Monitor International Ltd Page 82 Vietnam Shipping Report Q4 2009 Cost-cutting has become a key strategy and the company has revealed an ambitious savings target of US$300mn for 2009, which it expects to realise through 'chartering rates, logistics expenses and manning' We expect the majority of cuts to come from Hanjin's liner shipping business, which has been hit hard by the downturn and posted in a US$200mn operating loss in Q2 As costs for fuel and stevedoring services have crept up in recent months, increasing income from the badly underperforming container business has become a priority and the company has adopted an aggressive rate increase policy to stabilise revenue as freight rates have continued to plummet, averaging just US$888 per TEU in Q209 In July, Hanjin announced the introduction of a rate restoration programme on its Trans-Atlantic trades effective from September 2009, comprising a rate increase of US$150 per TEU and US$225 per forty-foot equivalent unit (FEU) on US-Europe routes in both directions This was accompanied by the announcement of a bunker fuel surcharge on Hanjin's Europe-South America route, effective from August, as rising oil prices have begun to constrict the company's already vulnerable operating margins The company is also a member of the Transpacific Stabilisation Agreement (TSA) - a group of 14 container lines that have agreed to push for an increase in freight rates on Asia-US routes to bring income up to sustainable levels Restructuring the group's route network is expected to be another key focus over the rest of 2009 as Hanjin, like many major shipping lines, has looked increasingly to untapped markets to offset losses resulting from slowing demand on major lanes South East Asia is a promising new region for the company and recent route additions include a direct Vietnam-US container service following the opening of a new deep-water container terminal in the Ho Chi Minh City region with Hanjin becoming the third major liner to operate out of the port Meanwhile, in July Hanjin said it will charter slots on a New World Alliance service from Southeast Asia to the US east coast via the Suez Canal RECENT ACTIVITY August saw Hanjin release its Q209 results, revealing a US$233mn operating loss for the period despite a small increase in total sales The company's container business was again the worst performing operation In the same month, Hanjin announced the introduction of a rate restoration programme on Trans-Atlantic container routes in both directions effective from September In July the South Korean government launched a US$3.2bn rescue fund to support the country's shipping industry by buying vessels from struggling lines to provide them with cash flow Hanjin was reported to be selling 20 ships to the fund © Business Monitor International Ltd Page 83 Vietnam Shipping Report Q4 2009 In the same month, Hanjin agreed to charter slots on the World Alliance service connecting Southeast Asia and the US east coast The CKYH Alliance, of which Hanjin is a member, named Ho Chi Minh City as a port of call on its All-Water East Coast-4 (AWE-4) service In June Hanjin launched a direct Vietnam-US west coast container service from Ho Chi Minh City, becoming the third major line to so © Business Monitor International Ltd Page 84 Vietnam Shipping Report Q4 2009 Mitsui OSK Lines SWOT Analysis Strengths Mitsui OSK Lines (MOL) has one of the largest dry bulk fleets in the world, owing to the implementation of an expansion strategy that began early in 2002 The company is a member of The New World Alliance with APL and Hyundai Merchant Marine, which was formed in 1998 The group has strong presence in the world's biggest emerging market, Asia The group is relatively diversified, with historically a fairly even spread of revenues between containerships and bulkships and with a pool of interests in other businesses Weaknesses MOL has a large fleet, which means profits may not be sustainable in periods of weak demand The company is vulnerable to changes in the Japanese yen Opportunities The company is reported to have locked in sustainable rates for its core dry-bulk division, having negotiated long-term contracts with key clients including Australian mining firm Rio Tinto Given MOL's relatively secure position, the company is reported to be eying opportunities for acquisitions within the dry-bulk shipping sector as the downturn has driven valuations to nearbottom lows The projected long-term growth in demand for the LNG should benefit MOL, which currently operates the world's largest LNG tanker fleet Threats Reduced demand for Japanese exports from the US and Europe, reduced raw material demand from China, a strong yen and weak domestic demand will all continue to reduce shipments to and from Japan in 2009 The auto industry, which represents 11% of total revenue, is in decline, with export figures yet to see any recovery Container trades will continue to deteriorate throughout 2009 due to contracted import/export demand, particularly on Asia-Europe routes Overview Mitsui OSK Lines (MOL) is Japan's second largest container shipping line after NYK Lines and is one of the world's largest bulk shipping companies The company came into being in 1964, when Mitsui Steamship Company - a division of Mitsui & Co - merged with OSK Lines, which was founded in 1884 In 1968, the company sent its first container ships on the Japan-California route The New World Alliance was formed in 1998, when MOL teamed up with APL and Hyundai Merchant Marine to operate services jointly on key trade lanes The company operates a raft of shipping services, including containers, dry bulk, oil, liquefied natural gas (LNG) and cars The group has one of the world's largest fleet of bulk carriers, and launched the world's largest iron ore carrier, which has a 300,000 deadweight tonne (DWT) capacity MOL is the world's 11th largest container liner, according to data from AXS-Alphaliner The group's statistics show that MOL operates 348,636 twenty-foot equivalent © Business Monitor International Ltd Page 85 Vietnam Shipping Report Q4 2009 units (TEUs) of capacity, which represents 2.6% of the world's fleet The company also operates in a number of other sectors, including logistics, cruise ships, real estate, construction, trading, marine engineering, finance, insurance, IT, telecommunications and manufacturing The liner's terminal operating division is called TraPac, and operates facilities in the US ports of Jacksonville, Oakland and Los Angeles The company also operates terminals at Tokyo, Yokohama, Osaka and Kobe in Japan, and Laem Chabang, Thailand PERFORMANCE Q109 With results released in July, the first quarter of FY2009 saw the company slump to a net loss of JPY13bn (US$136.45mn) as total revenues fell sharply, decreasing 41.5% y-o-y to JPY297bn (US$3.12bn) The result was in stark contrast to the company's JPY55bn (US$577.6mn) profit recorded during Q1 of FY2008 While MOL's bulk shipping division was able record a narrow profit of JPY4bn (US$42mn), aided primarily by a strong recovery in dry bulk charter rates, the company's container shipping arm suffered a heavy JPY20bn (US$210.13mn) deficit The disappointing results led to a downward revision of the company's original earnings forecasts for the current financial year MOL lowered its full-year FY2009 revenue outlook to JPY1,350bn (US$14.18bn), down from an original estimate of JPY1,400bn (US$14.71bn) Ordinary net income, or profit, was revised down from JPY80bn (US$837.4mn) to JPY50bn (US$524.9mn) - a reduction of 37.5% Meanwhile, The company pledged to raise its cost-reduction target from JPY40bn (US$418.4bn) to JPY57bn (US$596.2mn) with JPY27bn of savings to come from MOL's container shipping business However, it should be noted that despite the revision, the forecast is still relatively optimistic compared with those of its rivals, and MOL is the only one of Japan's three largest shipping lines - MOL, NYK and K-Line - to forecast a profit for the whole financial year Financial Year 2008-2009 In April 2009, MOL released its results for the financial year ending March 31 2009, revealing a marked decrease in profit margin Net income fell by 33.3% year-on-year (y-o-y) to JPY127bn (US$1.3bn) from JPY190bn (US$1.96bn) in the financial year ending March 31 2008 The reduction, which was largely consistent with company forecasts, was the result of a poor second half to the financial year, during which net income totalled just JPY3bn (US$31mn), while H2 net income was substantially higher at JPY124bn (US$1.28bn) Total © Business Monitor International Ltd Page 86 Vietnam Shipping Report Q4 2009 revenue for the financial year fell slightly below FY2008 levels to JPY1,866bn (US$19.2bn), representing a y-o-y decrease of 4.1% Container Shipping MOL's container division was among the worst affected of its core business areas, with revenue falling by 6.9% y-o-y to JPY640bn (US$6.6bn) The liner's total cargo volumes fell by 6.2% y-o-y to 936,000TEUs The steepest contraction was seen on transpacific routes, on which the total volume of cargo lifted fell by 10.8% to 498,000TEUs In contrast, Asia-Europe routes remained largely stable, with volumes falling by just 0.45% to 438,000TEUs MOL remains bearish in regard to the performance of its container shipping division over the financial year ahead, with no expectation of a recovery until late 2010 at the earliest The company is expecting operating conditions to remain severely challenging for the duration of FY2009 and in July reduced its original forecast of a net loss of JPY19bn (US$199.8mn) to a loss of JPY40bn (US$420.7mn), citing 'stagnant cargo movement on the key east and west routes, lower freight rates on North America eastbound route, and increasing bunker price' Bulk Shipping MOL's bulk shipping division was one of the strongest areas during FY2008, boosted primarily by an increase in profit from the company's tanker subdivision The company's bulk shipping business as a whole was weighed down by a challenging second half to the financial year, which resulted in total revenues falling by 2.6% y-o-y to JPY999bn (US$10.3bn) Ordinary income was further affected, falling by 23.1% to JPY213bn (US$2.2bn) MOL has become increasingly bullish as regards its dry bulk shipping operations in FY2009, and it is hopeful that the current financial year will bring a continued recovery in dry bulk rates, which will boost total income from the company's bulk shipping business to JPY740bn (US$7.77bn) from an original target of JPY710bn (US$7.46bn) Nevertheless, ordinary income was revised downwards from JPY85bn (US$893.5mn) to JPY73bn (US767.3mn) COMPANY ANALYSIS Container Shipping MOL's container shipping division is smaller relative to the total size of the company than that of many major shipping lines, and accounts for roughly 34% of total sales revenues As of July 2009, MOL operated the 11th largest container line worldwide according to AXS Alphaliner's rankings of the world's largest container fleets The company operates a fleet with a capacity of 348,636TEUs, equivalent to a market share of 2.6% The company operates 91 vessels, of which 32 are owned and 59 are chartered At 51%, a relatively high proportion of the company's total capacity is maintained through the use of chartered rather than owned vessels, allowing MOL flexibility to reduce its © Business Monitor International Ltd Page 87 Vietnam Shipping Report Q4 2009 fleet size in line with demand; an asset that is likely to prove beneficial as the world's container fleet faces a period of excess capacity over the next two to three years The company's orderbook is also smaller than that of several of its competitors and totals 29 vessels, equivalent to 151,012TEUs, or 43.3% of current fleet capacity Bulk Shipping MOL's operates one of the the world's largest bulk carrier fleets Correspondingly, the unit represents the company's most important division by sales, with 53% of revenues gained from bulk shipping in FY2008 Of this, dry bulk sales represent the largest share, at 29%, followed by car carriers at 11%, tankers at 10% and LNG carriers at just 3% Part of MOL's strength in this area is the size of its fleet, which numbered 33.3mn DWT in April 2008 MOL's dry bulk fleet is one of the largest worldwide and the company is the largest operator of Capesize vessels, the largest class of bulk carriers The company is also the world's second largest tanker operator after Frontline, the Bermuda-based supertanker specialist It is the second largest car carrier operator after Japanese rival NYK, and the largest LNG carrier operator, followed by Shell, MISC and NYK STRATEGY Unlike its main Japanese competitors NYK and K-Line, MOL expects to retain profitability throughout the duration of the economic slowdown and has been helped by its diversified business model, which is less reliant on container shipping than many competing lines in the Asian merchant shipping market As a result, the company has so far not felt the need to make deep structural changes along the lines of many of its major rivals As such, while the company's management appears to be fully aware of the financial impact of the economic downturn, MOL's approach to the crisis has been considered rather than hasty, and has waited to assess Q109 results before raising the company's cost-saving target from JPY40bn (US$418.4bn) to JPY57bn (US$596.2mn), with JPY27bn of savings to come from MOL's container shipping business where operating conditions are expected to be the most challenging The company's ability to reduce expenditure in the short term is expected to lie primarily in its strategy of limiting its fleet expansion during 2009-2012, with MOL president, Akimitsu Ashida, stating in April 2009 that the company would postpone its original target to expand its total cargo fleet to 1,200 vessels by 2012 while it waited for trade volumes to recover Meanwhile, direct cuts to MOL's chartered fleet capacity have already been made, with the company reportedly having paid JPY20.1bn (US$207mn) in cancellation fees for highcost chartered vessels during the 2008 financial year, though no indication was given of the volume or tonnage capacity reflected in these cuts With MOL forecasting a profit for the financial year ending March 2010, albeit a © Business Monitor International Ltd Page 88 Vietnam Shipping Report Q4 2009 substantially reduced margin, no plans for significant workforce cuts have been reported at the time of writing Meanwhile, following press speculation in June, MOL's management vehemently denied rumours that the company is planning to offload its container shipping business to a non-Japanese company to avoid incurring future losses from the division Nevertheless, comments made by the company's chief executive, Kenichi Yonetani, hinted that the company may look to continue to downsize its box fleet over the next few years as operating conditions remain depressed In an interview with Reuters, Yonetani said that the container business had been hardest hit 'due to unprofitable rates and sagging volumes' He also said he expects overcapacity in the container shipping market to remain an issue for several years While box shipping may become a less dominant part of the company, we expect the company to focus its long-term attention on growing its dry bulk business, which is forecast by the company to record a profit in FY2009-2010 as freight rates continue to recover from their 2008 slump Already a dominant player in the sector and the largest global operator of Capesize vessels, MOL is expected to concentrate its long-term efforts on increasing its already dominant market share in transporting iron ore cargoes to China and other Asian markets To this effect, in July the company revealed the signing of an agreement with Australian mining firm Rio Tinto on a series of contracts to ship iron ore to China over the mid- to long-term period The company has also hinted that it may grow its share of the market through acquiring another firm at some point during the downturn after Yonetani indicated that the company was willing to spend 'several tens of billions of yen' on the purchase of a smaller company In the short-term, the company looks to have adopted a strategy of routerestructuring as a means of maximising revenue from its current operations with a number of revisions made to the company's existing services since the start of 2009 The changes follow the announcement in October 2008 of the company's decision to withdraw from the Transpacific Stabilization Agreement (TSA) and the Canada Transpacific Stabilization Agreement (CTSA), suggesting that the company, being less reliant on container shipping, is under less pressure than several current TSA members to push for collective rate increases Masakazu Yakushiji, the executive vice-president of MOL, reiterated this view: 'With the European Union's abolition of liner anti-trust immunity, it has become extremely difficult to align the business processes of our entire organisation when its regional divisions must operate to differing standards Having done a thorough analysis of marketplace dynamics and the roles of TSA/CTSA relative to our unique ability to differentiate, we concluded MOL and its customers would be better served by conducting business independently from transpacific liner agreements.' Expansion into new markets has been a further strategy employed by the © Business Monitor International Ltd Page 89 Vietnam Shipping Report Q4 2009 company to offset the slump in cargo volumes on established transpacific and Asia-Europe trade routes In May 2009, MOL followed rival shipping line APL in announcing the beginning of a direct shipping service between Vietnam's Tan Cang Mep Terminal, based in the Ho Chi Minh City area, and the US west coast, which began in June 2009 The company also announced the inauguration of an additional port of call on its East Coast-Europe Africa service as well as expanding its Indian Ocean Island-Africa-West Africa service Meanwhile, in June the company launched a barge service which will transport container cargoes from the Cambodian capital of Phnom Penh to the US West Coast along the Mekong River and via the container terminal at Tan Cang Mep; and in July, revealed plans to operate a ro-ro freight service serving a new Nissan car factory in India We expect MOL to continue to expand its emerging market presence RECENT ACTIVITY In July MOL president, Akimitsu Ashida, announced plans for the company to add an extra port of call to its Japan-Hong Kong Straits service from April with a potentially lucrative stop at Da Chan Bay in China's Shenzhen region In the same month, MOL announced a revision to its original forecasts for FY2009 The company lowered its full-year FY2009 revenue outlook to JPY1,350bn (US$14.18bn), down from an original estimate of JPY1,400bn (US$14.71bn) Ordinary net income, or profit was revised down from JPY80bn (US$837.4mn) to JPY50bn (US$524.9mn) - a reduction of 37.5% Also in July, MOL's dry bulk division signed a series of short, mid and long-term contracts of affrieghtment with Australian mining firm Rio Tinto for the shipment of iron ore from Australia to the Chinese market On July MOL signed an agreement with a soon-to-be opened Nissan automobile factory in India to transport cargoes from the plant to a nearby port while also managing yard operations at the port In June MOL launched a container shipping service between Phnom Penh in Cambodia to the US West Coast The cargoes will be transported by barge from Cambodia to Ho Chi Minh City before being shipped to the US Previously in June, MOL's chief executive was forced to dispel rumours that the company was planning to offload its container shipping business to a non-Japanese company to avoid incurring future losses from the division © Business Monitor International Ltd Page 90 ... Vietnam Shipping Report Q4 2009 Vietnam Business Environment SWOT Strengths Vietnam has a large, skilled and low-cost workforce, that has made the country attractive to foreign investors Vietnam''s... .6 Vietnam Shipping SWOT Vietnam Political SWOT Vietnam Economic SWOT Vietnam Business Environment SWOT ... container decline during our forecast period Vietnam''s port recovery is reliant on a revival in Vietnam''s trade volumes For the whole of 2009 BMI expects Vietnam''s imports to decline by 15% and its exports