BMI Vietnam Shipping Report Q2 2014

Q2 2014
www.businessmonitor.com
VIETNAM
SHIPPING REPORT
INCLUDES 5-YEAR FORECASTS TO 2018
ISSN 2040-9834
Published by:Business Monitor International
Vietnam Shipping Report Q2 2014

INCLUDES 5-YEAR FORECASTS TO 2018
Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International
Copy deadline: January 2014
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CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................. 10
Shipping ................................................................................................................................................ 10
Political ................................................................................................................................................. 13
Economic ............................................................................................................................................... 14
Business Environment .............................................................................................................................. 15
Industry Forecast .............................................................................................................. 16

Port Of Ho Chi Minh City Throughput ......................................................................................................... 16
Table: Major Port Data, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table: Trade Overview, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table: Key Trade Indicators, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table: Top Import Partners, 2004-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Table: Top Export Destinations, 2004-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Market Overview ............................................................................................................... 24

Vietnam Container Shipping Market Overview .............................................................................................. 24
Industry Trends And Developments ................................................................................ 32

Company Profile ................................................................................................................ 35
Vietnam Petroleum Transport Company (VIPCO) .......................................................................................... 35
Vietnam National Shipping Lines (Vinalines) ................................................................................................ 37
Shipping - Global Industry View ....................................................................................... 41

Container Demand: Growth Outlook To Bolster 2014 Box Volumes .................................................................. 41
Container Supply: Overcapacity To Remain An Issue In 2014 .......................................................................... 51
Container Rates: Volatile As Demand Ticks Up, But Oversupply Remains .......................................................... 60
Table: Shipping Lines' Agents Offices Raided In Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Global Company Strategy ................................................................................................. 68

Maersk Line ........................................................................................................................................... 68
Mediterranean Shipping Company ..............................................................................................................
CMA CGM .............................................................................................................................................
Evergreen Line ........................................................................................................................................
COSCO Container Lines Company .............................................................................................................
78
84
92
99
Macroeconomic Forecasts ............................................................................................. 106

Table: Vietnam - Economic Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Demographic Forecast ................................................................................................... 110

Demographic Outlook ............................................................................................................................ 110
Page 4

Table: Vietnam's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Table: Vietnam's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Table: Vietnam's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Page 5
BMI Industry View

BMI View: Although we expect the Vietnamese economy to record yet another quarter of sub-par growth in
Q4 2013, we are beginning to see potential for upside surprises to domestic demand over the coming
quarters. Recent data on foreign direct investment inflows, remittances, passenger car sales, and property
market launches, suggest to us that domestic demand is on a nascent recovery, setting the stage for stronger
2014 growth and with it, providing a boon for the country's shipping sector.
The general consensus is expecting the Vietnamese economy to suffer yet another quarter of sub-par growth
mainly due to subdued external demand and the lack of progress on banking sector reforms. This is closely
in line with our view that real GDP growth will come in at just 5.3% in 2013, a slight improvement from
5.2% in 2012. Looking ahead to 2014, however, evidence of improving macroeconomic fundamentals in
Vietnam (especially with regards to the outlook for domestic demand) suggests to us the balance of risks to
our growth forecast of 6.0% is gradually tilting towards the upside.
The Port of Ho Chi Minh City remains by far and away Vietnam's outperformer in terms of total tonnage
throughput (41.22mn tonnes anticipated by the end of 2014), but it is the Port of Da Nang that will see the
largest year-on-year (y-o-y) growth this year (7.00% compared with a forecast 6.06% at Ho Chi Minh City).
These forecasts remain unchanged from last quarter.
Headline Industry Data
2014 tonnage throughput at the Port of Ho Chi Minh City is forecast to grow 6.06% to 41.22mn tonnes.
2014 tonnage throughput at the Port of Da Nang is forecast to increase 7.00% to 5.15mn tonnes.
2014 container throughput at the Port of Ho Chi Minh City is forecast to rise 10.0% to 4.22mn twentyfoot equivalent units (TEUs).
2014 container throughput at the Port of Da Nang is forecast to increase 9.43% to 173,000TEUs.
2014 total trade real growth is forecast to increase 6.55%.
Page 7
Key Industry Trends
Evergreen-Hanjin's Intra-Asia Tie-Up Highlights Vietnam Growth Story: The newly established intraAsia service by Taiwan-based Evergreen Line and South Korea-based Hanjin Shipping, which calls at the
port of Ho Chi Minh, will boost both companies' intra-Asia operations. We have long highlighted intra-Asia
trade as a region of strong growth and we note the port of Ho Chi Minh to be a specific beneficiary of the
new route - with the launch of the service offering upside risk to our forecast for the port.
Vietnam Set For Belgian Link-Up: Vietnam is set to make full use of Belgian expertise in the shipping
sector going forward after a collaboration agreement signed by the ports of Antwerp (the second largest port
in Europe) and Zeebrugge, Rent-A-Port and Saigon Newport relating to the construction of a new bulk
terminal in the port of Lach Huyen in the north of the country was announced in December 2013.
TSL, ASL Launch Second Service To Haiphong: Hong Kong's TS Lines (TSL) is poised to launch its
second service, HHX 2, to Haiphong in Vietnam, which will be in collaboration with Hong Kong-based
Asean Seas Line (ASL), will double the calls at the port of Haiphong. TSL is expected to provide one 700
twenty-foot equivalent unit (TEU) vessel to replace a 340TEU vessel. ASL will provide the second 700TEU
vessel to operate the service. Apart from this, TSL has joined its Hong Kong-Haiphong shuttle and its JTK
service, which calls at ports in Japan, Taiwan, Korea and South China.
Key Risks To Outlook
Plans are afoot by the Vietnamese Ministry of Transport (MOT) to rethink the port system in the south of
the country in order to maximise output from those ports, it was announced in November 2013. The move
comes after warnings by the Japan International Cooperation Agency (JICA) that the Cai Mep-Thi Vai port
complex must be ready to make changes to its operations or face the threat of operating ineffectively by
2015, according to reports by VietNamNet Bridge.
In response to the report by the JICA, Nguyen Van Cong, Deputy Minister of Transport, explained that the
MOT would seek to put in place measures recommended by the Agency, one of which relates to the
suggestion that it is too expensive to send goods through the Cai Mep-Thi Vai complex, compared to other
ports in Ho Chi Minh City. However, this scenario may mean that ports in the Vietnamese capital will be
dogged by oversupply in a couple of years' time.
Page 8
Meanwhile, Maersk were waxing lyrical about the prospects that Vietnam offer at the end of 2013 in
relation to the signing of a trade agreement between the country and various other countries including the
US, Australia, Japan and Singapore. Speaking to VIR, Maersk Line Vietnam and Cambodia CEO Nguyen
Thi Ngoc Bich said: 'The country continues to be an attractive sourcing destination with competitive
advantages in low labour costs, a strategic geographical location, strong deep water port infrastructure,
leading positions in agricultural exports, high GDP growth, long term political stability, and a government
committed to enhancing economic stability and development.'
With the aim to liberalise Asia-Pacific economies further, the other countries involved in the trade
negotiations include Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, and Peru.
Page 9
SWOT
Shipping
Vietnam Shipping Industry SWOT Analysis
Strengths
Vietnam's location by the South China Sea gives the country access to the main interAsian shipping routes, allowing it to meet its trading needs.
Vietnamese facilities feature as ports of call on Maersk Line, MOL, Hanjin Shipping
and APL services.
Weaknesses
Significant outside investment is required for the country to match expected export
growth over the next few years, despite a surge in state investment led by a US
$4.5bn government port investment programme.
Decades of underinvestment have left Vietnam with a port infrastructure system

ranked 97th out of 139 countries by the World Economic Forum's Global
Competitiveness Report.
Overcapacity is a looming spectre over the country's shipping sector and is an issue
that must be addressed.
Following three years of delays and due to state overseers failing to raise US$3.6bn in
foreign and national investment, the construction of Van Phong International
Transhipment Port was halted at the behest of the Vietnamese Transport Ministry.
The decision to shelve the planned port - originally proposed to be completed by
2020 - was undertaken by the Vietnamese Deputy Prime Minister, Hoang Trung Hai
and was made public in September 2012.
In mid-April 2013, Drewry Maritime Research reported that there are continuing
problems with under-capacity (four of six berths currently have no major customers)
at the new container terminals in Cai Mep-Thi Vai. Port statistics show that growth is
falling below expectations, highlighting the fact that poor Vietnamese infrastructure in
the port sphere is impacting on its bid to secure China production.
Vietnam Shipbuilding Industry Group (Vinashin) is set to lay off up to 14,000

employees as part of its restructuring process, it was announced at the end of 2013.
Page 10
Vietnam Shipping Industry SWOT Analysis - Continued
The restructuring initiative follows years of trouble for the company, which was
established in 2005 after the merger of 200-odd shipping companies.
Opportunities
There is growing international interest in Vietnam as a growth market within the box
shipping sector, catering for rising exports of manufactured goods to Western
markets.
The steady recovery in Vietnam's trade volumes from the 2009 downturn is set to
continue.
Vietnam and France entered into an economic dialogue in April 2013 in Hanoi to
discuss the strengthening of bilateral economic ties, especially in trade and
investment.
The US$1.2bn, 900,000TEU deepwater Lach Huyen Terminal in Haiphong (a joint

venture between Vietnam's Vinalines and Japan's Mitusi OSK Lines, Nippon Yusen
Kaisha and Itochu) became the first public-private project in Vietnam in April 2013.
It is in the container shipping sector that Vietnam has seen the most development - a
trend which is expected to continue. As Vietnam has become the factory of Asia, with
an emphasis on the development of clothing and shoe exports, the country's ports
and shipping links have had to keep up.
Construction of a new port began in April 2013, with the Lach Huyen Terminal project
offering upside risk to the Vietnamese shipping sector. The deepwater Lach Huyen
terminal in Haiphong is a US$1.2bn joint venture, which comprises Vietnam's
Vinalines and Japan's Mitusi OSK Lines, Nippon Yusen Kaisha and Itochu.
The inefficiencies in the Vietnamese port sector were adding to both higher costs for
shippers and lower levels of productivity, explained Fox Chu of consulting firm
Accenture at the end of July 2013, and he declared that improvements in
communication and co-operation in the sector could spur the establishment of
partnerships and privatisation, paving the way for foreign intervention and expertise.
Threats
The South China Sea territorial dispute with China, combined with widespread antiChinese sentiment in Vietnam, is a significant political risk factor to bilateral trade and
investment.
Page 11
Vietnam Shipping Industry SWOT Analysis - Continued
Some of the new ports built in the country are currently under-utilised and a change
of strategy is needed to encourage growth.
The malaise afflicting the Vietnamese shipping sector has manifest itself in the
summer of 2013 with a fairly high profile casualty as it was announced that SP-SSA
International Container Terminal has temporarily suspended operations at its terminal
at Cai Mep-Thi Vai Port complex.
Page 12
Political
SWOT Analysis
Strengths
The Communist Party of Vietnam remains committed to market-oriented reforms and

we do not expect major shifts in policy direction over the next five years. The oneparty system is generally conducive to short-term political stability.
Relations with the US have witnessed a marked improvement, 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 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
Macroeconomic instabilities continue to weigh on public acceptance of the one-party

system, and street demonstrations to protest economic conditions could 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 recent years 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 wide-scale environmental damage.
Page 13
Economic
SWOT Analysis
Strengths
Vietnam has been one of the fastest-growing economies in Asia in recent years, with
GDP growth averaging 7.1% annually between 2000 and 2012.
The economic boom has lifted many Vietnamese out of poverty, with the official
poverty rate in the country falling from 58% in 1993 to 20.7% in 2012.
Weaknesses
Vietnam still suffers from substantial trade and fiscal deficits, leaving the economy
vulnerable to global economic uncertainties. The fiscal deficit is dominated by
substantial spending on social subsidies that could be difficult to withdraw.
The heavily-managed and weak currency reduces incentives to improve quality of

exports, and also keeps import costs high, contributing to inflationary pressures.
Opportunities
WTO membership and the upcoming ASEAN AEC in 2015 should give Vietnam
greater 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 rising 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.
Page 14
Business Environment
SWOT Analysis
Strengths
Vietnam has a large, skilled and low-cost workforce, which 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. According to

Transparency International's 2012 Corruption Perceptions Index, Vietnam ranks 123
out of 176 countries.
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 high-tech
skills and know-how.
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.
Page 15
Industry Forecast
Port Of Ho Chi Minh City Throughput
Short Term: Strong 2014 Growth Ahead
Container throughput is to remain impressive during 2014 as the Port of Ho Chi Minh City once more looks
set to hit double-digit year-on-year (y-o-y) growth in this sphere as it did in 2012. This annual increase
would be slightly up on last year's rise of 9.30% as the port shows little sign of slowing down in terms of its
very healthy gains in recent years. If realised, this would see box throughput reach 4.23mn TEUs.
Tonnage throughout on the other hand, although not anticipated to hit the same heady heights of the
container side, will still perform well in 2014 and beyond into the medium term. We have pencilled in
growth of 6.06% in 2014, which is slightly down on the past few years as global economic headwinds
weigh ever so slightly on demand. This scenario would see tonnage come in at 41.22mn tonnes by the end
of 2014.
Macro Picture Supporting Port Throughput

Vietnam - Real GDP Growth, % chg y-o-y, 2000-2018
8
2017f
2018f
2016f
2015f
2014f
2012
2013f
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
Source: Asian Development Bank, General Statistics Office
Page 16
Investment in new facilities at the port complex, centred around the premier commercial centre of southern
Vietnam, support our view for the healthy rate of growth over the short and medium term. Despite a slow
start amid the bleak macroeconomic fundamentals affecting the eurozone, China and the US, there are signs
that Cai Mep International Terminal (CMIT) is beginning to outperform, placing upside risk on our
forecasts for the Port of Ho Chi Minh City as a result. We believe that Cai Mep's positive throughput
growth outlook for 2012 was in large part attributable to APM Terminal (APMT)'s operation of the
terminal over the year, as the company poured in investment and attracted new clients operating on key
trade routes.
All Signs Pointing Onwards And Upwards
Vietnam's latest real GDP reading, which showed that the economy expanded by 6.0% year-on-year (y-o-y)
in Q4 2013, has reaffirmed our conviction that the Vietnamese economy will begin 2014 on a strong note.
Not only are we witnessing more evidence of a sustained pick-up in production activity and employment in
the manufacturing sector, but also expect foreign direct investment (FDI) inflows to accelerate as the
economic recovery gathers pace over the coming quarters. We forecast real GDP growth to come in at 6.0%
in 2014, versus Bloomberg consensus of 5.5%. This feeds into our healthy projection for the Vietnamese
shipping sector over the coming 12 months.
Additionally, it has long been our opinion that intra-Asia trade is a key area for future growth with the
Vietnamese port of Ho Chi Minh in a strong position to take advantage. The launch of Taiwan-based
Evergreen Line and South Korea-based Hanjin Shipping's intra-Asia service at the end of 2013, which calls
at the port of Ho Chi Minh, will boost both companies' intra-Asia operations.
Page 17
APMT's presence should support continued growth

at the port over the medium term (2014-2018) as it
continues to improve the port's facilities and attract
Growth Supported By Terminal

Investment
Port Of Ho Chi Minh City Container
Throughput, TEUs, 2009-2018
shipping lines keen to capitalise on Vietnam's

positive macroeconomic outlook. Despite being
operational for just a year, CMIT likely handled
7,500,000
close to 600,000TEUs in 2012.
20
5,000,000
Medium Term: Impressive Growth Beckons

2,500,000
10
reach 54.21mn tonnes by the end of the forecast

period in 2018. Container throughput is also set to
2018f
2017f
2016f
2015f
2014f
2012
2011
2010
to 2018. Tonnage throughput will average 6.88% to
0
2009
the Port of Ho Chi Minh City over the medium term
2013e
Impressive growth will be the order of the day for
Port of HoChi MinhCity(Saigon New)throughput, TEU (LHS)

Port of Ho Chi MinhCity(Saigon New)throughput, TEU~ % y-o-y (RHS)
perform well to 2018, averaging 8.89%, which will

see throughput reaching 5.88mn TEUs by the end of
e/f = BMI estimate/forecast. Source: VPA
the forecast period. BMI highlights the substantial

investments APMT has made in CMIT since it opened in March 2011 as an important driver of growth and
believes this will continue to be the case.
BMI highlights that the Port of Ho Chi Minh previously only played a role as a feeder port, relying on the
transhipment of containers through one of Asia's larger, better equipped ports such as Singapore. Exposure
to these routes is in large part attributable to the port's ability to handle ultra-large container ships, which are
becoming the standard for shipping containers on Asia-Europe trade routes. This was demonstrated in
December 2011, when CMA CGM's 13,820TEU Laperouse docked at the terminal. We believe CMIT's
proven capacity for handling these vessels marked an important step for the terminal and will be a key
driver of growth over the medium term.
Page 18
With real GDP forecast to grow at an average annual
Strong And Steady Over Medium

Term
rate of 6.76% over the medium term to 2018, a key

driver of this growth will be the country's booming
Port Of Ho Chi Minh City Throughput, Tonnes

'000, 2009-2018
export sector, providing a boost to the country's

shipping sector, especially the Port of Ho Chi Minh
75,000
City.
50
50,000
Long Term: Infrastructure Improvements

25,000
Needed
2018f
2017f
2016f
2015f
2014f
2013e
2012e
2010
2009
Capacity issues at the Port of Ho Chi Minh are
2011e
expected to dog Vietnam in both the short and long

Portof HoChi MinhCity(Saigon New)throughput,tonnes '000 (LHS)
term, although Cai Mep provides sizeable
Portof HoChi MinhCity(Saigon New)throughput,tonnes~ % y-o-y (RHS)
opportunities. The solution to this disruptive

problem will not just be a small matter of capacity
expansion. BMI suggests that the country must also
e/f = BMI estimate/forecast. Source: VPA
put money into landside supply chain, such as road

and rail networks. These developments are
particularly vital if Vietnam is to achieve its aim of enabling Ho Chi Minh to handle larger container vessels
so that it can ship goods directly to destination markets.
Table: Major Port Data, 2011-2018
2011
Port of Ho Chi Minh City
(Saigon New) throughput,
tonnes '000*
7.45
3,066,234

(Saigon New) container
throughput, TEU, % y-o-y
Port of Da Nang
throughput, tonnes '000
2013e
2014f
2015f
2016f
2017f
2018f
33,450.71 36,029.40 38,866.71 41,222.56 43,986.36 47,175.83 50,747.63 54,212.19

(Saigon New) throughput,
tonnes, % y-o-y*
(Saigon New) container
throughput, TEU
2012
7.71
7.87
6.06
6.70
7.25
7.57
6.83
- 3,841,371 4,225,508 4,563,463 4,952,531 5,389,585 5,881,329
7.59
14.62
9.30
10.00
8.00
8.53
8.82
9.12
3,868.00
4,423.00
4,812.22
5,149.08
5,483.77
5,784.17
6,111.45
6,460.77
Page 19
Major Port Data, 2011-2018 - Continued
Port of Da Nang throughput,

tonnes, % y-o-y
Port of Da Nang container
throughput, TEU
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
17.10
14.35
8.80
7.00
6.50
5.48
5.66
5.72
114,373.0 144,555.0 158,095.5 173,005.8 189,636.5 207,618.7 227,209.7 248,120.0
Port of Da Nang container

throughput, TEU, % y-o-y
28.22
26.39
9.37
9.43
9.61
9.48
9.44
9.20
*2011 and 2012 figure is a BMI estimate. Source: VPA, BMI. e/f = BMI estimates/forecasts. Forecasts assume existence
of spare capacity and the correspondence of national trade trends at local port level.
Table: Trade Overview, 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Imports, real growth, % y-o-y
4.10
9.09
7.90
7.50
7.50
7.30
7.20
7.00
Exports, real growth, % y-o-y
10.78
15.71
6.00
5.60
5.80
6.20
6.60
6.80
7.44
12.40
6.95
6.55
6.65
6.75
6.90
6.90
112.4
119.0
137.2
159.3
182.3
206.5
234.7
266.1
24.2
5.9
15.3
16.1
14.5
13.3
13.7
13.4
106.8
124.4
140.9
160.7
181.0
203.0
229.5
259.7
31.5
16.5
13.3
14.0
12.6
12.1
13.0
13.2
219.2
243.4
278.1
320.0
363.3
409.5
464.2
525.8
27.6
11.0
14.3
15.0
13.5
12.7
13.3
13.3
Total Trade, real growth, % y-o-y
Imports, US$bn
Import growth, % y-o-y
Exports, US$bn
Export growth, % y-o-y
Total trade, US$bn
Total trade growth, % y-o-y
Source: National statistical authority, BMI. e/f = BMI estimates/forecasts
Table: Key Trade Indicators, 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Agricultural raw
materials, imports,
US$mn
3,732.44
4,358.92
4,947.19
5,651.36
6,374.98
7,168.92
8,103.55
9,198.02
Agricultural raw
materials, imports,
% y-o-y
39.98
16.79
13.50
14.23
12.80
12.45
13.04
13.51
Page 20
Key Trade Indicators, 2011-2018 - Continued
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Agricultural raw
materials, exports,
US$mn
3,394.24
3,608.58
4,201.61
4,920.01
5,669.50
6,562.26
7,413.54
8,530.83
Agricultural raw
materials, exports,
% y-o-y
-1.23
6.31
16.43
17.10
15.23
15.75
12.97
15.07
Ores and metals,

exports, US$mn
794.19
935.47
1,068.14
1,226.94
1,390.13
1,565.55
1,778.73
2,018.89
Ores and metals,

exports, % y-o-y
33.63
17.79
14.18
14.87
13.30
12.62
13.62
13.50
Ores and metals,

imports, US$mn
4,378.10
4,656.14
5,425.41
6,357.30
7,329.54
8,307.16
9,529.55
10,815.26
Ores and metals,

imports, % y-o-y
32.66
6.35
16.52
17.18
15.29
13.34
14.71
13.49
Iron and steel,

exports, US$mn
2,000.34
2,391.69
2,759.15
3,199.03
3,651.04
4,185.09
4,743.74
5,446.41
Iron and steel,

exports, % y-o-y
23.25
19.56
15.36
15.94
14.13
14.63
13.35
14.81
Iron and steel,

imports, US$mn
75,011.2
79,418.4
91,611.9
106,383.3
121,794.1
137,855.5 156,863.8
177,722.9
Iron and steel,

imports, % y-o-y
23.89
5.88
15.35
16.12
14.49
54,309.5
63,655.9
72,432.1
82,937.5
93,733.0
33.09
17.21
13.79
14.50
13.02
74,001.0
78,335.4
90,327.8
104,855.6
120,012.3
Manufactured
goods, imports, %
y-o-y
24.18
5.86
15.31
16.08
14.45
Fuels, exports, US
$mn
17,072.69
19,770.74
22,304.17
25,336.79
28,453.14
54.01
15.80
12.81
13.60
12.30
14,084.81
14,935.88
17,290.57
20,143.09
23,119.08
Manufactured
goods, exports, US
$mn
Manufactured
goods, exports, %
y-o-y
Manufactured
goods, imports, US
$mn
Fuels, exports, %
y-o-y
Fuels, imports, US
$mn
13.19
13.79
13.30
105,280.1 119,420.1
135,311.3
12.32
13.43
13.31
135,885.1 154,530.3
175,124.4
13.23
13.72
13.33
31,908.45 35,909.69
40,715.06
12.14
12.54
13.38
26,263.28 29,906.30
34,006.69
Page 21
Key Trade Indicators, 2011-2018 - Continued
2011
Fuels, imports, %
y-o-y
45.81
2012
2013e
2014f
2015f
6.04
15.77
16.50
14.77
2016f
2017f
13.60
13.87
2018f
13.71
Source: UNCTAD, BMI. e/f = BMI estimates/forecasts
Table: Top Import Partners, 2004-2012
2004
2005
2006
2007
2008
2009
2010
2011
2012
4,595
5,900
7,391
12,710
15,974
16,441
20,019
24,594
37,647
China, Mainland, US$mn, %

of total
14.4
16.0
16.5
20.3
19.8
23.5
24.0
23.5
27.2
Korea, Republic Of, US$mn
3,359
3,594
3,908
5,340
7,255
6,976
9,761
13,176
17,541
Korea, Republic Of, US$mn,

% of total
10.5
9.8
8.7
8.5
9.0
10.0
11.7
12.6
12.7
3,553
4,074
4,702
6,189
8,240
7,468
9,016
10,400
11,803
11.1
11.1
10.5
9.9
10.2
10.7
10.8
10.0
8.5
3,618
4,482
6,274
7,614
9,378
4,248
4,101
6,391
11,421
11.3
12.2
14.0
12.1
11.6
6.1
4.9
6.1
8.3
1,859
2,374
3,034
3,744
4,906
4,514
5,602
6,384
7,310
5.8
6.5
6.8
6.0
6.1
6.5
6.7
6.1
5.3
Total
31,969
36,761
44,891
62,765
80,714
69,949
83,365 104,510 138,166
Total, top 5 countries, US$m
16,984
20,424
25,310
35,597
45,753
39,648
48,500
60,944
85,721
53.1
55.6
56.4
56.7
56.7
56.7
58.2
58.3
62.0
China, Mainland, US$mn
Japan, US$mn
Japan, US$mn, % of total
Singapore, US$mn
Singapore, US$mn, % of total
Thailand, US$mn
Thailand, US$mn, % of total
% from top 5 trade partners
Source: IMF. N.B. Total exports is from Direction of Trade Statistics, consequently there may be some discrepancy with
data used elsewhere in this report
Table: Top Export Destinations, 2004-2012
United States, US$mn

United States, US$mn, % of
total
China, Mainland, US$mn
China, Mainland, US$mn, %
of total
2004
2005
2006
2007
2008
2009
2010
2011
2012
5,025
5,924
7,845
10,105
11,887
11,356
14,238
16,928
19,427
19.0
18.3
19.7
20.8
19.0
19.9
20.4
18.2
17.0
2,899
3,228
3,243
3,646
4,850
4,909
7,309
11,125
14,755
10.9
9.9
8.1
7.5
7.7
8.6
10.5
12.0
12.9
Page 22
Top Export Destinations, 2004-2012 - Continued
2004
2005
2006
2007
2008
2009
2010
2011
2012
3,542
4,340
5,240
6,090
8,468
6,292
7,728
10,781
13,722
Japan, US$mn, % of total
13.4
13.4
13.2
12.5
13.5
11.0
11.1
11.6
12.0
Korea, Republic Of, US$mn
608
664
843
1,243
1,794
2,065
3,092
4,715
5,199
Korea, Republic Of, US$mn,

% of total
2.3
2.0
2.1
2.6
2.9
3.6
4.4
5.1
4.6
1,065
1,086
1,445
1,855
2,073
1,885
2,373
3,367
5,070
4.0
3.3
3.6
3.8
3.3
3.3
3.4
3.6
4.4
Total
26,485
32,447
39,826
48,561
62,685
57,196
69,820
92,881 113,944
Total, top 5 countries, US$m
13,139
15,242
18,616
22,939
29,072
26,507
34,740
46,916
58,173
49.6
47.0
46.7
47.2
46.4
46.3
49.8
50.5
51.1
Japan, US$mn
Germany, US$mn
Germany, US$mn, % of total
% from top 5 trade partners
Source: IMF. N.B. Total exports is from Direction of Trade Statistics, consequently there may be some discrepancy with
data used elsewhere in this report
Page 23
Market Overview
Vietnam Container Shipping Market Overview
We have long been of the opinion that intra-Asia trade is a key area for future growth with the Vietnamese
port of Ho Chi Minh very well placed to take advantage. The launch of Taiwan-based Evergreen Line and
South Korea-based Hanjin Shipping's intra-Asia service at the end of 2013, which calls at the port of Ho
Chi Minh, will boost both companies' intra-Asia operations.
The New Ho Chi Minh Service (NHCMS) will see both firms receive a boost to their intra-Asia network.
The NHCMS will link South Korea, China, Vietnam, Singapore and Malaysia, and will employ four 2,500
twenty-foot equivalent units (TEUs) ships, one supplied by Evergreen and the remaining three by Hanjin.
The first vessel on the once-a-week NHCMS set sail from Kwangyang, South Korea, on November 22.
The Port of Ho Chi Minh City has expanded to become the largest facility in southern Vietnam. It now
accounts for more than 65% of port throughput in the Ho Chi Minh City area and 42% of throughput in
Vietnam as a whole. In 2013, the port handled an estimated 3.83mn twenty-foot equivalent units (TEUs), up
from 2012's 3.51mn TEUs. The port comprises three cargo terminals, as well as depot and customs points,
which are situated at different locations within the Mekong Delta area in south-east Vietnam, in an area
measuring 60km in circumference.
Cai Mep is Vietnam's largest deep sea facility. The Port of Cai Mep was developed in response to the rapid
growth in trade volumes at the Port of Ho Chi Minh, which caused congestion in the area. The Cai Mep
facility is located approximately 85km south east of Ho Chi Minh City, at the mouth of the South China
Sea.
Net Exports Present Downside Economy Risks
Net exports remain the biggest downside risk to our outlook for the Vietnamese economy, although we
expect external demand to pick up in 2014. Vietnam's trade account has fallen back into deficit in recent
months, but we see the case for a substantial pickup in external demand on the back of a rebound in regional
growth over the coming quarters. Accordingly, we still expect exports to expand at a moderate pace of 5.9%
in 2014.
Vietnam's export sector has performed exceptionally well despite the lacklustre economic environment we
have seen across the region. Since June, the country has been running consistent monthly merchandise trade
Page 24
surpluses averaging US$222mn in value (with the exception of a small US$88mn deficit in September).
Although we acknowledge that imports have remained suppressed by weak domestic demand as households
hold back on spending amid uncertainties over the economy, we are nonetheless encouraged by the resilient
export data. Indeed, merchandise trade exports expanded by 16.2% y-o-y for the first 11 months of 2013.
Exports Could Get Further Boost From FDI
More importantly, we note that this has mainly been driven by increased foreign direct investment (FDI)
inflows into the export sector - FDI-related exports made up an estimated 67% of total exports for the first
11 months of the year, according to figures published by GSO. We believe that as economic conditions in
Vietnam continue to improve as we head into 2014, we could see a further pickup in FDI inflows. This
should help to lend a further boost to exports. As of November, newly registered FDI has already surpassed
the government's full-year target of US$13bn, after having surged by 54.2% y-o-y in the first 11 months of
2013 to US$20.8bn. Japanese and South Korean investors remained the largest source of FDI inflows for
Vietnam, accounting for US$4.8bn and US$4.0bn worth of registered FDI in the first 10 months of 2013,
respectively.
In line with our view that the Vietnamese economy would accelerate forcefully into the final months of the
year (see 'Economy Picking Up Pace', October 4 2013), latest data released by the General Statistics Office
(GSO) showed that the economy expanded by 6.0% y-o-y in Q413. This translates into full-year growth of
5.4% for 2013, just slightly above our forecast of 5.3%. The latest GDP reading, combined with the strong
set of economic data we have seen in recent weeks (accelerating foreign direct investment inflows,
remittances, and merchandise trade exports), have reaffirmed our conviction that the Vietnamese economy
will begin 2014 on a strong note.
Connectivity
In 2013, Vietnam scored 43.26 on UNCTAD's liner connectivity index - a considerable improvement on
2004's score of 12.86. However, we note that the country is actually on a downwards trajectory, having
peaked in 2011 on 49.71, before falling to 48.71 in 2012. Although the port is trailing far behind regional
outperformer Singapore, it is well ahead of its neighbours Cambodia and the Philippines. Equally, the
facility is now in ninth place from the 14 Asian markets for which we produce Shipping reports, having
been firmly at the bottom of the pile in 2004. Crucially, Vietnam is better connected to international
shipping lines than neighbour, and competitor, Thailand, which will boost Vietnam's attractiveness to
manufacturers looking for the next factory of Asia, as wage increases in China has made the former holder
of the title less competitive.
Page 25
BMI believes that this vast improvement in its connectivity score over seven years demonstrates Vietnam's
growing importance in global containerised shipping. The country also now has direct links with major
markets in the West. However, it should be noted that Vietnam's place in global container shipping is not
yet assured, and that as the industry has struck difficulties Vietnam has been impacted more severely than
more established ports of call. This has been demonstrated by the fall in its score on the connectivity index
over the past two years.
Connection Slipping
Vietnam's Liner Connectivity Score
Source: UNCTAD
Vietnamese ports are well placed to take advantage of growing intra-Asia trade volumes.
The rapid growth in Vietnam's port volumes has attracted ample international investment in port
terminals, giving rise to overcapacity concerns.
Alleviating economic headwinds in the US and China will support Vietnam's export markets and
container ports but the global economic situation continues to prove unpredictable.
We continue to caution that Vietnam needs to invest in its freight transport network in its entirety to
ensure efficiency at its ports.
Page 26
Regional Role
The Port of Ho Chi Minh is a vital domestic and regional facility, with the port having rapidly expanded in
response to sharp growth in the Vietnamese economy. Container traffic through the port accounts for over
65% of Ho Chi Minh City's market share and more than 40% of the entire country's.
Rapid Climber
UNCTADstat Liner Connectivity Index For Asia In 2004 & 2011
Source: UNCTADstat
Intra-Asian trade has been growing rapidly, with many shipping firms using this to cushion themselves from
the slowly recovering big-money East-West routes. The Port of Ho Chi Minh has been a key part of this and
it is not only regional trade for which Vietnam is becoming key. In 2009, Hanjin Shipping became the first
carrier to launch a direct service between Vietnam and the US. In September 2010, Hanjin became the first
line to launch direct Vietnam-Europe services, followed in October 2010 by CMA CGM making the
country a port of call on its FAL3 service.
The Port of Cai Mep was developed in response to the rapid growth in trade volumes at the Port of Ho Chi
Minh City, which caused congestion in the area. BMI notes that the terminal has a considerable advantage
over Ho Chi Minh, in that it offers a draft of 14m, thereby enabling it to serve post-Panamax container
vessels, which cannot call at other Vietnamese ports due to draft and turning restrictions.
Page 27
The importance of the port's depth was reflected in December 2011, when Cai Mep International Terminal
(CMIT) docked its largest ever containership. The 13,830TEU CMA CGM Laperouse is the biggest vessel
to dock in the Vietnamese port, with its accommodation made possible by the post-Panamax cranes
operating at the site.
BMI believes that Cai Mep's positive throughput growth outlook is in large part attributable to APM
Terminal (APMT)'s operation of the terminal, as the company has poured in investment and attracted new
clients operating on key trade routes. We believe APMT's presence will support continued growth at the
port over the medium term (2014-2018) as it continues to improve the port's facilities and attract shipping
lines keen to capitalise on Vietnam's positive macroeconomic outlook.
Cai Mep International Terminal (CMIT) at the Port of Ho Chi Minh City (also known as New Saigon Port),
which is made up of a collection of terminals lying 50km away from Vietnam's capital city, handled nearly
600,000TEUs in 2012 - its first full calendar year of operation - according to estimates from Maersk Line
sister company APMT. CMIT accepted its first vessel on March 30 2011 and in the following nine months
to 2012 handled 186,000TEUs.
On The Up
Vietnam TEU Throughput, Total, 2000-2011
Source: World Bank
Page 28
BMI highlights the substantial investments APMT has made in CMIT since it opened in March 2011 as an
important driver of growth. In addition to helping to construct the port, which it did through a joint venture
(JV) with Saigon Port and Vietnam National Shipping Lines (Vinalines), APMT purchased two laden
reach stackers, an empty reach stacker, two empty container handlers and a 25-tonne forklift - all of which
were delivered by Konecranes in 2011. Weak infrastructure is one of the main factors holding back
Vietnam's shipping sector - the country ranks 111th out of 145 countries on the World Economic Forum's
Global Competitiveness Report on the Quality of Port Infrastructure. As such, APMT's commitment to
improving CMIT's facilities is an important step both for the terminal and the country's shipping sector as a
whole.
Investment in the port has allowed Cai Mep to attract a client base of some of the major players in the box
shipping sector. While a foregone conclusion, given APMT's close connection with the company, Maersk
Line began pulling into the port in August 2011, boosting throughput as expected. More significantly,
CMIT has added CMA CGM and the Grand Alliance - comprising shipping lines Hapag-Lloyd, Nippon
Yusen Kaisha (NYK), and Orient Overseas Container Line (OOCL) - to its client list. These lines not
only provide positive prospects for the port given their direct impact on throughput volumes, but also
because their presence signals the industry's confidence in the terminal's growth outlook and growing role in
the region.
An important aspect of the addition of these lines to the terminal is that they have exposed CMIT to the two
largest maritime trade routes: Asia-Europe and Asia-America. Maersk has added the port to its Transpacific
string from Asia to North America, while CMA CGM and the Grand Alliance have placed it on their AsiaEurope routes, marking the first time Vietnam had been directly connected on either of these trade routes.
We highlight that Vietnam previously only played a role as a feeder port, relying on the transhipment of
containers through one of Asia's larger, better-equipped ports such as Singapore. Exposure to these routes is
in large part attributable to the port's ability to handle ultra-large container ships, which are becoming the
standard for shipping containers on Asia-Europe trade routes. This was demonstrated in December 2011,
when CMA CGM's 13,820TEU Laperouse docked at the terminal. We believe CMIT's proven capacity for
handling these vessels marks an important step for the terminal and will be a key driver of growth over the
medium term, though in the near term there are significant hurdles to be crossed.
Page 29
Overcapacity Remains A Threat
The rapid growth in Vietnam's port volumes has attracted ample international investment in port terminals.
However, concerns are being raised about the possibility of overcapacity in the country's container port
sector. This a particular concern for operators at the Port of Cai Mep. In 2006, international terminal
operators secured stakes in nine terminals at the port after the government invited foreign investment,
believing that rising throughput volumes would be quickly soaked up by increasing capacity. Five of the
nine planned terminals are in operation in the Cai Mep area, but are working well below capacity, with as
little as 20% of capacity at CMIT being utilised. With additional new facilities due to come online, BMI
believes this is a considerable cause for concern. Further, as container shipping lines look to consolidate
their services Vietnam, as a relatively new addition, is at risk of being struck from the ports of call.
The lack of container traffic seen at the beginning of 2012 also poses problems for ports in the province of
Ba Ria-Vung Tau. Ports in the region have a total container handling capacity of up to 8mn TEUs; however,
the actual demand only comes to around 5mn TEUs. Ports in the Cai Mep-Thi Vai region of Ba Ria-Vung
Tau have been failing to attract a significant number of vessels, despite a total investment of over US$7bn
by the end of 2011, according to reports. The region contains several modern container ports and is set to
open several more facilities in 2012 and 2013. Industry analysts attributed the failure to a lack of
infrastructure, which has caused capacity to remain largely underutilised. Only 62.5% of overall port
capacity in the province of Ba Ria-Vung Tau is in use.
It is in this atmosphere of concern over having grown too much too soon that the construction of Van Phong
International Transshipment Port has been halted at the behest of the Vietnamese Transport Ministry. The
decision to shelve the planned port - originally proposed to be completed by 2020 - was undertaken by the
Vietnamese deputy prime minister, Hoang Trung Hai and was made public in September 2012.
The estimated cost of the project was set to be US$3.6bn and the construction work would have included 37
wharves at length of 12.5km. The initial stage of the project began in October 2009 and was pencilled in to
be completed by the end of 2012; however, financial mismanagement meant that the project fell way behind
schedule. Vinalines, the project's investor, was urged to alter its plans by the Vietnamese government and so
the company came up with the idea of expanding the port in order to handle container vessels up to
12,000TEUs.
The deputy prime minister asked the Transport Ministry to look into the feasibility of raising domestic and
foreign investment to fund the project, which is located in Hon Gom peninsula. The Van Phong port has
Page 30
become the target for criticism, as Vietnam's attractiveness for potential investors weakens. The Van Phong
site was described as too far from any major manufacturing companies, and the state's role in neglecting
better infrastructure at strategic locations is being highlighted.
Road And Rail Links Need Investment
The Vietnamese government plans to deepen the Port of Ho Chi Minh City's draught, allowing larger
vessels to access the facility. BMI notes that these works are badly needed, as we are seeing a growing
trend of lines ordering larger container vessels. Recognising the need to cater for bigger vessels, Vietnam's
prime minister has directed the country's ministry of transport and its Maritime Administration to focus on
developing deep water ports. A channel depth of about 14m is required for non-tide restricted access for
vessels with capacity of up to 8,000TEUs.
BMI notes that while Vietnam's port sector has received plenty of investment, due to growing intra-Asia
trade volumes, the freight transport networks that link the ports with production and consumer centres are
badly in need of investment. Growth in box throughput at the nation's ports has far outpaced investment in
its freight transport network. In 2010 (latest available data), total container throughput at the country's ports
reached 5.98mn TEUs, up 550% from the 919,264TEUs handled in 1999.
With a rating of 120 out of 142 in the World Economic Forum's 2012-2013 Global Competitiveness Report,
Vietnam's road infrastructure is the regional underperformer, trailing well behind regional leaders Singapore
and Hong Kong. The country's rail infrastructure fares slightly better, with a score of 68 out of 123. BMI
believes there must be more private and state investment in developing these links if the country's ports are
to take full advantage of increasing trade volumes.
Page 31
Industry Trends And Developments

Evergreen-Hanjin's Intra-Asia Tie-Up Highlights Vietnam Growth Story
Taiwan-based Evergreen Line and South Korea-based Hanjin Shipping's newly launched intra-Asia service,
which calls at the port of Ho Chi Minh, will boost both companies' intra-Asia operations. BMI has long
highlighted intra-Asia trade as a region of strong growth and we note the port of Ho Chi Minh to be a
specific beneficiary of the new route - with the launch of the service offering upside risk to our forecast for
the port.
Evergreen Line has partnered with Hanjin Shipping to launch the New Ho Chi Minh Service (NHCMS) that
will see both firms receive a boost to their intra-Asia network. The NHCMS will link South Korea, China,
Vietnam, Singapore and Malaysia, and will employ four 2,500 twenty-foot equivalent units (TEUs) ships,
one supplied by Evergreen and the remaining three by Hanjin. The first vessel on the once-a-week NHCMS
is to set sail from Kwangyang, South Korea, on November 22.
BMI notes that Evergreen Line has steadily been expanding its intra-Asia service in 2013, with the addition
of a further two express routes: the first being a Colombo, Sri Lanka-Kochi, India, service; and the second
being an Indonesia-Malaysia service. Hanjin Shipping has been implementing a similar expansion strategy,
with the addition of an Indonesia service in March 2013 and an Australasia service in July 2013.
BMI has previously identified the trend of intra-Asia trade as a strong growth area for container lines.
Growth in intra-Asia liner trade is developing from a low base and is set to continue expanding as China
rebalances its economy toward the consumer sector. The development of a consumer class in China means
that the country is increasing the number of containers it imports, rather than being primarily a box operator.
Evergreen and Hanjin's decision to include the port of Ho Chi Minh as part of its NHCMS is in line with the
intra-Asia growth story seen in the region. The Vietnamese port in particular is showing strong historical
growth rates in container throughput - a trend we predict will continue over the medium term. Between
2008 and 2012 the port of Ho Chi Minh's container throughput experienced an annual average increase of
14.4% year-on-year (y-o-y). BMI forecasts this robust growth rate to continue over the medium term
(2013-2018), albeit at a slightly slower pace, and forecasts container throughput at Ho Chi Minh expected to
expand by 53.1% from 2013 levels - an annual average increase of 8.9% y-o-y, to reach a throughput level
of 5.87mn TEUs in 2018.
Page 32
Vietnam Set For Belgian Link-Up
Vietnam cemented its place as a strategically important growth region in December 2013 with news of a
collaboration agreement signed by the ports of Antwerp (the second largest port in Europe) and Zeebrugge,
Rent-A-Port and Saigon Newport relating to the construction of a new bulk terminal in the port of Lach
Huyen in the north of the country.
Eddy Bruyninckx, CEO of Antwerp Port Authority, stated: 'Our subsidiary Port of Antwerp International
has been observing this growth market closely with a view to spotting opportunities that offer added value
for our port. Our partners can call upon a port that has developed into a leading international player with a
wide range of logistics, industrial and maritime activities.'
Meanwhile, further evidence of strong Flemish/Vietnamese relations were highlighted by the visit of
Flemish Minister for Mobility and Public Works Hilde Crevits to inspect the dredging work at the Soai Rap
project in November 2013.
Crevits said: 'The dredging by the DEME's dredger 'Uilenspiegel' are spectacular in Soai Rap. They are
technically advanced and offer a sustainable solution. This project also demonstrates the good cooperation
with Vietnam. Our dredgers are world class. I hope that Vietnam continues to rely on our expertise for
major projects.'
TSL, ASL Launch Second Service To Haiphong
Hong Kong's TS Lines (TSL) will launch its second service, HHX 2, to Haiphong in Vietnam. The service,
which will be started in collaboration with Hong Kong-based Asean Seas Line (ASL), will double the calls
at the port of Haiphong. TSL is expected to provide one 700 twenty-foot equivalent unit (TEU) vessel to
replace a 340TEU vessel. ASL will provide the second 700TEU vessel to operate the service. Apart from
this, TSL has joined its Hong Kong-Haiphong shuttle and its JTK service, which calls at ports in Japan,
Taiwan, Korea and South China.
Wan Hai Lines To Start New Direct Service
Taiwanese shipping companies Wan Hai Lines and Yang Ming Line intend to begin a new direct service
between ports of Japan, South Korea and China to the Vietnamese port of Ho Chi Minh on November 29
2013. The service will be called KCV and it will function with three vessels with an intake of 1,200 twenty-
Page 33
foot equivalent units. KCV is expected to provide better service coverage between Japan, Korea, China and
Vietnam.
DIS Orders New Tankers From Vietnamese JV
A total of four new product tankers were ordered by d'Amico International Shipping (DIS) from Hyundai
Vinashin for US$126m, it was announced at the end of 2013. The joint venture (JV) between Vietnam
Shipbuilding Industry Group (Vinashin) and Hyundai Mipo Dockyard is set to deliver the four 39,000dwt
vessels between November 2015 and October 2016.
Speaking about the deal, the CEO of DIS, Marco Fiori said: 'I am delighted to announce the deal for four
new additional vessels in continuity with the DIS strategies to innovate its fleet and increase its efficiency
through new eco-vessels, in order to represent one of the most modern and advanced fleet in the MR
market, to better fulfill the expectations of our clients.'
Page 34
Company Profile
Vietnam Petroleum Transport Company (VIPCO)

SWOT Analysis
Strengths
Around 60% of VIPCO's fleet is employed by Petrolimex.
The company boasts a relatively young fleet.
It has diversified away from operating in a single sector, with a real estate arm.
Weaknesses
VIPCO only operates in one shipping sector.
Opportunities
The company plans to expand its fleet, although no further information is currently
forthcoming.
Petrolimex made a company announcement at the end of July 2013 to state that it
had signed a memorandum of understanding (moU) with Japan International
Cooperation Agency (JICA) and Tamada Industries, Inc. (Tamada) relating to
'cooperation in the trial project of double-shell tank against harmful matters'.
Threats
Vietnam's reliance on imported refined products is decreasing as the country brings

online more refining capacity, which could negatively affect VIPCO. In the longer term,
Vietnam's refining capacity could allow the state to export.
Company Overview
The Vietnam Petroleum Transport Joint Stock Company (VIPCO) offers maritime
transport for petroleum products. The company has a diversified portfolio, including
units that support its product tanker fleet - such as its port operations and freight
forwarding services. It is also engaged in real estate.
Strategy
VIPCO has developed a fleet of six product tankers with a total capacity of 176,111
deadweight tonnes (DWT). The fleet is relatively young with an average age of 16 years.
VIPCO has a fleet expansion strategy in place and is prepared to invest either in
newbuilds or purchasing tankers under the age of 10 years. The company plans to
boost its fleet to 200,000DWT.
Page 35
The majority of VIPCO's tanker fleet (60%) is employed to meet the transport needs of
the Vietnam National Petroleum Corporation (Petrolimex). The remaining 40% is charted
to other consignees.
Via its connection with Petrolimex, the company is able to cater for Vietnam's oil sector.
While Vietnam has estimated oil reserves of 4.6bn barrels, it imports refined products.
The company's shipping unit is complemented by its petrochemical terminal's sector.
The board of directors of Petrolimex announced the establishment of a new whollyowned subsidiary, PG Tanker, in 2013, with Nguyen Anh Dung made chief executive
officer. Headquartered in Hanoi, the subsidiary will be charged with transporting oil
products, marine services and the repair and building of tankers.
Financial Data
2013
Deputy General Director Tran Ngoc Nam explained at the end of December 2013 that
profits were low at Petrolimex, owing to the Vietnamese government's efforts to curb
inflation and stabilise the economy through retail price adjustment. In the first half of
2013 the company announced profits of VND898bn (US$42.69mn), however, according
to Viet Nam News, earnings fell short 'of the full-year target of the country's largest fuel
wholesaler at VND1.98trn (US$94.2mn) in 2013. With only 45 per cent of the plan
covered, Petrolimex said it will exert efforts to make it in the second half of this year.'
2011
For the final quarter of 2011, VIPCO registered a drop in net income to VDN8bn, down
from VDN51.7bn a year previously. Meanwhile, in mid-February 2012, the company saw
its share price fall 2.2% to VND4,500.
For the first half ended June 2011, the company reported a net profit of VND38.66bn
(US$1.88mn), which represents a 121% year-on-year (y-o-y) increase. Revenues rose
36% y-o-y to VND943.12bn during this period, while six-month earnings per share were
VND647, compared with less than half of that for the corresponding period of 2010.
Latest Activity
Petrolimex Seeks Diesel Delivery

Petrolimex is seeking some 70,000 tonnes of diesel to be delivered in February 2014,
according to Business Recorder. Trade sources explained that Vietnam's top fuel
importer and distributor was looking to obtain two cargoes of 35,000 tonnes apiece,
which are to be loaded from Singapore, Thailand, South Korea, South China or Taiwan.
The tender will close on January 9 and is valid until January 14, and is necessary due to
Petrolimex skipping its first quarter term diesel and gasoline imports.
Page 36
Vietnam National Shipping Lines (Vinalines)

SWOT Analysis
Strengths
Diversified fleet operating in dry bulk, container and oil transport.
Largest commercial shipping line in Vietnam.
On December 16 2012, Vinalines launched the second biggest bulk carrier in Vietnam
in Hai Phong city. Named Vosco Sunrise, the bulk carrier has been designed to cater
for a deadweight of 56,200DWT.
Weaknesses
Vietnam does not play a role on the major Asia-Europe routes, despite developing as
a direct port of call on these routes.
The US$3.6bn Van Phong International Port project, primarily constructed by stateowned Vinalines, was suspended in June 2011 following a reassessment of the
geological conditions at the project site.
Vietnamese shipping company Vinalines is currently US$2.1bn in debt, reported

Reuters in June 2012.
Vinalines' heavy exposure to Vietnam's domestic transport sector, which has been
performing well recently, indicates that the firm's struggles go beyond the troubles
facing the global industry.
According to chairman of Vietnam Shipowners' Association Vu Xuan Quynh, a large

sell off of old tonnage is needed, with Vinalines seeking to offload around 1.4m dwt of
ships, Sea Ship News reported in July 2013.
Vinalines was asked by the government to withdraw its plans to participate in the
development of the northern Lach Huyen Port, reported Sea Ship News in March
2013. The company will continue to concentrate on its ongoing port projects;
however, Hanoi said that it needs to make arrangement of funds before it can mull
over additional expansion. Vinalines teamed up with Japan's Itochu, MOL and
NYK for the development of the port.
The death sentence handed out to Vinalines' former chairman at the end of 2013 for
embezzlement has done little for the company's reputation.
Page 37
SWOT Analysis - Continued
Opportunities
Vietnam is expanding its role in the global box market and it is fast becoming a
mainstay port of call on Asia-Europe services.
Potential to increase its intra-Asia role, shown by the expansion work at Cai Mep, and
well placed to be chosen as a partner on these services by major lines.
Threats
While Vietnam has invested heavily in its port network, the logistics supply chain
could be let down by the landside freight network, which will have a negative impact
on operators.
In 2011, Vinalines posted its first ever loss in 15 years of operations, with further
losses expected.
Overcapacity is a threat over the medium term, unless money is pumped into port
facilities and infrastructure.
Vietnamese police issued an arrest warrant for the former chairman due to the
scandal rocking the debt-mired company. Duong Chi Dung has been accused of
deliberately mismanaging Vinalines during his tenure.
Vinalines has been stung by the poor performance of the three container terminals it
has joint venture interests in.
Company Overview
Vinalines is Vietnam's largest commercial shipping line. Established in 1996, it caters for
domestic trade in Vietnam and offers intra-Asia services.
The company also has a port operating division that is the largest in Vietnam, controlling
and managing ports in Quang Ninh, Hai Phong, Da Nang, Ho Chi Minh and Can Tho.
Strategy
Vinalines' 14 shipping companies operate a diverse fleet, dominated by dry bulk vessels
but also boasting container ships, oil and product oil vessels.
According to the company's website, Vinalines' fleet consisted of 128 vessels. The line
is looking to expand, with a plan centred on increasing the proportion of specialised
vessels such as box ships or oil tankers.
In order to achieve this, the line was seeking to spend US$2bn on ordering new ships
from Vietnamese yards seeking state funding for the plan. Vinalines has in fact ended
up expanding its fleet quicker than intended, with the shipping line taking on 36 vessels
Page 38
from the debt laden Vietnamese shipbuilder Vinashin in July 2010. Vinaline's chairman,
Duong Chi Dung, said at the time that up to two-thirds of the acquired vessels could not
be used as they failed to meet technical requirements. He estimated that the company
would need to spend US$26mn to repair the vessels and purchase insurance cover.
Dung added that the company expected some financial aid from the government for the
project.
Vinalines services the trade needs of Vietnam's domestic shipping market, but also has
exposure to the intra-Asia trade lane after joining forces with NYK in December 2010 to
launch a Thailand-Vietnam-Singapore (TVS) service. Vinalines provides a 1,100 twentyfoot equivalent unit (TEU) vessel for the service.
BMI believes that Vinalines' presence on the intra-Asia trade route will increase, with
major lines looking to expand into the route and the company well placed to enter
partnerships with them. Vinalines is also increasing its contacts in the container sector,
partnering with a number of the majors on container terminal projects in Vietnam.
According to Port Strategy, Vietnam is of increasing interest in East Asia, due to the fact
that it is focusing on becoming better connected with both short and long haul
destinations. Providing the bedrock to this strategy are the new terminals constructed in
the Cai Mep area.
In September 2013, the wholly-owned limited liability company, Quy Nhon port under
Vinalines launched an initial public offering as part of ongoing restructuring of the
company, approved back in February 2013.
In a high-profile court case in Hanoi in January 2014, the former chairman of Vinalines,
Duong Chi Dung admitted to handing out bribes to members of the country's ruling
communist party in a bid to avoid his imminent arrest for embezzlement. Dung was
sentenced to death in December for siphoning off millions of dong from the company.
Financial Data
2013
Vinalines is bracing itself for a full-year loss of VND2.1trn (US$101mn) already as the
company continues to perform abysmally following 2012's reported loss of VND2.44trn.
The company's CEO, Nguyen Canh Viet, said: 'There are few transporting contracts
amid these crisis times, while several partners refused to clear their payment on time,
despite the cheap fares.'
2012
Vinalines announced a VND1,439bn (US$69.2mn) loss during the first half of 2012,
which is around double the losses incurred for the corresponding period a year
previous. The loss was attributed to a 'perfect storm of liquidity and jobs woes',
according to Vinalines Director Nguyen Canh Viet, reported by Vietnam Investment
Review.
Page 39
Financial Data
2011
Vinalines recorded a VND62.15bn (US$3mn) profit for 2011, despite posting a loss of
VND660bn (US$32mn) in H111 - the first time this has ever occurred in the company's
15 years of operations. The results came as a surprise to analysts who were expecting
the company to suffer from the sinking of the bulker Vinalines Queen. In 2011, Vinalines
shipped 36.8mn tonnes of cargo, which was a 1% annual increase on 2010.
Latest Activity
Former Vinalines Bosses Sentenced To Death

In a bid to curb corporate graft, the government of Vietnam announced in December
2013 that two former Vinalines bosses - Tran Ba Hung, former head of HyundaiVinashin Shipyard's Manufacturing Department; and Pham Ba Giap, director of Nguyen
An Limited Company - are to be sentenced to death for 'asset misappropriation'. The
sentences relate to the signing of a contract for floating dock 83M back in 2008
destined for Van Phong Port.
While Tran Hai Son is alleged to have colluded with Tran Van Quang, Tran Ba Hung and
Pham Ba Giap over the penning of repair contracts worth around VND8.7bn (US
$411,000) with Nguyen An Limited Company, Tran Hai Son is alleged to have
misappropriated a larger sum and also admitted to spending VND300mn on gifts for
former Vinalines Chairman Duong Chi Dung.
Page 40
Shipping - Global Industry View

Container Demand: Growth Outlook To Bolster 2014 Box Volumes
A continued recovery in 2014 in the major consumer markets of the US and Europe will boost demand in
the container shipping sector, enabling it to suck up some of the overcapacity in the market, which has
plagued the container shipping sector in recent years, negatively impacting freight rates and by extension
container lines' financial results.
The US and Europe, the world's major consumer markets, continue to recover, with US growth forecast to
strengthen by 2.8% in 2014 - up from an estimated 1.8% in 2013. A bellwether of Europe's recovery, the
eurozone, is projected to recover from two consecutive years of recession in 2014, with a growth of 1.0%
projected.
Growth Recovery
US & Eurozone Real GDP growth, % y-o-y
e/f= BMI estimate/ forecast. Source: National Statistics Authorities
Page 41
BMI also highlights the growing consumer demand stemming from emerging markets, specifically China,
which has the potential to become a consumer powerhouse and is steadily shifting its focus from being a
supplier of consumer goods to be a consumer in its own right.
The strengthening in demand for container shipping is already being felt in the industry. At the world's top
five largest ports (the ports of Shanghai, Singapore, Shenzhen, Hong Kong and Busan) between JanuaryNovember 2013 container throughput levels have increased by 1.6% y-o-y to reach 118.5mn TEUs.
The outperformer of the five is South Korea's port of Busan, which has recorded a 4.0% y-o-y increase in
throughput for the first 11 months of the year, with the port's role in the global transhipment market steadily
increasing. The market leader Shanghai has also performed well, with y-o-y growth of 3.8% - the only port
out of the five to record a strengthening in growth y-o-y. The underperformer of the group remains Hong
Kong.
Shanghai Driving Growth

Global Top Five Ports Jan-Nov 2012 % 2013, % Change y-o-y
Source: Port Authorities
The port of Hong Kong is steadily losing out to mainland China ports as liners choose to go direct, thereby
negatively impacting Hong Kong, as its primary role is to serve as a transhipment hub for China. In 2013
Page 42
the port lost its third place position to Shenzhen, with volumes in January-November 2013 falling by 4.2%
y-o-y. BMI does however highlight that the decline in Hong Kong's container throughput is slowing, as in
January-November 2012 container levels at the port were down by 4.6% y-o-y.
In 2014 BMI projects the container throughput volumes at the top five ports to strengthen as the
macroeconomic climate continues to improve. We forecast that total container throughput at the top five
global ports will increase by 3.5% y-o-y in 2014 to reach 133.9mn TEUs, up on the 1.7% increase we
estimate for the ports in 2013.
Bellwethers Indicate Box Growth

Global Top Five Ports Total Container Throughput, TEUs* & % change y-o-y
*Global Top Five Ports = Shanghai, Singapore, Shenzhen, Hong Kong and Busan. e/f = BMI estimate/forecast. Source: Port
Authorities
Page 43
BMI forecasts that each of the five ports will witness an improvement in throughput growth, and Shanghai
is projected to outperform, with a growth of 5.7% forecast.
US: Recovery Strengthening
The US, the largest consumer market in the world, with the consumer sector the major driver of the
country's economy, continues to grow. After a projected slowing in growth in 2013, with BMI estimating
an increase of 1.8%, compared to the 2.8% growth recorded in 2012, we forecast a strengthening of growth
in 2014, with real GDP forecast to increase by 2.8%.
BMI highlights that despite the slowing in the US economy's growth the total throughput recorded at the
country's bellwether ports of Los Angeles and Long Beach has been robust. In January-November 2013
total throughput volumes at the port increased by 3.0%, up from the 1.0% y-o-y growth recorded in the first
11 months of 2012. For the full year of 2013, BMI forecasts a y-o-y increase in throughput of 3.0%, with
the total for both ports projected to reach 14.6mn TEUs, up from the 14.1mn TEUs handled in 2012. This
throughput level for 2013 would take the port's total throughput levels back to 2008 levels.
Page 44
Boxes Booming On The West Coast

Port of Los Angeles & Long Beach Container Throughput, TEUs & % change y-o-y
Source: Port Authority
When analysing the US' container throughput outlook it is imperative to measure the throughputs of both
the US West Coast ports of Los Angeles and Long Beach, as they compete with one another for market
share. For example in 2013 the port of Long Beach outperformed in terms of growth, with box volumes at
the facility in January-November 2013 increasing by 12.1%, while at the port of Los Angeles container
levels dipped by 3.7% y-o-y.
The reason for Long Beach's increase at the expense of the port of Los Angeles is that the former is now
capable of handling 14,000TEU ships, with vessels of this size added to MSC and CMA CGM loops
calling at the port.
BMI forecasts 2014 demand to be even stronger at the US West Coast ports. The consumer picture
continues to brighten, with the University of Michigan's Survey of Consumer Confidence Sentiment
December 2013 reading increasing both month-on-month (m-o-m) by 10% and y-o-y by 13% to reach 82.5.
Page 45
Recovering Consumer To Boost Throughput

University Of Michigan Survey of Consumer Confidence Sentiment (LHC). Port Of Los Angeles
& Long Beach Container Throughput, TEUs & y-o-y % Change (RHC)
e/f= BMI estimate/forecast. Source: Bloomberg, Port Authority
This strengthening in the country's consumer ties into BMI's improving growth outlook for the US in 2014
and will have a positive impact at the country's ports. In 2014 we project the port of Los Angeles and Long
Beach to handle a total of 15.4mn TEUs, a y-o-y increase of 6.0% - a strengthening on the 3.0% y-o-y
growth predicted for 2013 - with the ports well on their way to once again hitting the 15.76mn TEU
milestone set in 2006.
Europe: Back To Growth
Europe's recovery is set to get underway in 2014, with BMI predicting that 2014 will be the year that the
eurozone pulls out of recession. After two consecutive years of contraction, BMI is forecasting eurozone
real GDP to grow by 1.0% in 2014.
Page 46
European Recovery Continues

Germany, France & United Kingdom Real GDP growth, % y-o-y
e/f= BMI estimate/forecast
The improvement in Europe's economic outlook is being driven by the region's three largest economies,
with Germany, France and the UK all projected to record y-o-y improvements in economic growth in 2014.
For those operating in the container shipping sector in Europe, the latest consumer sentiment data for the
region will bolster their outlook. According to information released by the European Commission's
Business and Consumer Survey, consumer sentiment in the region is ticking up. The European
Commission's Business and Consumer Survey ended 2013 on a high of -13.6, up 43% y-o-y and a level not
seen since July 2011.
Page 47
Consumer In Recovery
European Consumer Sentiment
Source: European Commission's Business and Consumer Survey
BMI highlights that the improving consumer sentiment is a longer term trend, with the European
Commission's Business and Consumer Survey rating steadily improving throughout 2013.
The strengthening European demand outlook will positively impact the region's ports, with its bellwether
facilities in the frontline to benefit.
2013 data have so far been released by Europe's largest and third largest ports, the ports of Rotterdam and
Antwerp, with both facilities still recording y-o-y declines in throughput and a worsening y-o-y picture. The
only European bellwether port to have witnessed a y-o-y improvement in throughput volumes and growth,
is the second placed port of Hamburg. The German port has yet to release its full 2013 data, but in its
January-September 2013 results it recorded a y-o-y growth of 3.6%. BMI estimates that the port's box
throughput increased by 3.5% in 2013, an improvement on the 1.3% contraction recorded in 2012.
Page 48
Box Ports Back To Growth

Port Of Rotterdam, Hamburg & Antwerp Container Throughput, % Change y-o-y
*2013 data is a BMI estimate. Source: BMI, Port Authority
In 2014 BMI is forecasting growth at all three of Europe's bellwether ports, and we also project a
strengthening in demand at all three. We highlight that our view of an improving box outlook in Europe
appears to be shared by the ports, with the port of Rotterdam announcing a 1.0% increase on its port tariffs an increase that will take its tariffs back to the pre-downturn levels of 2008. The port of Rotterdam, like
others in Europe and worldwide offered discounts to the shipping industry during the downturn in the
sector, and the decision to increase tariffs once more indicates that port authorities are detecting that a
recovery is underway.
China: A Consumer Power House In The Making
The US and Europe remain the world's largest consumer nations, but steadily China is developing into a
consumer player. This is greatly impacting the container shipping sector, as the country is becoming a major
importer of goods shipped by boxes, rather than just the world's largest container exporter.
The development of China's consumer class is the key driver to the emergence of Intra-Asia trade, with the
country seeking its box imports from the Asia region.
Page 49
China Economic Growth Slowing, But Consumer Growing

LHC: China Real GDP growth, % y-o-y. RHC: China Total Household Spending, US$ % y-o-y
e/f= BMI estimate/ forecast. Source: National Bureau of Statistics China
China's decision to rebalance its economy away from a raw materials importer to being driven by the
consumer sector, will lead to a slowing in the country's growth. BMI forecasts the country's real GDP to
grow by 6.1% over the medium term (2014-2018) compared to the 8.8% annual average increase recorded
in the previous five years (2009-2013).
However the country's growth, despite this slowing, remains robust. Vitally for the consumer sector, and by
extension the container shipping sector, China's total household spending is forecast to remain in double
digits, expanding by an annual average of 11% between 2014-2018.
Page 50
Container Supply: Overcapacity To Remain An Issue In 2014

The projected strengthening in demand in the container shipping market offers a more positive outlook for
the sector than it has witnessed in previous years. The key test for the industry however, remains its ability
to control the issue of overcapacity, which has plagued the sector since the 2009 downturn. BMI expects
capacity management to remain the major focus of shipping lines in 2014, as a greater volume of newbuilds
is due online in 2014 compared to 2013.
Volumes Up, Vessels Down, As Megas Change The Landscape
In January 2014, growth in the global container shipping market has remained static year-on-year (y-o-y),
increasing by 5% (measured on January 10 2014) to 214.2mn deadweight tonne (dwt) - the same growth
level recorded in January 2013.
BMI highlights that static levels of growth in the global fleet were recorded for the whole of 2013, with the
global box fleet expanding by 5%, the same level of growth recorded in 2012, which in turn marked a
slowdown from the 7.1% expansion recorded in 2011.
Page 51
Containership Capacity Increasing...

Average Containership Fleet In Service, DWT '000 and % Change y-o-y
Source: Bloomberg
Although in vessel capacity terms the global box fleet's growth has remained static, when the fleet is
measured by the growth in the number of vessels, there is a marked decline. At the end of 2013, the global
box fleet stood at 4,798 vessels - a y-o-y decline of 0.2% when compared to the 2012 figure of 4,807
container ships.
Page 52
... But Vessel Numbers In Decline

Average Containership Fleet In Service, Number Of Vessels and % Change y-o-y
Source: Bloomberg
The disparity between the y-o-y growth in the box shipping sector's capacity when compared to vessel
numbers highlights a major theme that BMI has been tracking in the container shipping sector - that of
vessels getting bigger. The trend for mega vessels has prevailed and this has led to the number of vessels
being utilised contracting, as operators swap to using larger vessels on strings, thereby decreasing the
number of ships needed for a rotation.
BMI highlights the steady trend for average vessel sizes increasing. In 2005 the average container ship
boasted a capacity of 33,187dwt; over eight years to 2013 the average box ship size has increased by 34.7%
to reach 44,715dwt.
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Box Ships Getting Bigger

Global Average Container Vessel Size, DWT
Source: BMI
This trend for bigger vessels as opposed to more vessels is also evident for newbuild ships. An indication of
the level of vessels due online over the next 18 months is the current number of vessels under construction.
At the end of 2013, the number of container ships being constructed stood at 82. This marked a 17%
decrease in the number of box vessels being built at the end of 2012.
Page 54
Mega Vessel Trend To Continue

LHC: Containerships Under Construction (Number of Vessels). RHC: Containership Launches By
Capacity (TEU)
Source: Bloomberg, AXS Alphaliner, BIMCO, Clarksons
However, this decline is at odds with the capacity that is projected online in 2014. AXS Alphaliner estimates
that 1.6mn twenty foot equivalent units (TEU) of new capacity is due online in 2014, a y-o-y increase of
10.3% on the 1.45mn TEU that came online in 2013.
Slow Steaming And Idling To Remain In Place
This increase in capacity will, despite the projected uptick in demand, continue to place pressure on the box
shipping market, with overcapacity set to ease but not disappear. Operators will therefore continue to utilise
their tried and tested methods for capacity managements, namely slow steaming and vessel idling. The
continued influx of larger ships will also lead to further cascading, whereby vessels are removed from a
particular service as larger ships come online to operate on that route and are placed onto other routes.
Containership vessel speeds continue to slow. The annual average speed for a box ship in 2013 stood at
10.23 knots, a y-o-y decline of 2% and a drop of 21.3% from the 2008 average box shipping speed of
13 knots. As overcapacity is set to remain an issue in 2014 we expect the strategy of slow steaming will
result in ship speeds potentially decreasing even further.
Page 55
Capacity Management Key

LHC: Containership Average Speed (Knots). RHC: Idle % of Global Container Fleet
Source: Bloomberg, Lloyds List Intelligence Unit
Idling of ships is another tactic that BMI believes will remain prominent in 2014. According to Lloyd's List
Intelligence the current idle container shipping fleet stands at 2.9% of the total box ships globally, as of
January 15 2014. This marks a considerable decline y-o-y in the proportion of container vessels at anchor,
as in the same period in 2013 the global idle box fleet stood at 6.7%.
BMI expects the idle box fleet to remain volatile over 2014, as container lines opt to anchor ships or
decrease the volume of idle ships due to seasonal reasons, such as the Chinese New Year or peak season.
The fact that carriers were prepared to idle as much as 6.7% of the total global fleet in January 2013
highlights the lengths they are prepared to go to in order to manage capacity, and we believe that this stance
will not change in 2014.
Cascade To Continue
The continued influx of larger vessels, with more Triple-E type Maersk Line ships due online in 2014 and
MSC's fleet expansion from 14,000TEU to 16,000-18,000TEU due to begin in Q314, will lead to further
cascading in the container shipping sector.
Page 56
The recovery in the US economy has led carriers to place more focus on their transpacific operations. The
development of the nation's ports, with the country's key gateways of Los Angeles and Long Beach both
expanding to ensure they can handle larger ships and retain their roles following the expansion of the
Panama Canal offers the carriers the ability to cascade displaced Asia-Europe tonnage onto the transpacific
route.
Long Beach handled its first 14,000TEU ship in October 2012. Such vessels at Long Beach are set to
become a regular sight at the port, with two 14,000TEU ships now assigned to MSC and CMA CGM's
Pearl River Express service.
The expansion of the Panama Canal, due to be completed in 2015, offers further cascade opportunities for
shipping lines, as the waterway will be able to cater for 12,500TEU box ships; East Coast ports are
expanding and investing in preparation for this.
BMI has previously highlighted how the cascade effect is also filtering down to emerging trade routes
(ETRs). For example, ships with capacities of between 8,000-9,000TEUs are becoming more standard on
the Asia-Latin America routes.
This is also the case on Europe-Latin America routes. Drewry Maritime Research highlights that in July
2008 the average largest capacity vessels operating on Europe-East Coast South America routes were the
5,552TEU ships on the Loop A service operated by Hamburg Sud, Alianca, CMA CGM and HapagLloyd. Latest data for this route for November 2013 show that the largest vessels now plying this route
offer average capacities of 8,456TEU.
P3 Network: Major 2014 Development, But What Impact On Supply?
The major development in the container shipping sector in 2014, which could have the potential to impact
capacity, is the planned launch of the P3 Network. The alliance, which will see the world's largest container
lines (Maersk Line, MSC and CMA CGM) join forces to operate services on the major trade routes of AsiaEurope, transpacific and transatlantic is currently being considered by regulatory authorities in the US,
Europe and China.
The threat feared by the shipping sector, which the regulatory authorities will evaluate, is whether the P3
Network has the potential to create a monopoly and have a negative impact on other shippers. To counter
this view and remain within regulations, members of the P3 Network have stated that an independent
operating centre will be set up to manage vessel schedules, allocations and ship utilisation.
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Such an alliance does have the potential to impact the capacity in service in the container shipping sector.
For example the P3 Network will be reducing the number of ships they deploy in the main east-west trades
by 37.3%, from 346 services to 252 routes.
The extent of the proposed P3 Network to control capacity is however up for debate, with Alan Murphy,
SeaIntel Maritime Analysis' chief operating officer, warning that 'the P3 Network will not lower
oversupply...Alliances are not consolidators. Members are not cooperating on pricing sales, marketing and
customer sales'.
Dominant Force
P3 Network, % of Total Route Coverage
Source: JOC
BMI also highlights that even though the P3 Network would be the largest in the world, it will still face
competition and would not slash its capacity and threaten its market share. In response to the planned P3
Network, the G6 Alliance - which boasts as its members Hapag-Lloyd, NYK, OOCL, APL, HMM and
MOL - has announced that it plans to expand on the trade routes of the transatlantic and Asia-US West
Coast.
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Taiwan's Evergreen Line, which has remained outside of the alliance structure, is currently in talks with
the CKYH Alliance (made up of COSCPO, 'K' Line, Yang Ming and Hanjin Shipping) to expand their
cooperation and UASC and CSCL, which currently cooperate in a vessels sharing alliance on the
transpacific, are likely to expand this alliance onto the Asia-Europe trade route in the next few years, with
both parties holding orders for 18,000TEU ships.
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Container Rates: Volatile As Demand Ticks Up, But Oversupply Remains

The container shipping sector has put a tough 2013 behind it, and is entering 2014 with rates improving on
those seen at the end of the previous year. The uptick in demand on the major trade routes, as European
markets begin to recover and US demand continues to steadily increase, offers a positive outlook for rates in
2014. However. continued supply side pressure tempers our view, as increased volumes of container
shipping capacity are set to be added to the global box fleet in 2014. Fleet management to tackle
overcapacity will remain in place and any slip in this tactic to chase market share will have a negative
impact on rates and continue to damage the container lines.
A rate push on the major trade routes at the beginning of 2014 enabled the Shanghai Containerised Freight
Index (SCFI), a bellwether of global container freight rates, to spike. As of January 17 2014 (last available
data) the index stood at 1,188.44 - a level last reached in March 2013.
Falling Down In 2014

SCFI Average First Three Weeks Of 2013 & 2014
Source: SCFI
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This marks an improvement on most of 2013, when the SCFI recorded a year-on-year (y-o-y) decline of
14% in freight rates as compared to 2012. However, when the first three weeks of 2014 are contrasted with
those in 2013, the index is in fact down by 2.6% y-o-y. This indicates that rates aren't making as strong a
start to 2014 as they did in 2013.
Asia-Europe: Starting The Year Strong, But Capacity Pressure To Remain
In contrast to most years, the y-o-y decline in the SCFI for the first three weeks of 2014 is not due to rate
issues on the Asia-Europe trade route. As BMI predicted in its last Container Rates Overview, freight rates
on this trade route would push above the US$1,000 TEU level.
At the beginning of 2014, operators unleashed a rate push, which increased y-o-y Asia-Europe freight rates
by 16.8% to US$1,765 per TEU. Rates on the route have since declined, losing 7% over two weeks. They
do, however, remain above the US$1,000 per TEU level and the average freight rate on this route for the
first three weeks of 2014 is 26.8% higher than the average for the same period in 2013. Freight rates on the
Asia-Europe trade route are therefore off to a strong start.
Strengthening
LHC: SCFI Europe Base Port (US$ per TEU) & w-o-w % Change. RHC: SCFI Europe Base Port
Average First Three Weeks Of 2013 & 2014
Source: SCFI, BMI Calculations
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BMI expects a continuation of the strategy of rate pushes, with one carrier publishing rate increase plans
and others implementing similar rate increases. This will serve to push rates up for one week, maybe two,
before once again rates tick down. The aim, as it has been in previous years, will be to keep the freight rate
on the Asia-Europe route above the US$1,000 per TEU level and so the continuation of strict capacity will
be required.
These is already evidence of this in 2014, with seasonal pressures connected with the Chinese New Year,
leading the G6 Alliance (an alliance made up of the shipping firms Hapag-Lloyd, NYK, OOCL, APL,
HMM and MOL) to cancel two more Asia-Europe routes following the Chinese New Year at the end of
January.
The major test for container lines in 2014 will be whether they push up the yearly freight rate average for
the Asia-Europe trade route. In 2013, the average freight rate on this trade route, as measured by SCFI data,
stood at US$1,086 per TEU. Although this figure was above the US$1,000 per TEU level, it marked a 21%
y-o-y decline in the average freight rate on the Asia-Europe trade route.
Recovering From A Tough 2013

SCFI Europe Base Port Average y-o-y % Change
Source: SCFI, BMI calculation
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BMI highlights that although freight rates on the Asia-Europe trade route have got off to a strong start and
are likely to be bolstered by the improving demand outlook in Europe; the majority of the overcapacity that
is due online in 2014 will be allotted on this route, as the trend for mega vessels, which due to their size can
only be operated on this route, continues to impact the sector.
The cascading of vessels onto other routes to make room for these new larger ships will remain a key
strategy to manage capacity, but BMI believes that overcapacity will remain the major issue for the sector
in 2014 and that the rate volatility associated with this will continue.
Transpacific: Cascade Impact To Be Closely Managed
Rates on the Shanghai-US West Coast (transpacific) route have, according to SCFI, steadily increased
week-on-week (w-o-w) since the beginning of 2013 - up 17% from the end of 2013 and growing by 13% in
just one week for the week ending January 17 2014 to reach US$2,111 per FEU, as members of the
Transpacific Stabilisation Agreement (TSA) enacted a planned rate increase of US$300 per FEU on the
trade route.
Rates Up, But Still Down Y-O-Y

LHC: SCFI USWC Base Port (US$ per FEU) and w-o-w % Change. RHC: SCFI USWC Base Port
Average
Source: SCFI, BMI calculation
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Despite this uptick in freight rates on the transpacific route, the average freight rate on the route for the first
three months of the year is down 18.2% y-o-y. The route is also likely to be the first port of call for
displaced vessels during cascading from the Asia-Europe route. We have already witnessed this start to
happen with MSC now operating 14,000TEU ships, once utilised on the shipping firm's Asia-Europe route
portfolio, now operating on its transpacific routes calling at Long Beach.
This cascading will raise the risk of the overcapacity that has plagued the Asia-Europe route negatively
impacting the transpacific route and its rates outlook, but BMI highlights that there are two factors that
should ensure the transpacific trade route is able to manage any new capacity influxes.
The first is the demand outlook in the US, with the country's economy continuing to grow steadily and
outpacing those in Europe. The second reason is the existence of the TSA. The TSA counts the major
shipping lines that operate on the transpacific as it members. Unlike on the Asia-Europe trade route where
the conference system is banned, members of the TSA are still able to discuss and coordinate rate increases.
This leads to much less rate volatility on the transpacific compared to the Asia-Europe trade route and also
increases the likelihood of success for freight rates.
Less Volatility On The Transpacific

SCFI Europe Base Port (US$ per TEU) & SCFI USWC Base Port (US$ per FEU) w-o-w % Change
Source: SCFI
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BMI expects that, as more cascading of larger vessels onto the transpacific is likely this year, capacity
management will come into greater focus. In terms of rates, operators will be seeking to improve on the
annual transpacific average of US$2,031 per TEU in 2013, which recorded a y-o-y decline of 12% on the
2012 freight rate average.
Antitrust Investigations - A Sector-Wide Worry
Another year managing capacity and trying to push rates up is ahead for operators in 2014. The rate level is
the difference between profit and loss for container lines and while firms' bottom lines have been improving
the threat of losses due to rate declines still exists.
BMI also highlights that firms will be wary of the potential negative impact on their results stemming from
accusations of price signalling, which are currently being investigated. In November 2013, the European
Commission (EC) stated it had launched a probe into 14 container lines which it suspects of violating
antitrust laws via the indirect practice of price signalling, by issuing advance notice of their rate increase
plans, which enables their rivals to initiate their own rate increases. The Russian competition authorities
have decided to initiate their own proceedings against local agents of some of the world's largest container
shipping lines in relation to raids as part of Russia's own investigation into price fixing and signalling.
Table: Shipping Lines' Agents Offices Raided In Russia
Maersk Line
MSC
CMA CGM
APL
K' Line
NYK
OOCL
CSCL
Hyundai MM
Zim
COSCO
Evergreen
Page 65
Shipping Lines' Agents Offices Raided In Russia - Continued
Hapag-Lloyd
Source: BMI
There is no timeframe around either the EC or Russia's Federal Antimonopoly Service (FAS) investigation
into container lines and their rate announcement practises. There is also no information on potential
penalties, which could be implemented if, when investigations are completed, the parties are charged and
are found to have violated antitrust laws.
This development will be a worry to the industry, as any penalties would negatively impact this recovering
sector and the strategy of published rate increases, which has enabled the container shipping lines to push
up rates and decrease losses, could be curtailed if it is found to be in violation of antitrust laws, raising the
question of what strategy carriers could utilise instead to manage rates during this period of overcapacity.
Tough Operating Environment, But ETRs Remain The Outperformers
The tough operating environment for container lines in 2013 is highlighted by the fact that only the intraAsia trade route of China-South Korea recorded a y-o-y increase in rates, with rates on other trade routes
either plateauing or declining y-o-y.
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Busan The Outperformer

2013 SCFI y-o-y % Change
Source: SCFI
This growth on the intra-Asia trade route of China-South Korea once again highlights BMI's view of
emerging trade routes (ETRs) over developed trade routes (DTRs). BMI expects this trend to continue as
demand on emerging markets is developing from a lower base and is therefore stronger. There is also less
saturation on these markets, which makes increasing rates for the carriers that do operate on them easier.
The rates on the China-South Korea trade route have been boosted by strengthening demand, as South
Korea's port of Busan expands its role in the transhipment market. In January-November 2013, the port of
Busan's container throughput increased by 4% - the strongest y-o-y growth out of the top five box ports
globally.
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Global Company Strategy

Maersk Line
Overview
Maersk Line is the main container shipping unit of highly diversified shipping and energy conglomerate AP
Moller-Maersk Group. The group's other box shipping subsidiaries are MCC, which operates its intra-Asia
route network, and Safmarine, which transports boxes to and from Africa and the Middle East.
The company is based in Denmark but boasts a global presence, in 125 countries. It has around 32,400
employees.
Maersk is the largest container shipping company in the world, boasting a total fleet capacity of 2.6mn
twenty-foot equivalent units (TEUs) and one of the largest box shipping networks. It is heavily exposed to
Asia-Europe but is increasing its role in intra-Asia trade, where it already possesses expertise in the form of
MCC.
SWOT Analysis
Strengths
As the world's largest container shipping line, Maersk has a greater share of global seaborne container
volumes than any other carrier.
Its large, expanding fleet offers it the ability to capture trade volumes.
Maersk is part of AP Moller-Maersk, a diversified company with activities in the oil & gas and terminaloperating sectors that synergise with its shipping operations.
Flexibility as a result of fleet size and type.
The company has a raft of strategies it can call on during the current depressed environment in the
container sector, including laying up vessels and super slow-steaming.
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Weaknesses
The dominance of the Asia-Europe trade route (accounting for 24% of volumes carried in 2012) in
Maersk's service portfolio leaves the company heavily exposed to a downturn on this route.
With such a large fleet, Maersk is constantly running the risk of overcapacity, which could be a drain on
resources if business slows.
Its presence in the oil & gas and terminal operating sectors means Maersk risks an overreliance on the
sector as an integrated whole. This could be dangerous if one sector's activities fail to hedge the other (for
example, if oil prices are at odds with bunker prices).
Opportunities
The company is increasing its exposure to intra-Asia trade, which is widely considered to offer huge
growth potential for the container shipping sector.
It looks set to remain number one in the container shipping sector and has cemented its position as a
global leader with an order for 20 18,000TEU vessels.
The company is increasing its exposure to Russia - one of the few European markets that still offer
growth for the container shipping sector.
The line's focus on emerging market routes is wise, not only as a diversification strategy from
overexposure to the 'big money' routes, but also as a way to enter potentially high-growth markets early.
By participating in the projected P3 Network, the company might improve efficiency by better utilising
vessel capacity to weather the slowdown in demand and overcapacity.
Threats
Overcapacity fears still plague the container shipping market.
The trend of alliances and partnerships could put pressure on Maersk Line's market share, as its rivals
join forces.
The company is to hold off on newbuild ordering for two to three years, and this could mean that it
misses some bargains being offered by shipyards, as newbuild prices have shrunk.
Maersk's offices, along with some of its peers, were raided in February 2013 by Russia's Federal AntiMonopoly Service (FAS) and in May 2011 by European Commission officials investigating antitrust
claims, and as of the end of 2013 the company was still part of both FAS' and EC's formal investigations.
If the shipping company is found to have acted inappropriately it will be in line for a hefty fine.
The company trades in kroner, which means it is vulnerable to changes in the US dollar.
Although the group operates in the oil & gas sector, disparities in the price of oil and bunker costs
threaten profits.
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Strategy
Maersk continues to dominate the global container shipping sector, holding a 14.6% market share,
according to AXS Alphaliner. This is still some way above its nearest rival, Mediterranean Shipping
Company (MSC), which boasts a market share of 13.2%.
Routes
The company offers 10 transpacific services and 10 Asia-Europe services (one of which - AE9 - is
suspended). Maersk is also heavily committed to intra-Asia trade, mainly through its subsidiary MCC,
which operates the group's intra-Asia services.
In terms of volumes handled on Maersk's services, Asia-Europe dominates. In 2012 the route accounted for
24% of the total, the same as in 2011. West and Central Asia is the second largest route, accounting for 17%
of the total. Africa accounts for 15% of the total; Safmarine operates in this area with a focus on the
transportation of containers to and from Africa and the Middle East. Transpacific trade accounts for 15%
and Latin America for 14%, while intra-Asia currently makes up just 7%. BMI expects intra-Asia's role in
Maersk's service portfolio to increase over the medium term, with the company - along with its peers putting huge emphasis on the growing demand between Asian states.
While holding its dominant position on the big money trade routes, Maersk is also increasing its exposure to
emerging trade routes (ETRs). These include intra-Asia, intra-Europe and West Africa. BMI considers this a
wise strategy, as competition continues to expand on the Asia-Europe and transpacific routes, pushing rates
down. As well as offering diversification away from the big money routes, ETRs offer both less competition
and high growth potential. There are, of course, obstacles, as there tend to be in emerging market-focused
activities. However, Maersk's tactic of hiving off specific units, as in the case of intra-Asia MCC, is a sound
strategy, in BMI's view. We also highlight the lack of infrastructure at many of the ports on ETRs and note
Maersk's strategy of overcoming this by developing vessels with on-board cranes, thus negating a risk in
operations.
Fleet
Maersk has the largest fleet in the world in terms of capacity with 2.6mn TEUs, comprising 572 ships. The
fleet's dynamics are fairly evenly split between owned and chartered, at 55.6% and 44.4% respectively.
Although the company charters in less capacity than it owns, it charters in more vessels, with the chartered
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fleet standing at 326 ships, compared with its owned fleet of 246 vessels. Maersk appears to have a strategy
of chartering smaller vessels while owning and operating larger ones. This could be because of the prestige
of owning a large fleet, but BMI believes it is also partly because there is a larger global supply of smaller
vessels, which Maersk can charter in as needed.
The largest share of Maersk's fleet, in terms of size, comprises 8,000-10,000TEU vessels. The company has
also invested heavily in larger vessels and owns five of the world's largest container vessels afloat - the
18,000TEU Triple-E class - and eight of the second largest vessels afloat - the 15,000TEU 'E' class.
Maersk is implementing a strategy that should, in the medium term, ensure it remains the market leader in
terms of capacity. The company originally ordered 10 18,000TEU vessels, but has now doubled that
number. The first five vessels were delivered by early 2014; the remaining 15 are scheduled for delivery in
2014 and 2015. Maersk did have the option to take another 10 18,000TEU vessels, but decided to let it
lapse. BMI notes that while volumes on the Asia-Europe route have picked up after the downturn, ordering
vessels that can only operate on one route heightens risk.
Further highlighting Maersk's strategy of 'bigger is better' are reports that the carrier is seeking to increase
the capacity of some of its 8,600TEU vessels to 10,000TEUs. The company is, however, to hold off on
ordering newbuilds for the next two to three years.
Financial Results
Q313 And 9M13
Maersk Line's profit in Q313 was up 11.2% y-o-y from US$498mn to US$554mn. A.P. Moller-Maersk
Group attributed such improvement to lower costs. Maersk Line's volumes increased by 10.6% to 2.3mn
FFE. Increased volumes and an average deployed fleet capacity decreased of 0.8% resulted in improved
vessel utilisation and unit costs lower by 13.0%. Freight rates were down 12.2%.
Maersk Line was expecting their 'result for 2013 to be significantly above 2012 (USD 461m) based on the
strong result for the first nine months of USD 1.2bn.'
Maersk Line's volume in the first nine months of 2013 was up 3.0% to 6.7mn FFE, while the average freight
rate decreased by 7.0%.
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Q213 And H113
Maersk Line's profit amounted to US$439mn in Q213 - a y-o-y increase of 93.4% on US$227mn in Q212.
The AP Moller-Maersk Group explained such significant improvement by lower costs during the period.
Volumes were up 2.1% to 2.2mn forty-foot equivalent unit (FFE), while average freight rate was down
13.1% and total cost per FFE fell by 12.7%. According to the group, the cost decrease was mainly due to
vessel network efficiencies and lower bunker price. The total fleet capacity of Maersk Line decreased by
0.9%.
In the first half of 2013, Maersk Line's revenue was down 4.9%, y-o-y, from US$13.634bn to US
$12.964bn. The company posted a US$643mn profit for the period (Net operating profit/loss after tax
(NOPAT)), compared to a loss of US$372mn in H112. As in the case of Q213 performance, the significant
improvement in the financial performance in H112 was achieved, according to the group, through lower
costs mainly driven by vessel network efficiencies and lower bunker price. The volume was down 1.0% to
4.3mn FFE, while the average freight rate decreased by 5.0%.
Q113
Maersk Line posted a net profit of US$204mn in the first quarter of 2013, compared with net loss of US
$599mn in the corresponding period of 2012. With revenue unchanged at US$6.3bn as a result of a y-o-y
freight rate increase of 4.7% offset by a 4.0% decrease in volumes, such an improvement in the bottom line
was attributed to lower costs.
According to AP Moller-Maersk Group CEO Nils Andersen, as reported by American Shipper, Maersk
Line has controlled expenses by reducing capacity and had 28 idle ships at the end of Q113 - the equivalent
of some 6.5% of its fleet.
Q412 And 2012
Maersk Line's revenue in Q412 increased by 2.5% y-o-y to US$6.52mn, despite a 9.1% fall in volumes to
2mn forty-foot equivalent units (FEU) and thanks to a 6.6% growth in the freight rate. As a result, Maersk
Line recorded a NOPAT of US$335mn, compared with the US$593mn loss it recorded in Q411, and was
also helped by fall in the bunker fuel price from US$658 to US$604 per tonne.
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Revenue for the year was up 8.0% to US$27.1bn, and volumes increased from 8.1mn FEU in 2011 to 8.5mn
FEU in 2012. Cost reductions, surcharges collection and 1.9% higher average rate y-o-y led Maersk Line
back to the black, posting a NOPAT of US$461mn in 2012 compared to a loss of US$553mn in 2011.
According to the company, it gained market share for the full year, but saw a declining share through H212.
Q312 And 9M12
In Q312 Maersk Line's revenue increased by 5.7% y-o-y to US$6.96bn. The main driver behind this
increase was a 5.7% increase in the freight rate, which averaged US$3,022 per FEU over Q312, as volumes
carried remained static y-o-y, at 2.1mn FEU.
On the back of this, Maersk Line recorded a profit of US$498mn - an improvement on the US$289mn loss
in Q311. The profit was accomplished not only by increased revenue, but by a fall in operating costs,
specifically the bunker fuel price - down 1.2% y-o-y to an average of US$648 per tonne in Q312.
The positive result in Q312 enabled Maersk Line to record a profit of US$126mn in 9M12. Over the first
nine months of 2012 the firm's revenue increased by 9.9% to US$20.6mn, with volumes growing by 10.2%
and freight rates by 0.24%. Bunker prices, while down in Q312, were elevated for the other two quarters, up
11.9% for the period.
Q212 And H112
Maersk Line's net profit in Q212, while a positive signal, was not enough to drag the carrier back into the
black for the first six months of 2012. The profitable second quarter was achieved due to success in pushing
up rates on the Asia-Europe route, to which the company is most exposed. The limited success of the sectorwide rate increase the company implemented on the route in Q312, however, offered downside risk to the
firm's ability to turn a profit for the whole of 2012.
In Q212 Maersk Line recorded a net operating profit of US$227mn, up from a US$95mn loss in Q211. The
Q212 profit was enough to wipe out the loss in Q112, with the line recording a net operating loss of US
$372mn, down from a profit of US$329mn in H111.
Maersk Line's revenue in Q212 increased by 16.7% y-o-y to US$7.3bn, with Q212 results outperforming
those the company posted in Q112 and with H112 revenue increasing by 12.2%.
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Maersk Line's revenue increase in Q212 was driven by the increase in volumes, with the carrier shipping
10% more boxes than in Q211, and the uptick in rates, with the company's average freight rates increasing
by 4.2% y-o-y in Q212. Operating costs remained high, as although the bunker price ticked down in Q212,
it was still up y-o-y, with Maersk Line posting an average bunker price increase of 10.3% in Q212 and
19.6% in H112.
Vitally for Maersk Line, Q212 rate increases were successful on the Asia-Europe route, the trade route to
which it is most exposed, accounting for 24% of its operations. Maersk Line boosted rates on the route by
14%, but this was not enough to wipe out the rate declines in Q112, with rates on the trade route down 8%
y-o-y.
Q112
Despite freight volumes increasing by 22.2% in Q112, enabling Maersk Line's revenue to grow by 7.4% yo-y, the company remained in the red, recording a loss of US$599mn. The company was dragged down by
the 9% decline in rates and the high price of bunker, with the price of fuel increasing by 30.9% in Q112.
BMI believes that the depth of Maersk Line's loss was mainly due to its exposure to Asia-Europe. In terms
of revenue generation, the trade route was the worst-hit, with the average rate declining by 21% y-o-y. In
fact, Maersk Line's main route exposure, measured in distribution of volumes across its networks, in all but
one case recorded rate declines in Q112. Rates on the Asia-Europe trade route, which accounts for 37% of
Maersk Line's operations, fell 21%. The Latin America and transpacific routes, which account for 14% and
11% respectively of Maersk Line's network, recorded y-o-y rate declines of 8% and 5% respectively. Africa
coverage, which accounts for 15% of Maersk Line's operations, posted a rate increase, but this was just 2%
y-o-y.
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2011
Despite Maersk Line's revenue increasing by 4.5% y-o-y from US$24bn to US$25.1mn, and transported
volumes increasing by 11%, the company still posted a loss of US$532mn; in 2010, it had recorded a profit
of US$2.8bn.The loss can be attributed to the sharp decline in freight rates, as a rate war between the major
box carriers played out in 2011, forcing Maersk Line's average freight rate down 7.7% y-o-y, to US$2,828
per TEU. This was coupled with the negative impact from spiralling fuel costs, with the bunker price
average increasing by 35.4% y-o-y to US$620 per tonne.
Maersk Line's exposure to the Asia-Europe trade route was a key factor in its 2011 loss. The route
dominates the company's operations, accounting for 39% (the operator in fact lifted its market share in this
route by 1 percentage point over the year, from 38%). While the route recorded solid throughput growth of
16% in 2011, a y-o-y decline in rates of 19% made turning a profit impossible.
Other key areas of growth for Maersk Line, in terms of container volumes, were Africa and Latin America,
which recorded throughput increases of 19% and 17% respectively. These regions also increased their role
in the carrier's distribution of volumes, with Africa accounting for 16% of the total and Latin America
accounting for 14%. Unfortunately, rates also declined on both routes. The three areas in 2011 where rates
did not decline were the transatlantic, Oceania and intra-Asia. Intra-Asia in our view, remained Maersk
Line's stand-out performer, seeing 5% volume growth. Intra-Asia still only accounted for 6% of Maersk
Line's total volume distribution, but with demand increasing and the fact that it has proved itself relatively
protected from the rate decline, BMI expected Maersk Line to continue expanding its coverage.
2010
Maersk's revenue increased by 30.65% y-o-y to US$26bn in 2010, compared with US$19.9bn in 2009. The
increase enabled the carrier to return to the black, with a full-year profit of US$2.6bn, following a loss of
US$2.1bn in 2009. The recovery in revenue was driven by the global uptick in both volumes and demand in
the container shipping sector. In terms of total volumes carried, Maersk's box levels shipped increased by
5.0%. The major driver of Maersk's recovery, however, was its ability to raise rates. Rates grew 29% y-o-y
in 2010; Asia-Europe saw the greatest rise, at 52% y-o-y, followed by the transpacific, where rates
increased by 33%.
The trend BMI noted from Maersk's results is that rates increased considerably more than volumes in all but
one case. The exception to the rule was intra-Asia, where volumes grew by 37% while rates rose 19%. This
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growth in volumes further cemented BMI's view that intra-Asia trade routes hold massive growth potential
for the box shipping sector.
The company achieved its recovery in 2010 mainly through rate rises but, like its peers, the line struggled in
2011 to implement planned increases.
We note that it was not simply the uptick in volumes and rates that enabled Maersk to improve its financial
position. The firm has continued its strategy of slow-steaming, ensuring a saving on bunker fuel. BMI
expected this strategy to continue as demand in the market for express services had not yet materialised.
Latest Activity
Maersk Still Under EC And Russia's Antitrust Investigation
Russia's Federal Anti-monopoly Service (FAS) has begun formal proceedings against Maersk and other
global container lines, it was reported in December 2013. The line is one of the companies accused of price
fixing, following the offices of the agents of Maersk, MSC, CMA CGM, APL, 'K' Line, NYK, OOCL,
China Shipping, Hyundai, ZIM, COSCO, Evergreen and Hapag-Lloyd in Moscow and St Petersburg being
searched in February 2013.
In November 2013 Maersk Line said it was informed that it was part of the EC's formal antitrust
investigations. China Shipping Container Lines, CMA CGM, COSCO Container Lines, Evergreen Line,
Hapag-Lloyd, Hanjin Shipping, Hyundai Merchant Marine, MSC, MOL, NYK, OOCL, United Arab
Shipping Co and ZIM are also under the EC's scrutiny. Maersk, MSC, CMA CGM, Hapag-Lloyd and
Evergreen confirmed they were under investigation for anti-competitive behaviour, according to Schednet.
According to FAS, Maersk and other carriers violated Clause 1 Part 1 of Article 11 of Russia's Federal Law
on protection of competition.
The Russian antitrust probe targeted at least 12 container lines in February 2013, according to Lloyds
Loading List, when their offices in Moscow and St Petersburg were visited by investigators. The list of
involved companies included the three largest lines Maersk, MSC and CMA CGM, along with APL,
Evergreen OOCL, China Shipping, COSCO, NYK Hyundai Merchant Marine and ZIM.
According to FAS, as quoted by the same source, 'the costs of marine container transportation constitute a
significant portion of the price of goods, every increase of the transportation costs directly affects customers
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across the globe.' At the time FAS also reminded about the antitrust investigations by the European, US and
some of the Asian countries' authorities. The EU banned rate-setting conferences in 2008, and the European
offices of 12 global lines were visited in May 2011, in what was thought to be part of the investigation into
the surcharges setting procedure.
Maersk Line in a statement in February 2013 confirmed that its offices in Moscow and St Petersburg were
visited by Russian antitrust authorities and denied any anticompetitive behaviour, Lloyds Loading List
reported.
Maersk Line, APL And OOCL To Co-Operate On Far East-Indian Subcontinent services
Maersk Line, APL and OOCL announced on January 14 2013 a new cooperation on three existing Far East
to Indian Subcontinent services from February. The slot-sharing agreement also includes CMA CGM,
Emirates Shipping Line, Hamburg Sd and Regional Container Lines and involves 18 ships with a total
capacity of some 17,500TEU being deployed on the three Far East-Indian Subcontinent services.
According to Maersk Line, the cooperation will provide more frequent sailings between Asia's major
trading hubs while eliminating service duplications between the carriers. The enhanced network allows
Maersk Line, APL and OOCL to offer three weekly sailings - covering China, Korea, Malaysia, Singapore,
India, Pakistan and Sri Lanka - instead of one weekly sailing previously offered independently by each
carrier.
The liners also announced port rotations for the three services. FI1 (operated by APL, Emirates Shipping
Line and OOCL) is to call at Nansha-Chiwan-Hong Kong-Singapore-Colombo-Jawaharlal Nehru-PipavavColombo-Port Klang-Singapore and Nansha. The port rotation of FI2 (operated by Hamburg Sd, OOCL
and Regional Container Lines) is Shanghai-Ningbo-Xiamen-Hong Kong-Singapore-Colombo-Jawaharlal
Nehru-Pipavav-Port Klang-Singapore-Hong Kong-Shanghai while FI3 (operated by CMA CGM and
Maersk Line) will be calling at Xingang-Dalian-Qingdao-Kwangyang-Busan-Ningbo-Hong KongSingapore-Tanjung Pelepas-Colombo-Pipavav-Jawaharlal Nehru-Port Qasim-Singapore and Xingang.
Intra-America Service Launched
Maersk Line from January 14 2014 launched a new weekly Meso America Express service, connecting the
US with Mexico, Guatemala, Honduras, Costa Rica, Panama, Colombia and the Dominican Republic on 34days port rotation Houston-Altamira (Mexico)-Veracruz (Mexico)-Santo Tomas (Guatemala)-Puerto Cortes
(Honduras)-Puerto Limon (Costa Rica)-Manzanillo (Panama)-Cartagena (Colombia)-Caucedo (Dominican
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Republic)-San Juan (Puerto Rico)-Cartagena-Manzanillo-Puerto Limon-Santo Tomas-Puerto CortesHouston.
Mediterranean Shipping Company

Overview
Mediterranean Shipping Company (MSC) was founded in 1970 in Geneva, Switzerland. It launched its first
service between the Mediterranean and South and East Africa in the mid-1970s. In 2003, it became the
second-largest container shipper in the world, and remains in that position.
The carrier operates 200 direct and combined services weekly, calling at 316 ports. It has 480 offices in 163
countries and employs more than 37,500 staff.
SWOT Analysis
Strengths
MSC is the second-largest container shipper in the world.
The company has a forward-thinking strategy, with a fleet of 14,000-twenty-foot equivalent unit (TEU)
vessels.
MSC is not averse to chartering, which has allowed it to expand its fleet.
The line is managing its capacity and exposure during volatility in the container shipping sector via linkups with other carriers and an alliance with CMA CGM.
The company is increasing its exposure to the US, operating its largest vessels on the transpacific trade
route.
Weaknesses
With such a large fleet, MSC is constantly running the risk of overcapacity, which could be a drain on
resources if business slows. It has 40 vessels on order, at a time when overcapacity remains such a major
issue for container lines.
Opportunities
The shipping sector has proved lucrative in the past two decades, with trade volumes growing year-onyear since 1982. Although the downturn affected the company, the medium- to long-term opportunity for
trade growth is ever present, and MSC is well positioned to capture these volumes.
The company is seeking greater exposure to emerging trade routes, specifically in South America, which
offer new growth opportunities.
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Threats
MSC is heavily exposed to Europe, not only on its Asia-Europe routes, but also its intra-Europe portfolio.
The slow growth outlook in the region will be a threat to demand, and growth in volumes on these routes
is likely to remain sluggish.
MSC's desire to become number one could be hampered by Maersk Line, which has started taking
delivery of its 18,000TEU fleet.
Overcapacity is set to remain a major threat for lines in the short term.
Strategy
MSC continues to snap at Maersk Line's heels, with a global market share of 13.2% compared with
Maersk's 14.6%, according to AXS Alphaliner. BMI believes that MSC will continue to battle for the top
position.
By some measures, it has overtaken Maersk Line to claim top position, with Containerisation International
reporting in February 2011 that it had overtaken the Danish carrier in terms of capacity. This measurement
takes into consideration only Maersk Line and not the whole Maersk Group, which includes Safmarine and
MCC Transport. Taking the group as a whole into account, Maersk Line still holds the top position.
In December 2011, the US-based Journal of Commerce reported that, based on US import and export trade,
MSC had replaced Maersk Line as the top container line serving the US in the first nine months of 2011,
with MSC's operations almost balanced between imports and exports.
BMI highlights that MSC operates the largest vessels on the transpacific route. The company now utilises
vessels with capacities of between 11,600TEUs and 14,000TEUs on the trade route and in October 2011
docked its largest box ship ever into the port of Long Beach, with the MSC Beatrice, a 14,000TEU capacity
vessel, calling there.
Routes
As the rates on both the Asia-Europe and the transpacific routes continue to decrease, container lines are
still battling the threat of overcapacity and are starting to link up to better manage the problem, with the
planned P3 Network being the latest example. MSC has also previously formed an alliance with France's
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CMA CGM on the trade routes of Asia-Europe, Asia-Southern Africa and South America. The alliance will
maintain considerable influence on the market share of lines on the Asia-Europe route: the two carriers are
operating a four-route service, including 44 ships with capacities of over 11,000TEUs. The effect of the
alliance on this route was immediately felt, with the members of the Grand Alliance and New World
Alliance announcing at the end of 2011 that they would join together to form a mega alliance of six
operators, called the G6 Alliance.
MSC is heavily exposed to the 'big money' routes, particularly the transpacific, with the line operating five
services from Asia to US West Coast ports. The line also caters to the US East Coast market with an allwater service.
It operates five Asia-Europe services: three (Silk Express, Lion Service and IPAK Service) to Northern
European ports and two routes (Dragon Express and Tiger Service) to ports in the Mediterranean.
MSC also caters for intra-Asia trade, with its New Shogun service linking China and Japan and its
TongKing Service connecting China with Vietnam. Some of the line's other services serve a number of
countries in Asia before linking elsewhere in the world. The Cheetah Service links Chinese ports with the
Taiwanese port of Kaohsiung, before travelling on to Africa.
BMI believes that there is room for expansion in MSC's intra-Asia portfolio, with the potential for more
intra-Asia specific routes either operated solely or in partnership. In comparison with its peers, MSC has
only a small exposure to the intra-Asia market, which is set to be a major growth area for box carriers in the
medium term.
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Fleet
MSC has the second-largest container fleet in the world, operating 471 vessels with a total capacity of
2.4mn TEUs. The fleet's dynamics are weighted toward the charter market, with chartered-in ships
accounting for 55.5% of the total.
It has an owned fleet of 191 vessels with a capacity of 1.05mn TEUs, while its chartered fleet of 280 vessels
has a combined capacity of 1.31mn TEUs.
An exact breakdown of MSC's fleet is unavailable, but the line is a member of the ultra-large container ship
club, with a fleet of 14,000TEU vessels. The company stated in December 2011 that carriers must deploy
the largest vessels on the Asia-Europe trade lane in order to minimise losses. Vice-president Diego Aponte
said that he expects the Asia-Europe trade route to remain unprofitable until 2013.
MSC is preparing to take on more box ship tonnage, both owned and chartered. The company's order book
currently stands at 40 vessels with a total capacity of 457,657TEUs.
While the carrier operates 14,000TEU vessels, it does not appear prepared at the moment to order larger
ships. In an interview with Lloyd's List, MSC's founder and chairman Gianluigi Aponte stated that the
company had no intention of following Maersk Line's lead and ordering 18,000TEU vessels. Aponte said
that he was 'only interested in ships up to 14,000 TEUs'. It should be noted, however, that Aponte initially
denied interest in ordering 14,000TEU vessels, yet his company has since done so. BMI will therefore not
completely rule out the development of vessels larger than 14,000TEUs by MSC in the future.
Financial Results
2012
Not available. Quantity of TEUs carried was 13.2mn.
2011
Not available. Quantity of TEUs carried was 13.1mn.
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2010
MSC does not publish its financial results. However, its operating fleet and the amount of cargo carried
increased in 2010. In that year, the line operated 432 vessels - a y-o-y increase of 14.3% from the 387 ships
operated in 2009 and above the company's pre-downturn fleet of 410 vessels. Despite the downturn in 2009,
the fleet's capacity continued growing, from 1.4mn TEUs in 2008 to 1.47mn TEUs in 2009 and 1.82mn
TEUs in 2010.
However, the real indicator of improvement in MSC's operations is the volume of containers carried. This
grew by 17.6% y-o-y to reach 12.1mn TEUs in 2010, following a y-o-y decline of 10.5% in 2009. In 2010,
levels reached and surpassed the pre-downturn handling level of 11.5mn TEUs, indicating that MSC has
recovered from the downturn. Coupled with rate increases during the year, which were implemented across
the board, this meant that the company was in the black in 2010.
Latest Activity
Expansion Plans At Antwerp
MSC aims to further expand its activities in Antwerp, its port authority announced in December 2013,
adding that the carrier officially asked Antwerp Port Authority 'to be able to do this' in the port's Deurganck
dock. MSC is Antwerp's largest container customer, handling some 4.6mn TEUs in 2012 in the Delwaide
dock where it operates. The port authority said it will 'organise an invitation for expressions of interest, in
an open and transparent way, in order to determine whether in addition to MSC there are other significant
market opportunities of a similar nature'.
MSC developed its European hub in the Delwaide dock in Antwerp; however, the location 'does not have
any more room for growth', triggering MSC's request to expand elsewhere at Antwerp. MSC has opted for
the Deurganck dock where, according to the port authority, it 'aims to have the MSC and P3 freight handled
in the existing PSA terminal, with a request to be allowed to expand the capacity'.
EC And Russia's Antitrust Investigation Continues
Russia's Federal Anti-monopoly Service (FAS) has begun formal proceedings against MSC and other global
container lines, it was reported in December 2013. The line is one of the companies accused of price fixing,
following the offices of the agents of Maersk, MSC, CMA CGM, APL, 'K' Line, NYK, OOCL, China
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Shipping, Hyundai, ZIM, COSCO, Evergreen and Hapag-Lloyd in Moscow and St Petersburg being
investigations. MSC, China Shipping Container Lines, CMA CGM, COSCO Container Lines, Evergreen
Line, Hapag-Lloyd, Hanjin Shipping, Hyundai Merchant Marine, MOL, NYK, OOCL, United Arab
Shipping Co and ZIM are also under the EC's scrutiny. MSC, Maersk, CMA CGM, Hapag-Lloyd and
According to FAS, MSC and other carriers violated Clause 1 Part 1 of Article 11 of Russia's Federal Law
on protection of competition.
Russia antitrust probe targeted at least 12 container lines in February 2013, according to Lloyds Loading
List, when their offices in Moscow and St Petersburg were visited by investigators. The list of involved
companies included the three largest lines Maersk, MSC and CMA CGM, along with APL, Evergreen
OOCL, China Shipping, COSCO, NYK Hyundai Merchant Marine and ZIM.
Saudi Arabia Call Added To India-Europe Service
MSC enhanced its IPAK Service between India and Europe by adding a call at Saudi Arabia's King
Abdullah Port from November 2013. The revised IPAK rotation, according to JOC.com is: Rotterdam, the
Netherlands-Antwerp, Belgium-Felixstowe, England-King Abdullah, Saudi Arabia-Jeddah, Saudi Arabia Salalah, Oman- Nhava Sheva (Jawaharlal Nehru), India-Mundra, India-Jeddah-Gioia Tauro, Italy-Valencia,
Spain-and back to Rotterdam.
IPAK is the fixed-day weekly service operated by MSC and CSAV and deploying seven 6,500TEU vessels
- five supplied by MSC and two by CSAV.
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CMA CGM
Overview
CMA CGM is the world's third-largest shipping line. Compagnie Gnrale Maritime (CGM) was formed in
1977 by the merger of Messageries Maritimes (MessMar) and Compagnie Gnrale Transatlantique
(Transat). Compagnie Maritime d'Affrtement (CMA) was founded the following year.
In 1996 CMA CGM was privatised and the following year made its first acquisition, Australian National
Lines (ANL). This was followed by a spree of acquisitions, beginning with UK-based MacAndrews in
2002. In 2006 CMA CGM purchased Delmas, an African shipping line previously owned by Groupe
Bollor. The acquisition propelled CMA CGM to third place in the ranking of the world's largest container
shipping lines. Strong growth enabled it to make three purchases in 2007, with the acquisition of Taiwanbased Cheng Lie Navigation, Moroccan line COMANAV and US-based US Lines.
Turkey's Yildirim Group has a 24% stake (which it is seeking to increase to 30%) in CMA CGM and has
voting rights, but the Saad family remains in charge, with a majority of both shares and voting
rights. Fonds Stratgique d'Investissement (FSI) holds a 6% stake in the company following its US$150mn
equity injection in 2013.
The group has operations in container shipping, with a focus on reefer cargo. It also operates in the tourist
industry through subsidiary Croisires et Tourisme. CMA CGM Logistics boasts 46 branches in Asia,
Europe, the Middle East, North and South America and Africa and owns TCX Multimodal Logistics - a
bonded warehouse company that operates in many French ports. CMA CGM's multimodal subsidiaries
include French River Shuttle Containers; ocean freight forwarder LTI France; as well as CMA Rail and
Progeco - the repair arm of CMA CGM's container business. Terminal Link is the group's terminal
operating business.
SWOT Analysis
Strengths
The group has the third-largest container fleet in the world.
CMA CGM has a number of diversified subsidiaries, catering for different markets across the globe.
Terminal Link supports the growth of the shipping division and the group's subsidiaries.
Its multimodal divisions also bolster growth, providing clients with an integrated 'door-to-door' service.
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The line is managing its capacity and exposure during volatility in the container shipping sector via linkups with other carriers and an alliance with Mediterranean Shipping Company (MSC).
Weaknesses
With such a large fleet, the risk of overcapacity is ever present.
The firm is not as diverse as competitors such as Maersk, COSCO and China Shipping, which also
operate in the bulk and tanker sectors.
Opportunities
The three-pronged acquisition of US Lines, COMANAV and Cheng Lie Navigation offers the
opportunity to capture traffic volumes to and from three different regional markets.
The partnership with Yildirim Group will enable the company to return to a strategy of growth rather than
being preoccupied with the threat of insolvency.
The company was back in the black in 2012 and expects similar profitability for 2013.
CMA CGM increasing its exposure to Russia, which BMI believes will be a high-growth market.
Increasing its exposure to Africa, a high-growth market, and expanding its services.
Threats
The company must ensure it does not place the importance of its market share above recovery.
Overcapacity and declining demand are still major issues facing the box shipping sector.
Debt restructuring is leading to less diversity in the company's operations portfolio, with the group selling
stakes in one of its major terminals and its cruise ship company.
CMA CGM's offices, along with some of its peers, were raided in February 2013 by Russia's Federal
Anti-Monopoly Service (FAS) and in May 2011 by EC officials investigating antitrust claims, and as of
the end of 2013 the company was still part of both FAS' and EC's formal investigations.
Strategy
CMA CGM is the third-largest global container shipping company, with an 8.5% market share, according to
AXS Alphaliner. This puts it considerably behind second-placed MSC with its 13.2% market share, but
significantly ahead of fourth-place Evergreen, on 4.8%.
CMA CGM managed to ride out the 2009 downturn, despite a period where it looked likely that the French
government would be required to bail it out. The shipping line was determined to remain a family concern.
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It found an investor in Yildirim Group, which agreed to invest US$500mn and take a 20% stake in the
shipping line. This has since been increased to 24%, but left the Saad family in charge, with a majority of
both shares and voting rights. However, Yildirim is making its presence felt, blocking a planned new build
strategy. Yildirim is seeking to increase its stake in CMA CGM from 24% to 30%.
Debt restructuring is affecting CMA CGM's diversity of operations, with the company selling its stake in
the Marsaxlokk Malta Freeport terminal and its cruise ship company Compagnie du Ponant.
Routes
As rates on the Asia-Europe and transpacific routes continue to decrease, container lines are still battling the
threat of overcapacity. Lines are starting to link up in a bid to manage the problem, with the planned P3
Network being the latest example. CMA CGM has also previously formed an alliance with MSC on the
Asia-Europe, Asia-Southern Africa and South America routes. The alliance will continue to considerably
affect the market share of lines on the Asia-Europe route, with the two carriers set to operate a four-route
service and deploy 44 ships with capacities of more than 11,000 twenty-foot equivalent unit (TEUs). The
impact of the alliance on the route is already being felt, with the members of the Grand Alliance and New
World Alliance announcing at the end of 2011 that they would join together to form a mega alliance of six
operators, called the G6 Alliance.
CMA CGM is a major player in Asia-Europe trade, boasting a service network of seven routes. It is exposed
to the transpacific with a route network of nine services and is heavily involved in intra-Asia trade. CMA
CGM offers more than 18 intra-Asia trade routes. These are, however, feeder services, and it is the
company's Asian subsidiary CNC Line that operates direct intra-Asia services. BMI expects CMA CGM to
continue its strategy of developing its exposure to intra-Asia trade, as the region is deemed to offer major
box shipping growth potential.
Fleet
Like its peers, CMA CGM's fleet is getting bigger, not only in terms of vessel numbers but also in terms of
capacity. It operates a fleet of 13,000TEU vessels, with 29 vessels of 11,000TEU-plus capacity. The
company has also welcomed three 16,000TEU ships to its fleet, with the vessels beginning operations on
the Asia-Europe trade route at the end of 2012 and in April and May 2013.
The company has 32 vessels on its order book with a total capacity of 321,157TEU, according to AXS
Alphaliner.
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The company has concentrated on developing its fleet via chartering in tonnage and is expected to continue
this strategy. Chartered tonnage accounts for 65% of CMA CGM's total TEU capacity. This offers the
company considerable flexibility. During periods of decline in volumes, it can return chartered vessels when
the charter period has finished, reducing the size of its fleet and operating costs.
Financial Results
Q313 And 9M13
CMA CGM's consolidated quarterly revenue was down 2.4% y-o-y from US$4.2bn to US$4.1bn in Q313.
Net profit attributable to shareholders decreased significantly - from US$363mn to US$70mn. The year-todate figures, however, improved, with a 0.3% y-o-y increase in revenue - from US$11.9bn to US$12.0bn and a 52.6% growth in net profit - from US$284mn to US$434mn.
Container volumes were up 11.1% y-o-y to 3.0mn TEUs in Q313, the year-to-date box volumes increased
by 6.3% from 8.0mn TEUs in January-September 2012 to 8.5mn TEUs.
Q213 And H113
CMA CGM's consolidated revenue increased by 1.7% y-o-y to US$7.9bn in the first half of 2013, compared
with US$7.8bn in H112, despite Q213 revenue at US$4.0bn being 2.4% below the US$4.1bn achieved in
Q212. The group's net profit was at US$364mn in H113, compared to a net loss of US$79mn in H112. Most
of the profit (US$268mn, +58.6% y-o-y) was achieved in Q213 and included US$249mn related to the
reorganisation of port operations, including the disposal of Terminal Link.
CMA CGM's container volumes were up 6.9% y-o-y to 2.9mn TEUs in Q212; however, the average freight
rate was down 8.6% over the period. H113 box volumes were up 4.9% from 5.3mn TEUs in H112 to 5.6mn
TEUs.
CMA CGM once again reported a significant reduction of its net debt - by US$385bn - to US$3.8bn at June
30, following US$1.1bn and US$0.4bn contractions over two previous quarters.
Q113
CMA CGM reported improved consolidated financial results for the first quarter of 2013. The group posted
a net profit of US$102mn in Q113, compared to a net loss of US$240mn in the corresponding quarter of
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2012. CMA CGM's container volumes were up 3.0% y-o-y, from 2.6mn TEUs in Q112 to 2.7mn TEUs in
Q113, resulting in a 6.0% growth in consolidated revenue, from US$3.6bn to US$3.8bn, which was also
affected by a 3.0% increase in freight rates.
CMA CGM also reported a significant reduction of its net debt to US$4.2bn at March 31 2013, which is US
$1.1bn less than, at the end of Q112 and US$0.4bn less than at December 31 2012.
2012
CMA CGM's consolidated revenue increased by 7.0% y-o-y in 2012, from US$ 14.9bn in 2011 to US
$15.9bn, driven by container volume growth of 6.0%, from 10mn TEUs in 2011 to 10.6mn TEUs in 2012.
The company said it achieved US$800mn of savings over the year - well above target. It posted a
consolidated net profit of US$361mn in 2012, compared to a net loss of US$5mn a year before.
The company managed to reduce bunker costs per TEU by 12.0% and charter expenses by US$200mn. In
2013 it expects a similar level of profitability, helping it to cut its net debt by US$1.1bn to US$3.5bn.
A company press release mentions the strengthening of CMA CGM's balance sheet thanks to the sale of
49% of Terminal Link for EUR400mn, the closing of US$100mn equity injection from Yildirim, the
signing of US$150mn equity injection from Fonds Stratgique d'Investissement (FSI) and the closing of the
agreement with company's banks regarding its debt restructuring.
Q312 And 9M12
CMA CGM reported improved earnings for Q312. This left it on course for a full-year profit after a hugely
challenging four years for the global container sector. However, while this provides some much-needed
respite and underscores the success of its cost-cutting programme, ongoing issues of overcapacity and a
weak global growth outlook do not give cause for much optimism.
CMA CGM posted a net profit of US$371mn in Q312, bringing 9M12 profit to US$310mn, compared to
just US$13.2mn in the first nine months of 2011. An improved Q3 was attributed to internal cost-reduction
measures, as well as some rates relief and the benefits of reduced fuel costs. The ongoing challenges of
overcapacity and weak global growth saw the company state that Q4 would be weaker. Yet it remained on
track to post a full-year net profit.
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Reasons for optimism for CMA CGM come in the form of the successful cost-control measures. In the first
nine months of the year it realised savings of US$550mn, equivalent to a 5% y-o-y reduction in operating
costs and well ahead of the target of US$400mn in savings for the full year. Planned asset sales, including
the disposal of a 49% stake in terminal operator Terminal Link and the sale and leaseback of some of its
self-owned vessels, should help keep operating costs under control moving into 2013. Furthermore, planned
investments from FSI (US$150mn) and Yildirim (US$100mn) should help alleviate operating pressures.
Finally, perhaps most importantly and related to the aforementioned planned capital injections, CMA CGM
reached a restructuring deal with its lenders to help manage its 2013 debt obligations.
While providing respite and putting the company on a firmer footing, BMI does not see all this as
preventing CMA CGM from having another challenging year in 2013. The external operating environment
is simply too difficult. On the supply side, issues of overcapacity will only become greater, and indeed
CMA CGM is contributing to this with its own ordering strategy. On the demand side, a weak outlook for
global economic growth will act as a further headwind.
BMI estimates global real GDP growth of 2.9% in 2013, revised down from a previous forecast of 3.0%.
While high frequency indicators suggest the outlook for global growth is weak rather than recessionary, a
Chinese hard landing, eurozone debt woes, the US fiscal cliff, the ever more marginal gains to be realised
from expansionary monetary policy and the increasing difficulty with which governments can pursue
expansionary fiscal policy, all mean this outlook remains precarious.
Q212 And H112
In Q212 CMA CGM bounced back into the black with a US$178mn net profit. Revenue increased by 12%
to US$4.15bn. In H112 CMA CGM made a saving of US$294mn, putting it on course to realise its 2012
cost-cutting plan of US$400mn.
Q112
Although the carrier's volumes increased by 13.4% y-o-y to 2.6mn TEU and revenues grew by 2.6% to US
$3.6bn, it posted a loss of US$248mn, with the relatively high bunker fuel price being blamed.
2011
CMA CGM reported a US$30mn loss in 2011, but this was considerably lower than that being posted by the
company's peers. The loss was despite a 4.0% increase in revenue to US$14.87bn and 11.0% growth in
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container volumes carried by the liner to 10mn TEUs. The loss was attributed to overcapacity in the market,
which forced rates down, and a rise in oil prices, which saw the bunker fuel price rise 34% y-o-y.
CMA CGM planned to get back into the black in 2012 via a cost-saving strategy, with US$400mn in
savings planned. It believes it will save as much as US$80bn due to the decline in charter rates. In terms of
expansion, the carrier planned to increase its coverage of Russia, India, Latin America and Africa, as well as
expand its reefer coverage.
2010
CMA CGM's revenue increased by 36% in 2010 to US$14.3bn, from US$10.5bn in 2009. This enabled the
line to post a US$1.6bn profit following a loss of US$1.4bn in 2009. The recovery in revenue was driven by
the global uptick in both volumes and demand for the container shipping sector. In terms of total volumes
carried, CMA CGM's box levels shipped increased by 14.7%. The company stated that 'Asia-Europe and
intra-Asia lines enjoyed record business Asia-US lines returned to pre-recession levels.'
BMI believes the volume uptick in 2010 was just part of the story. Volumes were up both y-o-y and on
2008 levels (by 4.4%). We believe rate increases also played a massive role.
Latest Activity
Europe And Med To West Africa Services Reshuffled
CMA CGM Group reshuffled its Europe and Med to West Africa services at the end of 2013, and from mid
December 2013 deploys five such services. UK and Nigeria calls were added to PC Weekly Service, which
is a weekly direct loop from North Europe and Tangier to West Africa, operating seven vessels 3,500TEU
each on a port rotation of Dunkirk-Antwerp-Tilbury-Le Havre-Montoir-Tangiers SB-Dakar-Abidjan SBLome-Tin Can Lagos-Abidjan NB-Dakar-Tangier NB-Dunkirk. PC Centre Service is a weekly direct loop
from North Europe and Tangier to West Africa, deploying five 2,500TEU vessels on a port rotation
Tangier-Dakar-Conakry-Tema-Cotonou-Douala-Tangiers. PC North Service is another weekly and direct
loop from North Europe and Tangier to West Africa; it uses four 1,600TEU vessels and rotates as follows:
Tangier-Nouakchott-Freetown-Monrovia-Banjul-Nouadhibou-Tangiers. PC South Service, a weekly and
direct loop from North Europe and Tangier to West Africa remained unchanged and continues operating
five vessels 2,000TEU each on a port rotation Tangier-Pointe Noire-Port Gentil-Libreville-Tangiers. Angola
shuttle Service is a nine-days frequency service from Europe and Tangiers to Angola deploying five
2,000TEU vessels. Its port rotation is Leixoes-Lisbon-Tangiers-Luanda-Lobito-Namibe-Leixoes.
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Newbuilding Programme Launched
CMA CGM has begun a newbuilding programme using a US$500mn provided by the shareholders Turkey's
Yildirim Holdings. The aim is to boost its fleet by 208,300TEUs on top of its current capacity of 1.5mn
TEUs, according to according to Lloyd's List data sourced from Schednet. This backing is in addition to the
financial support from France's sovereign fund for the recent orders of six 16,000TEU ships, three of which
are due for delivery in Q215 and three more by the end of 2015.
Liners Decrease Asia-South America Capacity By 10%
CMA CGM, Maersk, Hamburg Sud, CSAV, China Shipping Container Line and Hanjin have terminated
their joint Asia-South America SEAS 3/ASAX 3/ASAS 3/NGX 3 service, it was announced at the
beginning of November 2013. The move cuts capacity by 10% in an effort to deal with decreasing freight
rates, according to Lloyd's List Intelligence, as cited by Schednet. CMA CGM argued that the service had
been stopped to 'adapt to market conditions and rationalise the supply in the trade', while, according to
Hamburg Sud, the decision 'reflected reduced volumes between November and April' and CSAV said it had
reacted to 'current conditions'. The cut led to a withdrawal of 10 6,500-8,500TEU vessels from the trade
lane.
Cooperation Set Up On Asia-Indian Subcontinent Services
CMA CGM announced a new cooperation from February 2014 with current partner Maersk Line, APL and
OOCL on three existing Far East-Indian Subcontinent services (CIMEX 2/FM3, CIX, CIX3). The Slot
Sharing Agreement also includes Emirates Shipping Line, Hamburg Sd and Regional Container Lines.
Eighteen vessels with an average weekly capacity of some 17,500TEU will be deployed on the three
services. The new agreement enables CMA CGM Group to offer three sailings per week covering Korea,
China, Malaysia, Singapore, Sri Lanka, India and Pakistan. Previously one weekly sailing was offered by
each liner. The enhanced CIMEX 2 service has the following port rotations: CIMEX 2-N ('North Loop',
operated by CMA CGM and Maersk Line): Tianjin-Dalian-Qingdao-Kwangyang-Busan-Ningbo-Hong
Kong-Singapore-Tanjung Pelepas-Colombo-Pipavav-Nhava Sheva-Port Qasim-Singapore-Tianjin; CIMEX
2-C ('Central Loop', operated by Hamburg Sd, OOCL and Regional Container Lines): Shanghai-NingboXiamen-Hong Kong-Singapore-Colombo-Nhava Sheva-Pipavav-Port Kelang-Singapore-Hong KongShanghai; CIMEX 2-S ('South Loop', operated by APL, Emirates Shipping Line and OOCL): NanshaChiwan-Hong Kong-Singapore-Colombo-Nhava Sheva-Pipavav-Colombo-Port Kelang-Singapore-Nansha.
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Antitrust Investigation Under Way
Russia's Federal Anti-monopoly Service (FAS) has begun formal proceedings against CMA CGM and other
fixing, following the offices of the agents of Maersk, MSC, CMA CGM, APL, 'K'" Line, NYK, OOCL,
In November 2013 Maersk Line said it had been informed that it was part of the EC's formal antitrust
investigations. MSC, China Shipping Container Lines, CMA CGM, COSCO Container Lines, Evergreen
Line, Hapag-Lloyd, Hanjin Shipping, Hyundai Merchant Marine, MOL, NYK, OOCL, United Arab
Shipping Co and ZIM are also under the EC's scrutiny. MSC, Maersk, CMA CGM, Hapag-Lloyd and
According to FAS, CMA CGM and other carriers violated Clause 1 Part 1 of Article 11 of Russia's Federal
Law on protection of competition.
Russia antitrust probe targeted at least 12 container lines in February 2013, according to Lloyds Loading
List, when their offices in Moscow and St Petersburg were visited by investigators. The list of involved
companies included the three largest lines Maersk, MSC and CMA CGM, along with APL, Evergreen
OOCL, China Shipping, COSCO, NYK Hyundai Merchant Marine and ZIM.
Evergreen Line
Overview
Evergreen Line is the name and global brand under which five shipping companies operate. The brand was
established in May 2007 and encompasses Evergreen Marine (Taiwan), Italia Marittima (Italy), Evergreen
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Marine (Hong Kong) and Evergreen Marine (UK). A fifth carrier, Evergreen Marine (Singapore), signed a
joint service agreement in May 2009.
Evergreen Line's main routes focus on the delivery of goods from Asia, particularly Taiwan, Hong Kong,
China, South Korea and Japan. It operates to and from the US East and West Coasts, South America,
Europe, the Mediterranean, the Middle East and Africa. It also provides a container service between the east
coast of South America and the East Coast of the US, as well as a service linking Panama with the US West
Coast. The carrier provides regular feeder services in the Caribbean, the Mediterranean and around the
Indian subcontinent.
Evergreen is engaged in the port-operating sector, with terminals including the Taichung Container
Terminal and the Kaohsiung Container Terminal in Taiwan, the Colon Container Terminal in Panama, and
the Taranto Container Terminal in southern Italy, in which Hutchison Port Holdings also has a stake.
SWOT Analysis
Strengths
Evergreen operates one of the most globalised route networks, with strong coverage of major Latin
American and Middle Eastern ports in addition to its core Asian, US and European services.
Its route-sharing agreements allow it to reduce capacity while still meeting client demands.
Highly exposed to the intra-Asia trade route, which is widely considered a major growth market.
The CKYH Alliance (also known as the Green Alliance), made up of COSCON, 'K' Line, Yang Ming and
Hanjin Shipping has formed a partnership with Evergreen Line, allowing the line to compete more
strongly with other alliances, as well as market leader Maersk.
Has increased its routes through alliances, despite the difficult operating environment.
After a year of net losses, Evergreen Marine was profitable again, posting a net income of
TWD128.53mn in 2012.
Weaknesses
Evergreen Marine reported net losses of US$105mn for 2011 and was unprofitable in the first nine
months of 2013. With a large container fleet and little diversification into other sectors, the risk of
overcapacity is ever-present. This threat is especially relevant as the company has the largest newbuild
fleet currently on order, at 29 ships.
Flagship services are focused on Asia, so a shift in the dynamics of this region could make Evergreen
vulnerable.
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Opportunities
Seeking safety in numbers, Evergreen has joined up with the CKYH Alliance on several routes.
The company is currently conducting the 'rejuvenation' of its fleet, which will give it a younger and more
modern fleet and will optimise unit costs.
Ordered newbuilds at the bottom of the market, so has been able to expand more cheaply than its peers.
Well placed to take advantage of the growth in cargo traffic brought about by the opening of direct routes
between China and Taiwan.
Is expanding its emerging trade route coverage, with new services connecting Asia and Africa.
One of the shipping lines likely to benefit from a tax reduction the Taiwanese government is proposing
for Taiwanese-flagged vessels in order to boost the merchant maritime fleet.
Threats
While the company has built up intra-Asian history and expertise, the region's growth potential is luring
new players, increasing the competition Evergreen will face.
Evergreen's offices, along with those of some of its peers, were raided in February 2013 by Russia's
Federal Anti-Monopoly Service (FAS) and in May 2011 by European Commission officials investigating
antitrust claims, and as of the end of 2013 the company was still part of both FAS' and EC's formal
investigations. If the shipping company is found to have acted inappropriately it will be in line for a hefty
fine.
Strategy
Evergreen Line is continuing to claw its way back up the ranks, and is now fourth in terms of market share.
According to AXS Alphaliner, it has a capacity of 868,953 twenty-foot equivalent units (TEUs),
96,649TEUs ahead of fifth-placed COSCON. The third-largest container shipping company, CMA GGM,
has nearly double the capacity of Evergreen, meaning its climb up the table has likely ended.
Routes
Evergreen Line boasts a strong presence on intra-Asia trade routes, and continues to launch new routes. The
latest service to be included in its intra-Asia portfolio is its NHS service linking Korea, China, Vietnam,
Singapore and Malaysia with port rotation Kwangyang-Busan-Shanghai-Shekou-Ho Chi Minh CitySingapore-Port Kelang-Penang-Tanjung Pelepas-Singapore-Ho Chi Minh City-Kwangyang. The high
growth potential of intra-Asia routes has seen a number of lines expand into this area. BMI believes
Evergreen Line is positioned better than most, as intra-Asia is its traditional operating area and it has built
up expertise and a client base.
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In March 2012 the line announced its return to the North America-South America route, in conjunction with
a number of other lines. Evergreen, NYK Line (NYK), Hanjin Shipping and Hyundai Merchant Marine
(HMM) jointly launched a new service between the US East Coast and South America, the Atlantic North
South Service (ANS).
The company has also developed a role on the 'big money' routes, and has 11 Asia-Europe and 12
transpacific services.
Fleet
Evergreen Line has a fleet of 206 vessels, with a capacity of 868,953 TEUs. The company owns and
charters almost even number of vessels - 104 and 102 respectively. Making up 393,338TEUs, 45.3%, of
company's fleet is chartered. The capacity of Evergreen-owned vessels is 475,615 TEUs.
In terms of vessel capacity, its fleet is much smaller than its peers', with vessels ranging from 1,164TEUs to
8,452TEUs, although it recently chartered its first 13,800TEU newbuildings for 10 years, part of a 10 vessel
charter agreement with Greece's Enesel, with all vessels to be delivered to Enesel and chartered by
September 2014. Ten more 14,000TEU vessels were chartered as per charter agreements signed with
Costamare and Shoei Kisen Kaisha, with each company providing five vessels to be delivered in 2016 and
2017 respectively. Evergreen's strategy of maintaining a large fleet made up of smaller vessels ties the
carrier with intra-Asia routes, to which it is highly exposed. The company had previously seemed
unprepared to make the leap into the mega-vessel class, a move undertaken by most of its peers. However,
its orderbook shows it is prepared to take more vessels with an average capacity of 11,671TEUs.
The line's avoidance of ordering mega vessels appeared to be due to reservations by chairman and founder
Chang Yung-Fa. He has been reported to be 'a noted sceptic about the industry trend towards far larger
ships, believing that the need to fill them would end up driving down earnings'. This scepticism, however,
appears to have been overcome, with Evergreen chartering significant number of 14,000TEU vessels.
BMI notes that Evergreen is ensuring some protection, as it is chartering the vessels instead of owning
them.
BMI believes Evergreen's decision to join the mega-vessel club will enable it to optimise its costs. It will
also help the company to remain the number one container line in Asia.
Evergreen's orderbook, at 338,472TEUs, or 39% of its current fleet, is six times that of COSCON (at
53,544TEUs), meaning Evergreen should comfortably retain its lead. The change in strategy will also help
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the company move toward Chang's reported goal of 'steering Evergreen into becoming the world's largest
container line in his lifetime'.
The company calls its current fleet development a 'fleet rejuvenation programme', which it started in 2010
by ordering twenty 8,000TEU-plus L-type vessels from Samsung Heavy Industries and followed by an
order for 10 vessels of the same type from Taiwan's CSBC Corp in 2011. Evergreen also chartered five
8,800TEU vessels and 10 13,800TEU ships. Twenty four of the 45 vessels were delivered by the end of
2013; 18 more newbuildings are to be delivered in 2014 and the remaining three in H115, while the existing
54 vessels will be gradually redelivered as their charters expire.
Evergreen previously planned to build 100 container ships, but these plans have been put on hold until after
the Panama Canal expansion project is completed, which is due in 2015.
Financial Results
Q313
Evergreen Marine recorded a TWD48.5mn profit in Q313, a huge drop on the profit of TWD2.5bn posted in
the same period of 2012, according to Seatrade Global. Liner's revenue decreased by 10.4% y-o y to
TWD36bn.
Q213
Evergreen Marine posted a net loss of TWD400.5mn in Q213, compared to net profit of TWD 858.3mn in
the same period of 2012, according to Seatrade Global. Revenue decreased by 2.54% y-o-y, from
TWD37.45bn to TWD36.5bn.
Q113
Evergreen Marine recorded a net loss of US$61mn in the first three months of 2013, according to Taipei
Times, as reported by Cargonews Asia.
2012
Evergreen Marine returned to the black in 2012, posting a net income of TWD128.53mn, compared to a
TWD3.09bn loss in 2011. The company said it would not pay dividends.
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Q312 And 9M12
Evergreen Marine recorded a net profit of TWD104.15mn (US$3.56mn) for January-September 2012, and a
TWD2.5mn profit in Q312. While it was in the black for the first nine months of 2012, profits were
considerably lower for this period than 9M11, when the company saw a profit of TWD266.8mn.
Q212 And H112
Evergreen announced a net profit of TWD858mn (US$29mn) for Q212. It reported an operating income of
TWD641mn (US$22mn). However, it reported a loss of TWD2.4bn (US$82mn) in H112. This was
compounded by an operating loss of TWD2.24mn (US$76mn) in H112.
2011
Evergreen Marine reported a net loss of US$105mn in 2011. Revenue fell to US$514mn.
H111
Evergreen Marine managed to remain in the black in H111, unlike many of its peers, despite the fact that its
profit declined by 61% to TWD1.39bn (US$48mn) from TWD4.03bn in H110. Its revenue fell from
TWD8.6bn to TWD7.59bn, with the company attributing the decline to overcapacity and weakening in the
economic recovery, which suppressed demand.
2010
In 2010 Evergreen Marine registered revenue of US$3.5bn, up 39.9% y-o-y. This enabled it to return to the
black, with an operating profit of US$403.1mn compared to a loss of US$473mn in 2009.
Latest Activity
Ten 14,000TEU Vessels Chartered
Evergreen Line has signed charter agreements with Costamare and Shoei Kisen Kaisha, with each company
providing on charter five 14,000TEU vessels, which will be delivered in 2016 and 2017 respectively. The
agreement is part of Evergreen's fleet renewal programme, and the vessels are meant to optimise its
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operating fleet's competitiveness and reduce unit costs. The newbuildings will replace existing vessels when
their charter periods expire, therefore not increasing Evergreen's operating tonnage.
Fifteenth Samsung-built L-type Vessel Named
Evergreen Line held the naming ceremony for its 15th L-type vessel built by Samsung Heavy Industries, the
8,452TEU Ever Lotus, in December 2013. Evergreen Group launched its new shipbuilding programme in
2010 with an order for 20 L-type vessels from Samsung Heavy Industries. This was then followed by an
order of a further 10 vessels of the same specification from Taiwan's CSBC Corp. in 2011. Besides,
Evergreen also chartered five 8,800TEU vessels and 10 13,800TEU ships. EVER LOTUS is 24th of the 45
vessels in the programme; 18 more newbuildings are to be delivered in 2014 and the remaining three in
H115, while the existing 54 vessels will be gradually redelivered as their charters expire.
Boosting Intra-Asia Service Network
Evergreen Line has partnered with Hanjin, creating the New Ho Chi Minh Service (NHS), which links
Korea, China, Vietnam, Singapore and Malaysia from the end of November 2013. The weekly service
deploys four 2,500TEU vessels ships (one supplied by Evergreen and three by Hanjin) and has the
following port rotation: Kwangyang, Busan, Shanghai, Shekou, Ho Chi Minh City, Singapore, Port Kelang,
Penang, Tanjung Pelepas, Singapore, Ho Chi Minh City, Kwangyang. By enhancing its Intra-Asia offer,
Evergreen hopes to capitalise on the projected economic growth in the ASEAN countries, as well as
potential free trade development resulting from the establishment of the Regional Comprehensive Economic
Partnership (RCEP), which is being negotiated between ASEAN, China, Japan, South Korea, India,
Australia and New Zealand since 2013.
Enhancing Libyan Trade
Evergreen Line has boosted its services to and from Libya by launching a new feeder service from Piraeus
to Tripoli from the end of November 2013. The fortnightly LYS3 Service deploys the 700TEU M/V Luca.
Evergreen already had its LYS and LYS2 loops, with the former serving Benghazi via the network hub at
Piraeus and the latter connecting Misrata and Piraeus, Mersin and Alexandria.
EC And Russia's Antitrust Investigations Continue
Russia's Federal Anti-monopoly Service (FAS) has begun formal proceedings against Evergreen and other
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Shipping Co and ZIM are also under the EC's scrutiny. Evergreen, Maersk, MSC, CMA CGM, and HapagLloyd confirmed they were under investigation for anti-competitive behaviour, according to Schednet.
According to FAS, Evergreen and other carriers violated Clause 1 Part 1 of Article 11 of Russia's Federal
Law on protection of competition. Russia antitrust probe targeted at least 12 container lines in February
2013, according to Lloyds Loading List, when their offices in Moscow and St Petersburg were visited by
investigators. The list of involved companies included the three largest lines Maersk, MSC and CMA CGM,
along with APL, Evergreen OOCL, China Shipping, COSCO, NYK Hyundai Merchant Marine and ZIM.
COSCO Container Lines Company

Overview
COSCO Container Lines Company (COSCON) is one of the world's largest container shipping lines and is
the largest Chinese carrier, outgunning rival China Shipping Container Lines (CSCL) in terms of fleet
capacity.
COSCON is the container-transporting arm of China COSCO Holdings Company. The company dates back
to 1961 and was originally engaged in transport solutions. It did not become a shipping company until 1993.
In 2005 the firm issued an initial public offering (IPO) and now trades on the Shanghai and Hong Kong
stock exchanges. China COSCO Holdings Company is the flagship and integrated platform of COSCO. The
group is owned by the People's Republic of China.
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SWOT Analysis
Strengths
COSCO has a good relationship with the Bank of China, which has provided the company a source of
credit since the 1960s.
Its investment in a number of shipyards gives it the flexibility to adapt its order book to the economic
climate.
The carrier has a well-diversified fleet.
Weakness
COSCON's parent, China COSCO Holdings Company, was in the red for the second year in a row in
2012.
Opportunities
The opening of direct shipping routes between China and Taiwan is likely to provide long-term growth
opportunities for COSCO's container operations.
The group is well placed to take advantage of growing intra-Asia trade.
Threats
Ongoing overcapacity in 2014 will continue to drive down rates.
Continued debt crises in the eurozone will affect COSCON's Asia-Europe trade.
Strategy
Routes
According to COSCON's website, the liner operates more than 80 international shipping routes and 21
domestic services, connecting 155 principal ports in 53 different countries and regions.
COSCON plays a key role in domestic Chinese shipping, both coastal and on inland waterways. It operates
six coastal services, 16 coastal feeder lanes and 72 routes on the Pearl River Delta and Yangtze River.
As a Chinese company, COSCON is heavily exposed to the intra-Asia market, which BMI believes is a
growth area for shipping, particularly at a time when the more traditional routes are suffering from
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overcapacity. In addition to its domestic Chinese services, it also has a large number of services connecting
Chinese ports with ports in other Asian countries, such as Vietnam and Indonesia. COSCON also has high
exposure to the traditional East-West 'big money' routes of Asia-Europe and transpacific.
As well as falling rates, the company has faced rising bunker fuel prices. In an effort to combat this, it has
introduced a number of bunker adjustment surcharges. It has also tried to introduce a peak season surcharge,
but with vessel supply continuing to outweigh demand, this did not hold.
Alliances
BMI's view of an increase in link-ups between lines continues to play out, with the CKYH Alliance (also
known as the Green Alliance) - made up of COSCON, 'K' Line, Yang Ming and Hanjin Shipping - forming
a partnership with Taiwan's Evergreen Line. BMI believes the development of alliances will put further
pressure on carriers on the Asia-Europe route alone, leaving them with two options: join up or drop out.
The CKYH Alliance's link-up with Evergreen came into force in Q212, with the carriers operating a 12loop service using between 96 and 132 vessels.
Alliances are nothing new. They enable comparatively smaller players to operate on major trade routes,
which they would normally be priced out of, if operating by themselves. In 2009 link-ups between lines
became common and, as BMI projected, with the global economic environment once again turning sour,
lines are joining up once more; although it should be noted it is now on a scale we have never before
witnessed. The launch of the G6 Alliance highlights this, with members of the Grand Alliance (HapagLloyd, NYK Line and OOCL) joining with members of the New World Alliance (APL, Hyundai MM and
MOL) to create a super alliance of six members.
BMI believes it is due to the launch of this mega alliance, along with the link-up of MSC and CMA CGM
on the Asia-Europe route and the continued dominance of Maersk Line, that the CKYH Alliance has joined
up with Evergreen.
Further cooperation was announced in Q412, when CSCL and COSCON announced that they were to
operate their first joint domestic service linking north east China with Fujian and Shantao in the south. The
move will protect the firms, as by working together they will dominate the country's coastal shipping sector,
making it harder for outside shipping lines to break into the market.
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Fleet
According to AXS Alphaliner data, as of January 22 2014, COSCON was the fifth-largest container
shipping line in the world, with a market share of 4.3% - down from 4.5% in the previous quarter. The
company's container fleet has a capacity of 768,089 twenty-foot equivalent units (TEUs), down 2.9% from
790,939 TEUs on October 25 2013. COSCON's fleet is made up of 160 vessels. The majority are postPanamax vessels with capacities of more than 4,500TEUs. The largest vessels in the COSCON fleet are the
four 13,386TEU-capacity vessels, delivered in 2013.
COSCON slipped from fourth position in 2012, when it was overtaken by fellow Asian container shipping
company Evergreen. Although Evergreen has almost the same market share as COSCON, its capacity is
significantly larger, by 100,864TEUs. We expect Evergreen to maintain its new position above COSCON,
as it has a massive orderbook - 39.0% of its current fleet compared to COSCON's 7.0%.
Of its 160 vessels, COSCON has a fairly balanced ratio of chartered vessels, accounting for 47.2% of the
fleet at 362,491TEUs. COSCON's owned fleet of 99 vessels makes up the remaining 405,598TEUs of
capacity. COSCON has four ships on order, with a total capacity of 53,544TEUs. By 2014 COSCON
projects that, between its owned and chartered-in tonnage, it will have a fleet of 850,776TEUs.
Financial Results
Q313 And 9M13
In the first three quarters of 2013 China COSCO Holdings Company's revenue from container shipping and
related business decreased by 3.5% y-o-y, to CNY31.72bn. Box shipping volumes were up 8.4% y-o-y, to
6.425mn TEUs. The third quarter contributed 2.313mn TEUs (+7.8% y-o-y) in volumes and CNY11.38bn
(-7.0% y-o-y) in terms of revenue.
H113
China COSCO Holdings Company's revenue from container shipping and related business decreased by
1.6% y-o-y, to CNY22,746mn in the first half of 2013. Box shipping volumes increased by 8.7% y-o-y, to
4.112mn TEUs.
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Average container freight rate was down 10.6% to CNY4,526 per TEU compared to H112. The company
attributed such a result to the demand which recovered slowly in H113, the continued oversupply, and
market freight rates on the Asia-Europe route declining to historic lows. The company said that during the
period it 'focused on adjusting the route structure' and developed emerging markets and the Chinese
domestic market to reduce reliance on major European and American routes. The changes in routes and in
the cargo source led to a decline in the average container freight rate but, according to COSCO, had a
positive impact on the overall result.
Q113
COSCON posted a revenue of CNY9.2bn for the first quarter of 2013, up 14.3% on Q112, as box volumes
grew by 10.9% to 1,938,879TEUs. Transpacific trade revenue increased by 6.1% y-o-y to CNY3.25bn, even
though container volumes were down 0.5% to 407,267TEUs. Revenue brought by Asia-Europe trade
including the Mediterranean amounted to CNY2.58bn, a y-o-y increase of 14.8%, as box volumes were up
5.5% to 420,425TEUs. Intra-Asia and Australia were responsible for CNY1.5bn of the revenues, 9% more
than in Q112, and for an 11.4% increase in volumes to 460,905TEUs. Revenue brought by other
international trades, including the transatlantic, was up 30% to CNY515mn, as box volumes increased by
13% to 79,804TEUs, while domestic Chinese revenue reached CNY1.15bn, up 30.7%, with container
volumes amounting to 570,478TEUs - a y-o-y increase of 25%.
2012
COSCON's revenues increased by 16.9% y-o-y to CNY48,446mn in 2012, compared to CNY41,437mn in

2011. Capacity grew by 13.3% and box volumes transported by the company were up 16.0%, from 6.91mn
TEUs in 2011 to 8.02mn TEUs in H112. The highest revenues were earned by the transpacific trade
services (CNY14,863mn, up 21.5% y-o-y), followed by Asia-Europe, including Mediterranean
(CNY12,067mn, up 30.7%) and intra-Asia, including Australia (CNY7,318mn, up 14.3%).
H112
COSCON's H112 revenues were CNY23,117mn, a 14.1% decline from CNY20,265mn a year earlier.
Capacity had grown by 6.3% and volumes transported by the company had climbed by 16.7%, from 3.24mn
TEUs in the first half of 2011 to 3.78mn TEUs in H112. This ties in with the wider trend that BMI has been
seeing, whereby volumes transported have risen but revenues and profits have continued to suffer as a result
of overcapacity in the global fleet, which continues to worsen.
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2011
COSCON moved a total of 6.91mn TEUs in 2011, an 11.2% y-o-y increase in volumes. Even so, the tough
operating environment, in which excess capacity had driven down rates and high oil prices had driven up
bunker prices and operating costs, meant that the company (like most other container shipping lines)
recorded a loss for the year. COSCO's revenues from its container shipping segment were down 11% to
CNY41.4bn, which contributed to its overall loss of CNY10.5bn (US$1.66bn) for the year, compared with a
profit of CNY6.79bn (US$1.55bn) in 2010.
Latest Activity
13,386TEU COSCO Netherlands Christened And Delivered
The naming ceremony for COSCON's new 13,386TEU container vessel, the MV COSCO Netherlands, was
held at the beginning of November 2013. The vessel will be deployed on the COSCON CKYH Joint North
Europe Express Service 3 (NE3), calling at Xingang, Dalian, Qingdao, Shanghai, Ningbo, Singapore,
Rotterdam, Felixstowe, Hamburg, Antwerp, Hong Kong, Shanghai and back at Xingang.
The COSCO Netherlands is the fourth in a series of eight container vessels ordered from Nantong COSCO
KHI Ship Engineering Co., Ltd (NACKS) for US$166.8mn each in May 2008. The third such ship, COSCO
England, was delivered in August and deployed on the Asia/North Europe Weekly Express Service 7
(NE7), calling at Ningbo, Shanghai, Nansha, Hong Kong, Singapore, Suez, Hamburg, Rotterdam,
Felixstowe, Antwerp, Suez, Singapore, Nansha, Yantian, Kaohsiung and Ningbo.
Mombasa Calls Commenced
COSCON started calling the East African port of Mombasa, on an Asia/East Africa shuttle service (AES),
operated jointly with Evergreen and X-Press Feeders. The call began from November 2013, when
2,578TEU City of Beijing called the facility on its maiden call, according to Chineseshipping Net.
Antitrust Investigations Continue
Russia's Federal Anti-monopoly Service (FAS) has begun formal proceedings against COSCON and other
Page 104
Shipping Co and ZIM are also under the EC's scrutiny. Evergreen, Maersk, MSC, CMA CGM, and HapagLloyd confirmed they were under investigation for anti-competitive behaviour, according to Schednet.
According to FAS, COSCO and other carriers violated Clause 1 Part 1 of Article 11 of Russia's Federal
Law on protection of competition. Russia antitrust probe targeted at least 12 container lines in February
2013, according to Lloyds Loading List, when their offices in Moscow and St Petersburg were visited by
investigators. The list of involved companies included the three largest lines Maersk, MSC and CMA CGM,
along with APL, Evergreen OOCL, China Shipping, COSCO, NYK Hyundai Merchant Marine and ZIM.
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Macroeconomic Forecasts
BMI View: Although we expect the Vietnamese economy to record yet another quarter of sub-par growth in
Q413, we are beginning to see potential for upside surprises to domestic demand over the coming quarters.
Recent data on foreign direct investment inflows, remittances, passenger car sales, and property market
launches, suggests to us that domestic demand is on a nascent recovery, setting the stage for stronger 2014
growth.
The general consensus is expecting the Vietnamese economy to suffer yet another quarter of sub-par growth
mainly due to subdued external demand and the lack of progress on banking sector reforms. This is closely
in line with our view that real GDP growth will come in at just 5.3% in 2013, a slight improvement from
5.2% in 2012. Looking ahead to 2014, however, evidence of improving macroeconomic fundamentals in
Vietnam (especially with regards to the outlook for domestic demand) suggests to us the balance of risks to
our growth forecast of 6.0% is gradually tilting towards the upside.
Robust Remittances Could Boost Domestic Demand

Vietnam - Unrequited Transfers, US$mn
Source: BMI, Asian Development Bank
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Remittances: According to estimates published by the World Bank, the Vietnamese economy is on track to
record a bumper year for remittance inflows. The country is expected to receive US$10.6bn in remittances
from Vietnamese citizens working abroad, a robust 6.5% increase from 2012. Crucially, we believe that
remittance inflows will remain strong over the coming quarters as macroeconomic conditions in Vietnam
continue to improve. Growing confidence in the stability of the Vietnamese dong should also help to
encourage Vietnamese workers abroad, to a certain extent, to remit a larger share of their earnings back
home. We believe that this will help to boost domestic demand while providing support for the currency.
Foreign Direct Investment: Total foreign direct investment (FDI) inflows are also set to surpass the
government's full-year target of US$13bn, after data released by the Ministry of Planning and Investment
showed that inflows surged by 19.5% year-on-year (y-o-y) growth over the first eight months of the year.
The strong reading chimes with our view that the country's solid long-term growth story should continue to
attract foreign investors over the coming years.
Automobile Sales: We are witnessing signs of a robust recovery in automobile sales, a sign that pent-up
domestic demand is beginning to rebound. According to the Vietnam Automobile Manufacturers
Association (VAMA), September vehicle sales of its members surged by 20.6% year-on-year (y-o-y),
exceeding our already bullish forecast of 12.5% for the year (see 'Bullish On CV Sales In The Medium To
Long Term', October 14 2013).
Page 107
Developers Eyeing Property Market Rebound

Vietnam - Real Estate Index
Source: BMI, Blooomberg
Property Market: Meanwhile, we see increasing evidence that the Vietnamese property market may have
bottomed out (see 'Early Signs Of A Recovery, But No Property Market Boom In Sight', August 14 2013).
According to a quarterly report published by real estate agency CBRE Vietnam, the number of new
launches surged by 12% y-o-y in Q313. Anecdotal evidence from the local media suggests to us that
demand for real estate following the sharp decline in prices since 2011 may be recovering. To be sure, we
maintain our view that we are unlikely to see a property market boom given the healthy pipeline of new
units that will come online in 2014. Nonetheless, we acknowledge that consumer confidence is recovering
and we could potentially see some upside surprises to domestic demand in 2014.
Expenditure Breakdown
Private Consumption: We expect private consumption to grow at a relatively resilient pace of 5.0% in
2014. However, we note that the risk of further bankruptcies among SMEs could potentially lead to
widespread job losses, especially in export-driven sectors. Uncertainties over the outlook for employment
could, in turn, prompt households to cut back on spending.
Page 108
Gross Fixed Capital Formation: We foresee a pickup in private sector investment growth in 2014, partly
led by increased foreign direct investment inflows. We believe lending rates will gradually ease over the
coming months as the effect of recent rate cuts by the SBV begins to kick in. We are also seeing evidence
that credit conditions are improving. Accordingly, we expect gross fixed capital formation growth to
accelerate slightly from 4.1% in 2013 to 4.8% in 2014.
Public Spending: We expect total public spending to remain relatively resilient in 2014, expanding at a
respectable pace of 6.1%. However, there is limited room for the government to increase spending further
owing to concerns over the need to finance a potential bailout of ailing state-owned commercial banks.
Net Exports: Net exports remain the biggest downside risk to our outlook for the Vietnamese economy,
although we expect external demand to pick up in 2014. Vietnam's trade account has fallen back into
deficits in recent months, but we see the case for a substantial pickup in external demand on the back of a
rebound in regional growth over the coming quarters. Accordingly, we still expect exports to expand at a
moderate pace of 5.9% in 2014.
Table: Vietnam - Economic Activity
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
2,157,829
2,779,880
3,245,419
3,657,621
4,117,487
4,631,499
5,203,774
5,841,949
112.9
134.6
155.5
175.0
200.2
227.8
257.4
291.4
6.4
6.2
5.2
5.3
6.0
6.9
7.0
7.0
1,267
1,497
1,712
1,909
2,163
2,439
2,733
3,068
89.0
89.9
90.8
91.7
92.5
93.4
94.2
95.0
Industrial
production index,
% y-o-y, ave 1,5
14.1
10.9
7.0
7.6
8.7
9.6
9.9
9.8
Unemployment,
% of labour force,
eop 2,6
4.3
3.6
3.2
3.7
3.5
3.5
3.6
3.5
Nominal GDP,
VNDbn 3
Nominal GDP,US
$bn 3
Real GDP growth,
% change y-o-y 3
GDP per capita,
US$ 3
Population, mn
Notes: f BMI forecasts. 1 at 1994 prices; 2 Urban Area Only. Sources: 3 Asian Development Bank, General Statistics
Office; 4 World Bank/UN/BMI; 5 General Statistics Office; 6 General Statistics Office/BMI.
Page 109
Demographic Forecast
Demographic Outlook
Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is
the total population of a country a key variable in consumer demand, but an understanding of the
demographic profile is key to understanding issues ranging from future population trends to productivity
growth and government spending requirements.
The accompanying charts detail Vietnam's population pyramid for 2013, the change in the structure of the
population between 2013 and 2050 and the total population between 1990 and 2050, as well as life
expectancy. The tables show key datapoints from all of these charts, in addition to important metrics
including the dependency ratio and the urban/rural split.
Population Pyramid
2013 (LHS) And 2013 Versus 2050 (RHS)
Source: World Bank, UN, BMI
Page 110
Population Indicators
Population (mn, LHS) And Life Expectancy (years, RHS), 1990-2050
Source: World Bank, UN, BMI
Table: Vietnam's Population By Age Group, 1990-2020 ('000)
1990
1995
2000
2005
2010
2013e
2015f
2020f
68,910
76,020
80,888
84,948
89,047
91,680
93,387
97,057
0-4 years
9,315
9,323
7,128
6,898
7,229
7,152
7,012
6,575
5-9 years
8,606
9,212
9,253
7,023
6,791
7,052
7,181
6,968
10-14 years
7,857
8,541
9,162
9,117
6,899
6,619
6,757
7,147
15-19 years
7,359
7,788
8,492
9,050
9,011
7,686
6,866
6,726
20-24 years
6,644
7,222
7,673
8,333
8,874
9,148
8,936
6,802
25-29 years
6,006
6,470
7,065
7,471
8,112
8,528
8,772
8,837
30-34 years
5,138
5,890
6,352
6,910
7,286
7,703
8,022
8,680
35-39 years
3,888
5,065
5,803
6,242
6,763
7,011
7,208
7,940
40-44 years
2,463
3,826
4,994
5,719
6,147
6,472
6,685
7,127
45-49 years
2,017
2,409
3,753
4,935
5,648
5,894
6,054
6,589
50-54 years
1,968
1,959
2,346
3,700
4,855
5,306
5,521
5,926
55-59 years
2,046
1,891
1,885
2,237
3,542
4,278
4,677
5,330
60-64 years
1,669
1,934
1,790
1,734
2,068
2,795
3,352
4,444
65-69 years
1,412
1,522
1,771
1,610
1,562
1,673
1,906
3,104
70-74 years
1,028
1,216
1,322
1,530
1,399
1,360
1,379
1,695
Total
Page 111
Vietnam's Population By Age Group, 1990-2020 ('000) - Continued
1990
1995
2000
2005
2010
2013e
2015f
2020f
75-79 years
752
819
984
1,080
1,263
1,219
1,167
1,160
80-84 years
430
536
597
732
815
919
964
900
85-89 years
224
261
336
385
483
517
546
654
90-94 years
71
108
132
177
210
245
268
306
95-99 years
16
25
41
53
74
83
89
115
100+ years
12
17
21
24
30
e/f = BMI estimate/forecast. Source: World Bank, UN, BMI
Table: Vietnam's Population By Age Group, 1990-2020 (% of total)
1990
1995
2000
2005
2010
2013e
2015f
2020f
0-4 years
13.52
12.26
8.81
8.12
8.12
7.80
7.51
6.77
5-9 years
12.49
12.12
11.44
8.27
7.63
7.69
7.69
7.18
10-14 years
11.40
11.23
11.33
10.73
7.75
7.22
7.24
7.36
15-19 years
10.68
10.25
10.50
10.65
10.12
8.38
7.35
6.93
20-24 years
9.64
9.50
9.49
9.81
9.97
9.98
9.57
7.01
25-29 years
8.72
8.51
8.73
8.79
9.11
9.30
9.39
9.11
30-34 years
7.46
7.75
7.85
8.13
8.18
8.40
8.59
8.94
35-39 years
5.64
6.66
7.17
7.35
7.60
7.65
7.72
8.18
40-44 years
3.57
5.03
6.17
6.73
6.90
7.06
7.16
7.34
45-49 years
2.93
3.17
4.64
5.81
6.34
6.43
6.48
6.79
50-54 years
2.86
2.58
2.90
4.36
5.45
5.79
5.91
6.11
55-59 years
2.97
2.49
2.33
2.63
3.98
4.67
5.01
5.49
60-64 years
2.42
2.54
2.21
2.04
2.32
3.05
3.59
4.58
65-69 years
2.05
2.00
2.19
1.89
1.75
1.83
2.04
3.20
70-74 years
1.49
1.60
1.63
1.80
1.57
1.48
1.48
1.75
75-79 years
1.09
1.08
1.22
1.27
1.42
1.33
1.25
1.19
80-84 years
0.62
0.70
0.74
0.86
0.91
1.00
1.03
0.93
85-89 years
0.32
0.34
0.42
0.45
0.54
0.56
0.58
0.67
90-94 years
0.10
0.14
0.16
0.21
0.24
0.27
0.29
0.32
95-99 years
0.02
0.03
0.05
0.06
0.08
0.09
0.10
0.12
Page 112
Vietnam's Population By Age Group, 1990-2020 (% of total) - Continued
100+ years
1990
1995
2000
2005
2010
2013e
2015f
2020f
0.00
0.00
0.01
0.01
0.02
0.02
0.03
0.03
Table: Vietnam's Key Population Ratios, 1990-2020
Dependent ratio, % of total working age

Dependent population, total, '000
1990
1995
2000
2005
2010 2013e
75.8
71.0
61.3
50.8
42.9
41.4
2015f
2020f
41.3
41.9
29,712 31,567 30,734 28,617 26,741 26,860 27,293 28,655
Active population, % of total
56.9
Active population, total, '000
58.5
62.0
66.3
70.0
70.7
70.8
70.5
39,198 44,453 50,154 56,331 62,306 64,820 66,094 68,402
Youth population, % of total working age
65.8
Youth population, total, '000
60.9
50.9
40.9
33.6
32.1
31.7
30.2
25,778 27,076 25,544 23,038 20,918 20,822 20,950 20,690
Pensionable population, % of total working age

Pensionable population, total, '000
10.0
10.1
10.3
9.9
9.3
9.3
9.6
11.6
3,934
4,491
5,190
5,579
5,823
6,037
6,343
7,965
Table: Vietnam's Rural And Urban Population, 1990-2020
1990
1995
2000
2005
2010
2013e
2015f
2020f
Urban population, % of total
20.3
22.2
24.4
27.3
30.4
32.3
33.6
36.9
Rural population, % of total
79.7
77.8
75.6
72.7
69.6
67.7
66.4
63.1
Urban population, total, '000
13,958
16,867
19,716
23,175
27,064
29,632
31,384
35,771
Rural population, total, '000
54,952
59,153
61,172
61,773
61,983
62,048
62,003
61,286
Page 113

BMI Vietnam Shipping Report Q2 2014

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Q2 2014

Vietnam Shipping Report Q2 2014

Part of BMIs Industry Report & Forecasts Series

Business Monitor International

2014 Business Monitor International

Vietnam Shipping Report Q2 2014

Industry Forecast .............................................................................................................. 16

Market Overview ............................................................................................................... 24

Industry Trends And Developments ................................................................................ 32

Shipping - Global Industry View ....................................................................................... 41

Global Company Strategy ................................................................................................. 68

Macroeconomic Forecasts ............................................................................................. 106

Demographic Forecast ................................................................................................... 110

Business Monitor International

Vietnam Shipping Report Q2 2014

Business Monitor International

Vietnam Shipping Report Q2 2014

BMI Industry View

Headline Industry Data

2014 total trade real growth is forecast to increase 6.55%.

Business Monitor International

Vietnam Shipping Report Q2 2014

Key Industry Trends

Key Risks To Outlook

Business Monitor International

Vietnam Shipping Report Q2 2014

Business Monitor International

Vietnam Shipping Report Q2 2014

Decades of underinvestment have left Vietnam with a port infrastructure system

Vietnam Shipbuilding Industry Group (Vinashin) is set to lay off up to 14,000

Business Monitor International

Vietnam Shipping Report Q2 2014

Vietnam Shipping Industry SWOT Analysis - Continued

The US$1.2bn, 900,000TEU deepwater Lach Huyen Terminal in Haiphong (a joint

Business Monitor International

Vietnam Shipping Report Q2 2014

Vietnam Shipping Industry SWOT Analysis - Continued

Business Monitor International

Vietnam Shipping Report Q2 2014

The Communist Party of Vietnam remains committed to market-oriented reforms and

Vietnam has allowed legislators to become more vocal in criticising government

Macroeconomic instabilities continue to weigh on public acceptance of the one-party

Business Monitor International

Vietnam Shipping Report Q2 2014

The heavily-managed and weak currency reduces incentives to improve quality of

Urbanisation will continue to be a long-term growth driver. The UN forecasts the

Prolonged macroeconomic instability could prompt the authorities to put reforms on

Business Monitor International

Vietnam Shipping Report Q2 2014

Vietnam remains one of the world's most corrupt countries. According to

Vietnam is increasingly attracting investment from key Asian economies, such as

Business Monitor International

Vietnam Shipping Report Q2 2014

Macro Picture Supporting Port Throughput

Source: Asian Development Bank, General Statistics Office

Business Monitor International

Vietnam Shipping Report Q2 2014

All Signs Pointing Onwards And Upwards

Business Monitor International

Vietnam Shipping Report Q2 2014

APMT's presence should support continued growth

Growth Supported By Terminal

shipping lines keen to capitalise on Vietnam's

close to 600,000TEUs in 2012.