Hapag-Lloyd at the Gemini Shippers Association Annual Meeting June 6 th 2017 Hardy Pearson – SVP Area Midwest/Northeast P.J. McGrath – SVP Transpacific Trade
Agenda A. Industry Update B. Hapag-Lloyd in a Nutshell C. Trade Update 2
3 A. Industry Update
Present and future trends (and challenges) in liner shipping Alliances Consolidation Digitalization Prevailing Ship Size Losses Cost Cutting What trend will change our business most on the long run? 4
Demand: Container shipping remains an industry with healthy growth and balanced trade dynamics Container shipping volume and global GDP growth 6 2000-2008 2010-2015 2016-2018E GDP 2.1x 1.3x 1.2x multiplier +4.6% 300 +4.2% +3.5% +4.7% 250 +9.1% +3.6% +3.5% +3.1% +3.5% 200 Transport volume +4.3% 150 Global GDP 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 5 Source: Clarksons (April 2017), IMF WEO (April 2017)
Supply: Capacity growth is slowing – very few deliveries post 2017 expected 8 Orderbook-to-fleet [TEU m, %] Orders placed by year [TEU m] 61% 3.2 7 15,300 TEU 50% 2.2 2.0 1.8 6 38% 1.2 1.1 0.6 28% 27% 0.4 0.2 5 0.1 0.0 21% 21% 19% 18% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Apr17 16% 15% YTD 4 Vessel deliveries by year [TEU m] 6.5 3 6.0 +33% 1.7 5.0 4.3 1.5 1.4 1.4 1.4 2 1.3 3.9 3.8 1.3 3.6 1.2 1.2 1.2 3.4 3.3 3.2 3.1 0.9 1 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 6 Source: Clarksons (April 2017), Drewry
Reducing Gap between Supply and Demand Global Supply and Demand Growth 18 Demand 16 Supply 13.7% 14 12 9.7% 10 8.4% 8.0% 8 6.8% 6.3% 6.1% 7.8% 5.5% 6 4.5% 4.2% 3.4% 5.3% 4 5.1% 4.6% 2 3.1% 2.7% 2.2% 0 1.2% -2 -4 -6 -8 -9.2% -10 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e Source: Clarksons 1Q17, Drewry 1Q17 7 05/06/2017 Shipping, Trade & Economy Master Slides GI Feb17
Why are mergers and larger alliances needed … … because carriers have no choice. 8 05/06/2017
We believe that going forward there will be 5-7 significant global liner shipping companies – Gap to the rest is widening rapidly Consolidation wave leads to higher concentrations Carrier capacity [TEU m] and global capacity share [%] Global capacity share [%] 14% 13% 8% 2.5 Ranking end of 2013 2.3 1.5 4% 4% 4% 4% 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 1% 44% 60% 0.8 0.8 0.7 0.7 0.6 0.6 0.5 0.5 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 0.3 Maersk MSC CMA Ever- COSCO Hapag- Hanjin APL CSCL MOL NYK Hamburg OOCL Yang PIL K-Line ZIM Hyundai UASC CSAV CGM green Lloyd Süd Ming 17% 18% 15% 11% 8% 8% 7% 21% 3.7 Ranking as of 2017 2.9 39% 5% 3% 3% 2% 2% 1% 2.2 1.7 1.6 19% 1.4 1.0 0.6 0.6 0.5 0.4 0.3 2013 2017E Maersk / MSC CMA CGM COSCO Hapag-Lloyd MOL / NYK Evergreen OOCL Yang Ming Hyundai PIL ZIM Hamburg Süd / APL / CSCL / UASC / K-Line Top 5 Top 6-10 Remaining Note: Diagram assuming that all currently announced mergers (Hapag-Lloyd & UASC; NYK & MOL & K-Line, Maersk & Hamburg Süd) 9 Source: Drewry (Forecaster 1Q17), MDS Transmodal (April 2017, October 2013) will receive regulatory approvals and are executed as announced. Simple sum of stand-alone operating capacity as of December 1, 2016.
Liner Shipping is a capital intensive industry Capital cost for one Asia-US East Coast loop with 10,000TEU vessels = USD 1.2 billion Vessel investment Container investment 10 vessels are needed for one Asia-US EC Loop Total number of containers needed: 150,000 TEU Price 1 per vessel: Price 2 per container (40HC): 93 mio USD 3,825 USD Total vessel investment: 930 mio USD Total container investment: 287 mio USD without considering all operating costs such as port & terminal costs, bunker, channel passage, crew etc. 1 Source: Clarksons Mar 17, 2 source: Harrison Consulting 1Q17 10
Trends in the Market • Increased reliability for key slings by specializing port coverage • Carriers exiting chassis provision business • Carriers more selective in targeting inland locations • Reduction in demurrage / detention exceptions – the real cost is missed opportunities on strong leg • Need to recover bunker cost fluctuations 11 05/06/2017 Insert Presentation Title here "Insert > Header and Footer > Apply to All"
12 B. Hapag-Lloyd in a Nutshell
Hapag-Lloyd / UASC merger creates a top tier pure-play carrier At a glance Deal rationale Combined Strengthened Entity 1) Strong market position partnerships Corporate Hamburg Dubai Hamburg HQ G6 Ocean 3 Alliance THE Alliance (until (until Well-balanced membership (since 1 April 2017) 31 March 2017) 31 March 2017) trades Ships [#] 172 58 230 Large, Capacity young fleet 1.0 0.6 1.6 [TEU m] Significant synergy effects Container 1.6 0.7 2.3 [TEU m] 1) Sum of stand-alone figures as of 31 March 2017 (rounding differences may occur) 13
The combined company is steered from Hamburg – Dubai becomes HQ for the new Region Middle East Executive Board CEO CFO COO CCO Rolf Nicolás Anthony J. Thorsten Habben Jansen Burr Firmin Haeser Executive Committee Regions North America Latin America Europe Middle East Asia Wolfgang Freese Andrés Kulka Michael Pradel Lars Christiansen Joachim Schlotfeldt HQ: HQ: HQ: HQ: HQ: Piscataway Valparaíso Hamburg Dubai Singapore Central functions Trade Global Markets Global Sales Network Operations Management Thorsten Haeser Hans Schäfer Ulf Schawohl Glenn Hards Martin Rolf (interim) 14
Fleet – The combined company will operate a younger and more efficient fleet Average fleet age Fleet ownership Average vessel size [TEU] +982 -1.3 yrs 8.7 8.5 8.5 6,839 35% 8.3 40% 43% 47% 7.6 6,181 51% 7.4 54% 5,970 7.2 5,858 64% 5,281 5,163 5,038 65% 60% 57% 53% 49% 46% 36% Hapag-Lloyd Hapag-Lloyd Hapag-Lloyd Combined Combined Combined CMA CGM CMA CGM CMA CGM COSCO COSCO COSCO Maersk Maersk Maersk Top 15 Top 15 Top 15 MSC MSC MSC 15
Easy. Fast. Ecofriendly. Keep it simple and efficient – from door to door ▪ One-stop service covering the complete transport chain – even across borders ▪ Extensive intermodal network in the USA and Canada for service to and from all key locations ▪ Experienced, trained at motivated staff at local offices ▪ Save time and costs by avoiding delays in your supply chain ▪ Handling of all customs and clearance formalities ▪ Tailor-made inland solutions by our experts 16
Hapag-Lloyd shares with supportive tradings in recent months Share trading 160 Frankfurt Stock Exchange / Stock Exchange Hamburg Stock Exchange 140 Market segment / Regulated market (Prime Standard) / 120 Index SDAX 100 ISIN / WKN / Ticker Symbol DE000HLAG475 / HLAG47 80 Ticker Symbol HLAG 60 Primary listing 6 November 2015 Hapag-Lloyd Maersk Evergreen OOCL DAX Global Shipping Number of shares 118,110,917 17 Source: Bloomberg (10 May 2017)
e-Business Focus Customer Hapag-Lloyd Automation of E-Business Processes Channels and Products Efficiency Digitization Supply Chain Process Standardization Transparency Cost Cutting 18
Technology Impact at Hapag-Lloyd New Channels New Services Hapag-Lloyd App ▪ Presently working on a ▪ Piloting for remote ▪ Mobile retrieval of number of potential new container monitoring for schedules, company news, channels Reefer and Dry and contacts ▪ Pilot projects ongoing ▪ Evaluation ongoing whether ▪ Real-time container tracing new services generate ▪ Once we are confident that ▪ Potential new channels will value for our customers the new channels create also be available for mobile and create economical value for our customers we usage advantages for Hapag- will announce them ▪ Ongoing development of Lloyd additional features and ▪ Ongoing process of usability improvements evaluating digitally enabled products – announcements will follow once decisions are taken 19 05/06/2017
Technology Impact at Hapag-Lloyd Existing IT - Services ▪ So far not all steps along the value chain are fully linked and automated ▪ Target is to provide an increasingly seamless and digital interface to customers who value this approach ▪ Empty Empty Consolidation Consolidation Inland Inland Inland Inland Distribution Distribution Empty Empty Examples: Import Import Export Export Ocean leg Ocean leg transport transport transport to transport to Center/ Center/ Container Container Center/ Center/ Container Container port port port port (Delivery) (Delivery) to port to port consignee consignee Factory Factory (Redelivery) (Redelivery) Factory Factory – Equipment forecasting Depot Depot Shipper Shipper Container Container Container Container Shipper Shipper Depot Depot Consignee – terminal terminal terminal terminal Digital rate delivery Only One Shipment File – Online invoicing/payment – Automated ETA update Export Region Import Region Simultaneous Access 20 05/06/2017
21 C. Trade Update
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