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THE RORO MARKET FROM A BROKERS’ PERSPECTIVE
2. MAIN THREATS AND CHALLENGES BEING FACED BY RORO OWNERS AND OPERATORS
* PRESENTATION IS PRIMARILY FOCUSED ON SHORT SEA ROROS WITH STRAIGHT STERN RAMP
4
OVERVIEW OF THE CURRENT SITUATION
• MARKET CONDITIONS HAVE STARTED IMPROVING IN 2014 SO THE MARKET HAS FOUND A BALANCE
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RORO ACTIVE FLEET
600 1,080,000
500 1,060,000
400 1,040,000
300 1,020,000
200 1,000,000
100 980,000
- 960,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Active Fleet in Lm 1,008,813 1,023,084 1,048,276 1,066,618 1,079,308 1,086,894 1,056,696 1,058,425 1,071,751 1,036,587 1,025,905
Active Fleet in N° 570 572 578 582 581 570 541 522 515 486 467
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FLEET CONTRACTION
THE FLEET WILL CONTINUE TO DECREASE IN NUMBERS - 108 VESSELS (23% OF ACTIVE FLEET IN NUMBERS OR 15% ACTIVE
FLEET CAPACITY) ARE OLDER THAN 30 YEARS !
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FLEET BREAKDOWN – NUMBER & AVERAGE SIZE PER AGE CATEGORY
3,000 120
2,500 100
108 VSLS OLDER THAN 30 YRS ARE
CLEAR DEMOLITION CANDIDATES (ABT 154,000LM)
2,000 79 80
78
1,500 60
56
49
46
1,000 40
500 18 20
13
0 0
> 40 Years 35 - 40 Years 30 - 35 Years 20 - 30 Years 20 - 10 Years 10 - 5 Years < 5 Years Orderbook
Average Lm N° Ships
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DEMOLITION TRENDS
60
Demolition Trends 120,000
Number of Vessels Demolished & LM Capacity Lost
1950
50 100,000
2115
1675
40 80,000
2030
30 60,000
1770
1275
20 40,000
1131
0 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Number of Ships Demolished 7 7 10 24 50 42 26 41 27 2
Total Lm Capacity Removed 7,869 8,113 14,881 30,608 97,441 70,367 52,749 86,702 47,708 2,262
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DEMAND FOR TONNAGE
• THE RORO MARKET IS CONCENTRATED IN EUROPE, NORTH AFRICA AND THE BLACK SEA
• NON-EUROPEAN MARKETS STILL DO NOT HAVE A SUFFICIENT INFLUENCE ON THE RORO SECTOR TO SPUR
SERIOUS DEMAND
• ECONOMIES OF EU COUNTRIES AND THE COUNTRIES AT ITS PERIPHERY HAVE BEEN GOING THROUGH A
LONG PERIOD OF NEGATIVE OR MINIMAL GROWTH AND WEEK DEMAND
• THE SITUATION HAS STARTED TO CHANGE IN 2014 WITH THE IMPROVING ECONOMIC CONDITIONS IN
MOST EUROPEAN COUNTRIES
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CHARTER RATES
14,000
12,000-14,000
12,000 12,000
12,000
11,000
10,000 10,500
10,500
10,000
9,000 9,000 10,500
8500-9500
9,500 9,500
7,750
8,000
7,250
7,000
5,750 5500-6500
6,000 5,450 5,500 5,500
5,250
4,000
-
2010 2011 2012 2013 2014 2015
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OWNERS & OPERATORS
• DIFFICULT MARKET CONDITIONS ALLOWED THE SURVIVAL OF THE FITTEST ONLY => DECREASING NUMBER OF ACTIVE
PLAYERS
• THE TREND OF CONSOLIDATION HAS SLOWED DOWN BUT SHIPPERS/OPERATORS CONTINUE TO COOPERATE (SOL-
STORA ENSO, STENA-MANNLINES, MESSINA-MARGUISA…)
• WEAK CHARTER RATES & THE SHRINKING OF THE TRAMP MARKET HAVE BEEN HURTING TONNAGE PROVIDERS IN
PARTICULAR
• ‘TOP 20’ OPERATORS CONTROL 42% OF THE FLEET IN NUMBERS AND 61% IN TERMS OF TOTAL LM CAPACITY
=> THIS TREND WILL CONTINUE !
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RORO OPERATORS
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RORO PARENT OWNERS
Top 20 RoRo Parent Owners
Grimaldi : LM Capacity
30 Vessels (approx. 115,210
240,000 70
230,000
LM) are deep sea con/ros with
220,000 quarter stern ramp
210,000 61
Total Lm Capacity N° Vessels
60
200,000
190,000
180,000
170,000 50
160,000
150,000 Messina :
140,000 8 Vessels (approx. 48,400 LM) 40
130,000 are deep sea con/ros with
120,000 quarter stern ramp
110,000
100,000 Bahri : 30
90,000 All 6 Vessels (approx. 37,400
80,000 LM) are deep sea con/ros with
70,000 20 quarter stern ramp 20
60,000
50,000 15
40,000 12 12
9 10
30,000 8
20,000 7 6 6 7 6 7 6
10,000 4 4 4 3 4 4
0 0
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RECENT ORDERS AND DELIVERIES
Number of Units (Bars) RoRo Orderbook and Deliveries Total LM Capacity (Line)
Number of Units (Bars)
50 Average
50 Size / 100
RoRo Orderbook and Deliveries Total LM Capacity (Line)
80,000 80,000
4630
4630
45 45 4510
4510
70,000 70,000
4290 4300
40 40
60,000 60,000
35 3480
35 3480
3200 3100
3200 50,000
30 3100 50,000
30
25 40,000
25 40,000
20
20 1930 30,000
30,000
1650
15 1650
15
20,000
23 K-LINE 20,000
10 21 12
23 19
10 21 12 CAPACITY
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UNCONFIRMED
10,000
12
5 K Line
12 8 10,000
5 (Cap?)
8 4 4 3
0 4 4 1 -
1800
0 2010 2011 2012 2013 2014 2015 2016 2017 2018
1 1 -
2010 2011 2012 2013 2014 2015 2016 2017 2018
Delivered
Delivered OnOrder
On Order AverageSize
Average Size(Lm)
(Lm) TotalCapacity
Total CapacityDelivered
Delivered(Including
(IncludingExpected)
Expected)
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ORDERBOOK
THE ORDERBOOK 2015-2018 (INCLUDING VESSELS ALREADY DELIVERED IN 2015):
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DELIVERIES AND NEW ORDERS
WHAT HAS BEEN DELIVERED TO THE WORLD FLEET IN THE LAST 5 YEARS?
• 87 VESSELS WITH TTL 312,130 LM HAVE BEEN DELIVERED TO THE FLEET SINCE 2010. THE AVERAGE VESSEL SIZE WAS 3580 LM.
HOWEVER:
• 25 OF THESE VESSELS (29%) WITH TTL 120,150 LM CAPACITY (38%) ARE DEEP SEA RORO/CONRO VESSELS WITH QUARTER STERN
RAMP (ABT 4,800 LM AVERAGE SIZE)
SINCE 2010, VERY LITTLE TONNAGE HAS BEEN DELIVERED FOR THE TRAMP MARKET (NOT ORDERED FOR A
SPECIFIC SERVICE):
• ONLY 12 VESSELS WITH 41,216 LM CAPACITY WHERE DESTINED FOR THE MARKET, AVG. SIZE 3430 LM (SMALLEST UNIT 2570 LM
WEDELLSBORG)
• SINCE 2013 24 VESSELS HAVE BEEN DELIVERED OF WHICH ONLY 1 FOR THE TRAMP MARKET (WEDELLSBORG) !
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WHICH YARDS HAVE BEEN BUILDING RORO VESSELS?
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MAIN CHALLENGES TO THE RORO MARKET
THE BIG GAME CHANGER – ECA REGULATION IMPLEMENTED 1ST JAN 2015
THE MAJORITY OF COSTS WILL FALL ON OPERATORS’ SHOULDERS
END 2014 / BEG 2015 – PERIOD OF FLEET OPTIMIZATION
MIGRATION OF TONNAGE WHICH IS EITHER TOO SMALL OR TOO OLD FOR INVESTMENTS
USE OF MDO IS A SHORT-TERM SOLUTION WHICH DEPENDS ON THE BUNKER PRICES (-35% VS MAY 2014)
INVESTMENTS IN EMISSION ABATEMENT TECHNOLOGY: SCRUBBERS, LNG, METHANOL
OPTIMIZATION OF SERVICES: SAILING SPEED, FREQUENCY, CLOSURE OF UNPROFITABLE LINES
EMISSION CONTRO RULES HAVE INCREASED MARINE TRANSPORTATION COSTS OVERALL – WILL THE SHIPPERS & END USERS
CONTRIBUTE OR WILL THEY TURN TO OTHER MODES OF TRANSPORT?
SERVICES COMPETING WITH OTHER MODES OF TRANSPORT AND LONG-HAUL SERVICES ARE UNDER PRESSURE
PCTC OPERATORS ARE INCREASINGLY PENETRATING SHORT SEA MARKETS
CONTAINER TRANSPORTATION REMAINS A CHEAP(ER) ALTERNATIVE
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MAIN CHALLENGES TO THE RORO MARKET
o ECONOMIC ENVIRONMENT
OVERALL, EUROPEAN ECONOMIES ONLY SHOWED MINIMAL GROWTH IN 2014 (0,8%) AND SO FAR IN 2015
(PROJECTION ABT 1,5%)
SOUTH EUROPEAN ECONOMIES CONTINUE TO SUFFER
THE DECLINE IN OIL PRICES WILL LIKELY HAVE CONFLICTING IMPLICATIONS ON THE EMERGING MARKETS ON
EUROPE’S PERIPHERY, FAVOURING OIL-IMPORTING ECONOMIES AND HURTING OIL EXPORTERS LIKE RUSSIA AND
NORTH AFRICAN COUNTRIES
SANCTIONS ON RUSSIA HAVE HAD A DETRIMENTAL EFFECT ON THE BALTIC & BLACK SEA MARKET
VOLATILE MEDITERRANEAN MARKET IS SENSITIVE TO GEOPOLITICAL SHOCKS (CIVIL WAR IN SYRIA, CONFLICTS IN
LIBYA)
SEASONAL FLUCTUATION IN DEMAND IN THE MED
IMPORT RESTRICTIONS (ALGERIA)
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EXPECTATIONS FOR THE FUTURE
o TONNAGE SUPPLY
RORO FLEET WILL CONTINUE TO SHRINK IN NUMBER (18 VESSELS ON ORDER VS 108 OLDER THAN 30 YEARS) AND CAPACITY
(ABT 58,000 LM ON ORDER VS ABT 155,000 LM OVER 30 YEARS OLD)
VESSELS WILL CONTINUE TO GROW IN SIZE (ECONOMIES OF SCALE)
WE EXPECT A SHORTAGE OF TONNAGE IN 2 SIZE SEGMENTS: 700-1500 LM AND 3000+
WE ARE TURNING A CORNER FROM OVERSUPPLY TO UNDERSUPPLY
o NEWBUILDING ACTIVITY
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EXPECTATIONS FOR THE FUTURE
o DEMOLITION ACTIVITY
DEMOLITION ACTIVITY HAS STARTED TO SLOW DOWN DRASTICALLY ON THE BACK OF RECENT IMPROVED CHARTER RATES
HOWEVER, THE LARGE NUMBER OF VESSELS >30 YEARS OLD WILL EVENTUALLY HAVE TO BE RECYCLED
o DEMAND
AFTER FIVE YEARS OF WEAK DEMAND, THE SITUATION IS IMPROVING SO THERE IS ROOM FOR OPTIMISM DESPITE OUR
RESERVATIONS REGARDING THE FULL RECOVERY OF THE EUROPEAN ECONOMIES
WE EXPECT CONTINUED GOOD PERFORMANCE IN CONTINENT-UK CORRIDOR, THE SPANISH DOMESTIC AND TURKEY TO ITALY
MARKETS
THE DEMAND SIDE SHOULD RECEIVE A BOOST ONCE THE SITUATION IN UKRAINE, SYRIA AND LIBYA IS RESOLVED
LESS PRESSURE ON OPERATORS’ COSTS AS LONG AS THE BUNKER PRICES REMAIN MODERATE
WE EXPECT STABLE DEMAND FOR ICE-CLASSED TONNAGE AND LARGE ROROS
VESSELS UNDER 1500 LM WILL CONTINUE TO MIGRATE FROM NORTH EUROPE TO ‘SECONDARY MARKETS’
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Thank you for your attention !
www.brsbrokers.com
DISCLAIMER:
THE INFORMATION IN THIS REPORT IS GIVEN IN GOOD FAITH BASED ON THE MARKET SITUATION AT THE TIME OF PREPARATION
AND AS SUCH IS SPECIFIC TO THAT SITUATION ONLY. WHILE ALL REASONABLE CARE HAS BEEN TAKEN IN THE PREPARATION AND
COLLECTION OF INFORMATION IN THIS REPORT BRS GROUP DOES NOT ACCEPT ANY LIABILITY WHATSOEVER FOR ANY ERRORS OF
FACT OR OMISSION OR OPINION, OR FOR ANY LOSS INCURRED BY ANY PERSON WHO MAY SEEK TO RELY ON THIS INFORMATION.
THIS REPORT IS INTENDED SOLELY FOR THE RECIPIENT AND MUST NOT BE REPRODUCED OR PASSED OR SHARED WITH ANY THIRD
PARTIES WITHOUT THE WRITTEN PERMISSION OF BRS GROUP.
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