Hapag-Lloyd Analyst Day - CFO Nicolás Burr & COO Dr. Maximilian Rothkopf
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Hapag-Lloyd Analyst Day CFO Nicolás Burr & COO Dr. Maximilian Rothkopf Hamburg, 20 November 2019
Today’s Agenda
1 Recap on Financials & Strategy 2023 incl. Q&A
Market Fundamentals
Financial Performance
Strategy 2023 Recap
2 THE Alliance & IMO 2020 incl. Q&A
THE Alliance – Setup 2020
IMO 2020 – Implementation at Hapag-Lloyd
2
Recap on 9M 2019 Results & HL 2023 CFO Nicolás Burr Hamburg, 20 November 2019
Agenda
1 Market Fundamentals
2 Financial Performance
3 Strategy 2023 Recap
4
Consolidation has been shaping the industry –
Hapag-Lloyd has been at the forefront
Industry consolidation Global capacity share [%]
Carrier capacity [TEU m]
2.5
2.3
Ranking end of 2013
Top 5
1.5 Top 6-10
Remaining
0.8 0.8 0.7 0.7 0.6
44%
0.6 0.5 0.5 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 0.3
65%
Maersk MSC CMA Ever- COSCOHapag- Hanjin APL CSCL MOL NYK HSüd OOCL Yang PIL K-Line ZIM Hyundai UASC CSAV
CGM green Lloyd Ming
17%
4.0
Ranking as of 2019
3.4
2.9 2.7 19%
39%
1.7 1.6
1.3
0.7
0.4 0.4 16%
0.3
Maersk MSC COSCO CMA CGM Hapag-Lloyd ONE Evergreen Yang Ming Hyundai PIL ZIM
2013 2019
5
The orderbook remains historically low at only 11%…
Orderbook-to-fleet Newly placed orders
[TEU m, %] [TEU m, %]
Vessels ordered after 30 September 2019
61%
Orderbook
2.0 2.2
6.5 50% Vessels > 13,999 TEU
1.8
Share of world fleet 1.2
6.0 1.1
38% 0.8
0.4 0.4
0.2
5.0 27% 28%
21% 21% 2011 2012 2013 2014 2015 2016 2017 2018 YTD
4.3 18% 19% October
16%
3.9 13% 12% 2019
3.8 11%
3.4
3.6 Idle fleet
3.3 3.2 [TTEU] Share of world fleet 4.9%
2.8
2.5 2.5 28 October 2019
1,359 1,420 (increase driven by
scrubber retrofits)
809 1,123
595 779
628
417
228
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4
October 2011 2012 2013 2014 2015 2016 2017 2018
2019
6 Source: MDS Transmodal (October 2019), Drewry Forecaster (various issues), Clarksons (October 2019), Alphaliner weekly (various sources)
…and scrapping is expected to increase,
which indicates a healthier outlook for the industry
Scheduled vessel deliveries Scrapping
[TEUm] [% of world fleet]
1.7
3.3%
1.3 1.2
1.2 1.1
1.0
0.9 2.0%
1.5% 1.7%
1.1% 0.9%
0.6%
2015 2016 2017 2018 2019e 2020e 2021e 2015 2016 2017 2018 2019e 2020e 2021e
Net capacity growth in 2019e Supply / demand balance
5.1% 9 8.0%
8.0%
8
7 6.3% 5.8%
3.7% 6.1%
-0.9% 5.5% 4.6% 5.6%
6
-0.5%
5 7.6% 3.7% 3.9%
4 3.3% 4.7% 4.9%
-1.2%
3 4.3%
2 3.8% 3.2%
2.1%
1 2.2%
1.2%
0
Gross capacity Scrapping Slippage Net capacity Estimated Fleet 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e
growth growth ’Out of Service’
Demand Supply
for scrubber
retrofits
7 Source: Drewry (Forecaster 3Q19), Clarksons (October 2019)
Alliances have taken measures to actively manage capacity
on the Far East and Transpacific trades in 2019
Far East
Transpacific Far East Trade (~408,000 TEU weekly capacity)
THE Alliance and Ocean Alliance have removed more than 150,000
Peak Season TEU capacity during peak season and have announced blank
sailings around Golden Week
Extra-loaders have been added during peak season Temporary suspension of 2M´s AE2/Swan loop
~18,000 TEU/week to North Europe equal to 18% of 2M’s trade capacity;
~4% of total trade capacity & ~7% of North Europe related capacity
Post Peak Season 2M has announced three blank sailings in the first half of October
31,000 TEU/week equal to ~8% of total trade capacity; ~6% of North
Carriers have announced 9 blank sailings to US WC Europe related capacity & ~10% of Med related capacity
Carriers have announced 6 blank sailings to US EC / US HMM withdrew it‘s standalone AEX-service
GC ~4,900 TEU/week to North Europe equal to ~1% of total trade capacity &
~2% of North Europe related capacity
8
Also, the consolidation is beginning to materialize in less volatile
freight rates on a global level
CTS global rate index and rate volatility vs. carrier consolidation
Comments
120 40 30 The industry has reached an
[Index: 2008 = 100] [USD] [% capacity share]
unprecedented level of global rate
35 stability
Top 10 carrier control of global capacity
40
Absolut difference between highest
105
and lowest rate in past 12 month
30 Volatility at a global scale has
45
CTS Global Rate Index
diminished sharply over the
50 decade
90
55
20 Individual trades will always show
60 higher levels of volatility due to
75
65 capacity shifts
70
10 Clear correlation between
60 75 reduction in rate volatility and
80
degree of industry consolidation
45 0 85 Development clearly shows that the
Jan.-10
Jan.-11
Jan.-12
Jan.-13
Jan.-14
Jan.-15
Jan.-16
Jan.-17
Jan.-18
Jan.-19
Jan.-09
Jan.-10
Jan.-11
Jan.-12
Jan.-13
Jan.-14
Jan.-15
Jan.-16
Jan.-17
Jan.-18
Jan.-19
industry is changing already
9 Source: CTS Oct. 2019, Transmodal Oct. 2019
Agenda
1 Market Fundamentals
2 Financial Performance
3 Strategy 2023 Recap
10On the back of two mergers, Hapag-Lloyd was able to significantly
increase transport volume and revenues
Volume and Revenue Development Q1 2014 – Q3 2019
Capacity
1,009 966 963 1,573 1,643 1,670
year end [TTEU]
3,356 3,608
3,268 3,565 3,534 3,569
Transport Volume [TTEU] 3,221 3,478
3,119
Revenue [USDm] 3,052 3,038 3,045
2,987 2,974
2,861
2,807 2,774
+69.4%
2,593 2,620 2,629 2,929
2,411 2,376
2,276 2,271 2,287
2,229 2,225 2,182
2,124 2,152
2,088 +117.7%
1,945 1,934
2,130 1,861 1,822 1,811
1,774
1,947 1,950
1,560 1,892
1,474 1,473
1,399
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
2014 2015 2016 2017 2018 2019
11While bunker prices increased since 2016, freight rates have
remained stable
Freight Rate vs. Bunker Price Q1 2014 – Q3 2019
Freight Rate [USD]
1,448
1,422 1,426 1,412 Combined Bunker Price [USD/mt]
1,331
1,264
1,189
1,116
1,084 1,079 1,063 1,084
1,067 1,056 1,072 1,065 1,055
1,019 1,027 1,033 1,030 1,029 1,010
595 592 585
525
446 467
425 434 416
399
362 372
338
312 306 313 312 308
245 257
224
178 182
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
2014 2015 2016 2017 2018 2019
12 Note: For the financial year 2018, revenues for additional services in Latin America and Turkey were included in the calculation of freight rates. The previous year´s figures have not been adjustedWe were able to substantially improve our cost structure
Cost per TEU development 2014 – 2018 (ex bunker) 9M 2019 vs. 9M 2018 (ex bunker)
Limited comparability due to new
Transport-
volume
P&L structure and IFRS 16
TTEU 5,907 7,401 7,599 9,803 11,874 8,900 9,011
New PL structure
[USD] -26%
1,165
IFRS 16
999
895 865 863
859 858
1,057
929
825 785 766 796 755
108 70 70 74 92 69 108
2014 2015 2016 2017 2018 9M 2018 9M 2019
Purchased services ex. Bunker Depreciation Transport costs ex. Bunker Depreciation
13Results have been improving consistently since Q2 2016
despite a challenging industry environment
EBITDA and EBIT Development Q1 2014 – Q3 2019
EBITDA USDm
EBITDA USDm ex. IFRS 16
EBIT USDm 617
556
524
453 479
415 443
390 392
372
319
266 282
231 247 253 251 243
219 206 202
196 248 197
150 152 167
136 144
103 90 111 92
88 83 73 62 47 164
34 18
4 5 8
-29 -50
-110 -109
-403
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
2014 2015 2016 2017 2018 2019
14Effects of sector consolidation can also be seen in stabilizing results
across the industry over the past quarters
7.8% 9M 2019
7.0%
6.1% 6.9% Hapag-Lloyd 6.8%
5.4% 5.5%
5.1% 4.6% COSCO 4.9%
1)
3.5% Maersk 4.7%
3.4% 5.0% 2.9% Wan Hai 3.7%
1.9% 1.8% 2.1%
1.3% 1.3% Evergreen 2.6%
0.4% 2.7%
0.2% 0.6% Yang Ming -0.8%
1.4% 2)
HMM -7.2%
-0.9% -1.2%
-2.4% -3.0% Q3 2019
Hapag-Lloyd 7.8%
-5.8% Maersk 1)
7.3%
COSCO 4.8%
-7.7%
-8.5% Wan Hai 3.6%
-8.1%
Evergreen 2.7%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Yang Ming -1.5%
2016 2017 2018 2019 HMM
2)
-4.7%
Average carrier EBIT margin Hapag-Lloyd EBIT margin
15 Average values are based on a varying number of carriers due to differences in data availability in the respective quarters
1) Based on Maersk Group as Maersk has stopped to publish a liner EBIT in Q1 2018; 2) HMM incl. bulk business due to unavailability of liner business onlyStable equity base of USD 7.3 bn, very strong cash flow
generation of USD 1.7 bn and reduced net debt to EBITDA of 3.2x
Equity base [USD m] Net debt [USD m]
Equity ratio 41.3% 45.5% 44.6% 40.9% 40.9% 40.2% LTM LTM
Net debt /
Gearing 72.1% 66.1% 71.0% 93.8% 85.5% 92.0% 27.9x 3.9x 5.7x 5.7x 4.8x 3.2x
EBITDA
7,332 7,595 7,272
7,263 7,171
783 737 6,084
5,068 5,497 5,342 636
4,518 4,256 4,415
Cash 1) 865 625 622
6,812 6,535
5,448
Net debt 3,653 3,631 3,793
2014 2015 2016 2017 9M 2018 9M 2019 2014 2015 2016 2017 9M 2018 9M 2019
Operating cash flow [USD m] Invested capital [USD m] & ROIC [%]
Free CF 159 -38 109 1,048 651 1,483 14.134 13.749 14.076
1,727 8.722 9.128 9.136 6,5%
3,1% 3,1%
1,3%
1,020
872 4,1%
635
501 461
-6,0%
2014 2015 2016 2017 9M 2018 9M 2019 2014 2015 2016 2017 9M 2018 9M 2019
16 1) Includes Restricted Cash booked as other assetsFinancial Highlights 9M 2019 –
Clearly improved financial results compared to previous year
Transport volume [TEU m] Freight rate [USD/TEU] Revenue [USD m]
+1.2% +4.2% +5.1%
9.0 1,075 10.7
8.9 10.1
1,032
9M 2018 9M 2019 9M 9M 9M 2018 9M 2019
2018 2019
EBIT [USD m] EAT [USD m] Operating CF [USD m]
+102.2% +USD 318 m +98.1%
722 333 1,727
26*
399*
357 872
696 363
1,328
15 -30*
9M 2018 9M 2019 9M 2018 9M 2019 9M 2018 9M 2019
17 * IFRS 16 impactAgenda
1 Market Fundamentals
2 Financial Performance
3 Strategy 2023 Recap
18Our Strategy 2023 has 3 overarching goals
Number 1
Be profitable Profitability Deliver unparalleled
for quality
throughout the cycle quality, be
customer-oriented,
and create value for
customers as well as
capture value for
Hapag-Lloyd
Global
Reinforce strongholds
player Focus on customer
Expand in key growth markets
segments willing to
Global market share (excluding pay for value
Intra Asia) greater than 10%
19Overview of core elements to achieve the goals of our Strategy 2023
Continuously earn and keep Mid and long-term differentiating strategy
the “right to play”
Environmental
No. 1 quality carrier
responsibility
Continuous
Cost Management
Superior land side Best-in-class
capabilities Web Channel Sustainable
value
creation
Revenue Management Focus on selected
attractive markets Opportunistic M&A
and segments
Digitization & Automation
Agile Organization
20Tangible steps made on Strategy 2023 in 9M 2019
GLOBAL PLAYER BE PROFITABLE # 1 FOR QUALITY
We have reinforced our market share We are on-track to deliver on We have made further progress
and expanded in niche markets profitability and deleveraging targets in achieving our quality targets
Global market share stable around Financial result significantly up, Quick Quotes (Web Channel) with
10% (excl. IRT Asia) EBIT +102% vs. 9M 2018 ongoing strong growth rates in
2019
Continued growth in reefer and Financial debt reduced by
special equipment towards 10% USD ~800m (excl. IFRS 16) , A new CRM tool for our sales force
market share target e.g. due to early Bond repayments launched in summer 2019
Strengthened position in Net leverage improved to 3.2x Further Quality Service Centers
attractive markets by launching (excl. IFRS 16), earlier than expected (QSCs) to strengthen our delivery
new services e.g. from Turkey to consistency and organizational
Strong cash conversion (>90%) and
North America East Coast (Apr efficiency
adequate liquidity reserve of
2019), from South East India to
USD >1.1 bn available Substantial improvement in
Europe (Oct 2019) and from Middle
Net Promoter Score (NPS)
East / India to Africa Cost Management Program
(Oct 2019) (incl. restructuring of unprofitable
services) on track with positive effect
on unit cost
Overall good results achieved with
Revenue Management
21Cost management program with substantial savings ramp-up in 2019
Cost savings potential
Full run rate [USD m] Cost savings ramp up [USD m]
350 – 4001) 350 – 4001)
Savings
implemented
for 2019
Network Container Collaboration Terminal Procurement Total 2019 2020 2021
Steering Partnering Full savings run rate
22 1) Compared to a FY 2017 cost base (incl. UASC business for 12 months) Subject to further evaluation and specification in 2019/20We are well on track in implementing our planned
savings initiatives
Degree of
Implementation Measures
Advanced analytics tool developed
NETWORK Optimize share of transshipment and direct cargo
Optimization of all shipsystems
90%
Raise service level and reduce costs
Establish standardized procurement tools/methods across Hapag-Lloyd
PROCUREMENT Build up partnerships with key suppliers
70%
Timely exchange of information
TERMINAL Reduced waiting time
Improved productivity
PARTNERING Early departure
20%
Reduce empty moves
CONTAINER Advanced analytics further enhanced
Avoid container type imbalances through substitution
STEERING Direct moves between customers to avoid depots
95%
Enhanced and jointly operated Feeder network
Shift volumes from 3rd-party feeder to own services
COLLABORATION
Review and expand collaboration opportunities
20%
23Example Network: Restructured services CCI, IMX and AGX
contribute mid double digit USD m savings in 9M 2019
Measures
CCI IMX AGX
Combination of 2
services
Reduction by 1
vessel Implemented: June 2018 Implemented: December 2018 Implemented: January 2019
9M cumulated savings [USD m]
Optimization of
Mid double digit
vessel size
Joint operation in
new partnerships Jan Feb Mar Apr May Jun Jul Aug Sep
24We have further built on our foundation of new Revenue Management
with the implementation of advanced revenue optimization drivers
▪ Improved Transhipment attractiveness Examples
steering
Cargo Mix
▪ Building of Inland Products Far East Trade1) Asia – LatAm Trade1)
Capabilities
▪ Cargo Mix Optimization tool with constraint Jan-19 Sep-19 Jan-19 Sep-19
based rule set
6.1%
Uptake ▪ Advanced Booking Acceptance engine 9.2%
7.9% 9.5%
Management ▪ Granular booking uptake analytics -1.8ppt
-0.3ppt
Tools
▪ Rule Based Price Setting Key Concepts
▪ Quick Quotes Improvement in cargo mix optimizes profitability of ship systems
Pricing ▪ Shipping Guarantee and trades
Techniques A 100% fully optimized ship system will never occur
▪ Cargo Insurance
Different trades can have very different optimization potentials
▪ Low contributing cargo steering
25 1) A lower figure represent a more optimized scenarioWe remain ambitious and are confident to achieve the goals we have
set our self
Financial Targets to be achieved until 2023 Non-Financial Targets to be achieved until 2023
Achieve best in class Net Promoter Score (NPS)
Profitability ROIC (throughout the cycle) > WACC Quality
Measure and improve On Time Delivery
Superior Increase share of door-to-door business
Deleveraging Net Debt / EBITDA ≤ 3.0x
landside to over 40% of total by 2023
Grow volume in selected attractive markets and
Attractive
Equity Equity ratio > 45% achieve a market share of ~10%
Markets (excl. Intra Asia) in reefer market by 2023
Comply with or exceed all environmental
Liquidity Adequate liquidity reserve of ~ USD 1.1 bn Environmental regulations (incl. IMO)
Grow volume booked via Web Channel
Web Channel to 15% by 2023
26Major targets for 2019 and beyond continue to remain unchanged
Continue to increase profitability and further deleverage our company
Continuously proactively adjust to changing market conditions
Successfully implement IMO 2020
Continue Revenue Management professionalization and
make further progress on our Cost Management program
Continue to implement our “Strategy 2023” and create more value for our
customers and shareholders as we strive to become number one for quality
Further develop and offer more digitalized solutions to our customers
27THE Alliance setup and Status on IMO 2020 preparations COO Dr. Maximilian Rothkopf Hamburg, 20 November 2019
2020: A key year for operations
Operational focus topics for the year 2020:
Manage Further
Improve
Schedule
Strengthen IMO 2020 enhance
IT Systems
Reliability THE Alliance Transition &
Organization
29Agenda
1 THE Alliance – Setup 2020
2 IMO 2020 – Implementation at Hapag-Lloyd
3 Q&A session
30THE Alliance: Multilateral framework based on core principles
defining our unique selling proposition
Core principles of THE Alliance
Multi-Trade agreement: THE Alliance members as from 1 April 2020
Atlantic, Far East-Europe, Asia-Middle East and
Transpacific
Best ship for the loop principle:
Deployment of operationally most appropriate vessel
in each loop, regardless of providing line – mixed
loops are the norm
~280 vessels
Loop allocation share: 32 services
Based on core principle: “What you put in, is what
you get out” – irrespective of where own vessels are
deployed
Organizational setup:
Joint coordination center in Singapore, with agreed
Joint Working Procedure for daily operation
31THE Alliance partnership allows Hapag-Lloyd to offer a superior
product on core east-west-trades
Setup of joint service network Same underlying mechanisms as Use of large vessels to leverage
covering a defined scope of trades a classical “vessel sharing economies of scale
Alliance agreement”, but larger scope
Ensure multiple weekly departures Joint deployment decisions of fleet
concept
from/to main east/west Frequent joint review of product based on each line’s demand
destinations offering and clearly defined
processes for changes
Enhanced product for customers Reduced investment needs due Improved utilization over all
Advantages for Multiple departures per week to vessel sharing between services
Hapag-Lloyd which would be impossible in alliance partners Reduced unit costs
stand-alone situation
32HMM joining THE Alliance on 1 April 2020 brings additional
ULCV capacity…
Current capacity HMM New orders
Total fleet
Yearly transport volume: ~ 4,500 TTEU
Vessels: 12
Vessels: 76
Vessel capacity: 23,000 TEU
Capacity: 428,966 TEU Delivery as of Q2 2020
HMM will participate in
Avg. capacity: 5,644 TEU % of future total fleet1): 33%
THE Alliance on major
East-West trades (such
as Far East and
Owned fleet Chartered fleet Transpacific) from
Vessels: 8 1 April 2020
Vessels: 19 Vessels: 57
Vessel capacity: 15,000 TEU
Capacity: 154,160 TEU Capacity: 274,806 TEU
Delivery as of Q2 2021
Avg. capacity: 8,114 TEU Avg. capacity: 4,821 TEU
% of future total fleet1): 15%
% of total fleet: 36% % of total fleet: 64%
33 1) Assumption that entire current fleet will be continued; likely some return of charter vessels…and will further strengthen THE Alliance’s competitive position
Alliance capacity shares on major trades (incl. HMM)
Atlantic Transpacific Far East
Others 2M Others 2M Others 2M
5% 45% 8% 21% 0% 39%
36%1) ( - pp) 14% 29% (+3 pp) 42% 25% (+1 pp) 36%
THE Alliance Ocean THE Alliance Ocean THE Alliance Ocean
34 Source: Alphaliner Monthly Monitor (October 2019) Note: (%) = Market share excl. HMM 1) HMM with no participation on Atlantic tradeAgenda
1 THE Alliance – Setup 2020
2 IMO 2020 – Implementation at Hapag-Lloyd
3 Q&A session
35As of 2020, all ships will be required to use fuel with 0.5% Sulphur
content or less worldwide
IMO 2020 Sulphur Regulation Bunker fuel Sulphur limit
% Sulphur (by weight)
4.5
Global
4.0 ECA
3.5
3.0 Emission control All international
0.5% worldwide areas (ECAs3: bunkers outside
2.5 Europe and North ECAs3 scheduled
0.1% at berth
2.0 America) with move to move to 0.5%
0.1% Emission control areas (ECAs) to 0.1% Sulphur Sulphur on Jan 1
Targeted 0.1% ECAs China
1.5 levels in 2015 2020
1.0
Fuel type Today 2020
0.5
Worldwide Only with
HSFO 3.5% (excl. ECAs) 0.0
scrubbers2 2010 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2025
No large scale Worldwide
VLSFO 0.5%
use (excl. ECAs)
ECAs3 + ECAs3 +
MDO 0.1%
EU Ports EU Ports + New
ECAs China
36 1) Marine Diesel Oil (0.1% sulphur) 2) Possible use of scrubber for Sox post-treatment 3) Emission Control Area (ECAs) = The Channel, North Sea, Baltic Sea, North America, US CarribbeanThere are three options to comply with IMO2020
Options for ensuring compliance
1 2 3
Compliant Scrubber (EGCS) Liquefied natural
fuels gas (LNG)
Current HL fuel portfolio in light of IMO 2020
Majority of fleet will use 10 Hamburg Class Pilot conversion of "Sajir“
compliant fuel 9 charter ships Potential to convert 16 additional
Study further scrubber LNG-ready ships
opportunities
37Hapag-Lloyd is on its way to ensure compliance with IMO 2020
Latest date for change-over
December 31st
No vessel burns HSFO Carriage ban
Last stocks to be debunkered for HSFO
Jan 1st – February 29th (except scrubber)
March 1st
Consumption of
HSFO is now
First consumption of forbidden
VLSFO Jan 1st
From December 1st
First VLSFO is
Regulatory deadline to ensure compliant
bunkered
fuel is provided to every vessel
Mid October
38Transition of Hapag-Lloyd’s fleet towards IMO 2020 compliance is
a complex task but well underway
The objective of the IMO 2020 project group is to ensure a smooth transition of Hapag-Lloyd’s fleet while avoiding any HSFO
debunkerings in 2020
Fleet
Management
Chartering Network &
Cooperations
There are certain operational requirements to ensure
compliance
– Tanks need to be cleaned prior to bunkering of VLSFO
IMO 2020
– Ship implementation plan has to be developed Group
Fuel Purchase
– Debunkering to be avoided due to financial and
operational risks
– Contractual agreements for charter vessels have to
Business
be fulfilled Legal &
Intelligence
Insurance
Working group established = Project Lead
39The industry faces a 3-dimensional dilemma between
change over date vs. risk of debunkering vs. additional costs
Individual fuel change-over monitoring for each vessel
Fuel change-over monitoring Key takeaways
Bunker VLSFO Bunker HSFO HSFO tank capacity Consumption Change-over
date ▪ Required tank
ROB HSFO VLSFO tank capacity Tank cleaning cleaning reduces
tank capacity for
HSFO
▪ Port omissions could
Fuel in metric tons
disrupt bunkering
and cleaning plans
▪ Speed ups might
result in earlier
consumption of
VLSFO
▪ Additional cost
could occur due to
earlier change-over
Port 1 Port 2 Port 3 Port 4 Port 5
Latest by
31st Dec 2019
40We are confident that Very Low Sulphur Fuel Oil will be sufficiently
available at major ports
Current coverage of secured VLSFO [0.5%]
Share of total
Top 8 HLAG
yearly volume
Bunker Ports
[%]
A
B ~ 55
Top 8 ~ 80%
C
D
E ~ 20
F
G
~5
H
Other ~ 20
Total 100
41 Source: Internal assessmentPrice spread between VLSFO and HSFO was estimated to be around
250 USD/mt – Current prices support our estimation
Rotterdam bunker prices [USD/mt]
600
550
500
464
450
+57
400
350 +150
+248
300
250
HSFO [3.5%] VLSFO [0.5%]
200 HSFO [3.5%] Forward VLSFO [0.5%] Forward 216
150
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov May
19 19 19 19 19 19 19 19 19 19 19 20
42 Source: Platts data as per 30.10.2019, futures data & own calculationWe have introduced a Marine Fuel Recovery mechanism (MFR)
to pass on higher bunker prices
The Marine Fuel Recovery Mechanism (MFR) replaces all
existing fuel charges
MFR has been gradually implemented from 1 February 2019
It is causal, transparent and easy-to-understand
It helps our customers predict and plan the price increases for
their trade routes
The calculation is based on average market data
As of today, MFR has been implemented in the majority of our
contracts
43As of 1 December 2019, Hapag-Lloyd will implement an additional
bunker surcharge to cover the IMO 2020 transition period (ITC)
The ITC will apply to FAK and short term business
Fuel price development Transitional operational expenses Inefficient fuelling expenses
Expected higher fuel price based on a Tank cleaning (Riding Gangs, Additives, Due to unavailability of LSFO 0.5% in
certain spread: Flushing Parcels) specific bunker ports it is possible that
we cannot optimize our bunker
Tank modifications purchasing and…
Stripping pumps – use ULSFO 0.1% instead of
HSFO debunkering VLSFO 0.5%
Spread Replacing emergency fuels – bunker several times taking in smaller
quantities
– bunker in more expensive ports
Examplary graph
Competitors, such as Maersk/ Hamburg Süd, CMA CGM, ZIM and others have also announced to introduce surcharges to cover the
IMO 2020 transition period, effective December 1st, 2019.
44We have continually modernized our fleet and now
need to address evolving emission regulations
Fleet modernization programs
2010s 2015s 2020
"Engine power reduction to "Optimizing water resistance of "IMO 2020 compliance & Future
Theme match demand" Hull" GHG regulations"
Turbo charger cut out and power Replacement of traditional Installation of scrubbers and
Action reduction. Improved power bulbous by float-optimized conversion to LNG dual fuel
management for auxiliary engines bulbous bow, trim optimization propulsion
and hull roughness
Increased fuel efficiency due to Optimized floating characteristics Compliance to IMO emission
Result operating on optimized design can lead to fuel savings of up to regulations by reducing CO2
point for engine 10% emissions
In view of IMO 2020, we started modernizing our fleet (own and chartered) by installing 19 scrubbers and a LNG pilot by end of year 2020,
and continue to look at further opportunities
45Our 13,200 TEU Hamburg Express class vessels are currently being
fitted with Scrubbers
General Information
Meets all current regulations
Uncertain longer term outlook due to possible further restrictions
Limited capex and relatively short payback time
Slightly higher consumption than w/o scrubber
Technical data
GVU forOpen loop scrubber (hybrid ready)
HIMSEN G/E
At sea ~3,000 tons / hr wash water
3 wash water pumps (+1 in standby) with ~1,000 kW
power consumption
Switch over to compliant fuel in none discharge areas
(Elbe River, Singapore, China Coast, Belgium Coast…etc.)
46Work in progress and in plan…
GVU for HIMSEN G/E
… all Hamburg Express class vessels refitted by end of 2020!
47LNG appears to be an attractive alternative fuel, until future
emission free technologies reach commercially viable scale
LNG
Regulation Widely accepted technology
Lower costs from carbon tax / levy, once applied
Technological Medium-to-long term option to bridge gap from fossil fuels to future emission free technologies
maturity
Proven technology already in use with large LNG tankers and some cruise ships and smaller vessels
Still in pilot mode for ULCVs
Fuel availability Long-term availability of LNG appears secured (e. g. increase of US production)
Infrastructure/bunkering capacity building up rapidly
Gas price dropping towards expected long term floor ( e. g. new/cheaper methods such as fracking)
Capex
Higher Capex than scrubber but lasts for vessel lifetime (~25 years)
Emissions Lowest emissions among currently available fuels
Reduces SOx up to 100%, Particles up to 100%, NOx up to 95%, and CO2 between 20–25%
48Compared to Heavy Fuel Oil (3.5%), Liquefied Natural Gas (LNG)
reduces emissions significantly
Reduction of emissions through LNG versus HSFO (3.5%)
Liquefied Natural Gas (LNG)
Reduction by:
CO2 ~20-25%
LNG successfully attacks all
issues with one solution
NOx ~90-95%
The best solution to reduce CO2
emissions in the mid-term
SOx ~99-100%
Particles ~98-100%
49 Source: IMO GHG study (adjusted)For container shipping, LNG appears to be a viable mid-term
option – Other fuels / technologies are all still at the concept stage
High-level comparison per fuel type
Fuel type Shipping readiness Timing1)
LNG Commercial operation - growing order book 2020 2050
Bio fuels Demonstration - first fuel trials of up to 20%
(DME, RME, Ethanol) mixtures 2020 2050
e-Methanol Concept stage 2020 2050
Synfuels
Concept stage
(GTL, BTL, MTBE) 2020 2050
Ammonia Concept stage
2020 2050
Hydrogen Demonstration - considered for regional ferry
(+ fuel cells) operation 2020 (small) (large) 2050
Electricity
Concept stage 2020 2050
(thorium energy conversion)
Note: battery-electric propulsion excluded due to weight and space constraints 1) Indication based on market expert feedback
50 Source: Market research, expert interviewsHapag-Lloyd is the first in the world to convert a large container
ship to LNG – What we expect from the conversion of the „Sajir“
What to expect from the “Sajir” conversion?
We want to drive environmental friendly shipping
We do expect reasonable pay back times based on our
business case
The conversion is a pilot project for the entire industry
Conversion planned to be completed by Q3 2020
Planning phase started in Q4 2018
We will gain valuable operational experience
Hapag-Lloyd has further 16 LNG-ready vessels which
could potentially be refitted Our A15 (11x) and A19 (6x)
class vessels were built “LNG-Ready” in line with DNVGL
regulations
Flag Germany Breadth 368.52 m
Class 15,000 TEU Draught 51.00 m
Length 14.50 m
51Disclaimer Forward-looking statements This presentation contains forward-looking statements that involve a number of risks and uncertainties. Such statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, as well as uncertainties and contingencies that are subject to change. Actual results can differ materially from those anticipated in the Company’s forward-looking statements as a result of a variety of factors, many of which are beyond the control of the Company, including those set forth from time to time in the Company’s press releases and reports and those set forth from time to time in the Company’s analyst calls and discussions. We do not assume any obligation to update the forward-looking statements contained in this presentation. This presentation does not constitute an offer to sell or a solicitation or offer to buy any securities of the Company, and no part of this presentation shall form the basis of or may be relied upon in connection with any offer or commitment whatsoever. This presentation is being presented solely for your information and is subject to change without notice. 52
You can also read
