Bulk Tonnage Down, Containers Up Compared to out last quarterly report, we have reduced our gross tonnage forecast for the Port of Tallinn, but raised the outlook for box traffic in the same port. We now expect that the former will contract by just under 10%, while the latter will grow by just under 20%. This ”tale of two halves” reflects the evolution of two main factors. As far as gross tonnage is concerned, the key influence is growing competition from the new Russian Port of Ust Luga on the Gulf of Finland, which is gaining a greater share of liquid cargo business (basically crude oil and oil product shipments) at Tallinn”s expense. The generally sluggish state of the European and global economies is a contributing factor.
The box story, however, is something else: it is being driven by the reasonably strong performance of the Estonian economy and Tallinn”s emerging role as a gateway port. It is true that we have reduced our forecast for Estonian GDP this year to growth of 2.7%, compared to 3.0% previously, with both consumption and investment reacting to the eurozone economic crisis. That said, we note that Estonia is set to be the fastest-growing economy in Europe for the second year running. Additionally, the total value of foreign trade is set to grow by 7.8% this year – about a third of the pace achieved last year, but nevertheless a strong showing in current conditions, and more than double the domestic economy”s growth rate. It is this, together with Tallinn”s gateway role supplying a range of neighbouring economies, from Ukraine to Kazakhstan, that is keeping the box business healthy. Estonia has good medium-term prospects and we expect GDP growth to average 3.2% over the next five years.
Headline Industry Data
- Port of Tallinn gross tonnage set to fall by 8.0% to 33.549mn tonnes in 2012, following a 0.5% fall in 2011.
- Box traffic at Tallinn to grow strongly, increasing by 18.0% to 233,306 twenty-foot equivalent units (TEUs) in 2012, down from 30.1% growth the year before.
- Estonian foreign trade to gain 7.8% in real terms in 2012, after 25.9% growth in 2011. Import growth will lead with 10.0% expansion, ahead of exports, which will be up by 5.7%.
Key Industry Trends Profits Up At Tallinna Sadam Tallinna Sadam, the company that runs the Port of Tallinn, reported a nearly 12% increase in first quarter net profits to US$19.1mn, on sales of US$32.7mn. Improved profits were achieved despite a 9% fall in gross tonnage to 8.3mn tonnes, caused by a fall in liquid cargo volume. Tallinn operates a number of harbours and terminals, the most important of which is Muuga, which handles about 80% of the port”s total cargo volumes and processes around 90% of all transit cargo passing through Estonia.
Plans For LNG Terminal Moving Forward Tallinn Port and the power transmission grid Elering (both state-owned) said in early May that they had selected Vopak LNG of the Netherlands as a strategic partner to assess the feasibility of building a LNG terminal at Muuga, the commercial harbour within the Port of Tallinn. Under the terms of the agreement, Vopak would carry out a full feasibility study to assess the technical and economic parameters for the terminal, as well as the potential for applying for a European Union (EU) subsidy to support the investment. Officials said that the argument for EU financial support would be based on the fact that the terminal could have the capacity to cover at least 25% of total LNG demand across the Baltic region and Finland. The case for EU support would be presented to the European Commission in due course.
Hinterland Links Improved By Ukraine Rail Service Estonian Railways subsidiary EVR Cargo, together with Citodat Invest OU, has launched a regular container freight rail service from Tallinn through to Dnepropetrovsk and Kiev in the Ukraine. The project has the support of the rail infrastructure authorities of Estonia, Latvia, Belarus, and Uktaine. Urmas Glase, spokesperson for Citodat, said that the train, the Zubr, has enhanced the Tallinn port volumes by 1,500-2,000TEUs per month. Glase stated he expected the train would attract interest from northern Europe and in Asia
Key Risks To Outlook BMI believes the balance of risks to our forecasts continues on the downside. The eurozone crisis remains the main source of concern, with renewed worries in May that Greece might leave the Eurozone and provoke a ”domino effect” intensifying the financial crisis in more exposed economies such as Spain, Portugal, and Italy. While Estonia has to date been relatively protected from the European downturn, an intensification of the crisis could hit the country”s foreign trade and domestic growth rates, leading to a downturn in freight demand. We also continue to monitor the possibility of a new cooling in bilateral relations with Russia, which could have an adverse impact on the significant transit trade flows between the two countries. Bilateral relations hit an all-time low in 2007, and have improved significantly since.
However, there are signs that Moscow is becoming increasingly concerned over what it sees as a policy of discrimination against Estonia”s minority Russian-speaking population. A possible reduction in the official status of Russian as the country”s second language could leads to reprisals which would adversely affect trade.
Published: July 2012 No. of Pages: 112 Price: US $ 1175
Table of Contents
Executive Summary . 5
SWOT Analysis . 7
Estonia Shipping SWOT 7
Estonia Political SWOT 7
Estonia Economic SWOT 8
Estonia Business Environment SWOT 8
Global Overview – Container Shipping 9
Executive Summary: Rate Decline Risk, Threat Of Another Year Of Losses 9
Slowing Demand A Major Threat To Freight Rates 10
Carriers Thinking Outside Box On Overcapacity, Can Rate War Be Avoided? . 16
Lines Must Tackle High Bunker Prices To Avoid Impact On 2012 Bottom Line 21
Evergreen”s Order Raises Questions For Future Of Box Fleet Expansions 24
Global Overview – Dry Bulk Shipping 30
Executive Summary: Rates Struggling To Recover From 25-Year Low 30
Bleak Demand Outlook Gives Cause For Concern 31
Lines Withhold Payments As Shipping Struggles In Depressed Market 33
Vale”s Valemax Woes Continue, Vessel Values And Demand Plunging 35
Orders Continue As Lines Take Advantage Of Bargain Basement Prices 40
Record Dry Bulk Scrapping Levels No Match For Global Fleet 42
Global Overview – Liquid Bulk Shipping 44
Executive Summary: Bearish View Maintained Despite Industry Optimism . 44
Will Increased Asian Crude Imports Offset Excess Tonnage? 45
More Pain For US Tanker Operators Despite Investor Confidence 49
2012 Political Impact On Crude Oil Shipping Emanating From Iran 51
Tanker Operators Scrap In Desperate Attempt To Shore Up Rates . 55
Tanker Pools To Grow As Operators Seek Safety In Numbers 57
Industry Trends And Developments 59
Estonia Container Shipping Market Overview 61
Industry Forecast 68
Table: Major Port Data, 2009 – 2016 70
Table: Trade Overview, 2009 – 2016 71
Table: Key Trade Indicators, 2009 – 2016 71
Table: Estonia’s Main Import Partners , 2002-2009 (US$mn) . 72
Table: Estonia’s Main Export Partners, 2002-2009 (US$mn) 73
Company Profiles 74
Maersk Line 74
Mediterranean Shipping Company (MSC) 80
CMA CGM 84
COSCO Container Lines Company Limited (COSCON) 89
Evergreen Line 98
China Shipping Container Line (CSCL) 108
Hanjin Shipping (Container Operations) .113
Mitsui OSK Lines (MOL) (Container).117Table: Major Port Data, 2009 – 2016 . 70
Table: Trade Overview, 2009 – 2016 . 71
Table: Key Trade Indicators, 2009 – 2016 . 71
Table: Estonia”s Main Import Partners , 2002-2009 (US$mn) . 72
Table: Estonia”s Main Export Partners, 2002-2009 (US$mn) . 73