Intra-Asia Shipping: Changing Dynamics: More Insight, Better Decisions

14.Oct.
15
Intra-Asia shipping: Changing
dynamics
More insight, better decisions…
Confidential – not for third party distribution © Seabury Group 2015

Agenda
 Global trends and developments
 China’s trade growth; a 2-speed development
Confidential – not for third party distribution © Seabury Group 2015 2

Was TEU growth in 2014 the exception rather than the rule?
The relatively strong demand for container shipping in 2014 has made place for slower
growth in 2015 so far, in line with recent figures of 2% to 3% recorded in recent years
Global containerized ocean trade growth

YoY growth (%), per quarter
9%
5.9% 6.1%
6%
5.0% 5.0%
3.3% 3.5%
3.0%
3% 2.4% 2.4%
2.1% 2.1%
1.7%
1.2%
0.8%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2012 2013 2014 2015
The lower growth in 2015 seems less exceptional in light of recent growth rates
Source: Seabury Ocean Trade Database (September 2015), Seabury Analysis

Global picture of TEU growth in first half 2015 varies
Although globally containerized ocean trade only grew 1.6% in the first half of the year,
growth on individual trade lanes varied strongly
Ocean trade growth 2015 YTD

% Ocean trade lane growth, YoY % Regional Share of Total Ocean Trade
-2 -8
10 2 7
12 -6 13 51
-2 -6
-3 0 11
4 5 -5
12 0
4
1 6
-1 4 4 5
>5%
0-5%
<0%
Global containerized ocean trade growth 1.6%
Note: 2015 YTD contains January to June

Source: Seabury Ocean Trade Database (September 2015) Seabury customs data only, UN Comtrade data excluded (July 2015)

Asia export growth driven by China
Although growth rates vary across the region, clearly China is the one country driving overall
trade developments in Asia Pacific
Incremental export volume, H1 2015

TEU (000’s)
1,200
1,000
887
800 751
600
100%
400
200
0
China Vietnam Japan Thailand Australia Philippines Indonesia Other Total
YoY (%): 4% 9% 3% 2% 4% -12% -3% 0% 3%
To understand China is to understand Asia Pacific to a large extent
Note: North East Asia excludes China


Asia Europe trade shows strong decline in recent months
Growthrates on all major tradelanes are declining since they peaked mid-2014, growth on
most trades is now negative; transpacific is the only trade showing recent improvement
Growth trends of largest trade-lanes, Jan 2013 - Jun 20151

YoY change (%)
15%
Intra-Asia Asia-Europe
Transpacific Asia-ME&ISC
10%
5%
-5%
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J
2013 2014 2015
Sluggish growth in 2015 to date is shared across major trade-lanes
1) Smoothened for enhanced clearness; trades are in both directions


Asia responsible for over 50% of all ocean exports
For ocean exports, the importance of North America and Europe has decreased, while
China and the Middle East & Indian Subcontinent increased their share of world trade
Containerized exports by origin region

TEU (M)
9% 9% 7% 7%
10% 10% 9%
13% Africa
8% 10% 11%
6% Latam
14% 13% 13%
17% NAM
ME&ISC
28% 27% 26%
Europe
30%
Asia (rest)
China
30% 32% 32%
22%
2000 2005 2010 2014
China’s exports volumes are larger than the rest of Asia-Pacific combined
SourceSource: Seabury Ocean Trade Database (September 2015), Seabury Analysis

Asia’s exports largely remain within Asia
Intra-Asia is the largest Asia trade, and has grown faster than Asian exports to
North America and Europe
Asia-Pacific exports by destination region, 2010-2014

TEU (M) 2010 – 2014 CAGR (%)
40 10%
2014 volume 2010 - 2014 CAGR
8%
30
6%
20
4%
10
2%
0 0%
Asia Pacific North America Europe ME & ISC Latin America Africa
Although fast growing, Latin America and Africa are still relatively small
destinations for Asia’s exports

Agenda

China’s trade has slowed down….significantly
Chinese trade, which used to grow between over 15% per year, has mostly grown in the
single digits since 2007
China’s TEU and GDP growth rates

YoY change (%)1
25%
CAGR: ‘00-’07 ’07-’14
20% Exports 18% 3%
Imports 16% 7%
15% Real GDP2 11% 9%
10%
5%
0%
-5%
’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14
Growth of China’s imports and exports has consistently been below its GDP
growth in the past 3 years
1) 3-year moving average; 2) Real GDP in USD at 2005 prices
Source: Seabury Ocean Trade Database, Economist Intelligence Unit (EIU)

China’s trade growth varies by province
Although China’s fastest growing provinces are located inland; the great majority of growth
in absolute numbers still comes from the coastal provinces
Export China by province Import China by province
TEU (M) TEU (M)
Guangdong 6.3 2.0 Guangdong
Zhejiang 3.5 1.3 Jiangsu
Inland 3.3 1.2 Shandong
Jiangsu 2.9 1.1 Shanghai
Shandong 2.5 1.0 Zhejiang
Fujian 1.6 0.9 Other inland
Shanghai 1.3 0.8 Fujian
Liaoning 0.7 0.6 Beijing
Hebei 0.7 0.3 Tianjin
Tianjin 0.6 0.3 Liaoning
Other coastal 0.1 0.2 Other coastal
<5% >20%
2012 YTD
2015 incremental
Inland
Guangdong is the main driver of export and import growth in China
Note: Colors on map indicate growth rate per province; the darker the color, the higher the growth rate; Year-to-date includes January until June
Source: Seabury Ocean Trade Database; Seabury analysis (September 28th, 2015)

China’s trade growth is mainly driven by raw materials
Raw materials is by far the largest absolute contributor to China’s trade growth, capital
equipment, perishables and automotive also have also shown a healthy groth rate
China’s trade growth by industry, 2010-2014

Incremental volume in TEU, CAGR (%)
Automotive Capital equipment Chemicals
7% 6% 3%
932,000 teu 415,000 teu 319,000 teu
Consumer goods Fashion goods High Tech
3% 1% 2%
1,407,000 teu 154,000 teu 117,000 teu
Machinery parts Perishables Raw materials
4% 6% 7%
680,000 teu 327,000 teu 6,068,000 teu
Fashion and consumer goods, traditionally important industries for China

have below average growth rates..
Notes: Trade contains both import and export of China

Agenda
- Imports
- Exports

China´s import sources
Containerized imports into China grow healthily from most regions around the globe, but are
declining from other North East Asian countries
China´s imports by origin region, 2010-2014
TEU (M) % Ocean Trade Lane CAGR, 2010 – 2014
South East Asia
North America
6
3
Europe -5
10
13
North East Asia 8
12
ME & ISC
Latin America
>5%
2010
0-5%
Africa 2014 increment
<0%
-1 0 1 2 3 4
South East Asia has become China’s largest source of imports in 2014

Chinese import growth exclusively driven by raw materials
Outside of raw materials, most other commodity categories have contributed little to import
growth over the past 4 years
China’s containerized imports, 2010-2014

TEU (M) CAGR (%)
14 35%
2014 incremental
12 2010 volume 30%
CAGR (%) 25%
10
20%
8
15%
6
10%
4
5%
2 0%
0 -5%
Raw Chemicals Automotive Perishables Machinery Capital Consumer High Tech
Materials parts Equipment Goods1
Perishables and consumer goods have substantially outgrown other import

industries, but still account for only a fraction of overall imports
1) Consumer goods consists of consumer fashion goods and personal consumer goods and household goods combined

China’s containerized raw materials imports
Waste paper and wood & cork account for over half of all containerized basic raw material
imports into China
Raw materials imports China, 2010-2014 Basic raw materials imports China, 2010-2014
TEU (M) TEU (M)
Basic raw materials Waste paper
Plastic/rubber consumables Wood & cork
Food & beverages Metal scrap
Semi-manuf.consumables Agricultural consumables
Textiles consumables Marble
Leather/furs consumables Building stone
Other consumables Other basic raw mats
2010 volume -2 0 2 4 6 8 0 1 2 3
2014 incremental volume
Containerized imports to China depend on a small number of commodities

Import commodities have different destination regions..
Imports of raw materials feed industries along the coast as well as further inland, while
imports of chemicals and high tech mainly stay along the coast
Raw materials Chemicals
High Tech Perishables
High granularity in shipper data helps drive new commercial strategies

Note: Bubble size represents total import weight of the transported goods;
Source: Seabury China Shipper Trade Database (September 2015); Seabury Analysis

Absolute volumes per pulp & waste paper importer
The 2 largest pulp and waste paper importers, Nine Dragons and Lee & Man control a vast
share of the total market; while some smaller players have grown faster in 2015 to date
Top 10 pulp & waste paper importers1, 2015 YTD

Tonnes (M)
2015 incremental
2.0
2014 YTD
1.5
1.0
0.5
0
Jiulong Shanying Jian Longchen All
Paper Paper Paper Paper
YoY (%): 24% 13% 17% 117% 47% 18% 9% 14% 77% 24% 24%
2015 import growth rates vary substantially by shipper
1Ranked by 2015 ocean volume in metric tonnes; Year to data contains January to June 2015

Agenda
- Imports
- Exports

China´s export partners
Exports to North America, North East Asia and Europe, China’s largest destination markets
in the past 4 years, have been outgrown by exports to South East Asia and ME & ISC
China´s exports by destination region, 2010-2014
TEU (M) % Ocean Trade Lane CAGR, 2010-2014
North America
North East Asia

1
2
Europe 8
2
12
South East Asia 14 7
ME & ISC
Latin America
>5%
2010
0-5%
Africa 2014 increment
<0%
0 2 4 6 8 10
China is increasingly relying on “developing” markets for its exports

China slowdown differs per trade
China’s export trades to developed regions such as Europe, North America and North East
Asia have sustained most of the decline in trade growth since 2007
Growth rates for China’s exports trades 2000 - 2007 CAGR

CAGR (%) 2007 - 2014 CAGR
-13%
-21%
25% -8% -7%
22%
21%
-16% -16% 20% 20% -7%
20%
16% 16%
15%
15%
12% 12%
10% 9% 9%
5%
0%
0%
0% -1%
-5%
CN>Europe CN>NAM CN>NEA CN>ME&ISC CN>SEA CN>Africa CN>Latam
China to Europe trade has seen the strongest slowdown of China’s export trades

Raw materials take a more dominant position in China’s exports
The share of raw materials, already the largest export industry of China, has increased by
1.4% in the past four years, while the share consumer goods declined by -1.5%
China’s export growth by industry
Industry Export in TEU (M) Change in export share1 Comments

 Basic raw materials constitute only 7%
Raw Materials +1,4% of raw materials exports
 Household goods grew 4.5% while
Consumer goods -1,5% personal cons. goods declined -1.3%
Machinery parts -0,2%

 ~70% of China’s containerized automotive
Automotive +0,4% exports are vehicle parts
 Export growth of footwear was close to
Fashion Goods -0,9% 0% p.a. since 2010
Chemicals -0,1%
Capital Equipment +0,4%

 High-tech export growth was negative
High Tech -0,2% from 2010 to 2013
Perishables -0,1%
2010 0 5 10 15
2014 increment
Raw Materials exports now make up a larger share of China’s container exports at the
expense of high tech, fashion and consumer goods exports
1) To illustrate: if Raw Materials made up 50% of exports in 2010 and 55% in 2014, its change in export share would be 5%

Export industries have a distinct local footprint
Exports of raw materials mainly originate from the Shanghai and Beijing catchment area;
..
while consumer goods exports have a strong concentration in South China
Location of raw materials shippers Location of consumer goods shippers
Ocean shippers, by zip code Air shippers, by zipcode
Consumer goods Raw materials
% Each dot is a zip code, size represents amount of ocean or air weight traded in 2014
% The shift in export commodities benefits North China more than the South
Note: Export only; bubble size represents total export weight of the transported goods per shipper;

Market consolidation in China varies per industry segment
Although the degree of consolidation varies by sector, the top 10 shippers control a vast part of
the market in most segments
Market share of top-10 shippers per household goods segment1

Share of export value, (%)
6% 6% 4% Top-10 shippers
30% 23%
47%
Other shippers
Household Climate control Household Home Furniture Lighting

goods appliances entertainment
The level of consolidation increases from 6% of all household goods shippers

combined, to 47% for the top-10 climate control shippers
1) Limited to shippers in China; chart not exhaustive, not showing all industries. identified shippers cover 41% of trade volume

Air-conditioner shippers have different supply chains
Shippers from similar market segments produce different products for different regional
consumer markets and need different modes of transportation as a result
Share aircon of total trade shipper Destination markets for aircon
By export weight, 2013-2014 By export weight, 2013-2014
42%
88%
95% 37% 28%
North America
81% 74% ME & ISC
Latin America
Asia Pacific
Europe
13% 32% 43%
Africa
Climate control Other
100% 100%
Midea serves a very diverse geography whereas other shippers focus mainly
on one single market, like Fujitsu and Asia in this example
Note: ME&ISC is Middle East and Indian Subcontinent

Some regions have picked up steam in the past four years
North East Asia is still the world’s main exports region although its growth rate has lagged in
recent years, while South Asia and the Gulf grow faster, albeit from a lower base
Trade growth by origin region, 2014

TEU (M) CAGR (%), 2010-2014
60 10%
50
8%
40
6%
30
4%
20
2%
10
0 0%
North South Western USA South South Asia Gulf
East Asia East Asia Europe America
2014 CAGR (right axis)
South East Asian exports have grown fastest among the 5 major exporting regions

South East Asia will not be a China replacement
All South East Asian markets combined still account for a considerably smaller fraction of
global exports than China alone, and mostly trade within Asia
Share of global exports, 2014 SEA exports by destination region 2010-2014
TEU (M), share (%) TEU (M)
North East Asia

50
- Brunei - Malaysia 32% South East Asia

40 - Burma - Philippines
- Cambodia - Singapore
- Indonesia - Thailand North America
- Laos - Vietnam
30
Europe
20 14%
10% Africa
10 2010
Latin America 2014 increment
0
other NEA SEA China 0 2 4 6 8
South East Asia lacks the scale and scope to become a “China replacement” and
significantly impact global trade growth in the near future

Asia to remain the driving force for containerized exports
China remains the single biggest market in container shipping, but the rest of Asia is
expected to grow faster
Containerized exports by origin

TEU (M)
160 154
Africa
140 Latam
122
NAM
120
ME&ISC
100 Europe
80 Asia (rest)
China
60
40
20
0
2014 2019
Although the rest of Asia will grow faster than China, no market will come close to
having the impact China has in the near future
Source: Seabury Ocean Trade Database

Key take-aways
1 Global container growth has been sluggish in 2015, but Asia Pacific is doing relatively well
2 China is still driving global container trade developments
3 China’s containerized imports are heavily dominated by raw materials, industrial consumables
and foods
4 Consumer goods as a a portion of total Chinese exports has declined
It is highly unlikely that a (combination) of markets will have the impact on container trade China
5 has had, so China will remain the driving force, for good or bad, of the container shipping
industry in years to come
In markets with slower growth, using all available market intelligence data can
make a huge difference!

Introduction Seabury Group
With over 250 professionals, Seabury is a global specialist advisory services practice and a
leading advisor to the maritime and air cargo industries
 Founded in 1995, Seabury provides management

consulting, investment banking and corporate
reorganization advisory services
Forwarders  Seabury’s cargo practice services many of the
world’s leading shipping lines, ports, forwarders,
integrators, airlines and airports
Integrators Shipping lines  Seabury Cargo Advisory has an unparalleled range of
expertise in:
Seabury - Strategy consulting and business planning
Cargo - Operational improvement (e.g. cost reduction, revenue
Advisory boosting, contract negotiations and outsourcing)
- Network and alliance optimization; fleet selection, acquisition
and financing
Airlines Port Authorities
- Business intelligence, market research and forecasting
 The practice is led by a combination of former cargo

Airports airline and maritime experts, and consultants from
leading cargo consulting firms
 Seabury’s proprietary suite of software tools are

considered the industry’s best with a depth of
analytics necessary to support rapid decision making

China Shipper Trade Database
Seabury’s China Shipper Trade Database allows analysis of shipments to and from Chinese
zip codes, capturing trade behavior of individual shippers by mode
375,000 shippers
& manufacturers
Air, Ocean, Rail Weight, value & shipments
Database & Map
& Road Modes
14,000 Zip codes
Updated monthly 2000 commodities
7 Industries

How can the China Shipper database support your business?
The China Shipper Trade database compiles insightful analytics, for a broad range of
strategic and tactical uses
Various uses for the China Shipper database...
1 Understand key Chinese shippers and their supply chain behaviors

Strategy &
business
planning
2 Track trends and how key shippers shape the market
3 Segment and size shippers across various verticals

Marketing and
product dev.
4 Profile shippers and their needs in air/ocean transportation
5 Highlight business opportunities with Chinese shippers

Tactical sales &
business dev.
Target, locate and get in touch with Chinese shippers
From high-level market trends to tangible business opportunities

China Shipper Lookup Tool
The China Shipper Trade Lookup Tool allows you to filter and select specific (groups of)
shipper and provides you with the granular global trade and location details.
Filter and Identify Shippers Granular shipper specific trade data
Identify your target based on location or industry or trade countries and

get in touch with them

Global Ocean Trade Database
Seabury provides the industry's most comprehensive, reliable and up-to-date set of ocean
trade data with extensive historical time series and forecasts
Extensive coverage High granularity Covering worldwide ocean flows…
Global perishable shipments

 Imports and exports of 200  Global updates provided each
Containerized
countries, covering ~100% of month with minimal time lags of
Bulk
international ocean trade data availability Tons (M) YoY growth
Containerized growth
- Full transparency about data that 160 15%
 For large production and
is actual versus estimated 120
consumption markets drill-down 10%
to customs district (city) level:  Containerization ratio (split 80
USA, China, India and Brazil between container, dry bulk, 5%
40
liquid) based on:
 Trade separated in 0 0%
containerized, bulk and liquid - Exact containerization 05 06 07 08 09 10 11 12 13 14
percentages for all 2000
 Drill-down to 2,000 individual commodity types
commodities; proprietary …with an exceptional high level of data granularity
- Specification of containerization
classification of commodities in split per trade lane Seasonality of Aircos and Christmas articles from
Guangdong to Europe
70 industries and 12 sectors TEU (K)
 Ocean weights (kgs) have been 6 Christmas articles Aircos
 Measures are weight (kgs) value converted into TEU based on: 5
($) and number of TEU per trade - Specific stuffing factors for all 4
lane per commodity 2000 commodities
3
 Extensive and historical yearly - Stuffing factors per container type 2
and monthly data available from 20’ and 40’
1
2000 (availability depends on - Equipment (20’/40’ split) per
0
reporting country) commodity per trade lane
2012 2013 2014 2015
Source: Seabury Global Ocean Trade Database

Contact details
For more information, please contact…
Michel Looten
Director Maritime
Seabury Cargo Advisory
E-mail: mlooten@seaburygroup.com
Cell: +31 62 139 1196
Phone: +31 20 880 4265
Fax: +31 20 890 8620
Website: www.seaburygroup.com

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14.Oct.

More insight, better decisions…

Confidential – not for third party distribution © Seabury Group 2015

 Global trends and developments

 China’s trade growth; a 2-speed development

Confidential – not for third party distribution © Seabury Group 2015 2

Global containerized ocean trade growth

Source: Seabury Ocean Trade Database (September 2015), Seabury Analysis

Confidential – not for third party distribution © Seabury Group 2015 3

Ocean trade growth 2015 YTD

Global containerized ocean trade growth 1.6%

Note: 2015 YTD contains January to June

Confidential – not for third party distribution © Seabury Group 2015 4

Incremental export volume, H1 2015

YoY (%): 4% 9% 3% 2% 4% -12% -3% 0% 3%

To understand China is to understand Asia Pacific to a large extent

Note: North East Asia excludes China

Confidential – not for third party distribution © Seabury Group 2015 5

Growth trends of largest trade-lanes, Jan 2013 - Jun 20151

Sluggish growth in 2015 to date is shared across major trade-lanes

1) Smoothened for enhanced clearness; trades are in both directions

Confidential – not for third party distribution © Seabury Group 2015 6

Containerized exports by origin region

2000 2005 2010 2014

SourceSource: Seabury Ocean Trade Database (September 2015), Seabury Analysis

Confidential – not for third party distribution © Seabury Group 2015 7

Asia-Pacific exports by destination region, 2010-2014

Source: Seabury Ocean Trade Database (September 2015), Seabury Analysis

Confidential – not for third party distribution © Seabury Group 2015 8

 Global trends and developments

 China’s trade growth; a 2-speed development

Confidential – not for third party distribution © Seabury Group 2015 9

China’s TEU and GDP growth rates

Confidential – not for third party distribution © Seabury Group 2015 10

Guangdong 6.3 2.0 Guangdong

Zhejiang 3.5 1.3 Jiangsu

Inland 3.3 1.2 Shandong

Jiangsu 2.9 1.1 Shanghai

Shandong 2.5 1.0 Zhejiang

Fujian 1.6 0.9 Other inland

Shanghai 1.3 0.8 Fujian

Liaoning 0.7 0.6 Beijing

Hebei 0.7 0.3 Tianjin

Tianjin 0.6 0.3 Liaoning

Other coastal 0.1 0.2 Other coastal

Confidential – not for third party distribution © Seabury Group 2015 11

China’s trade growth by industry, 2010-2014

Automotive Capital equipment Chemicals

Consumer goods Fashion goods High Tech

Machinery parts Perishables Raw materials

Fashion and consumer goods, traditionally important industries for China

Confidential – not for third party distribution © Seabury Group 2015 12

 Global trends and developments

 China’s trade growth; a 2-speed development

Confidential – not for third party distribution © Seabury Group 2015 13

South East Asia

Source: Seabury Ocean Trade Database (September 2015), Seabury Analysis

Confidential – not for third party distribution © Seabury Group 2015 14

China’s containerized imports, 2010-2014

Perishables and consumer goods have substantially outgrown other import

Confidential – not for third party distribution © Seabury Group 2014 15

Basic raw materials Waste paper

Plastic/rubber consumables Wood & cork