MarketReportsOnline.com - Estonia Shipping Report Q3 2012

MarketReportsOnline.com - Estonia Shipping Report Q3 2012

Published: July 2012 No. of Pages: 122 Price: US $ 1175



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.

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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.
Estonia Shipping Report Q3 2012 -
http://www.marketreportsonline.com/175618-estonia-shipping-.html

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

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Industry Trends And Developments 59
Estonia Container Shipping Market Overview 61
Industry Forecast 68
Trade 71
Company Profiles 74
Maersk Line 74
Mediterranean Shipping Company (MSC) 80
CMA CGM 84
COSCO Container Lines Company Limited (COSCON) 89
Hapag-Lloyd 94
Evergreen Line 98
APL 102
China Shipping Container Line (CSCL) 108
Hanjin Shipping (Container Operations) .113
Mitsui OSK Lines (MOL) (Container).117

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