Maritime Development Center RoRo & RoPax Market

Challenges and Opportunities

Source: Navitaship; ShipPax

Oct-10

Agenda
Before the Crisis RoRo Market RoPax Market Challenges Opportunities Questions

Oct-10

Before the Crisis

RoRo/RoPax markets enjoyed healthy growth in freight volumes. Development and expansion of route network by operators. High profitability. Charter market enjoyed historical high rates. Large orderbooks and high contract values. Vintage tonnage went through life extension. Deficit of tonnage and high demand.
Oct-10 3

What does the market look like in terms of tonnage profile?

Oct-10

RoRo Definition
Vessel with RoRo Capacity Minimum 800 Lanemeters Passenger capacity of maximum 12 persons
Maximum 1,800 cars Maximum 2.0 cars per Lanemeter
(To avoid typical car carriers)

Oct-10

RoRo Fleet Composition

(No. of Vessels)

3200+ LM 13% 800-1200 LM 26% 2700-3200 LM 8%

2200-2700 LM 9%

1700-2200 LM 17%

1200-1700 LM 27%

Average Age: 19.8 Years Fleet: 443 Vessels / 865,022 Lanemeters

Oct-10

RoRo Fleet Composition

(Capacity)
800-1200 LM 13% 3200+ LM 26%

1200-1700 LM 20%

2700-3200 LM 12%

2200-2700 LM 11%

1700-2200 LM 18%

Average size: 1,986 LM

Oct-10

No. of Vessels
40 60

10

20

30

50

1970

Oct-10
1971 1972 1973
1974 1975 1976 1977 1978

1979 1980 1981

1982 1983 1984 1985 1986 1987
Delivered

1988 1989 1990

1991 1992 1993 1994 1995
On Order Scrapped/Lost

RoRo Delivery Profile

1996 1997 1998

1999 2000 2001 2002 2003

2004 2005 2006

2007 2008 2009 2010

443 Vessels Delivered 38 Vessels on Order 114 Vessels Scrapped/Lost

2011

2012 2013

Lanemeters
1.000 1.500 3.000 3.500 5.000

2.000

2.500

4.000

4.500

500

Oct-10
1970
1971

1972
1973

1974
1975

1976
1977

1978
1979 1980 1981 1982

1983
1984

1985
1986

1987
1988

1989
1990

1991
1992

1993
1994 1995 1996 1997

RoRo Size Development

1998
1999

2000
2001

2002
2003

2004
2005

2006
2007

2008
2009 2010

2011 2012

2013

RoRo Age Profile

0-4 Years 12% >30 Years 26% 5-9 Years 12%

10-14 Years 16% 25-30 Years 18% 15-19 Years 8%

Average Age: 19.8 Years

20-24 Years 8%

Average in 2007 abt 21 years

Oct-10 10

RoRo Order Book

16

14

12

TotalOrderbook 38Vessels 128,847 Lanemeters 14.9% of Fleet

Total Orderbook 1Q 2008 Abt 60 Vessels Abt 200,000 Lanmeters Abt 19% of Fleet

10

No.of Vessels

2010

2011
800-1200 1700-2200

2012
2700-3200 3200+

2013

Oct-10

11

RoRo Fleet Development

1.000.000 900.000 10,0%

2009 scrapping: 32,000 LM 2010 scrapping: 90,000 LM (ytd)

8,0%

800.000
6,0%

700.000 600.000
500.000 400.000 4,0%

2,0%

0,0%

300.000
-2,0%

200.000
100.000 -4,0%

-6,0%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Total Fleet Capacity

Total Est. Fleet Capcity

Growth Rate

Est. Growth Rate

Oct-10

12

Fleet Growth Rate

Lanemeters

RoRo T/C Rates Development

(1 year Moving Average)
16.000

14.000

-30%

12.000

10.000

EUR / Day

8.000

6.000

4.000

2.000

1,251 - 1,750 LM

1,751 - 2,250 LM

2,251 - 2,750 LM

Oct-10

13

RoPax Definition
Vessel with RoRo and Passenger Capacity Minimum 800 Lanemeters Passenger capacity of above 12 persons
Passenger capacity of maximum 2,000 persons Minimum 1.25 Lanemeters per Passenger
(To avoid typical ferries)

Oct-10

14

RoPax Fleet Composition

(No. of Vessels)
>3200 LM 5%

2700-3199 LM 4%

800-1199 LM 17%

2200-2699 LM 14%

1200-1699 LM 29%

1700-2199 LM 31%

Average Age: 16.7 years Fleet: 299 Vessels / 556,963 Lanemeters

Average Age in 2007: Abt 17 years Oct-10 15

RoPax Fleet Composition

(Capacity)
>3200 LM 10% 2700-3199 LM 7%
1200-1699 LM 23%

800-1199 LM 9%

2200-2699 LM 18%

Average Size: 1,863 Lanemeters Average Pax: 578 Passengers

1700-2199 LM 33%

Oct-10

16

No. of Vessels
16 18

10

12

14

2 4 6 8

1970 1972
1973 1974 1975 1976 1977 1978 1979 1980

Oct-10
1981 1982 1983 1984
1985 1986 1987 1988 1989 1990 1991 1992
Delivered

1993 1994 1995 1996 1997

1998 1999 2000 2001 2002 2003 2004 2005

RoPax Delivery Profile

On Order

2006 2007 2008 2009

17

2010
2011 2012

Lanemeters
1.500 2.500

1.000

2.000

3.000

3.500

500

Oct-10
1970

1972 1973
1974 1975

1976
1977 1978

1979 1980
1981 1982

1983
1984 1985 1986

1987
1988 1989

1990 1991
1992 1993

1994
1995 1996

RoPax Size Development

1997 1998
1999 2000

2001
2002 2003 2004

2005
2006 2007

2008 2009

18

2010 2011

2012

Passengers
1400

1000

1200

400

800

200

600

Oct-10
1970
1972 1973

1974
1975 1976

1977
1978 1979

1980
1981 1982

1983
1984 1985

1986
1987

1988 1989
1990

1991
1992 1993

1994
1995 1996

1997
1998 1999

Average Passengers per RoPax Vessel

2000
2001 2002

2003
2004 2005

2006
2007 2008

2009

19

2010

2011
2012

RoPax Age Profile

>30 Years 17%

0-4 Years 15%

25-30 Years 5%

5-9 Years 18% 20-24 Years 13%

15-19 Years 17%

10-14 Years 15%

Average Age: 16.7 Years

Oct-10

20

RoPax Order Book

5

Total Orderbook 19 Vessels 49,349 Lanemeters 8.9 % of Fleet

Total Orderbook 1Q 2008 Abt 38 Vessels Abt 90,000 Lanmeters Abt 16% of Fleet

No. of Vessels

2010

2011

2012

1700-2200 LM

2200-2700 LM

2700-3200 LM

3200+ LM

Oct-10

21

RoPax Fleet Development

700.000 14,0%

600.000

12,0%

10,0%

500.000
8,0%

400.000
6,0% 300.000 4,0%

200.000
2,0%

100.000

0,0%

-2,0%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Total Fleet Capacity

Total Est. Fleet Capaity

Growth Rate

Est. Growth Rate

Oct-10

22

Growth Rate

Lanemeters

Challenges

Oct-10

23

Market Conditions
Soft demand for modern RoRo and RoPax tonnage within last 18 months, with rates down abt 30-35% from peak in Spring 2008. Surplus tonnage in the market, particularly RoPax having a number of laid up vessels.

Order book delivering additional tonnage to a saturated market. In 2011 more than 50% of the current order book will be delivered.
Yet only weak signs economic upturn. Expectation of further 18-24 months of depressed markets to be bridged.
Oct-10 24

Opportunites

Oct-10

25

Factors
Low shipbuilding activity, and order books reduced to less than 15 pct for RoRo and less than 10 pct for RoPax. High age profile (20/17 years average). High scrapping activity for RoRo 90,000 LM (~10%) ytd. Political pressure to put trailers at Sea.

Oct-10

26

RoPax vs. Ferries

RoPax tonnage replacing vintage Ferry tonnage. RoPax provides more freight capacity, and less passengers, in line with todays travel/traffic pattern. More steady year round freight earnings.

Ageing Ferry fleet fail to comply with new SOLAS 2010 requirements coming into force by Oct 2010.

Oct-10

27

Ferry Age Profile

0-4 Years 10% >30 Years 29%

5-9 Years 12%

10-14 Years 9%

25-30 Years 14% 20-24 Years 16%

15-19 Years 10%

Average Age: 21.8 years

Oct-10

28

Political Pressure
Focus on lower emissions
Trucks and trailers by sea in stead of road
EU subsidies to new lines (e.g. LD Lines St. Nazaire/Gijon) Modernisation of fleet to improve economy of scale Larger vessels to reduce emission level per transported unit.

Other political measures

Road pricing being introduced Road safety Truck free days More restrictive driving hours / Resting requirement

Oct-10

29

Limited Newbuilding
Number of capable shipyards is limited
RoRo 4-5 yards in Asia (this number is increasing) 8-10 yards in Europe RoPax 2-3 yards in Asia (this number is increasing) 5-6 yards in Europe

After crisis Korean and Chinese yards have again started to focus more on specialised tonnage including RoRo and RoPax. Highly sophisticated vessels, compared to standard tonnage High building cost
High degree of specialisation for each design
Short building series Prices have not been reduced to the degree expected during crisis.

Oct-10

30

Forecast
3-5 years
Soft market will continue through 2011. Continued scrapping of RoRo and expected scrapping of RoPax/Ferries from 2012. Scrapping of RoRos will off-set newbuilding capacity through 2013. Current surplus RoPax vessels will be absorbed by the market during next 1-2 years. Balanced supply/demand expected again during 2012. Continued growth in European freight volumes. Further consolidation of operators expected (like DFDS/Norfolkline) Focus on economy of scale Larger more cost effective vessels. Limited newbuilding activity in 2009 and 2010, leaving a supply deficit in the market from 2013. Increased overall demand.
Oct-10 31

Question?

Shipbrokers
Sales & Purchase Newbuildings Chartering - Valuations

September 2010
Oct-10 www.navitaship.com 32