Combined with weak global trade, the shutdown of factories and scarcity of manpower to de-stuff cargos has derailed the functioning. In order to survive cost pressures and solvency risks, container shipping industry has undergone aggressive consolidation. This helped the companies to achieve economies of scale and scope and hence, lower cost through capacity and network optimization.

1. 1
Global Shipping Industry:
Performance Benchmarking
— Kapil Yadav
kapil.anand.Yadav@gmail.com
June 2020

2. 2
Competitive
Position
Market & Business
Scenario
Container Shipping
Performance
• As COVID-19 is set to dent the global
economy of > $5 trillion of growth over
the next two years, economies have
started to plunge into recession.
• Combined with weak global trade, the
shutdown of factories and scarcity of
manpower to de-stuff cargos has
derailed the functioning.
• In order to survive cost pressures and
solvency risks, container shipping
industry has undergone aggressive
consolidation.
o This helped the companies to
achieve economies of scale and
scope and hence, lower cost
through capacity and network
optimization.
• APM-Maersk, during 2017-19, has
successfully achieved its three major
priorities for container shipping
business –
o Value-focused volume gains
o Profitability improvement
o Capital discipline – new capacities
and green-field projects
• Despite COVID, Maersk delivered
strong Q1 2020 driven by –
o Contract renegotiations
o Increased freight rates to mitigate
volume decline and higher fuel
costs
• Versus its competitors, Maersk’s stock
has remained steady in 2019
o In 2019, driven by successful cost-
optimization efforts Maersk
improved its profitability by ~5.0 %
points
• COSCO with aggressive expansion
plans poses threat to Maersk, however
COSCO stays vulnerable to debt
pressures
o Ongoing transformation efforts
position Maersk as a highly value-
focused player in the shipping
industry
o Further, Maersk’s capital discipline
has strengthened balance sheet
and substantially improve debt
servicing capacity
EXECUTIVE SUMMARY
Delivering on cost-levers and capital discipline helped Maersk stay competitive amidst weakening
demand, albeit 2020 outlook stays uncertain as COVID weighs on global trade

3. 3
Market & Business Scenario
Weathering COVID-19

4. 4
Weak Macros have resulted in significant erosion of economic activity and consumer spending…
As COVID-19 is set to dent the global economy of > $5 trillion of growth over the next two years, economies have started to plunge
into recession. Uncertainty about the depth of economic effects have fueled perceptions of risk and volatility in financial markets and
corporate decision-making.
Large-scale Economic Erosion (GDP growth) Soaring Unemployment Levels (%) Global MFG & Services Contraction (PMI)
2.9%
1.7%
3.7%
-3.0%
-6.1%
-1.0%
World Advanced Em & Dev
2019 2020F
3.6%
8.5%
3.2%
3.8%
3.7%
4.3%
10.4%
3.9%
4.8%
10.4%
China France Germany UK US
2019 2020F
Large-scale quarantines, travel bans ad social
isolation measures have adversely affected key
demand hubs and supply centers
• For the first time since the Great Depression both
advanced economies and emerging markets along
with developing economies are in recession
• Amidst economic erosion, and lower spending,
income per capita is projected to shrink for over
170 countries
Halt in business activity has dented both new job
creation and sustaining existing jobs
• Corporates trying to preserve profits and lower
costs have resorted to downsizing in addition to
halting new recruitment activity
• During 1Q 2020, claims for unemployment benefits
have soared, notably the US
• The leisure, travel and hospitality industry has been
the hardest hit accounting for ~50% of job loss
Amidst industrial shutdowns and output
contraction and new orders have recorded
steepest decline since 2008/09 crisis
• Q2 2020 is likely to witness an increase in Industrial
activity as lock-downs ease in a calibrated way,
however demand side pressures would create
head-winds
• Expectations of a V-shaped recovery have rapidly
receding as COVID’s progression has accelerated
and lockdowns are expected to be extended
Macroeconomic Uncertainity
Source: IMF; CEIC; ADB; Market Economics

5. 5
…as weak global trade outlook could impede the business fundamentals of global container
shipping industry through 2020-21
The container shipping industry faces disruption both from supply and demand side cause everything such as vessels, terminals,
depots, freight stations and warehouses have been hit. Combined with lower demand, the shutdown of factories and scarcity of
manpower to de-stuff cargos as well as truckers for cargo evacuation has derailed the functioning.
-14%
-12%
-17%
-12%
-10%
-15%
-37%
-33%
-41%
-32%
-29%
-34%
Asia
Europe
North Am
Asia
Europe
North Am
Global Trade Outlook 2020, y/y growth
2020 Pessimistic 2020 Optimistic
EXPORTS
IMPORTS
COVID-19: Impact on Shipping 1Q/1H 2020
81% decline in Baltic Dry Index by May 2020 from September 2019
>50% decline in Port Traffic with 300% increase in turnaround time
$6.0 Bn decline in profits for Shippers for every 10% reduction in volumes
25% reduction in Shipping volumes in 1H 2020 (Estimated)
>60% decline in Arab Gulf-Far East Arab Gulf-China rates in 1Q 2020
5%-15% decline in tech shipments in Q12020
17% drop in deployed shipping capacity in 1H 2020 vs 1H 2019
~1700 cancelled sailings for 1H 2020, equivalent to ~15% of the volume
Weakness in Global Trade
Source: UNCTAD; WTO

6. 6
Containerisation
of Cargoes
Intra-Asian Trade
Growing
End-user Industries
Growth from
new Regions
High priced
Air-Transport
The growth in global manufacturing will continue to be the most important factor driving the growth of container shipping. Further,
the industry is yet to tap into several underserved markets and regions currently, due to lower volumes however, the optimistic future
potential cannot be denied.
Strong global manufacturing combined with demand from emerging end-user industries and regions
provide long-term potential
Global tech shipments, chemical exports/imports and F&B trade are set to grow by 6% to
11% every year, thus driving the demand for container shipping
Currently, the main commodities traded in containers are chemicals F&B and consumer
goods however, untapped potential lies in forest products, paper, scrap metals, and
automotive industries
Despite the dominance of China, underserved regions such as Africa and hold a high long-
term potential to drive demand for world trade
Growth rates for air freight are more than double of those for shipping, making container
shipping the dominant mode of transportation in terms of value-to-weight ratio of the goods
Asian businesses have turned their focus within the region, as the year-long US-China trade
war hampered export relations and weighed on future investments. As one of the world’s
fastest growing regions, South Asia is at the forefront of regional trade balance.
Long-term Growth Fundamentals
Source: Lloydslist; Ship-Technology; BIMCO

7. 7
Oversupply of
Capacity
Debt burden
IMO 2020
Demand for
‘Local’
Geopolitical
Interference
While container shipping industry has managed to survive with decade-old overcapacity situation and Geopolitical hurdles, the
market actors face new trade challenges emerging from ‘Localization’ of consumer demand and regulatory issues related to
sustainability.
War-hardened container shipping industry has survived overcapacity and rate volatility, however,
new regulations and localized consumer spending could deter future trade volumes
The introduction of the sulphur cap from January 1st 2020, means the container sector alone
faces a fuel bill hike in the range of $12bn-$20bn per year
Growth in new fleet capacity has overtaken the demand growth resulting in diminished freight
rates and fleet utilization. The overcapacity levels continue to be further worsened by addition
of Ultra-large vessels.
68% of the Millennials in the US and Europe are likely to purchase a locally produced
product, especially in F&B segment, owing to health reasons
Events such as Russian sanctions, US-China trade-war and embargoes have all contributed
detrimentally to disrupt the global sea-borne trade
Cumulated debt of fourteen major container carriers reached USD 95 billion by Q3 2019,
increasing solvency risks. This is likely to hamper their capital commitments and investor
attractiveness.
Potential Risks and Inhibitors
Source: Source: Lloydslist; Ship-Technology; BIMCO

8. 8
Amidst growing financial risk and cost pressures, global container shipping industry has undergone
significant consolidation over the last decade
In order to survive cost pressures and solvency risks, container shipping industry has under gone aggressive consolidation. This
helped the companies to achieve economies of scale and economies of scope and hence lower cost through capacity and network
optimization.
- 1.0 2.0 3.0 4.0 5.0
PIL
HMM
Yang Ming
Evergreen
ONE
Hapag-Lloyd
CMA-CGM
COSCO
MSC
Maersk
Owned vs Operated Capacity,
Mn TEU
Owned
Chartered
0 200 400 600 800
PIL
HMM
Yang Ming
Evergreen
ONE
Hapag-Lloyd
CMA-CGM
COSCO
MSC
Maersk
Total Vessels
# Count
Owned
Chartered
PIL, 1.5%
HMM, 2.2% Yang Ming,
2.5%
Evergreen,
5.1%
ONE, 6.6%
Hapag-Lloyd,
7.1%
CMA-CGM,
11.1%
COSCO,
12.1%
MSC, 15.4%
Maersk, 16.9%
Others, 19.5%
Market Share
2019
Shipping
Capacity Share
Top 10 in Container Shipping
Source: Alphaliner; Company Publications

9. 9
Further, the industry has achieved an oligopolistic nature via formation of large scale alliances which
control 80% of the industry volumes
Three major shipping alliances facilitate two elements that ocean carriers compete on: low prices and broad service coverage. The
set-up has resulted in risk-diversification, broader service network and lower costs.
2M
ALLIANCE
OCEAN
ALLIANCE
THE
ALLIANCE
34%
28%
18%
• Widen service coverage through
economies of scale and economies of
scope
• Limit financial risk and increase
utilization rates using collaboration via
vessel sharing agreement
• Lower variable costs via shared
resources – ships, ports, terminals and
networks
• Diversify service offerings to their
customers through a more comprehensive
global shipping network.
Why Alliances ?
Top 10 in Container Shipping
Source: JOC; BIMCO

10. 10
Note: Due to several companies not being listed and delayed financial reporting, from top 10
competitors, selective have been included on a case-to-case basis depending upon the data availability.
Competitor Position
Investor attractiveness and financial
strength

11. Despite the COVID’s adverse impact, Maersk’s optimized portfolio and capital discipline is guiding
the stock price recovery
Versus its competitors, Maersk’s stock has remained steady in 2019. The stock reached peak in Q4 2019 as Maersk announced a par
dividend per share of $22, despite the volume uncertainty. Post collapse in Q1 2020 due to COVID-19, Maersk’s stock has recovered
from the beginning of Q2 2020 as the company registered a strong Q1 2020.
11
40%
50%
60%
70%
80%
90%
100%
110%
120%
130% Stock Performance, Indexed
COSCO Maersk EverGreen Yang-Ming
Hapag-Lloyd’s share price has not been included in the chart in order to simplify the chart visualization. The company’s share
price has increased exponentially by almost 300% during April-May 2020, arguably attributed to high EPS reported by the company
Maersk reports
strong Q1 2020
results
Maersk vs Competitors: Market Sentiment
Source: Company websites and publications; Yahoo Finance

12. Maersk
COSCO
CMA-CGM
Hapag Lloyd
HMM
Evergreen
Yang-Ming
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
-10% 0% 10% 20% 30% 40%
Revenue Growth 2019
Revenue
Growth
2018
Positive
Momentum
Negative
Momentum
Maersk
COSCO
CMA-CGM
Hapag Lloyd
HMM
Evergreen
Yang-Ming
-12%
-7%
-2%
3%
8%
13%
18%
-12% -7% -2% 3% 8% 13% 18%
EBITDA Margin 2019
EBITDA
Margin
2018
Positive
Momentum
Negative
Momentum
In 2019, despite the improved profitability resulting from cost optimization, the top-line was affected
by exiting the dry container business and divesting the bulk activities…
While efficient capacity and cost management has helped majority of key players in shipping industry to stay profitable, strategic
acquisitions to diversify at geographic and portfolio level has helped top-line – for example CMA-CGM’s acquisition of CEVA
12
Maersk vs Competitors: Business Momentum
Source: Company websites and publications

13. 13
The acquisition of CEVA logistics in 2019, helped CMA-CGM to add ~ USD 7.0 Bn to its topline and increase its revenue per unit
capacity by almost ~25% in 2019.
…and the CMA-CGM overtook Maersk in terms of revenue per unit capacity
9,704
11,489
8,362
9,043
5,233
7,779
Maersk CMA-CGM Hapag Lloyd HMM Evergreen Yang-Ming
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Maersk CMA CGM Hapag Lloyd Hyundai
Marine
Evergreen Yang Ying
2018 2019
Revenue per Unit Capacity, $, 2019
Volumes Traded, FFE (‘000)
Maersk vs Competitors: Volumes
Source: Company websites and publications

14. 14
8.2%
1.0%
0.3% 0.4%
-15.1%
0.0% 0.4%
-0.1%
4.5%
-0.7%
3.0%
-10.7%
-0.1%
-4.4%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
Maersk COSCO CMA-CGM Hapag
Lloyd
HMM Evergreen Yang-Ming
5.7%
0.5% 0.3% 0.3%
-19.2%
0.0% 0.4%
-0.1%
2.6%
-0.7%
2.3%
-8.2%
-0.1%
-4.5%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
Maersk COSCO CMA-CGM Hapag
Lloyd
HMM Evergreen Yang-Ming
Net Income Margin
Return on Assets
As a structural solution for oil and oil-related businesses, Maersk Drilling in April 2019, was spun-off from APM-Maersk via a separate
listing on Nasdaq Copenhagen. Maersk Drilling in 2019, recognized a loss of USD 553 Mn which adversely affected the Group’s ROA.
The bottom-line was subdued due to the losses in now demerged Maersk-Drilling, amidst weakness
in E&P and oil-field services industry
-20.0%
0.0% 2018 2019
Maersk vs Competitors: Bottom Line
Source: Company websites and publications

15. Over last 3 years, Maersk has reset its growth targets and strategic priorities to maintain competitive advantage. However, real threat
comes from COSCO, which mirrors Maersk’s strategy to become a leading integrated player and is willing to make ambitious
acquisitions even at premium costs.
Maersk
COSCO
CMA-CGM
Hapag Lloyd
HMM
Evergreen
Yang-Ming
Maersk COSCO
CMA-CGM
Hapag Lloyd
HMM
Evergreen
Yang-Ming
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
-5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
UNDERPERFORMER
INCREMENTAL REVENUE as % of Total Revenue
EBITDA
MARGIN
Peer
average
=
10.0%
Peer average = 9.2%
VALUE FOCUSSED OPTIMALLY BALANCED
VOLUME FOCUSSED
Amidst growing threat from COSCO, ongoing transformation efforts still position Maersk as a highly
value-focused player in the shipping industry
2018 2019
15
Maersk vs Competitors: Market Position
Source: Company websites and publications

16. Over the past three years, Maersk has deleveraged by more than USD 10bn via strict CAPEX discipline placing on hold, the
commissioning of new vessels and other greenfield projects.
Maersk
COSCO
CMA-CGM
Hapag Lloyd
HMM
Evergreen
Yang-Ming
Maersk
COSCO
CMA-CGM
Hapag Lloyd
HMM
Evergreen
Yang-Ming
(3.00)
(2.00)
(1.00)
-
1.00
2.00
3.00
- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00
CONSERVATIVE
Debt to Equity
Interest
Coverage
OPTIMALLY BALANCED
HIGHLY LEVERAGED
Aggressive capital discipline has helped Maersk to deleverage and improve its debt servicing
capacity, while COSCO stays vulnerable due to aggressive capital commitments
2018 2019
16
VULNERABLE
Maersk vs Competitors: Debt Management
Source: Company websites and publications

17. THANK YOU
26