This document provides a market summary and outlook for the global shipping industry in 2015. It discusses trends in key shipping sectors such as containerships, oil and gas tankers, and bulk carriers. Specifically for containerships, it notes that liner companies increased cooperation through new alliances in 2014 and expects further consolidation. It also predicts continued growth of ultra-large containerships over 18,000 TEU as alliances seek economies of scale. Overall container trade is forecast to grow 6.5-7% in 2015 while the container ship fleet is expected to expand 7-7.5%, which could put pressure on freight rates if not balanced with other measures.

1. DNV GL © 2013 SAFER, SMARTER, GREENERDNV GL © 2013
BUSINESS AREA MARITIME – BUSINESS DEVELOPMENT
2015 FEBRUARY

2. DNV GL © 2013
MARKET SUMMARY ………………………..……………………………………
BUSINESS ENVIRONMENT ………………..……………………………..
CONTAINERSHIPS ……………..…………………………………………………
OIL & PRODUCT TANKERS ………………………………………………
BULK CARRIERS .…………..……………………………………………………….
OFFSHORE ….................…….…………………………………………………
FOCUS ON:
CRUISE VESSELS …….……………….…………………………………………..
MULTI PURPOSE VESSELS ……………………………………...............
GAS CARRIERS ………………………………………………………………………..
3
4
5
11
17
23
30
32
34

3. DNV GL © 2013
Market Summary
At the same time, liner operators welcome cheap bunkers with
no less enthusiasm. On the negative side, cheap oil may put an
end to many offshore projects, leaving a lot of ships and units
unemployed or even obsolete.
In addition, cheap bunkers tend to favour older ships! New “eco
designs” offer considerable savings, providing that bunkers are
expensive. In the current scenario, an 5-10 year old ship, with
considerably lower capital expenses, will require lower break-
even rates, thus in the overall picture may be cheaper to run
compared to a modern, brand new vessel.
In terms of new contracts, preliminary year-end numbers fully
match our earlier forecast. With 2,755 ships (82,6 mGT) the
newbuilding activity fell by 33% and 23% respectively. It gives
an average monthly contracting of 230 vessels, compared to
over 340 in 2013. The last quarter added 384 new contracts
corresponding to 11,8 mGT.
It was an active quarter for crude oil tankers (33) mainly within
Suezmax and VLCC range. Strong activity within LNG tankers
resulted in 25 more contracts. A contrary development was
observed in the LPG sector where contracting slowed down
noticeably. Twelve more container ships were signed, bringing
the total annual number to 152. Lower activity in the bulk carrier
sector, with 81 new contracts. Low activity levels in the offshore
support sector, with 20 AHTS and 16 PSVs only. For offshore
units, 10 drilling Jack-ups and 2 FPSOs deserve attention.
Falling oil prices have certainly dominated the news recently.
Although the dive started already in July 2014, very few
anticipated that prices would plummet as low as 50$/bbl or even
below! Record high oil production is blamed, however we believe
that perhaps the underperforming economy should be blamed
too. Most of other commodity prices are tumbling down as well,
clearly indicating a lack of demand thus lower industrial activity.
Low oil prices are in general great news for shipping as current
bunker prices hoover around $275/t only. The benefits however
are not so great, as freight rates are falling as well, wiping out
potential savings on the fuel bill. Undisputed short-term winners
are crude oil tankers, which thank to Asian countries stock-piling
process, harvest rates close to $80 000/day.
Cheap oil, good news or bad news?
GLOBAL SHIPPING MARKETSGLOBAL SHIPPING MARKETSGLOBAL SHIPPING MARKETSGLOBAL SHIPPING MARKETS
MONTHLY NEWBUILDING CONTRACTSMONTHLY NEWBUILDING CONTRACTSMONTHLY NEWBUILDING CONTRACTSMONTHLY NEWBUILDING CONTRACTS
0
100
200
300
400
500
FebJan Mar DecNovSep OctAugJulJunMayApr
20142013
3

4. DNV GL © 2013
PURCHASING MANAGERS INDEX
120
80
40
750
500
250
2014201320122011201020092008
500
1.000
1.500
2014201320122011201020092008
-20
40
20
-40
60
2014201320122008 2009 2010 2011
40
45
50
55
60
2012 20132010 20142011
Business Environment
Oil prices tumble to fresh lows
During the second half of 2014, the US dollar made significant
gains against all major currencies. The US economy grew by
almost 5% in the 3rd quarter which allowed the federal reserve
to end its emergency stimulus. In the Eurozone, unemployment
is near to a record high, the economy is still stagnating and the
risk of deflation is growing. In Japan, officials are going all in
with stimulus and during the 3Q2014, China has experienced its
slowest GDP growth rate in five years at 7,3%.
A surplus of global supplies and flat demand continue to pull the
oil market down. Bunker prices and crude oil prices are now
reaching a five-and-half year low. Brent crude has lost more
than half of its value since mid-2014 and now stands at 53 USD
per barrel. The 380 cst Rotterdam ended the year at 278
USD/Tonne, down by 323 USD, or 53% compared to the high of
601 USD reached on the 20th of June 2014.
OIL / BUNKER STEEL / SCRAP
Bunker
$/tonne
Crude
$/bbl
USD
EXCHANGE RATES
Crude (Brent)380cst R’dam
Index
Avg. Demolition Price VLCC (USD/ldt)
Global Steel Price (USD/t)
USD/KRW USD/JPN
USD/CNYUSD/EUR
%
China Manufacturing Purchasing Managers Index
4

5. DNV GL © 2013

6. DNV GL © 2013
Executive Summary| Containerships
So last year, there were lots of examples of liner companies
finding new ways of cooperating, pooling resources, in order to
offer a worldwide network of routes and save costs. For the liner
industry in total, 2014 is expected to turn into a profitable year.
This will probably mainly be achieved by the rather large
contributions of a few strong companies such as Maersk and CMA
CGM. At the same time, there are bound to be some liner
companies that had to cope with a loss in 2014.
For 2015, one of the hopes is that bunker costs will remain low.
The 50% drop in bunker fuel prices year-on-year will benefit
container liners this year as well, even if increased cost for SECA
areas are incorporated. But the question is how long oil prices –
and therefore bunker fuel prices - will remain at these levels.
One possible fear is that liners will increase vessel speed again,
thereby increasing the fleet capacity and adding to oversupply.
For this year, a 7.0%-7.5% global fleet growth is expected,
opposed to a cargo volume growth of 6.5%-7.0%, so this could
put pressure on rates. But if it all works out positively, unit cost
could decrease more than freight rates, leading to a rise in
profitability for liner companies. Furthermore, the introduction of
the mega-alliances in the industry could help improve liners
operational performance (commercial result and reliability).
A new trend seems to have been set with the ordering of ultra
large containerships around 19,000 - 20,500 TEU. Currently,
experts see the size limit in the short term at 22,500 TEU.
The container liner industry is known for its very volatile track
record when it comes to profitability. Looking at the top liner
companies reveals that only half of them were able to turn out a
profit for the 2009-2013 period. However, last year should have
been much better, helped by a strong 6.5% increase in cargo
volume and significant lower fuel cost.
Containership industry regulators played an important role in
2014 as companies reshaped their alliances. We have witnessed
the failure of P3, and the creating of both the 2M and the Ocean
Three alliances. The two other big alliances for the main East-
West routes tightened their cooperation and took on new
members to increase their market power. UASC and Hamburg
Sud announced a global agreement to access each other’s
trades. And when Hapag-Lloyd and CSAV have completed their
merger, they will be the fourth largest liner in the world.
CONTAINERSHIPSCONTAINERSHIPSCONTAINERSHIPSCONTAINERSHIPS
Liners increase competitiveness by operating even
larger vessels and building stronger alliances
6

7. DNV GL © 2013
-8
-4
0
4
8
12
16
201620142012201020082006200420022000
Just recently, both the World Bank and International Monetary
Fund have cut their expectations for worldwide economic growth,
despite lower oil prices.
The IMF revised its global GDP growth forecast to 3.5% in 2015
and 3.7% in 2016, compared with previous forecasts of 3.8%
and 4% respectively. The World Bank expects growth of 3% this
year and 3.3% in 2016, compared with previous forecasts of
3.4% for 2015 and 3.5% next year.
For the USA, GDP levels are expected to increase at a higher rate
than previously. For the Euro area, China and Russia, GDP
growth levels were all revised downwards.
Global containerized trade is forecast to grow by 6.5%-7.0% in
2015, after global growth rates of 6% in 2014 and 5% in 2013.
In 2015, for two main tradelanes (Far East-Europe and Far East-
USA), an average growth of 6.0% is expected. For the third
mainlane trade, the transatlantic Europe-USA trade, a 2015
growth of 3.0% is predicted. Non-mainlane East-West trades and
the North-South trades are expected to increase by 6.2% and
7.7% respectively in 2015.
According to the demand forecast, high hopes are set on the Far
East-USA trade, which is forecast to increase by 1.3 mTEU in
2015 (after an 2014 increase of 0.7 mTEU).
%
p.a.
200
50
0
100
150
250
+7%
+5%
+6%
201620152014201320122011201020092008
+7%Other
Transpacific (FE-US) North-South
Transatlantic (EU-US)
Non-Mainlane East-West
Far East-Europe
mTEU
Containerships | Demand
USA
EUGlobal
China
GDP EXPECTATIONS
GLOBAL CONTAINERISED TRADE
Global containerized trade is forecast to grow by
6.5%-7.0% in 2015
7

8. DNV GL © 2013
Newbuilding contracting in 2014 amounted to 152 vessels with
1.1 mTEU, a decline of more than 40% compared to 2013 (both
in capacity and number of vessels). The estimated investment in
2014 sums up to $10.6 billion.
For 2015, a newbuilding volume around 1.5 mTEU is expected.
Newbuilding activity was very high in the first half of 2014, with
a strong focus on ultra large containerships, but then tapered off
for the rest of the year. At the end of 2014, and at the start of
2015, ordering for vessels of 19,000-20,500 TEU began.
The main reason for these ultra large containerships comes from
the ambitions of the four largest containership alliances. In order
to stay competitive, they all want to have lower slot cost due to
economies of scale. And that means sailing with larger vessels.
The group of owners with +18,000 TEU vessels now consist of
Maersk, MSC, CMA CGM, CSCL, UASC and lately Evergreen.
Companies MOL and OOCL are expected to follow soon in 2015.
New financing systems, like the one occurring in Japan with
shipyard Imabari and subsidiary Shoei Kisen, are being seen
more nowadays. In this structure, after collecting capital from
investors, the subsidiary company of the shipyard orders vessels.
The vessels are then fixed on long term bareboat charters to
liner companies.
For the yard, the advantage is to be in complete control
regarding the choice of and cooperation with suppliers.
mTEU
Containerships | Supply
(EXPECTED) CONTRACTING
EAST-WEST ALLIANCES NEED +18,000 TEU
VESSELS TO STAY COMPETITIVE
2,0
1,5
1,0
0,5
201620152014201320122011201020092008
<3k TEU8-12k TEU 3-8k TEU>12k TEU
Newbuilding activity tapered off in the second half of
2014. Strong focus on ultra large vessels.
Maersk
Line
MSC
China
Shipping
CMA CGM
UASC
APL
Hapag-Lloyd
Hyundai
MOL
NYK
OOCL
Coscon
Evergreen
Hanjin
K-Line
Yang Ming
2M Ocean Three G6 CHKYE
+18,000 TEU vessels available or
ordered
Without +18,000 TEU vessels, but
probably ordering soon
8

9. DNV GL © 2013
2014 newbuilding contracting for ships above 12,000 TEU
remained on previous year’s level (47 units), as well as the
smaller sized vessels below 3,000 TEU (82 units). Newbuilding
activity in the size cluster of 8,000-12,000 TEU plummeted to
only 23 ships last year (2013: 100). No orders were placed for
3,000-8,000 TEU sized containerships.
Containership deliveries are expected to reach around 1,75
mTEU in 2015, a strong increase compared to a year ago. Vessel
deliveries will be heavily based toward the ultra large vessel
sizes, with more than 40 vessels of +12,000 TEU planned for
delivery.
Scrapping of containerships has helped to some extent in
reducing global fleet growth. In the 2012-2014 period, a total of
1,15 mTEU of containership capacity was scrapped, adding up to
7,5% of the fleet capacity at the start of 2012. In 2014,
containership scrapping amounted to 400,000 TEU, almost 10%
less than in 2013. For 2015, an equal scrapping volume of
around 400,000 TEU is expected.
Containership fleet growth is forecast to reach 7.0%-7.5% at the
end of 2015. In the past two years, the fleet growth was +6.5%
and +5.5% respectively. This means the liner industry will have
to put even more effort in balancing supply with slow steaming,
network optimizations and the scrapping of vessels.
mTEU
mTEU
Containerships | Supply
EXPECTED DELIVERIES & REMOVALS
FLEET DEVELOPMENT
0,0
-0,5
2,0
1,5
1,0
0,5
201620152014201320122011201020092008
<3k TEU
3-8k TEU
8-12k TEU
>12k TEU
2015 will see a strong fleet expansion due to
deliveries but at the same time lower bunker cost
10
5
20
15
201620152014201320122011201020092008
8-12k TEU>12k TEU <3k TEU3-8k TEU
9

10. DNV GL © 2013
Containerships | Prices & Chartering
200
150
100
50
0
20142013201220092008 2010 2011
Secondhand prices remained relatively stable in the first months
of 2014, but then started to drop. The average y-o-y price
decrease was 10%. For instance, the price of a 8,500 TEU 5-
years old vessel dropped from $67 million to $60 million in 2014.
Freight rates remained volatile as market fundamentals have not
changed significantly. Freight rates for the Asia-Europe route are
down 27% and the Asia-Med route noted -13% year-on-year.
Asia-US West coast is down 7%, but Asia-US East coast was up
due to port congestion on the other side. The early 2015 General
Rate Increases and the peak season surcharge did not work
fully, which is not a good sign for the rest of the year. The next
possibility for a rate increase will be in February 2015.
mUSD .000 USD
per day
Newbuilding prices for large container ships increased only
slightly in 2014. At the end of the year, the average newbuilding
price for the largest containerships was around 3% higher than
12 months before. Price increases have not been that strong as
seen in 2013 (+8,9%), and the current price level is still low in a
historical context.
On the secondhand market, almost 200 container vessels
changed ownership in 2014, an increase of 27% compared to the
previous year. Most notable, the amount of Panamax vessels has
more than doubled (40 ships), and for the first time ever, a
significant number of vessels (12) between 8-12k TEU were sold.
15
5
25
30
20
0
10
2010 2011 20142012 20132008 2009
1,700 TEU
2,750 TEU
3,500 TEU
4,400 TEU
13K TEU new
8.5K TEU 5yrs
8.5K TEU new
6.6K TEU 5yrs
6.6K TEU new
2K TEU 5yrs
2K TEU new
NEWBUILDING & SECONDHAND PRICES TIME CHARTER RATES
Prices remain stable, rates still on a low level
10

11. DNV GL © 2013

12. DNV GL © 2013
Executive Summary| Oil & Products Tankers
92 million bbl/d, it sounds insignificant, but apparently it is
enough to demolish prices by as much as 60%!
OPEC’s so called “open market” game seems to work pretty well
for the time being. Cost of the marginal barrel in the Middle East
remains the lowest, so the region can easily cope with lower oil
prices, at least in the short to medium term. In the US however,
it may prove to be difficult to maintain the output from new
sources. It is believed that 25% of all unconventional wells in the
US have stopped their operations already, as the banks stopped
their credit lines due to low oil prices.
On the other side of the world, Russia which is heavily
dependent on oil exports, suffers tremendously. Russia’s
involvement in the Ukraine’s conflict has been condemned by
the international community and resulted in many economic
sanctions. If you add low oil prices to the equation, the result for
the country is nothing but dramatic.
On the flip side, cheap oil means heaven for the net importers.
In theory yes, however the potential beneficiaries such as
Europe or Asia demonstrate rather moderate economic results
(particularly Europe). One undisputed effect is oil stock-pilling,
especially by Asian countries. It has dramatically increased the
demand for crude oil tankers, lifting their earnings three-fold. In
addition there is a growing floating storage as contango develops
rapidly. There are 21 VLCCs and 12 Suezmaxes currently storing
oil and this number is likely to increase in the next months.
Our previous tanker report was dominated by oil prices, which by
then had plummeted by some 25%. Little did we know that the
final quarter of the year would bring the prices as low as
45$/bbl! But how come?
One of the reasons is that we got used to OPEC taking
appropriate measures every time the oil prices would divert from
the “desired” trend. This time around, OPEC decided to do
nothing! The oil producing countries with Saudi Arabia in
particular decided no to intervene and announced that “they are
prepared to compete in an open market”. As a consequence oil
prices continued to decline.
High OPEC production, combined with increasing volumes of oil
in the US, created an estimated oversupply of some 2 million
bbl/d. Compared to the worlds daily consumption of some
Too much oil will kill you…
OIL & PRODUCTS TANKERSOIL & PRODUCTS TANKERSOIL & PRODUCTS TANKERSOIL & PRODUCTS TANKERS
DNV GL “ORTHIS”
delivered 2011,
320 105 DWT, 333.05m Loa
12

13. DNV GL © 2013
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
400
300
200
100
0
-100
-200
20162014201220102008
Preliminary figures suggest that in 2014 the world oil demand
grew by 0.8% to 91,8 mbpd. Not surprisingly, the demand was
driven by non-OECD countries, particularly gaining momentum in
the last quarter due to stock-piling. Looking ahead we expect 1%
growth in consumption in 2015, reaching some 92,8 mbpd.
The decline in oil prices is likely to increase the demand across
many importing nations. In China and India, a 4% growth is
expected. This is due to opening new refinery capacity. It is
expected to add 0,3 mbpd to the existing trade. On the other
hand, Europe is forecast to have a 1% decline in imports due to
weak economic conditions. In the US we expect 1% growth of
demand, due to increased vehicle usage.
The crude tanker demand increased substantially in the last
quarter with rates surging over 80,000$/day in the spot market.
The overall DWT demand is estimated to have risen by 2.7%
driven mainly by the growth in AG-Japan, Korea and China,
where the trade has grown by 10% y-o-y. In 2015, a further
growth is expected on the WAF-FE and India (8% and 7%
respectively).
Although the product tanker earnings improved in the last
quarter, the market was generally weaker than expected. The
DWT demand was around 3.5% but it is expected to grow to
3.8% in 2015, mainly in the long-haul trades.
Million
bpd
mDWT
Great “home run” in the 4th quarter
Oil & Products Tankers | Demand
GLOBAL OIL DEMAND
TANKER DEMAND DEVELOPMENT
80
60
0.0
100
40
20
0
-20
-40
3.0
2.0
4.0
-2.0
-1.0
1.0
2010 20122008 2014 2016
mio bpd
y-o-y change in %
Product tanker demandCrude tanker demand
y-o-y change product in %y-o-y change crude in %
13

14. DNV GL © 2013
It seems like it only takes a couple of months of good earnings in
order to entirely change the sentiment. As many as 39 contracts
have been signed in the last 3 months (5 VLCC, 20 Suez, 4 Afra
and 4 Panamaxes). It represents 32% of the annual contracting
in the shortest (due to Christmas) quarter.
Contrary on the products side, where the market has not been
that strong, contracting was very low, with only 11 contracts
placed in the yards (2 LR1 and 9 small Chem/oil tankers). It
represents only 7% of the total 162 product tankers contracted
in 2014.
In the last year there were 50 crude oil tankers corresponding to
10.7 mDWT delivered. It represents a decline of 20% and 25%
respectively when compared to the 2013 result.
On the product side, 265 ships corresponding to 6.1 mDWT hit
the water. Although it represents a 15% decline in number of
ships, in terms of DWT, due to higher average size of newly
delivered tonnage, the output was on the same level as in 2013.
There were 115 crude and products tankers sold for scrapping
last year. It is worth mentioning that 50% of them were single
hull tankers, as from 2015 they are no longer allowed to operate
even within bilateral trades. Total DWT capacity removed was
7.3 mDWT which represents 44% of newly delivered tonnage.
mDWT
mDWT
Newbuilding contracting – change of hearts?
Oil & Products Tankers | Supply
EXPECTED DELIVERIES & REMOVALS
(EXPECTED) CONTRACTING
40
30
20
10
0
50
20092008 2016201520142013201220112010
VLCC
PanamaxSuezmax
HandyAframax
10
30
0
20
-20
40
50
60
-10
2013 201420122010 2011 201620152008 2009
Suezmax
Handy
Panamax
AframaxVLCC
14

15. DNV GL © 2013
11,4
10,4
0
5
10
15
20
LR1
Panamax
Grand Total
14,0
VLCC
13,6
Suezmax
13,6
LR2
Aframax
300
400
100
700
0
500
200
600
2009
+3%+2%
20162010 2012 2013 20142008
+3%
20152011
It is nice when things just click. Crude oil tankers owners could
not wish for a better finish of the year. High earnings were
triggered by at least three different factors kicking in at the
same time. First of all the seasonal peak in rates which always
come around November. The effect of that was magnified by
extremely low oil prices which triggered off much higher demand
as many countries (particularly Asia) started stock piling oil. The
third factor that also played significant role in earnings was
tonnage availability. The increased demand for tonnage came in
the time of limited fleet growth, which was caused by low
contracting in 2011 and 2012. As a result it created a shortage
of available tankers on the market sending spot rates in to high
80,000 $/day.
The oil tanker orderbook consists of 820 ships corresponding to
66.9 mDWT. It currently represents 8% and 12% of the existing
fleet respectively. There are 262 Crude oil tankers (48.2 mDWT)
and 558 products tankers (18.6 mDWT).
In 2014 the crude oil tanker demand has grown by 0.7%
compared to the fleet growth of 1.4%. On the product side the
demand for tonnage was weaker than expected at around 3%. At
the same time, the fleet has grown by 4%.
In 2015 the demand for tonnage is estimated at 2.2% on the
crude side and 3.8% within for the product tankers. Expected
fleet growth will be 1.1% and 5.7% respectively.
mDWT
Oil & Products Tankers | Supply
FLEET DEVELOPMENT
Order book versus fleet [in %]
Suezmax
Handy
Panamax
AframaxVLCC
%
It is all about crude oil tankers nowadays
15

16. DNV GL © 2013
Oil & Products Tankers | Prices & Chartering
Average earnings in the crude sector improved substantially with
VLCC spot rates growing from 14,974 $/day in September to a
whooping 60,821 $/day in December!
On the product side there was a two tier development. Clean MR
grew strongly with average spot earnings reaching 25,117$/day
in December (from 11,759 $/day in September). In the LR1 and
MR range the increase of earnings was marginal, up by 5%.
The newbuilding market has not reacted much and the prices
remained unchanged. We did however observe an upswing of the
second hand market where the prices have gone up by some
15%. An average 5 year old tanker cost 89% of the newbuilding
one in December, but in January this ratio grew to 98%.
000.USD
Per day
Million
USD
TIME CHARTER RATES NEWBUILDING & SECOND HAND PRICES
000.USD
per day
CRUDE OIL TANKER EARNINGS
Rates are up, lifting the S/H prices
70
60
50
40
30
20
10
201020092008 2014201320122011
Handy
Panamax
Afra
Suez
VLCC
140
120
100
80
60
40
20
2014201320122011201020092008
5yrs
Handy
5yrs
Aframax
5yrs
VLCC
120
60
100
80
20
40
2014201320122011201020092008
VLCC AfraSuez
16

17. DNV GL © 2013

18. DNV GL © 2013
Executive Summary| Bulk Carriers
Iron ore imports to China have been projected to reach more
than 1Bn tonnes in 2016, but the slow-down in steel production
in 2014 now indicates a much more modest growth. Still, iron
ore mining companies are on a heavy expansion scheme which is
expected to increase global iron ore supply heavily for the years
to come, putting further pressure on prices.
Coal imports requirement will depend on the growth in electricity
demand, growth in hydro-power capacity and Chinese politics to
combat their environmental challenges, such as the ban on
import of coal with high ash or sulfur content. This may typically
affect lower import of low-heating value coal from Indonesia and
coal with arsenic content from Australia. It is assumed that coal
prices will continue to remain under pressure as international
supplies are in abundance and demand remains relatively low.
The closure of high-cost mines will continue and total seaborne
coal demand is forecast to grow by only 2%.
Dry bulk fleet growth measured in DWT has reduced from 14,4%
in 2011 and 10,3% in 2012 to 5,7% in 2013 and 4,9% in 2014.
The number of deliveries in 2014 has slowed for the second
consecutive year and scrapping is down 30% in DWT terms
compared to 2013. It is expected that fleet growth will reduce
further to 3,5% in 2015. Total dry bulk trade growth
expectations remain positive with an average growth of around
4% p.a. for the 2015-2016 period, which balances expected fleet
growth, but this in itself will most likely not be sufficient to
initiate a major dry bulk recovery.
The optimism in the dry bulk market was high going into 2014
due to the upbeat ending in 2013 which provided high earnings
in a strong market. The year started on a high note but the
reduced demand for coal imports to China, the Indonesian ban
on exports of unprocessed minerals, the reduced Chinese GDP
growth and the continued fleet expansion managed to derail
freight rates.
Earnings for panamaxes were pushed down to just above 3,000
USD/day in June 2014, well below operating costs. Compared to
2013, the average panamax and capesize spot market rates are
down 5% and 15% respectively. Newbuilding and secondhand
prices continued climbing during the first half of the year but
started to lose ground afterwards. Critical factors for tonnage
demand in 2015 will be Chinese import requirements of iron ore
and coal, which are both quite uncertain.
BULK CARRIERSBULK CARRIERSBULK CARRIERSBULK CARRIERS
DNV GL bulk carrier “Aeolian Heritage”
delivered 2011. 80,650 DWT. 229m loa
Dry bulk market facing bleak prospects
18

19. DNV GL © 2013
The Indonesian ban on exports of unprocessed bauxite and
nickel ore resulted in a weak handy/supramax market in the Far
East. Towards the end of the year, the late arrival of strong
exports of iron ore out of Brazil helped the market but proved to
be insufficient to deliver on the promise of 2013, when rates
went up in all segments.
For 2014, Chinese seaborne iron ore imports grew by 15% year-
on-year to total 912.9M tonnes accounting for 69% of global
seaborne iron ore trade. The growth has been driven by a surge
in supply out of Australia which contributed to a near 50% fall in
iron ore spot prices. This in turn has led to the displacement of
some of China’s domestic iron ore which is generally of lower
quality than Australian ore and lies at the top end of the cost
curve. Despite an 15% increase of iron ore import, China’s pig
iron production remained the same as in 2013!
Coal seaborne trade was one of the worst-performing sectors of
the dry bulk industry with Chinese imports being the most
disappointing, resulting in a year-on-year decline of about 26M
tonnes, i.e. around 10%. On the other hand, India increased
their import by around 30M tonnes in 2014.
The 2014 year-end total dry bulk seaborne trade reached 4.5Bn
tonnes, which is a 4% growth year-on-year (+172M Tonnes).
Dry bulk seaborne trade in 2015 is forecasted to grow by 165M
tonnes (4%) to reach 4.7Bn tonnes.
Million
tonnes
Million
tonnes
Weak coal imports from China and Indonesian ban
neutralized the strong iron ore demand
Bulk Carriers | Demand
CHINESE SEABORNE COAL IMPORTS
CHINESE SEABORNE IRON ORE IMPORTS
0
10
20
30
40
50
60
70
400
600
200
800
0
1.000
%shares
20142013201220112010
% Others (RHS)
% Brazil (RHS)
% Australia (RHS)
Others
Brazil
Australia
0
10
20
30
40
50
60
70
80
100
0
400
200
300
%shares
20142013201220112010
% Others
% Indonesia (RHS)
% Australia (RHS)
Others
Australia
Indonesia
19

20. DNV GL © 2013
The number of deliveries in 2014 slowed to 47.7M DWT (618
ships), down from 61M DWT (786 ships) in 2013 and around
100M DWT in the previous two years. A total of 294 bulk carriers
(15.9M DWT) were scrapped compared to 434 ships (22.7M
DWT) in 2013 and a record volume in 2012 of 571 ships (34.1M
DWT).
In the handymax sector, most of the deliveries were ultramax
bulkers between 60K to 65K DWT with 91 ships delivered. 166
panamaxes, 146 handysize bulkers as well as 54 capesizes and
40 VLBC also entered the fleet in 2014. Most of the vessels
scrapped were handysize bulkers (120 ships) and handymaxes
(80 ships). The average scrapping age in 2014 was 28 years old
which is similar to the previous year.
The weak freight market and firm newbuilding prices led to a
deceleration in the number of newbuilding contracts during Q3
and Q4 2014. Total contracts in 2014 amounts to 765 ships
(65.9M DWT). Within the handymax sector, almost 80% of
contracts (224 orders) have been accounted for by vessels in the
ultramax segment. 161 handysizes (5.9M DWT), 137
kamsarmaxes between 80K to 90K DWT (11.3M DWT) and 72
capesizes (13M DWT) were also ordered. VLBC contracting has
been most prevalent in the newcastlemax sector (200K to 210K
DWT) with orders for vessels in this segment accounting for 60%
of all VLBC ordering in terms of DWT.
mDWT
mDWT
Deliveries slowing down and deceleration in the number
of new orders
Bulk Carriers | Supply
(EXPECTED) DELIVERIES & REMOVALS
(EXPECTED) CONTRACTING
120
80
40
0
-40
201320122011201020092008 201620152014
100
0
120
20
40
60
80
2008 2009 2010 2011 2012 2013 2014 2015 2016
Capesize
VLBC Handysize
Handymax
Panamax
VLBC* > 200.000 dwt Capsize 100-200.000 dwt Panamax 65-100.000 dwt Handymax 40-65.000 dwt Handysize 10-40.000 dwt
*contains Ore Carriers (avg 250.000 dwt) and „Newcastlemax“ bulk carriers (avg 208.000 dwt)
HandysizePanamax
HandymaxCapesize
VLBC
20

21. DNV GL © 2013
The dry bulk fleet of 11,121 ships (748M DWT) grew
approximately by 4.9% in 2014 which is lower than the 5.7%
growth in 2013. The highest fleet growth rate in DWT terms was
reached by the VLBC sector (+8%) while Capesizes experienced
the lowest growth rate (+2.9%). The panamax fleet growth
slowed to 5.3% in 2014 down from a 10.5% growth in 2013. The
kamsarmax fleet growth had the fastest expansion out of all
bulker sectors with 14.5%.
The current orderbook for bulk carriers stands at 1,848 ships
(155.2M DWT). In DWT terms the orderbook had a net growth
by 5% in 2014. 552 ultramaxes are currently on order which
represent the biggest sector in numerical terms and similar in
tonnage to the VLBC on order. 398 handysize bulk carriers and
389 panamaxes are under construction. 306 kamasarmax
bulkers are on order which represent a stunning 79% of the
panamax orderbook.
At the end of 2014, the bulk carrier orderbook represented 20.7
% of the existing fleet in DWT terms compared to 16.8% at the
end of 2013. The high ordering of Capesize/Newcastlemax in
2013 and up to mid 2014 has cooled off considerably. Instead,
there is increased interest for Ore carriers and Kamsarmaxes,
benefitting from scale of economy and more flexibility with
respect to ports and trading respectively.
mDWT
% based
on DWT
Lower fleet growth still higher than trade growth
Bulk Carriers | Supply
FLEET DEVELOPMENT
YEAR-ON-YEAR FLEET CHANGES IN %
600
400
200
800
201620152014201320122011201020092008
Handysize
Handymax
Panamax
Capesize
VLBC
25%
20%
15%
10%
5%
0%
-5%
2015 2016201320122011201020092008 2014
HandysizePanamax
HandymaxCapesize
VLBC
VLBC* > 200.000 dwt Capsize 100-200.000 dwt Panamax 65-100.000 dwt Handymax 40-65.000 dwt Handysize 10-40.000 dwt
*contains Ore Carriers (avg 250.000 dwt) and „Newcastlemax“ bulk carriers (avg 208.000 dwt)
21

22. DNV GL © 2013
120
140
100
80
60
40
20
0
2012 2013 20142011201020092008
Bulk Carriers | Prices & Chartering
Capesize newbuilding price peaked in May at 58M USD before
gradually declining by 7% to end the year around 54M USD.
Resale value and 5 year-old prices surged to 65M USD and 53M
USD respectively in April before sliding down, in correlation with
the market conditions. Average newbuilding prices for
panamaxes increased by 4.5% in 2014 but started to be under
pressure during the second half of the year. 5 year-old second
hand prices declined steeply by 21%. Second-hand prices are
likely to face some continued downward pressure for most sizes.
In general, there appear to be few opportunities for shipyards to
increase the relatively low price levels for bulk carriers. Bunker
price cut of 50% since mid-year 2014 may dampen Eco-ship
orders, and rather favor second-hand tonnage.
.000 USD
per day
Million
USD
The reduced coal demand from China, the Indonesian ban on
raw ore exports and continued robust fleet expansion were
responsible for the supply/demand imbalance that drove the
freight rates down in 2014. The decline in oil prices may put
further fuel to the fire, potentially freeing up a substantial fleet
reserve capacity caused by slow steaming.
Spot capesize rates started the year with a quarterly high of
16,298 USD/day but the early gain was eroded and the lowest
point was reach on December 19th at 3,735 USD/day. Average
earnings are down 5% compared to 2013. The Panamax spot
rate started the year at a peak of 14,188 USD/day but continued
to lose value, reaching an annual low of 3,397 USD/day by the
end of June. The annual average earnings are down by 15%
year-on-year.
ONE YEAR TIME CHARTER RATES NEWBUILDING & SECOND HAND PRICES
Freight rates and asset prices on a downward spiral
22
80
60
120
0
20
100
140
40
20132012 201420112008 20102009
Capesize
Handysize
Handymax
Panamax
61K Resale Prices
5 yrs P’max
Handymax (61K)
Panamax
5 yrs Cape
Capesize

23. DNV GL © 2013

24. DNV GL © 2013
Executive Summary | Offshore
Due to the current situation, the ordering volumes for offshore
units were reduced substantially in 2014, and the outlook for
2015 does not look any better. Recently, Clarksons Research has
reduced their contracting forecasts by 30-40% for the major
segments mainly because of the falling oil prices.
The offshore industry is now preparing for tougher times. Last
year proved to be very difficult, but 2015 and 2016 are expected
to be even worse! In the light of diminishing profits the rig
owners are desperately trying to cut their costs. Increased
scrapping of old rigs, suspended dividends, delays and/or
cancellations of contracts as well as deferring costly maintenance
are to be expected.
We have already started to observe increased scrapping activity.
As many as 20 units have already been announced to be
removed from the market and we expect this number to
continue to grow. In addition, cold-stacking of old units has
increased in order to remove the excess capacity.
The rig utilisation rate will continue to go down as the gap
between supply and demand widens. Too many units have to
compete for the same projects, which leads to falling day rates.
As the day rates are moving towards break even levels, fixing
activity is also low.
The offshore market has been under pressure and is expected to
remain oversupplied for at least the next 2 years. The current
overproduction of oil (around 2 mbpd) has its impact on the oil
price and hence the whole offshore industry. In addition more
drilling vessels will enter this falling market in 2015 and 2016.
The drilling contractors have taken the worst hit. Three of the
five worst performers in the Standard and Poor’s 500 index in
2014 were in fact drilling contractors. For example Seadrill has
lost 70% of its stock value, (NOK 85 billion).
As oil companies keep reducing their spendings, more field
developments are being postponed or cancelled.
Challenging times
COSL Prospector was built at
Yantai CIMC Raffles in China
and delivered at the end of
2014. Classed by DNV GL
OFFSHOREOFFSHOREOFFSHOREOFFSHORE
24

25. DNV GL © 2013
Crude oil prices have been on a steady decline for the second
half of 2014. During the 4th quarter, prices reached the lowest
level since May 2009. To much oil in the market and a lack of
OPEC-intervention are the main reasons for the falling crude oil
prices.
In 2014 there has been a strong growth in oil production, adding
1.98 mbpd, mainly driven by the US shale oil production.
Preliminary OPEC output indicates a fairly stable production. By
the end of 2014, the global production was around at 93.16
mbpd. This is well ahead of the world oil consumption, which
stood at around 91.2 mb/d.
According to Rystad Energy, offshore CAPEX for 2014 have
grown by only 4.9%. This year forecast shows a negative
development of 3.5%. Several oil companies have announced
significant cuts in their E&P spending (20-30%). Nevertheless,
Rystad expects that the prolonged level of low upstream
spending will eventually lead to a lower oil-supply and hence
higher oil prices and also increased investments from 2017-
2018.
Utilisation rates have been steadily falling for the past year, with
jack-up units being less affected compared to the floaters. The
current utilisation rate hoovers around 90%, which is regarded
as low.
X1.000
USD
In %, change month on-month
Offshore E&P CAPEX decline
Offshore | Demand
Offshore E&P CAPEX growth
GLOBAL RIG DEMAND DEVELOPMENT
-20
-15
-10
-5
0
5
10
15
20
25
2014201320122011201020092008200720062005
Floaters
Jack-up
1990 1995 2000 2005 2010 2015 2020 2025 2030
0
100
200
500
400
300
Forecast
25

26. DNV GL © 2013
With 550 vessels entering the market in 2014, newbuilding
deliveries have been high. Another 480 vessels are expected to
be delivered in 2015. There will be fewer OSVs, but still a
considerable amount of MOUs. As many as 200 drilling units are
scheduled for delivery in the coming years. But several drilling
units are built on speculation and are likely not to be delivered
on time or even cancelled.
Stacking and scrapping continues, as owners have to reduce
their cost base. A total of 20 old, uncompetitive and capital
intensive floaters have been retired recently. Most of them were
semi-sub drilling units, built in the 70-ties (mainly owned by
Transocean and Diamond). More removals are expected to be
announced.
In 2014 there were only 370 vessels contracted, which is far
behind the number registered in the recent years. In fact it
represents only 40% of the volume contracted in 2007, which
was the record year in terms of ordering.
The MOU contracting will probably also be lower in the next year
(especially drilling units). The uncertainty in the market has held
back OSV owners from contracting new vessels. They seem to
have taken a “wait and see” approach. We expect limited
ordering particularly in the PSV sector as the oversupply
increases.
No. of
vessels
No. of
vessels
Scrap, scrap and then scrap
Offshore | Supply
EXPECTED DELIVERIES & REMOVALS
(EXPECTED) CONTRACTING
700
600
500
400
300
200
100
201720162015201420132012201120102009
OSVMOU
700
600
500
400
300
200
100
0
-100
-200
201720162015201420132012201120102009
MOU OSV
26

27. DNV GL © 2013
In 2014 the total offshore fleet has increased by 4.2%. The fleet
growth was highest for the PSVs, where the fleet has increased
by nearly 8%. However, the overall offshore fleet growth is
expected to slow down in the coming years.
The MOU fleet is forecast to grow by 3.5%. Within the drilling
segment we will see the biggest changes. The drillship fleet is
projected to increase by a whooping 15%. In the jack-up fleet,
the growth is estimated to be 5% only, but it is worth
mentioning that it represents as many as 70 units (mostly within
the largest size). Contracting of production units will probably
continue to be low, hence the fleet growth will be limited.
The OSV fleet is expected to grow by 3.3%. The challenges
influencing the drilling industry have started to affect also this
sector. When looking at the support fleet one must not forget
the regional differences. In the last quarter we have observed a
typical slowdown in the North Sea region due to winter season.
In December the first vessels were laid up. Elsewhere we also
observe a slowdown, but it is triggered by different factors. In
the Middle East, as well as in shallow waters GoM, the activity
fell mainly because of low oil prices. Surprisingly, the deep sea
GoM experienced a record high activity in 2014 that still drives
the offshore support fleet.
No. of
vessels
X 1.000
vessels
Fleet development slowdown
Offshore | Supply
MOU - FLEET DEVELOPMENT
OFFSHORE SUPPORT VESSELS – FLEET DEVELOPMENT
1.800
1.500
1.200
900
600
300
0
201720162015201420132012201120102009
6
8
10
12
4
2
0
201720162015201420132012201120102009
Construction vessels
Platform Supply vessels
OSV - Other
AHTS
Semi-Sub
MOU - Other
Jackup
FPSO
Drill ship
27

28. DNV GL © 2013
Offshore | Prices & Chartering
Last quarter there were no major changes in the newbuilding
prices. The most substantial trend was seen for the large PSVs.
The newbuilding prices have been falling steadily since 2012,
mainly due to the growing market share of Asian yards.
Traditionally large PSVs were built in Europe. Lately more
contracts have been awarded to the Asian yards, however they
are still built to European designs (Ulstein, Rolls Royce and
MMC).
Since the newbuilding prices for floaters have never recovered
after 2008-2009, further development is expected to continue
mostly unchanged. Unfavourable market conditions are certainly
not going to change that.
.000USD
Per day
Million
USD
Charter rates for floaters have been on a sharp decline
throughout 2014. Despite high rig availability, fixing activity has
remained low.
Oil companies have also started to renegotiate existing
contracts. For example Ocean Rig Poseidon, which has
renegotiated the charter with ENI from 600,000 USD/day down
to 450,000 USD/day. In order to compensate for the loss on the
day rate, the contract has been extended by another 12 months.
Other examples are PEMEX renegotiating their jack-up contracts
or Petronas and Saudi Aramco targeting up to 20-30% reduction
on their charters.
TIME CHARTER RATES NEWBUILDING PRICES
Renegotiations of charters
0
200
400
600
800
1.000
140
120
100
80
60
40
20
0
2015201420132012201120102009
900
800
700
600
200
100
0
20152014201320122011201020092008
PSV
AHTS
Drillship
Semi-sub
Jack-Up
PSV 4,000 dwt
Floater West Africa- Med/ UDW
AHTS 240t BP
Floater Sth America UDW
Floater GoM UDW
28

29. DNV GL © 2013
FOCUS ON CRUISE SHIPS, GAS CARRIERS AND MULTI PURPOSE
VESSELS

30. DNV GL © 2013
Focus on | Cruise vessels
In Europe, there is the trend of cruise vessel shipbuilding
consolidation. On the other side of the world, the question is
when China will start to build their first cruise vessel? Last but
not least, a ‘new kid on the block’ could show up in the cruise
sector.
Worldwide cruise vessels accommodated approximately 21.7
million passengers in 2014. More than half of them came from
North America (55%), followed by Europe with 30%. UK/Ireland
and Germany each contributed around 1.7 million passengers.
Around 700,000 passengers from China booked a cruise last
year, a figure that is forecast to increase to 1.0 million in 2015.
The story of China and the cruise sector is twofold. First of all,
China intends to build up a strong national cruise industry. The
Chinese government itself is targeting 4.5 million in Chinese
cruise traffic by 2020. For this target, a lot depends on what the
government will do to enable it. Recently, the Chinese
government stated that it want to develop the Beibuwan Bay
towards “one of the world’s top tourist destinations by 2020” and
that it wants to operate three cruise homeports by that time.
Secondly, an increasing number of Chinese tourists is expected
to book a international cruise trip, outside China, to see the
world. Both developments promise a growing number of
passengers on cruise vessels.
The cruise industry is looking into 2015 with optimism, for
several good reasons. This year’s passenger growth is expected
to be around 2.0%, after a similar growth last year. The current
price level of crude oil promises a lower fuel bill for cruise vessel
operators. Furthermore, the overcapacity that was present in the
Caribbean was reduced by redeploying vessels into other
regions. The only possible downside is formed by the increasing
value of the US dollar. For Europeans going on a cruise in the
Americas, this has made it 15% more expensive.
Right now, China is one of the key focus areas in the cruise
world, due to the enormous growth potential. Further focus is on
attracting the younger travelers to cruise trips. Since the
average age of cruise travelers is 46 years, there is a great
number of potential younger passengers not yet reached.
CRUISE VESSELSCRUISE VESSELSCRUISE VESSELSCRUISE VESSELS
DNV GL “Norwegian Epic”
delivered 2010, 19 decks, 329 m loa
1,700 crew / 4,100 passengers
The cruise industry expanding in Asia and looking to
attract younger customers
30

31. DNV GL © 2013
Focus on | Cruise vessels
Virgin will probably not go for second hand, but order two large
cruise vessels for 4,000-5,000 passengers. If they order this
year, they could be operational in 2018/2019. Considering
Virgin, they are in a good position to attract younger cruise
travelers, looking for service & entertainment.
Worldwide, there are around 350 cruise vessels in operation and
40 ships on order. The 2014 increase in capacity was around
3%, or 25,000 passengers. The planned 2015 deliveries will add
another 20,000 passenger capacity on top.
Newbuilding orders for cruise vessels amounted to 14 vessels
with 1.8 mGT in 2014. Although in numbers this is comparable to
2013, the average size of vessels doubled in 2014. In the short
term, around 10-12 cruise vessel orders p.a. are expected for
the period 2015-2017.
The current orderbook of the largest cruise vessels represents a
passenger capacity of 110,000 (20% of the existing capacity).
The delivery of these vessels will add additional capacity
equivalent to the current number two player in the cruise
industry.
Since vessel earnings are driven by revenue generating
passenger capacity, it will be interesting to see how this future
increase will affect cruise holiday pricing and in the end, cruise
operator revenues.
The number one player in the cruise vessel sector, Carnival Corp,
is one of the companies with a strong focus on China. Last year,
Carnival signed an MOU with China State Shipbuilding
Corporation (CSSC) and Italian builder Fincantieri. Recently,
Carnival Corp said it is in talks with state-owned China
Merchants Group Ltd (CMG) to develop a new cruise line for the
fast-growing Chinese market. Furthermore, Carnival has initiated
a first major repair job for a one of its cruise vessel in China,
done by Huaran Dong shipyard (Shanghai).
The number two in the cruise vessel sector, Royal Caribbean
International, has been building up capacity in China over
several years and will send its newest ship, Quantum of the
Seas, to year-round operations in Shanghai starting in summer
2015. Parent company Royal Caribbean Cruises Ltd., through a
venture with Ctrip.com, plans to launch SkySea Cruises in China
with the vessel Celebrity Century.
In Europe, a consolidation of cruise vessel shipbuilding expertise
is taking place. After Meyer Werft took over STX Finland in 2014,
there were rumors about Italian yard Fincantieri looking to take
over STX France. This could open up opportunities for others to
enter the shipbuilding market for smaller cruise vessels.
A possible new entrant to the cruise market is Virgin Cruises,
which has been planning an entry for a couple of years already.
Will the planned capacity expansion put pressure on
cruise vessel revenues?
31

32. DNV GL © 2013
Focus on | Gas Carriers
For US ethane and propane production a similar story applies.
Production of these products has increased strongly on the back
of the boom in US tight oil- and shale gas production.
In recent years, a lot of LNG and LPG carriers were ordered
based on these high US export expectations. LPG carriers
newbuilding orders increased strongly in 2013 and in 2014. LNG
carrier ordering peaked in 2014, with newly ordered tonnage
increasing by 65% compared to the year before.
But then, in the midst of the last year, crude oil price started to
drop, altering at least one factor that influences the prospects of
US LNG exports. The outcome will depend on how long the oil
price will stay low, and on the future level of the crude oil price,
all of it very hard to predict.
LPG
Regarding the LPG sector, spot rates for VLGCs reached their
heighest ever peak mid-2014, with $130,000/day for a 82,000
cbm vessel. Towards the end of last year, however, rates had
returned to a level around $60,000/day. In the case of the USA,
last year’s LPG export amounted to 11.5 million tonnes, which is
further expected to increase to 20m tonnes in 2015 and to 30m
tonnes in 2016. The other main exporting region in the world,
the Middle East, has a relatively stable LPG export of 32-33m
tonnes per year (although with prospects to increase it).
In the past couple of years, no other country has caused such
major change in the natural gas market as the USA. Their shale
gas production, which accelerated already in 2006, is expected
to increase by 55% between 2012-2040.
The demand growth for US natural gas comes from the power
generation sector (to replace coal fired electricity plants) and
industrial sectors (fuel for trucks and trains). Further growth is
expected to come from LNG exports, which could start this year.
Future US LNG exports depend on a number of factors, which are
difficult to foresee. It includes the speed and extent of gas prices
moving closer together in global gas markets, as well as the
competitiveness of gas compared to crude oil. Furthermore, the
gas supply growth outside the US plays an important role too.
U.S.U.S.U.S.U.S. NATURAL GAS PRODUCTION FORECASTNATURAL GAS PRODUCTION FORECASTNATURAL GAS PRODUCTION FORECASTNATURAL GAS PRODUCTION FORECAST
US shale gas production stimulating vessel orders
trillioncubicfeet
Shale gas30
20
60
0
50
40
10
2025 2030 2035 20401990 20102000 20051995 2015 2020
Tight gas Other sourcesShale Gas
Source: EIA, 2014
ForecastHistory
32

33. DNV GL © 2013
Focus on | Gas Carriers
Ethylene carriers
Thanks to the shale gas revolution, ethane is now available
abundantly in the U.S. and the export market for ethane is
growing. In 2013, the domestic demand for ethane in the U.S.
was 960,000 barrel per day (bpd), while its supply was 1.155
million bpd. This situation of oversupply led to a sharp decline in
the price of ethane, making it more attractive for the chemical
industry. This has led to the a birth of a new class of vessels for
transporting liquefied ethane, having significantly higher carrying
capacities, over longer sea routes such as from the East coast of
the U.S. to Europe and to Asian countries (for instance India).
Beyond that, there are the shale gas and oil developments in
many other parts of the world that could provide additional
Ethane.
Ethane is the base chemical used for making plastic and other
synthetic material. The primary use of Ethane is in the
petrochemical sector, where it is broken down in large
processing systems called “crackers” (by steam cracking) in the
production of Ethylene (which is an alternative to naphtha).
2014 saw a total of 26 newbuilding orders for Ethylene/Ethane
carriers, summing up to 1,0 million cbm (2013: 21 vessels with
0,4 million cbm capacity).
The LPG orderbook has increased strongly, especially for VLGCs.
During the last two years, the capacity of ships on order reached
a level of 46% of the fleet capacity. When delivered, the capacity
increase in the 2015-2019 period would be twice the capacity
that entered the fleet in the 2010-2014 period. For 2015, LPG
fleet capacity expansion is expected to be 15%-17%.
LNG
Last year, total LNG trade reached 243.6 million tonnes, up 2%
compared to 2013. Amongst other factors, the demand for LNG
is pushed by the need to reduce pollution caused by using coal,
but also by the lower price of LNG due to abundant volumes
available in North America.
The LNG orderbook has increased to the current level of 40% of
the fleet, mainly on the back of 2014 strong contracting levels of
almost 10 million cbm capacity (2013: 6 million cbm). The high
number of orders in 2014 for LNG carriers developed as LNG
export projects progressed worldwide (but foremost in the USA
and in Australia).
After this year, the LNG fleet will have expanded by 10%, as was
the case in 2014. This is the reason for a lot of market players to
start worrying about the future earnings outlook for LNG
carriers.
Worldwide gas carrier orderbook increased strongly
33

34. DNV GL © 2013
Focus on | Multi Purpose Vessels
Further threats consist of the growing number of previously
under-developed ports that are now installing box-handling
infrastructure as well as the still continuing containerization
process.
But lets have a look at the cargoes where MPVs can play out
their strongest hand, (heavy lift) cargoes related to engineering,
project and construction business. Here, the story for this year
may be different. These cargoes are, for example, strongly
supported by construction projects in the US related to the
growing volumes of oil and natural gas. Many of the components
for the new construction projects have to be imported, meaning
trading opportunities for heavy lift vessels.
Also the import of tubular steel for oil and gas pipelines is
expected to benefit the MPV sector in 2015.
Furthermore, investments by foreign steelmakers in the US,
which are building new plants to take advantage of cheap natural
gas, could mean additional cargoes for heavy lift carriers.
Demand from the wind power industry for projects in the US is
strong as well and also expected to remain a driving factor as
long as current tax incentives stay in place.
In addition, construction projects in the Middle East and Asia are
likely to create additional demand for heavy lift cargoes, which
could improve the sector in the coming years.
Last year turned out to be a difficult one for MPVs, with rates
generally too low to secure a sustainable business.
MPVs of 12,000 dwt with heavy-lift cranes were getting fixed for
short periods at around $7,000-$9,000/day in 2014, far below
what is needed. With so many owners losing money, further cost
reduction will have to take place if the market situation does not
change in 2015. The question is how?
There is a certain irony in the story of the MPV sector, where the
main problem is not a lack of cargoes, but strong competition
from other vessel types. Ever since the containership and bulk
carriers sectors have been suffering from oversupply, they try to
fill the ship’s holds with typical MPV cargo, subsequently cutting
rates, and in this way taking away MPV cargoes.
MULTI PURPOSE VESSELSMULTI PURPOSE VESSELSMULTI PURPOSE VESSELSMULTI PURPOSE VESSELS
MPV “Clipper Helvetia”, delivered in 2013, 17.500 DWT, LOA 161m,
3x 80t SWL cranes, DNV GL class
MPVs stuck between a rock and a hard place
34

35. DNV GL © 2013
2
10
4
6
8
0
5,0
7,8
2006
5,7
3,8
2004
3,5
1,9
2002
1,1
2001
1,5
2000
1,9
2007
2005
2003
2009
2011
1,51,7
2010
4,5
1,2
2,0
2013
2014
2008
2,7
2012
Focus on | Multi Purpose Vessels
In the future, we expect to see more orders for vessel which are
designed for special purposes, for instance vessels sized and
designed to transport wind turbine blades or for vessels having
DP2 capabilities for offshore installations. Vessels often operating
in ECA zones are likely to opt for LNG as fuel.
The worldwide MPV delivery volume dropped from 3.8mDWT in
2013 to 2.1mDWT in 2014. Basically all of the deliveries from the
contracting boom years 2006-2008 are now on water. Since the
past years were modest in ordering volume, the MPV sector
could now start to benefit from lower deliveries volumes.
Scrapping activity increased in the post-crisis years 2009-2012
to around 5,0mDWT per year. In 2013, MPV demolition fell to
3.5mDWT. Last year only 2.7mDWT was demolished (327
vessels, with an average age of 33 years).
With relatively few deliveries and a healthy orderbook (6% of the
fleet), the fleet is hardly growing. The supply side of the MPV
sector is therefore in a good shape. MPV earnings in 2015 will be
highly dependant on the rate development in the containership
and bulk carrier sector and on the state of the project market.
An imminent threat for the MPV sector comes from the crisis in
Russia, reducing the potential number of project cargoes.
Furthermore, the low oil price could reduce offshore investment,
reducing the need for seaborne transport of project cargo.
Using a broad definition of multi-purpose vessels, ranging from
small short-sea MPVs to traditional MPVs as well as the semi-
submersibles and the heavy-lifters, total 2014 newbuilding
orders accumulated to 2.0mdwt with 155 vessels (24% below
the volume that was ordered in 2013).
A total of 11 semi-submersibles were ordered last year, ranging
from 17,000–90,000 DWT. The largest semi-sub was ordered by
COSCO Ltd, China and will provide transport for the very largest
offshore structures.
Of the 2014 MPV orders, the larger ones (MPVs above 20,000
dwt were mostly ordered by Chinese, Dutch and German owners,
whereas the orders for small MPVs (below 10,000 DWT) are
mostly connected to Japanese interests.
MPV WORLDWIDE CONTRACTING (MPV WORLDWIDE CONTRACTING (MPV WORLDWIDE CONTRACTING (MPV WORLDWIDE CONTRACTING (mDWTmDWTmDWTmDWT))))
MPV sector could start to benefit from the drop in
contracting volumes after the 2006-2008 boom
mDWT
35

36. DNV GL © 2013
SAFER, SMARTER, GREENER
www.dnvgl.com
The Trend Report is published by the Sales & Market Intelligence department.
Contact persons for the respective chapters are:
Market summary, Oil & Product Tankers Jakub Walenkiewicz
Containerships, Gas carriers, MPVs Jeffrey van der Gugten
Bulk Carriers Pierre Pochard
Offshore (Oil & Gas) Viktor Sinding-Larsen
Cruise vessels Helge Hermundsgård, Jeffrey van der Gugten
Philipp Westphal
Head of Sales & Market Intelligence
Business Development / Business Support
Email: philipp.westphal@dnvgl.com
Telephone: +49 40 36149 6197