Business opportunities in Turkish Maritime Industry Marco Rensma Director MEYS Emerging Markets Research Istanbul, 24 May 2012
Content presentation 1. Introduction MEYS Emerging Markets Research 2. Global trends seaborne trade and shipbuilding 3. Economic developments Turkey 4. Turkish maritime industry: 4.1 Developments seaborn trade Turkey 4.2 Trends in Turkish shipbuilding 4.3 Market of tankers and bulk carriers 4.4 Market of mega yachts 4.5 Market of naval ships 4.6 Market of offshore supply vessels 5. Outlook maritime industry Turkey 2012-2014
1. Introduction MEYS Emerging Markets Research
What we do International market research and advisory for Dutch companies Focus on the emerging markets of: Romania Turkey Hungary Morocco Czech Republic Vietnam Business clients from industry, construction, trade & logistics, transport Official partner TurkeyDesk - Fenedex Writing articles on emerging markets for: Fenedexpress, monthly magazine Fenedex Romania Magazine, quarterly magazine Dutch Romanian Network Presentations for companies, business associations, and universities on emerging markets and globalisation Parttime lecturer Global Marketing, The Hague University of Applied Sciences
2. Global trends seaborne trade and shipbuilding
1980 1985 1990 2000 2005 2006 2007 2008 2009 2010 2011 Increased volume world seaborne trade 3.000 International developments seaborne trade (millions of tons loaded) 2.500 2.000 1.500 1.000 500 - Source: UNCTAD Note: (*) Iron ore, grain, coal, bauxite/alumnia and phosphate Oil Main bulks* Other dry cargo Container
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012f 2013f 2014f Growth rate (%) USD/barrel Growth rate world seaborne trade could become lower after 2011 12 10 8 6 4 2 0-2 -4-6 Source: UNCTAD, IMF, own calculations Seaborne trade Global economy Oil prices (R-axis) 125 110 95 80 65 50 35 20
Declining world volume new orders and order books 400 350 300 250 200 150 100 50 0 World volume (million GT) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: SAJN New orders Order books
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Declining demand tankers and bulk carriers; small increase container ships 160 World order book (mill. DWT) 7.000 World order book container ships (mill. TEU) 140 120 100 6.000 5.000 80 4.000 60 40 20 3.000 2.000 0 1.000 Source: RS Platou Tanker < 200.000 DWT Tanker > 200.000 DWT Capesize
2008M01 2008M04 2008M07 2008M10 2009M01 2009M04 2009M07 2009M10 2010M01 2010M04 2010M07 2010M10 2011M01 2011M04 2011M07 2011M10 2012M01 2012M04 Million USD Falling prices for new tankers, bulk carriers and container vessels 100 90 80 70 60 50 40 30 Suezmax Capesize 3.000 TEU Source: RS Platou
Numbers Lower demand mega yachts 300 250 200 218 214 261 213 195 176 150 100 90 114 108 50 20 53 0 2007 2008 2009 2010 2011 2012* New orders Note: (*) Jan. - April Source: Camper and Nicholson, Boat International, SuperYacht Times Deliveries
2007okt 2008jan 2008apr 2008jul 2008okt 2009jan 2009mei 2009aug 2009nov 2010feb 2010mei 2010aug 2010nov 2011feb 2011mei 2011aug 2011nov 2012feb 900 Increasing demand for offshore supply vessels (excl. tugboats) Volume world order books OSVs (number) 850 800 750 700 650 600 550 500 Source: Marcon International
2008 2009 2010 2011e 2012e 2013e 2014e 2015e Million CGT Increasing overcapacity at shipyards worldwide 60 50 40 30 20 10 0-10 -20 Completions Shipbuilding capacity Overcapacity Source: POSCO Research Institute
3. Economic developments Turkey
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Turkey higher economic growth rate than EU-27 10,0 Economic growth rate (GDP, %) 8,0 6,0 4,0 2,0 0,0-2,0-4,0-6,0 Source: IMF EU-27 the Netherlands Turkey
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Strong increase total foreign trade 300,0 Total foreign trade Turkey (billion euro) 250,0 200,0 Economic liberalisation 150,0 100,0 50,0 Source: Turkstat
Turkey relatively small export sector Ireland Malta Hungary Estonia Slovakia Netherlands Belgium Czech Republic Lithuania Slovenia Bulgaria Latvia Austria Switzerland Denmark Sweden Germany Poland EU-27 Croatia Norway Finland Romania Portugal United Kingdom Spain Italy France Greece Turkey Source: Eurostat Exports, 2011 (% of GDP) 0% 20% 40% 60% 80% 100% 120%
Turkey large deficit current account Current account balance, 2011 (% GDP) Norway Switzerland Netherlands Sweden Denmark Germany Estonia Korea Japan Austria Slovak Republic Ireland Israel Belgium Finland Slovenia United Kingdom Australia France Canada Czech Republic United States Italy Spain New Zealand Portugal Iceland Greece Turkey Source: IMF -10-5 0 5 10 15
2009M01 2009M03 2009M05 2009M07 2009M09 2009M11 2010M01 2010M03 2010M05 2010M07 2010M09 2010M11 2011M01 2011M03 2011M05 2011M07 2011M09 2011M11 2012M01 2012M03 30,0 High inflationary pressure Inflation Turkey 2009 2012 (%) 25,0 20,0 15,0 10,0 5,0 0,0-5,0 Source: Eurostat Total Food Energy
01-2008 04-2008 07-2008 10-2008 01-2009 04-2009 07-2009 10-2009 01-2010 04-2010 07-2010 10-2010 01-2011 04-2011 07-2011 10-2011 01-2012 Weak Turkish Lira 105 Real effective exchange rate TRY (2010 = 100) 100 95 90 85 80 Source: Bank International Settlements
2010M05 2010M06 2010M07 2010M08 2010M09 2010M10 2010M11 2010M12 2011M01 2011M02 2011M03 2011M04 2011M05 2011M06 2011M07 2011M08 2011M09 2011M10 2011M11 2011M12 2012M01 2012M02 2012M03 2012M04 Turkey Central Bank (still) holds interest rate relatively low 7,50 Policy rate (%) 7,00 6,50 6,00 5,50 5,00 Source: Central Bank Turkey
Economic outlook Turkey 2012 2014 positive 10,0 Growth rates for Turkey (%) 8,0 6,0 4,0 2,0 0,0 Source: EIU 2010 2011 2012 2013 2014 GDP Private consumption Exports Government consumption
Turkish current account deficit remains high after 2011 0,0 Balance current account Turkey (% GDP) 2010 2011 2012 2013 2014-2,0-4,0-6,0-8,0-10,0 Source: IMF
4. Turkish Maritime Industry
4.1 Developments seaborne trade Turkey
Turkey strategically located for international seaborne trade
Ports are located all along Turkish coast 175 Ports 90 per cent private operated Source: ISPAT
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Busy times at Turkish seaports 400 Volume goods handled at Turkish seaports (million tons) 350 300 Cabotage 250 200 150 100 50 Source: UMA Total volume Export/import
2009M01 2009M03 2009M05 2009M07 2009M09 2009M11 2010M01 2010M03 2010M05 2010M07 2010M09 2010M11 2011M01 2011M03 2011M05 2011M07 2011M09 2011M11 2012M01 2012M03 60% Slowing down growth rate seaborne trade Growth rate seaborne trade Turkey(%) 40% 20% 0% -20% -40% -60% Source: Turkish customs Exports Imports
Turkey relatively large merchant fleet Greece Japan Germany China excl. Hong Kong Republic of Korea US Norway China, Hong Kong SAR Denmark Taiwan Singapore Bermuda Italy UK Turkey Russia Canada India Malaysia Belgium Iran Saudi Arabia Brazil Indonesia Cyprus UAE Netherlands France Viet Nam Sweden Total DWT merchant fleet as a percentage in world total, 1-1-2011 (%) (a) 0 5 10 15 20 Source: UNCTAD Note: (a) Vessels of 1,000 GT and above operating under national and foreign flag
Relatively young merchant fleet Age merchant fleet Turkey, % in total DWT (December 2011) 30+ years Mainly smaller vessels < 10.000 DWT 20-29 years 10-19 years 0-9 years Source: Turkey Chamber of Shipping 0 10 20 30 40 50 60
Strong increase container handling 7.000 Volume container handling Turkish ports (x 1.000 TEU) 6.000 5.000 4.000 3.000 2.000 1.000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: UMA, TURKLIM
Turkish ports relatively small globally China United States Singapore Hong Kong Japan Korea, Republic of Malaysia UAE Germany Spain Taiwan Netherlands Belgium Italy India Indonesia United Kingdom Brazil Egypt Australia Thailand Viet Nam France Panama Turkey in container handling Container throughput, 2009 (x 1.000 TEU) Source: UNCTAD - 20.000 40.000 60.000 80.000 100.000 120.000
4.2 Trends in Turkish shipbuilding
Concentration of shipyards in Istanbul (Tuzla Bay) and Yalova (27) (8) (1) (1) (1) (1) Yalova (21) Canakkale (2) Izmit (6) Sakarva (1) 71 shipyards as of 1-1-2012 (1) Hatay (1) Source: UMA
Turkey among the best of the rest Top 20 economies for shipbuilding, 2010 deliveries (% in world total DWT) China Republic of Korea Japan Philippines Romania Viet Nam Denmark Taiwan Croatia Germany Turkey US Russia Spain Indonesia Netherlands India Italy Poland Bulgaria 1,24% 0,60% 0,56% 0,50% 0,44% 0,35% 0,35% 0,33% 0,22% 0,17% 0,15% 0,12% 0,12% 0,09% 0,08% 0,08% 0,07% 21,77% 31,34% 41,07% Source: UNCTAD 0% 10% 20% 30% 40% 50%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2011 Large overcapacity at Turkish shipyards Number of ships built at Turkish shipyards Ship deliveries and max. production capacity (x 1.000 DWT) 160 4.000 140 3.500 120 100 80 60 3.000 2.500 2.000 1.500 1.000 40 20 500-0 Ship deliveries Production capacity Source: Turkey Chamber of Shipping, UMA
2005 2006 2007 2008 2009 2010 2011 Order books Turkish shipyards are under pressure. Focus primarily on tanker building 3.000 2.500 2.000 1.500 1.000 500 Total order books Turkish shipyards (x 1.000 GT) Order books by type of ship 2010 (%) 71% 9% 17% 1% 2% - Container General cargo RO-RO Bulk Carrier Tanker Source: Turkey Chamber of Shipping, SAJN
4.3 Market of tankers and bulk carriers
Tankers and bulk carriers most used vessels in Turkish merchant fleet 11.500.000 10.000.000 8.500.000 7.000.000 5.500.000 4.000.000 2.500.000 1.000.000 Note: (*) ships over 150 GT Source: UMA Merchant fleet Turkey (DWT)* 2008 2009 2010 2011 Tankers Bulk carriers Total
Tankers and bulk carriers main shipbuilding marketsegments Ship deliveries Turkey 2010 (percentage of built tonnage) 4,6 1,2 16,8 18,7 58,6 Source: OECD Tankers Other dry cargo/passenger Others Bulk carriers Offshore
Since 2007 domestic demand for tankers higher than foreign demand 90 80 70 60 50 40 30 20 10 0 Tanker deliveries Turkish shipyards (number) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: OECD, Turkey Chamber of Shipping Export Domestic
Decreasing volume order books, particular for tankers 200 175 150 125 100 75 50 25 0 Order books Turkey (number) 179 116 90 77 74 57 21 21 23 24 21 22 8 12 12 13 0 2 5 10 3 8 2 1 2008jan 2009feb 2009dec 2010dec 2011mei 2011okt Source: OECD, Turkey Chamber of Shipping, Clarkson tanker bulk dry cargo container
4.4 Market of mega yachts
Strong increase international tourism 35.000.000 Foreigners arriving (persons) 30.000.000 25.000.000 20.000.000 15.000.000 10.000.000 5.000.000 Source: Turkstat 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Others China UAE Taiwan New Zealand UK US Germany Turkey Netherlands Italy Turkey third largest builder of mega yachts Source: Camper and Nicholson Mega yachts builders 2010 (% in total boat length) 0 5 10 15 20 25 30 35
2007 2008 2009 2010 2011 2012* Lower demand mega yachts from Turkish shipyards 30 25 20 23 Market of mega yachts Turkey (number) 29 27 25 19 18 18 15 10 5 0 10 5 6 1 Completed New orders Note: (*) Jan. April Source: SuperYacht Times, Camper and Nicholson
Euro Lower prices 2012Q1 after records in 450.000 400.000 350.000 300.000 250.000 200.000 150.000 100.000 50.000 2010 and 2011 2007 2008 2009 2010 2011 2012* Note: (*) Jan. - April Source: Boat International, Super Yacht Times, The Yacht Market Average asking prices mega yachts Turkey (Loa per metre)
Examples of mega yachts built in Turkey Boat: Peri 37M Builder: Peri Yachts Boat length (Loa): 37.75 metres Asking price: 8.000.000 euro Boat: Aegean Yacht Ketch Builder: Aegean Yacht Boat length (Loa): 26.60 metres Asking price: 2.000.000 euro
4.5 Market of naval ships
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Strong increase turnover Turkish defense industry 3.500.000 3.000.000 2.500.000 2.000.000 1.500.000 1.000.000 500.000 - Defense industry Turkey (x 1.000 USD) Source: SaSad Turnover Exports
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Million USD Strong increase in expenditures on military equipment 2.000 1.800 1.600 1.400 1.200 1.000 800 600 400 200 0 Development Defense Industry Support Fund Income Expenditures Source: Undersecretary Defense Industry (SSM)
Large investment programs Turkish navy MILGEM Investment program of 2 billion dollars over a period of 15 years Building of twelve (four optional) Patrol and Anti-Submarine Warfare Ships GENESIS Upgrading weapons systems on board 8 frigates Submarines Building of 6 submarines Value of the contract 2 billion dollars Cooperation between HDW from Germany and several Turkish companies, among others Aselan and Havelsan TF-2000 Building of 6 anti-air frigates Value of the contract 3 billion dollars First delivery 2018
4.6 Market of Offshore Supply Vessels
2007okt 2008jan 2008apr 2008jul 2008okt 2009jan 2009mei 2009aug 2009nov 2010feb 2010mei 2010aug 2010nov 2011feb 2011mei 2011aug 2011nov 2012feb Turkey small builder in global market of OSVs 14 12 10 Volume order books OSVs Turkish shipyards (number) Turkey 1% of global market 8 6 4 2 0 Source: Marcon International
Examples Turkish built OSVs RMK Shipyard Offshore multi-purpose ship 7.800 DWT Delivery 2009 North Sea Shipping (Norway) CEMRE Shipyard Offshore support vessel LOA 86 metres Delivery September 2011 Havyard (Norway)
5. Outlook maritime industry Turkey 2012-2014
Market segment Outlook 2012 2014 Market opportunities Market threats Tankers ++ Increasing demand oil and gas transport Strong domestic base Partly replacement merchant fleet Regional energy hub Relatively low labour costs Bulk carriers + Growing economy Turkey Partly replacement merchant fleet Relatively low labour costs Container ships + Growing economy Turkey Regional trading hub Relative low labour costs Mega yachts ++ Strong increase international tourism Higher incomes in Turkey Naval ships +++ High government expenditures Increase foreign demand OSVs ++ Investments by oil and gas industry Increasing energy demand Turkey Falling newbuilding prices -> excess capacity Strong competition Asia High investments costs Falling newbuilding prices -> excess capacity Strong competition Asia Lower growth rate global economy Falling newbuilding prices -> excess capacity Strong competition Asia Lower growth rate global economy Strong competition from Europe Volatile and small global market Political developments Difficult market to enter for new foreign companies Strong global competition High investments in R&D Strong dependence on foreign imports
Thank you for your attention! Marco Rensma Mobile: +31(0)612792560 E-mail: mrensma@meys.eu