Operational Environment

In 2016, various geopolitical, economic and legislative events impacted the logistics market in Containerships’ area of operation. Nevertheless, there were no changes in the operating environment dramatically affecting the Company’s activities or performance in 2016.

Overall freight volumes in the Company’s area of operation did not increase in 2016. Nevertheless, the share of unitised cargoes continued growing as in previous years. Cargo units between North and Continental Europe remained in balance in 2016. In the Mediterranean, there was no major change in shipping between Turkey and North Africa compared to 2015.

Oil prices impact the logistics sector in various ways. In 2016, cargo levels continued decreasing partly due to low oil prices, but the sharp increase in bunker prices during the last quarter of 2016 impacted directly on the Company’s operating expenses. At the same time, Russia and Libya, two markets important for the Company , are expected to see economic growth as the price of oil rises.

The Russian import ban continues to impact, particularly on cargo flow from Europe to Russia. When the ban entered into force in 2014, Containerships successfully changed its strategy in the Russian market and replaced grocery cargoes with other cargoes and increased cargo flow from Russia to Europe. In 2016, Russian exports continued to increase.

Some markets in North Africa are exposed to political and economic insecurity. For instance, growing insecurity in the Company’s important market Libya has increased handling times in ports. Growing political unrest in Turkey has not yet impacted the Company’s freight volumes.

In recent years, logistic companies have been forced to adapt also to increasingly stricter environmental regulations. Minimising environmental hazards is a leading trend also in the logistics sector. Containerships is responding to environmental requirements with its unique environmental strategy. The Company aims to be the first logistics company to offer customers a logistics chain in Europe based completely on Liquefied Natural Gas (LNG).

In June 2016, the United Kingdom voted to withdraw from the European Union. Brexit has not yet impacted cargo volumes in 2016. In future, the UK’s withdrawal from the EU may cause a decrease in cargo flows to the UK, but on the other hand it may strengthen the country’s exports.