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Outlook for Ocean Carriers & NVOCCs

Outlook for Ocean Carriers & NVOCCs. Presenter: Ed Piza epiza@ohl.com. Past. Small Ships/Capacity Limited Competition High Rates of Shipping Non-Agreement. Growth Factors. Vessel Size Growth Containerization Non-Vessel Operating Common Carriers (NVOCC) Large Retailers Higher Demand

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Outlook for Ocean Carriers & NVOCCs

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  1. Outlook for Ocean Carriers & NVOCCs Presenter: Ed Pizaepiza@ohl.com

  2. Past • Small Ships/Capacity • Limited Competition • High Rates of Shipping • Non-Agreement

  3. Growth Factors • Vessel Size Growth • Containerization • Non-Vessel Operating Common Carriers (NVOCC) • Large Retailers • Higher Demand • Emergence of New Shipping Lines (“Rust Buckets”) • New Conference Systems and Agreements

  4. Current Day

  5. Rate Conference Systems • Existed as early as 1916 until about 10 years ago • Established Federal Maritime Commission (FMC) • Used to stabilize rates and service • Limited negotiation options/Dual-rate contract • Prohibition of individual service contracts • Growth in global shipping led to a growing concern • with conference systems

  6. Discussion Agreements • Shipping laws more relaxed 1984-1998 • Ocean shipping became differentiated/sophisticated • Created specifically for different markets/commodities TACA

  7. NVOCC & Carrier Contract Negotiation • Spot market rates • 52-week rolling average • 13-week contracts (Asia-Europe) • Volume shippers and minimum shipment charges • GRI waiver and cap negotiation

  8. General Rate Increase (GRI) • Pre-May 2009 • July 2009 GRI • NVO’s • BCO’s • Current Day Status

  9. Additional “Add-On” Costs • Fuel Surcharges • Service Fees • Handling Charges • Security Fees • Delivery Area Surcharge • Accessorial Charges • Chassis Surcharge As of 9/1/09

  10. Current Market Conditions & Outlook • General Rate Increase (GRI) • Vessel Capacity • Vessel Sharing Agreements • Ocean Carrier Customer Service • Expansion of Panama Canal • Suez Detours “Idled ocean container capacity hit a new high of 1.41 million TEUs” - JOC

  11. Ed Piza – epiza@ohl.comSVP, OHL Global Freight Management and LogisticsThank you.

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