FONASBA ANNUAL MEETING The containership market

1. FONASBA ANNUAL MEETINGThe containership market Centro de Navegación (Argentina) Eng. Rodolfo García Piñeiro Opatija, October 2008

2. Executive summary • Foreword. • Bunker, consumption, prices, etc. • Construction. • The fleet • The charter market • The ports

3. Foreword • Carriers launched huge construction programs in 2007, focusing on ships of 12,500 teu, mostly aimed at the Far East – Europe trade. • In a high fuel cost era, the impact of the fuel bill can be spread over a larger number of containers. • Many carriers are set to compete with ships that are based on the same or similar molds as their competitors. • Competition will move to other areas, in particular to marketing innovations and the management of complex logistics operations. • On the Europe related trades, conferences will disappear this month (october 2008), carriers will all become outsiders to each other. • New initiatives to attract new or lost customers have been unveiled this year: online rating and booking system, online calculator to handle the BAF, conversion of box rates from dollars to euros (Maersk).

4. Foreword (cont.) • Carriers controlling terminals, to avoid the disruptions in schedules caused by the “first come, first served” principle, or fixed berthing windows, with other carriers seeking the same windows, we will see in the years to come. • The increase in bulk carriers rate provided an incentive to shift containerizable cargoes (agro, forest and steel products) from bulk to containers. Quantities has been modest. • The main challenge nowadays and beyond, is to reduce bunker expenses while at the same time a responding to increased environmental pressure to contain and reduce emissions. • Nuclear power on ships raises ecological and safety concerns, e-m propulsion tunnels are a remote possibility. Wind power and solar cells are not a realistic option. • Kite sails are being experimented, saving a small ammount of fuel on favourable wind conditions. • The most efficient solution to achieve this is to reduce speed. Speed is costly. A 10 % increase in speed demands a 30 % increase in FO consumption. • How deep the US crisis could go and to what extent could it impact in the shipping business, is the question with a not easy answer.

5. Bunker consumption July 11th., 2008 Oil barrel u$d 147,27 (historic record) Bunkers: IFO 180 u$d 709.- per mt. MDO u$d 1208 per mt. (Rotterdam)

6. Bunker consumption Vessel loaded up to 90% of its capacity Source: BRS

7. Vessel operating costs Source: Hamburg Sud

8. Construction, Shipyards, Type Source: BRS

9. Construction cost(in million u$d) Source: BRS

10. The market share • In 2007 the teu capacity on liner trades reached 11,7 million teu. • The global market share of the three world leading lines, Maersk Line, MSC and CMA CGM, has grown from 32,1 % to 34,1 % in terms of teu capacity during the year 2007. • The growth in 2007 has been far from being equally shared by the three leading lines, as Maersk continued to lose share (from 16,8 % to 16,1 %), reflecting the dificulties the company experienced in integrating P&O Nedlloyd. • MSC and CMA CGM continued to strengthened their positions. MSC has increased its share from 9,6 % to 10,4 % while CMA CGM increased from 6,5 % to 7,6 %. • Both lines, family businesses, do not have shareholder pressures. With huge order books (around 600.000 teu each) it is expected an increase in their respective shares • The carriers that most raised their market shares in the past eigth years are in order CMA CGM, MSC, CSCL, and Hapag Lloyd (218 %, 140 %, 120 % and 110 %). • Bid on Hapag Lloyd outcome remains open. NOL and Hamburg Alliance are the two potential buyers left in the race. Source: Axs-Alphaliner

11. Concentration in Container Liner Shipping:Top 10 Carriers 60,6% 49,3% Source: Axs-Alphaliner

12. Top 20 container shipping lines(October 2008) Fuente: AXS-Alphaliner

13. Top 20 league(October 2008) • The percentage shown on the left of each bar represents the operator's share of the world liner fleet in TEU terms Fuente: AXS-Alphaliner

14. The charter market • We can see in the following graph, the charter market development since january 2000 up to now. • Owners opt for lower rates than risk having their vessels unemployed. Carriers are taking vessels on much shorter charters. • It is however not posible to make any concrete statement about the charter market trend, as the effects of the financial market crisis on various sectors of the economy are still not foreseeable. • Many ports have now reached the limit of their handling capacity, an waiting times may become longer. • Aditional ships may be needed due to the speed reduction. • ?

15. Evolution of charter rates for containerships Source: Axs-Alphaliner

16. The cellular fleet • 400 cellular ships were delivered in 2007 for 1.36 million teu, adding 13.9 % to the existing fleet. • The cellular fleet on 1st of April 2008 comprises 4.375 ships for 11.13 million teu. • During 2007, 606 cellular ships for 3.64 million teu were ordered, at a global value of $ 53.2 billion. • On the 1st January 2008, the cellular ship orderbook reached 1462 ships for 6.96 million teu, representing 63.7 % of the existing fleet. • Half of the capacity on order concerned 328 VLCS of over 8.000 teu. • 114 ships over 12.000 teu have been contracted, all in Korea. • 23 cellular ships (26.134 teu) have been deleted in 2007. Of these, 22 were scrapped and one was lost.

17. Liner vessels Orderbook(October 2008) Source: BRS

18. The container market • More than 95 % of intercontinental trade moves by sea. • Tankers and bulk carriers account for the largest shares of the world merchant fleet. • The annual growth rate of container traffic in the past 20 years averaged approx. 10 %. (Clarkson research). • This of course led to a further increase in container handling figures in the world’s ports. • In 2007 the number of containers handled rose 45 million teu, to reach the overall number of 465 million teu. • Half of global container turnover takes place in the top 20 container ports. • Analysts expect to see this volume double by the year 2015. • Twelve of the top 20 ports lie in Asia region (seven in China).

19. Top 20 container ports(x mil teu) Source: ISL Port Database

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