CONFIDENTIAL Policy Overall 2009.09

The Role of CPO (Chief Procurement Officer) CPO Performs various roles from setting up the procurement strategy of company to executing & supporting with comprehensive perspective. Also, CPO ensures the enormous leadership is not limited in procurement organization, but company-wide. CPO Role CPO Agenda Strategist Emerging Trends Ensure a global view on new principles & Trends Planner Multi-year planning Define Procurement Strategy Corresponding Financial / Non-Financial Target of the Company Must go with “Leadership” … Controller Total cost focus Consider Total Cost Ownership (incl. Risk, Innovation, Service Cost) … Inside the procurement group AND outside the group Innovator Supply base rationalization Harmonize & Rationalize Suppliers Based on Procurements Expense & Strategic Plan Integrated systems and processes Decide over common IT platform for Efficient Process Integration and Extension Supporter Supplier & Staff development Coordinate Purchasing teams in monitoring and reviewing company relationships with the Supply Base Source by: Accenture CPO Community 2008 Autumn Session

Introducing Status of CPO Introduction of CPO allows all global & local market leader to rationalize process leveraging and optimize procurement cost Local Company Global Company LG Electronics Sam Sung Electronics LG Display LG Household & Healthcare The Office of Supply Han Kook Tires Hyundai-Kia Motors Sam Sung Petrochemical LS Cable KT Automotive / Automotive Parts Logistics Toyota Volvo VW Audi Good Year Fedex Airlines High-Tech & Consumer Goods United Airline IBM Lucent Nortel Tyco Sara Lee Chemicals/ Energy /Pharmaceuticals & Medical Products Finance Aventis Astra Zeneca Arcelor BP Castrol ABN Amro Deutche Bank HFC Bank / Dow

HMM CPO (Chief Procurement Officer) Vision & Mission HMM CPO performs its Vision & Mission to attain cost optimization & visibility enhancement “ Strategic1) Partner2) for Achieving Global Level3) Cost Leadership4)” Vision Cost Optimization Visibility Enhancement Mission CPO Role Enhancement CPO Strategic Direction for Executing CPO Mission Cost Optimization Sourcing Capability Enhancement Strategic : Transform its Role from Simple Procurement & Settlement of Account to High Value Strategic Sourcing Partner : Conducting HMM Cost Optimization as a Partner/Collaborator & Coordinating Cross BU as a Coordinator Global Level : Global TCO Managing Level Competing with Other Global Shipping Company Cost Leadership : As Org. under immediate control of CEO, CPO Performs a TCO (Total Cost Ownership) Cost Optimizing Role Cross Over BU

CPO Transformation Project CPO Project established strategic sourcing & service procurement management structure in 1st wave and conducts global rollout in 2nd wave based on implications from executing pilot project in 2nd half of 2008 2009 1~2Q 2009 3~4Q 2010 ~ CPO Mission CPO Transformation Wave I “Foundation & Conceptualization” CPO Transformation Wave II “Stabilization & Rollout” CPO Transformation Wave III “Enhancement & Integration” 1 SVC Procurement Management Structure 4 Strategic Sourcing Stabilization 7 Strategic Sourcing Enhancement Cost Optimization - Establish Procurement Policy Design & Define Procurement Process & R&R (8 SVCs) Rollout Strategic Sourcing Structure Set Up Strategic Sourcing System Base - Complete Rollout of Strategic Sourcing Structure 8 SRM* System 2 Strategic Sourcing Execution 5 Visibility Enhancement - Implement Strategic Sourcing System - Execute Strategic Sourcing (Long Term Lease / Dry Dock Repair) Rollout Procurement Policy Define Monitoring Operational Rule CPO Role Enhancement 9 CPO EIS** 3 Strategic Sourcing Structure - Implement EIS System Define Strategic Sourcing Framework/Approach(5 SVCs) *SRM : Supplier Relationship Management **EIS : Executive Information System 6 Procurement Staff Capability Enhancement Managing Portion (19 Categories) 1 Billion (USD) (38.1%, 8 SVCs) 2.7 Billion (USD) (100.0%, 19 SVCs) Cost Management Enhancement & Completion CPO Cost Optimization Target : 5 SVCs (Acc. 80 Million) Expected Saving : Accumulated 11 Million(13.96%) To Be Estimated (After CPO 2nd Wave) To Be Estimated (After CPO 3rd Wave) * $1 = 1,250 KRW

Value Creation of CPO Activities Applying procurement policy to HMM will have an effect on supplier selection and contract all over the company. For those implication and improvement opportunity by applying procurement policy, CPO will contribute to saving procurement cost & maximizing profitability by providing strategic sourcing approach & supporting to set up procurement strategy Cost Visibility Improvement Opportunity Value Added Cost Competitiveness High Profitability What kind of Procedure does HMM follow to make a payment? Which Supplier Does HMM Pay for? What is the Improvement Opportunity for Cost Saving or Procurement Visibility? As a Procurement Policy Owner (incl. Strategic Procurement Knowledge), What Kind of Guideline does CPO Provide? What is the detailed Execution Plan for Cost Optimization? Contribute High Profitability for HMM by achieving CPO Vision & Mission Policy Gate Truck Feeder Depot M&R Fuel Parts … Supplier Evaluation Method Supplier Management & Differentiation/ Segmentation Volume Allocation Rule Others “High Profitability of HMM” CPO Transmits Strategic Sourcing Value for Improvement Opportunity to related Operating Team  Conducting In-house Consultant Role Cost Optimization CPO Vision & Mission Achievement Revitalize Supplier Competition Circle by Procurement Visibility & Fairness Ensuring Visibility & Fairness of Supplier Evaluation/Selection/Contract

Definition of Procurement What is Policy? Definition of Procurement Procurement is the acquisition of goods and/or services at the best possible total cost of ownership, in the right quality and quantity, at the right time, in the right place and from the right source, generally via a negotiation, contract and purchase order. Objective Maximize the impact of procurement by securing the visibility in procurement activity, managing risks in advance and acknowledging improvement opportunity HMM Value Maximization introducing Supplier Competition Structure Enhancing Procurement Capability by Managing Strategic Suppliers Minimizing External/Internal Risk of the privities of Contract Section Details 1 Procurement Ownership & R&R Procurement Ownership/ Changing Procurement Ownership / CPO R&R 2 Procurement Process Supplier Qualification / Bidding & negotiation / Supplier Selection / Contract Management / PO (Purchase Order) Management 3 Supplier Management Potential Supplier Management / Supplier Evaluation / Supplier Differentiation & Segmentation / Special Management 4 Risk Management SOD (Separation of Duties) 5 Information Management Procurement IT System

Transformed Operation by Applying Procurement Policy Applying procurement policy will lead to improve compliance by self-check for supplier evaluation & selection Transformed Operation Role & Responsibility Do (Operate) Self-Check Verification Competitive Bidding 1 Supplier Selection/ Contract / Management Monitoring Compliance Procurement Policy (Supplier Selection / Contract / Management) Confirm / Verify Result of Self-Check Supplier Evaluation/Selection as Defined Procedures (incl. Competitive Bidding) [Case 1 : Operation by RHQ] Inform Zoom In next Page RHQ Regional or HQ CPO Supplier Selection 2 [Case 2 : Operation by RHQ & Approval by HQ] Inform Periodical Supplier Capability & Performance Evaluation for ensuring Supplier Competitiveness RHQ Regional or HQ CPO Approval/Confirm HQ Inform Potential Supplier Qualification [Case 3 : Operation by HQ] 3 Inform HQ HQ CPO Minimum Qualification Standard for Potential Suppliers to Minimize Risk [Case 4 : Operation by CPO] Inform RHQ / HQ CPO HQ CPO

[Example] Practical Use of Supplier Evaluation Operating team has an ownership for supplier evaluation part, one of policy gate keeper’s roles, and the result will be used for core supplier selection, volume allocation, leading fact-based negotiation and supplier risk management 2 [ Zoom In – Practical Using of Evaluation Result] [ Supplier Assessment – Operating Team] Result Supplier Result Utilization Value Add Score Grade Segmentation [Evaluation Template] Proper Supplier Selection ‘A’ ‘B’ ‘C’ ‘D’ ‘Y’ ‘Z’ … ‘A’ ‘B’ ‘C’ ‘D’ ‘Y’ ‘Z’ … 93 Excellent Excellent Gr. Core Strategic Supplier Selection Asset & Liability, Sound Finance, Profitability, Liquidity Finance Capability Performance Information Management, Facilities/Providing Service, Quality Assurance, CRM, System, etc Price History, Service Quality History, OTD, etc Supplier Differentiation 90 Excellent Excellent Gr Volume Integration Core Supplier-oriented Operation 86 Good Excellent Gr Volume Allocation Rule Service Level Improvement 79 Normal Emerging Gr. Supplier Improve Opportunity Survey Supplier Collaboration Fact-Based Negotiation Supplier Competition 69 Bad Improvement Gr. Fact Based Negotiation Sharing Evaluation Result / Competition Contract Management (Singing/Expiration/Renewal) Advanced Warning Supplier Bankrupt 63 Bad Improvement Gr. Advanced Procurement Activity

Efficient Operational Plan for Procurement Policy For managing procurement value driver in actual fact, procurement policy will be operated considering the characteristic of service and operation HMM Procurement Policy Operational Direction “In Principle, Procurement Policy Applies 100% of Total Spend for each Service” but, 1. Considering The affiliates/partners/spot/small Sum Supplier  80% (minimum target) of total spend will be managed considering operational efficiency. [Reflection of Operational Reality] “In Order to attain the most effective Result of Supplier Evaluation for Actual Selection & Management..” 1. Integration of former evaluation system & best practice from market leaders”  Define & apply differentiated supplier evaluation (capability/performance) for each service [Improvement of Supplier Evaluation Effectiveness] [Differentiated Applying Level for Policy Provision] “In Principle, Competitive Bidding & Supplier Evaluation Applies all Supplier in Scope..” but, 1. Considering sole & single supplier due to special condition  There are only exceptional cases for competitive bidding, not for supplier evaluation “To Find Out Improvement Opportunity for Value Enhancement from Result of Applying Procurement Policy” 1. Spend ratio (supplier evaluation), competitive bidding, supplier evaluation  Define right Direction for those opportunities & enhance the level of supporting strategic sourcing activities [Indicator Selection & Management]