Recovery or not? U.S. Clay Producers Traffic Association Spring Meeting, March 21-23 2011 Hilton Head, SC Recovery or not? Jack Mahoney Trade & Marketing Maersk Line Martha asked that I address “Great recovery… or not?”. ML is clear in our view: we will not go back to what we went through in 2009! (As for her question, it is not as b&w as hoped…) But we say that knowing we have even more to offer in serving our shippers, even as we add needed disciplined to our approach

We got through this & we will not go through it again Early 2008, before the troubles, ML implemented a turnaround strategy We not only survived the crisis but emerged stronger / healthier & even more competitive

streamLINE has meant we’ve come out of the crisis stronger than ever Work never stopped on initiatives, both those improving our performance & those improving the customers’ experience Simpler inland network, chassis program, commitments delivered, Nansha, EEE Reliability, ease-of-use, environment More keep coming: especially related to reliability, ease-of-use, & environmental performance EEE: accommodation is same as 12 storey bldg 2 anchors each weigh same as 6 African elephants, 31 tons 600 plugs 19 crew PAC VSA in May APMT in Costa Rica

US economic indications? Fragile… Unemployment, housing market, household & gov’t debt (Federal & state/local), imported price rises, post-stimulus domestic demand

Emerging markets lead demand Asian Demand and Imports Emerging markets: strong rebound & demand pull Global economy continues to recover: between 3.0-4.0% growth consensus Emerging markets rebounded strongly during 2010 After a 2H10 slowdown, the US economy is regaining momentum In Europe, Germany is recovering due to export growth. Challenges remain in other parts of Euro area Global international trade volumes recovered to pre-crisis levels 5

Looking ahead Supply & demand Demand Growth: Supply Growth: Maersk Line: 8-9% SeaIntel: 10-13% Goldman Sachs: 10.7% Clarksons: 10.4% JP Morgan: 8.7% Deutsche Bank: 7.6% OECD total: 7.4% Drewry: 7.4% IMF total: 6.3% Supply Growth: Alphaliner: 9.5% Clarkson: 6.7% Drewry: 8.5% ‘10 demand was 13%, after -10% in ’09 Slowing of demand seen during 2H10 will likely prevail 1H11 For full year 2011, we expect Supply & Demand to be in an overall balance & a relatively strong peak and 4Q vs ’10, and into ’12 Goldman Sachs view of ‘12 & ‘13 beyond… 2011 may be more volatile with supply additions sometimes out of step with demand growth

Panama Canal Expansion Global infrastructure change Changes: known changes (like this, off in ‘14), new changes (eq sit’n), changED (bunker), Unchanged (imbalances) Just toured it Finish 2014, 100th anniversary Expansion will allow substantially larger ships: VLCC, post-PMX, “aircraft carriers & submarines” per a tour guide (!) Some USEC ports will have to increase channel/berth depth or air draft Ocean carriers are ordering larger ships. Will US port productivity justify that? Source: Panama Canal Authority

Equipment The lowest equipment-to-slot ratio ever Total box production in 2011 needs to be around 4.2M TEU to maintain the current balance This is close to production capacity Due to bottlenecks (e.g., tight labor supply) the container factories are only operating at only 2/3 utilization A shortage of 1.5M TEU… “The reduced availability of container units means that the industry will need to adapt through faster equipment turnaround, increased upkeep of old containers and extending the lifespan of containers” Source: Alphaliner

Slow-Steaming Here to stay (as is BAF) And floating BAF too! Yes, slow speeds increases the number of days of steaming But, per Alphaliner, a 24% reduction in sailing speed from 25 knots to 19 knots could have a 55% reduction in daily fuel consumption I.e., over 150 MT/day savings or $90,000/day for a 8,500 TEU ship (NRA’s “black chart” is based on simulated 4 port FE-USWC rotation)

Equipment imbalances No prospects for that to change People are here Imports go here Recall observations about eq being tight… Production is here Exports come from here

From here… Slow steaming has a limit “Surplus” fleet has been largely absorbed due to strong recovery 2010 & slow steaming ’10-’11 rates: up on strong capacity utilization & equipment shortages, 1H10 especially Equipment will remain tight. Impact to exports– when emerging market is demanding raw materials & imports? Slow steaming has a limit Added carrier awareness / discipline Attention to “no shows” & free time A return to the turmoil of 2009 is unlikely & it is not in the interest of shippers and carriers to see rates fall below breakeven levels Another question of Martha’s was “What can they do better?” A: Falldown ratio!

Thank you U.S. Clay Producers Traffic Association Spring Meeting, March 21-23 2011 Hilton Head, SC 12