Göteborg 25 November, 2009 Lloyd’s Register-Fairplay and IHS General Overview Presented by: Christopher Pålsson Manager & Senior Consultant Lloyd’s Register-Fairplay Research

What We All “Know” …. Net fleet growth exceeds demand in most shipping sectors Downwards pressure on ship charter rates — Non-operative ship owners in distress Downwards pressure on shipping rates, but… — Upwards correction to sustainable levels expected — Short lived temporary spikes likely No tonnage shortage, but… — Changing market structures – M&A

LRF Port Activity Indicator

World fleet development

New vessel deliveries

Vessel removals

Cancellations – no of vessels

Cancellations – % of orderbook

Total world fleet development 6.6% pa

Total world fleet development 6.8% forecast

New vessel ordering by month

And it is in China it is happening

Capacity supply absorption Changing trade patterns New networks/routes Sourcing of cargo further away Slow steaming & rerouting Savings; bunker fuel & canal charges Storage Removals (scrapped & lost) Already included in fleet forecast Conversion Idle Warm or cold lay-up Maintenance & repairs Queing outside ports

Why buy a new ship now? Price Spec Lowest cost position Delivery time Employment & Speculation The Godmother!

New ship ordering – dwt

New ship ordering – no of vessels

North & Baltic Sea region Present in ECA >49.9% 2009 >1,999dwt On order for group owners with vessels present in ECA >49.9% 2009 >1,999dwt Excl unknown/unidentified owners

Business Implications and the Bottom Line Cargo Owners/Shippers Generally low transport costs, but “nervous” rates Unstable market conditions Changing market organization Treasure reliability! Ship Owners & Operators Very tough competition Difficult financing Newbuilding exposure? Lowest cost per unit Survival of the wealthiest

Tack! Christopher Pålsson, Lloyd’s Register-Fairplay Research,