Port of San Francisco Maritime Cargo Market and Warehouse Analysis Prepared by CBRE Consulting Martin Associates ∙ January 13, 2009

Port of San Francisco Study Purpose Examine current Port of San Francisco cargo base Examine current Port of San Francisco cargo base –Bulk –Breakbulk –Competing ports –Current situation –Factors influencing port selection Identify potential new cargo opportunities Identify potential new cargo opportunities Identify economic impact of potential opportunities Identify economic impact of potential opportunities Discuss implications and conclusions Discuss implications and conclusions

Port of San Francisco Source: Port of San Francisco Dry Bulk Cargo Handled at Port of San Francisco 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , SandAggregate Metric Tons 600, , , Port of San Francisco’s cargo tonnage has been dominated by dry bulk cargo

Port of San Francisco Bulk Market Outlook Current dry bulk tenants see flat/negative growth over the near term due to economic conditions Current dry bulk tenants see flat/negative growth over the near term due to economic conditions –It appears cement and aggregate supplies from current tenants are adequate to handle market needs –Biodiesel facility at Darling International will require additional feedstock, however it will not come via water Port has available facility at Pier 96 if another bulk shipper can be identified Port has available facility at Pier 96 if another bulk shipper can be identified

Port of San Francisco Source: Port of San Francisco Breakbulk Cargo Handled at Pier 80 by Commodity 300, , , ,000 Tons 100,000 50, SteelNewsprintLumber Project Port of San Francisco’s breakbulk cargo tonnage

Port of San Francisco Breakbulk Steel Outlook Overall, steel imports reflect the strength of the US economy Overall, steel imports reflect the strength of the US economy Near term forecast - flat volumes for Bay Area customers Near term forecast - flat volumes for Bay Area customers Port partnering with ILWU to increase productivity and competitiveness Port partnering with ILWU to increase productivity and competitiveness Illinois Street Bridge will offer more options to move freight inland via rail Illinois Street Bridge will offer more options to move freight inland via rail Bay Bridge Project Bay Bridge Project –Some steel work left to do, potential additional opportunities

Port of San Francisco Northern California Ports Non-Containerized Cargo Summary Port of San Francisco has Bay Area’s only breakbulk terminal; imported steel dominates cargo mix Port of San Francisco has Bay Area’s only breakbulk terminal; imported steel dominates cargo mix Port of Stockton has been primary competitor in the breakbulk market (steel products, windmill parts) Port of Stockton has been primary competitor in the breakbulk market (steel products, windmill parts) Newsprint import business has dried up Newsprint import business has dried up Benicia has been the dominant player in the auto market, however Richmond is capitalizing on opportunities Benicia has been the dominant player in the auto market, however Richmond is capitalizing on opportunities Oakland handles no non-containerized cargo Oakland handles no non-containerized cargo

Port of San Francisco Implications Current/Existing Markets The Port’s key and most stable line of business has been bulk cargoes Breakbulk at Pier 80 has been unstable –Breakbulk steel is volatile and extremely sensitive to world market conditions Key obstacles to cargo growth –Port is geographically “isolated” –Impediments to freight rail access, especially tunnel clearance –Market perception of productivity and competitiveness of labor at Pier 80

Port of San Francisco Implications Potential New Cargo Opportunities Project cargo – particularly windmills are a growing market with over 225 projects in the planning stages across the US – over 12,000 wind towers Autos – potential to develop national distribution from Port if rail tunnel clearance issue can be solved Breakbulk fruit - will be displaced from SoCal ports, but due to fumigation this opportunity may not be realistic for the Port Containerized fruit – bananas/pineapples from a single user such as Dole, offer the most potential as no fumigation required

Port of San Francisco Implications Focus of Marketing Efforts Focus Pier 80 marketing efforts on long-term, sustainable cargo. Include the following: Windmills and project cargoWindmills and project cargo Auto processors and manufacturersAuto processors and manufacturers Single containerized fruit tenant with volume to bring in regular serviceSingle containerized fruit tenant with volume to bring in regular service Regional steel importers where the Port has a competitive advantage to induce callsRegional steel importers where the Port has a competitive advantage to induce calls Address any terminal and labor issues which could impact future cargo opportunities Identify actual cost of rail tunnel repairs for tri-level auto railcars Investigate fumigation restrictions within the City

Port of San Francisco Thank You