1. Containership Market Outlook 2010 March 2010 LONG BEACH A LPHALINER The worldwide reference in liner shipping Web: www.alphaliner.com  E-mail: data@alphaliner.com  Sales: commercial@axsmarine.com T RANS- P ACIFIC M ARITIME

2. Transpacific Maritime – March 2010 1 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Containership Market Outlook 2010 Agenda Over capacity in the liner markets Impact of Slow Steaming Demand-Supply : Transpacific

3. Transpacific Maritime – March 2010 2 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Over capacity in the liner markets Substantial number of idle containerships started to build up in Sep 2008. Peaked at 577 units in Nov 2009. Idling observed in all size categories except for the largest vessels.

4. Transpacific Maritime – March 2010 3 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Over capacity in the liner markets In TEU terms, idle capacity peaked first in March 2009 at 1.42 Mteu and has remained roughly stable at 1.3 Mteu to 1.5 Mteu over the last 12 months. Highest level of idling at 1.52 Mteu in December 2009.

5. Transpacific Maritime – March 2010 4 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Over capacity in the liner markets But … overcapacity problem turned out to be less serious than projected 12 months ago. Capacity controlled through - Orders cancelled 0.10 Mteu - Extra scrapping 0.15 Mteu - Deliveries deferred0.45 Mteu - Slow steaming 0.40 Mteu (Impact of capacity management through Feb 2010)

6. Transpacific Maritime – March 2010 5 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Over capacity in the liner markets - Cancelllations Cancellations have only hit 6.8% of orderbook since crisis started Owners’ ability to walk away from orders is limited … But it has taken 445,000 teu out of orderbook Containership order cancellations since Oct 2008 144 © Alphaliner

7. Transpacific Maritime – March 2010 6 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Over capacity in the liner markets - Scrapping Scrapping has surged since late 2008. Record 380,000 teu removed in 2009. Scrapping is expected exceed 250,000 in the next two years

8. Transpacific Maritime – March 2010 7 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Over capacity in the liner markets - Deferrals Deferrals have been recorded on about 50% of the orderbook since Sep 08. A significant majority has been delayed by 6 months or more. Stats / Deferrals (Ships > 1,700 teu) ShipsTEU 24 mths and more27163,191 12-23 mths116833,339 6-11 mths1371,045,342 3-5 mths86572,184 1-2 mths63454,188 TOTAL4293,068,244

9. Transpacific Maritime – March 2010 8 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Extra Slow Steaming Capacity absorbed by ESS has risen since June 2009 440,000 teu of additional capacity absorbed due to slow steaming by March 2010 (3.4% of existing capacity)

10. Transpacific Maritime – March 2010 9 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Extra Slow Steaming – Asia to North Europe ESS has been almost fully applied on the Asia-North Europe routes 19 out of 23 services currently on ESS

11. Transpacific Maritime – March 2010 10 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Extra Slow Steaming – Asia to USEC Majority of Asia-US East Coast services has also switched to ESS 10 out of 19 services on ESS

12. Transpacific Maritime – March 2010 11 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Extra Slow Steaming – Asia to USWC With Asia-US West Coast services also expected to follow (15/38 on ESS) Shippers need to accept longer transit times as a norm in the near future as fuel costs and emissions reduction efforts take center stage Continued adoption of ESS would bring about supply-demand balance much earlier than originally predicted. However, there is a limit on how much ESS could add to the demand for vessels.

13. Transpacific Maritime – March 2010 12 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Overall impact on demand-supply Under the best-case scenario analysis, the supply overhang could be cleared earlier than originally forecast : in mid-2011 i.e. balance is still at least 15 months away. Best case forecast based on :- - 10% demand growth 2010-2011 - ESS to absorb 1.2 Mteu by end 2010 - Scrapping of older tonnage to continue - Delivery deferrals maintained Idling would still re-appear in slack season in 2012

14. Transpacific Maritime – March 2010 13 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Freight Rate Development Despite excess capacity, carriers have shown effective capacity management on Asia-Europe trade. Same could happen in Transpacific …

15. Transpacific Maritime – March 2010 14 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Transpacific (Eastbound) Demand vs Supply Demand on the Trandspacific Eastbound trade dropped by 15% in 2009 At the same time, Transpacific carriers have dropped capacity deployed by 13% between Jan 2009 and Jan 2010 and is 20% lower than the peak in Aug 2008 2008/9 Demand statistics from JOC

16. Transpacific Maritime – March 2010 15 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Transpacific (Eastbound) Demand vs Supply Major carrier groups have all reduced operated capacity over last 18 months but some carriers have increased exposure since March 2009 :- - CKYH/New World/CSCL/Zim have introduced new capacity

17. Transpacific Maritime – March 2010 16 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Newbuildings 2010-2012 There are 312 units of 5,100-14,000 teu due for delivery in 2010-2012 Total orderbook at 712 ships (4,472,000 teu) – 33.9% of the existing fleet There is sufficient new capacity in the next 3 years to meet demand growth. Most of the new capacity of large ships will be deployed on the Asia-Europe trades but some of these, as well as vessels cascaded from Europe, will enter the Pacific trades.

18. Transpacific Maritime – March 2010 17 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Idle Capacity – By Carrier The carrier operated idle fleet has dropped from its peak in Mar 2009 Plans to re-activate much of the idled tonnage is in place for 2010

19. Transpacific Maritime – March 2010 18 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission Takeaways  Surplus fleet capacity could last till mid-2011 But this does not ensure sufficient capacity in Transpacific if rates remain non-compensatory  Carriers are better at managing capacity now than before: more willing to accept loss in market share less competition on transit time (extra slow steaming)  New capacity additions are in the pipeline – TCC/PIL but this represents less than 2% of current trade capacity rates will have to be higher before significant new capacity is introduced/maintained  Shippers should expect to pay higher rates in 2010

20. Transpacific Maritime – March 2010 19 ALPHALINER Containership Market Outlook 2010 axs-alphaliner.com – the worldwide reference in liner shipping © Alphaliner 1999-2009 – Contents not to be reproduced without permission END Please contact: data@alphaliner.com for enquiries on presentation datadata@alphaliner.com commercial@axsmarine.com for sales enquiriescommercial@axsmarine.com