1. 1 The Propeller Club of Los Angeles & Long Beach January 26, 2011 David Arsenault Vice President Hyundai Merchant Marine

2. 2 Are we out of the storm yet?

3. 3 What Just Happened? Great Recession 9/11 Asia Financial Crisis Great Recession had the greatest impact on trade volume since the start of containerization

4. 4 Vessel Impact Trend Record # of idle ships in ’09 – Largest ships have returned to service

5. 5 Port Impact Trend Alphaliner

6. 6 Carrier Earnings Impact ‘09 Carriers posted losses of over us$15 bil. ‘10 Carriers estimated profits of approx us$13 bil. Faster recovery than forecasted but still - $2 bil.

7. 7 Lessons Learned  Rate volatility encountered in 2009-2010 was not good for carriers or customers  Forecasting will play an increasingly important role in the customer – carrier relationship  Carriers must manage vessel schedules much more dynamically to align supply with demand  Surprisingly there were no carrier casualties during this recent downturn  All stakeholders in the supply chain were impacted (ship owners, ship operators, rail, truck, terminals, labor, BCO, NVO, shippers and consignees)  Tested partnerships on both sides under duress

8. 8 Current Market Environment  Global trade forecasted to grow 7-8% with a 9.5% projected increase in capacity in 2011 supply closely aligned with demand  A year of stronger earnings has invited a number of smaller new entrants to the carrier market  Carriers have not announced Winter schedules to date and have been reluctant to withdraw capacity prior to the pre Lunar New Year surge  Adequate supply of equipment and vessel space for both imports and exports for current demand  New build vessel orders have increased as carriers try to secure any remaining discounts (60% of new orders larger than 13,000 TEUs)

9. 9 Next Generation Container Ship 20,250 TEU Ultra Large Container Ship (ULCS) LOA: 1,443 feetBeam: 194 feet 220,000 Tons21 knots 8 above deck 11 below2 Prop What is the right size vessel? Fuel Cost vs. Unit Cost

10. 10 Bunker – On the Rise (Again) Fuel price volatility will continue = shared risk thru floating bunker surcharges

11. 11 Emerging Trends in 2011  Expect to see stable but more moderate growth of 7-8% during the next few years  Terminal, rail and roadway infrastructure concerns that were regular concerns will begin to resurface  Expect to see carriers announcing void sailings and winter schedules in February/March  Lunar New Year Impact will effect equipment availability for exports in late Feb/early March  Weak dollar continues to promote strong export market – anticipate equipment & space issues to resurface in the U.S. by April  Australian flooding has wiped out an estimated 60% of agricultural exports increasing demand for US agri exports to Asia

12. 12 Emerging Trends in 2011  Fuel volatility will continue – floating bunker will remain a shared variable cost exposure  More distribution center growth on USEC due to rising fuel costs & last mile of supply chain & in preparation for Panama Canal expansion in 2014  Escalating costs as market rebounds (raw materials, manufacturing costs & transportation costs)  Increased interest from customers for multi-year contracts – longer term partnerships & stability  Carriers exiting the chassis business & transferring control/ownership to truckers and pool managers  Carrier alliance churn and expansion as larger new build vessels are introduced to the market  Hub & spoke deployments = more transshipments  Reduced sailing frequency options  Extended port times = pressure on terminals & infrastructure

13. 13 Emerging Trends in 2011  Increased regulatory monitoring & legislation that could begin to change customer/carrier relationships  Shipping Act - carrier anti-trust immunity  Contracts with increased service definition  FMC playing increased role for mutual contract compliance  Increased pressure for a national transportation policy that incorporates & synchronizes all modes across city and state boundaries  Origin sourcing diversification  PRC inland  Non – PRC (less dependency/risk with China)  Terminal utilization factors increasing with challenges to keep pace with mid-term volume growth forecasts  Improved carrier / customer relationships and reduced strain as market stability is restored

14. 14 What Lies Ahead? www.hmm21.com I believe we will return to calm seas & smoother sailing in 2011 With the impact of “The Great Recession” seemingly behind us, what is the new challenge awaiting the industry?

15. 15 What Lies Ahead? www.hmm21.com I believe we will return to calmer seas & smoother sailing in 2011

16. 16 Q & A Thank You January 26, 2011 David Arsenault Vice President Hyundai Merchant Marine