1. McCloskey Petcoke Conference June 10-11, 2008 Presented by: Thomas Springer Steamship Agents since 1905 The Strong Charter Market: Identifying Risk$ Before Fixing

2. Biehl & Co - History Founded in 1905 in the Port of Galveston, TX With the purchase of Carolina Shipping in 1989, Biehl / Carolina has grown to become one of the largest steamship agents in the U.S. – 18 offices located in the US Gulf Coast / US East Coast – More than 150 dedicated employees – ISO Certified / committed to personalized customer service – 100% ASBA certified operations employees Biehl is committed to meet the needs of: – Suppliers / Charterers / Ship Owners / Shippers / Terminals Cargo expertise: – Petcoke, Dry Bulk, Tankers, Chemicals, Break-bulk, RORO, etc.

3. Biehl & Co – Thomas Springer Education – Vanderbilt University – Bachelors of Engineering – Hamburg School of Shipping – Chartering Broker – Institute of Chartered Shipbrokers – Member – Cass Business School – Msc in Shipping, Trade & Finance Work Experience – H. Schuldt (Hamburg, Germany) – A.J. Zachariassen (Hamburg, Germany) – Boyd Steamship (Panama City, Panama) – Oskar Wehr (Hamburg, Germany) – Biehl & Co. (Houston, Texas)

4. Current Freight Rate Clarksons – Shipping Intelligence Network

5. Example – Lake Charles, LA Import Vessels – Crude Tanker – LNG (3 terminals) Export Vessels – Dry Bulk (Petcoke) Smaller vessels which are generally not affected by restrictions on large vessels

6. Calcasieu River Port Restrictions 24 hr transit – Channel is sometimes closed during the evening (night traffic) per pilot determination Draft Restrictions – 40 ft First Come / First Served (for pilot orders) Two-way traffic allowed unless: – The combined beam of the passing vessels is greater than 200 ft – The draft of either vessel is greater than 34 ft Convoy system for large vessels – One-way traffic – Vessels start in 30-60 min intervals LNG vessel exclusion zone – 2 miles ahead / 1 mile astern

7. Calcasieu River Traffic Issues Fog – about 30 days annually causing delays – Fog generally “burns off” around 1100 hrs Tide Window (required for deep draft vessels) – Flood tide (about 12 hrs) – Cameron Narrows (fast current / large wake) Port Restrictions – Affects Crude and LNG (inbound) and Bulk (outbound) – Indirectly also other vessel traffic

8. But Where Are The Risk$? Vessel Port / Waterway Terminals Government Agencies Weather Factors

9. Vessel Risk$ Vessels in poor condition which can leading to: – Equipment failures / USCG deficiencies 96 hr advance notice required for dead-ship movement Terminal may issue Vacate Berth order (penalty dockage) Vetting rejection – requirement of various charterers – Additional costs Owner is off-hire and needs to make repairs Waiting vessels accrue demurrage Possible berth congestion

10. Vessel Risk$ (cont) New operators not familiar with handling petcoke – Documentation issues Issuance of the B/L, Mate’s Receipt, etc. Delays can sometimes result in the loss of 2-4 hours – Petcoke handling procedures Fast load rates result / need to deballast the vessel quickly. Delays can sometimes exceed 10 hrs for slow vessels. Cargo handling Cargo will also have a certain moisture content (reduce dust) Cargo quantity – ensure that vessel is not overloaded *may result in the need to hire a barge and floating crane

11. Port / Waterway Risk$ New Vessel Designs – Increased hull width / changed hull design Displaces more water / larger wake (moored vessels) Restrictions for vessels passing (one-way traffic) – Increase LOA May require an additional pilot (extra cost) May exceed the max length to turn the vessel (turning basin) – Increase draft above Panama Canal max (12m / 40 ft) General 40 ft draft restriction in the US Gulf Restrictions on vessel movements (day light / tide restricted)

12. Port / Waterway Risk$ (cont) Daylight Restriction – Restricted due to draft / LOA – Arrival / sailing only during daylight – May result in a 12 hr delay Traffic Control – Some ports convoy large deep draft vessels High tide – additional draft Tug availability – lack of equipment / crews – LNG Vessels Exclusion zone (2 miles ahead / 1 mile astern)

13. Terminal Risk$ Berth Application – Binds the vessel to terminal’s Terms and Conditions – Provides ship details / acceptance of financial responsibility – Outlines fees, dispatch rates and general operations including terminal and vessel liability Load Rate – The terminal will specify a load rate (dispatch) – Possible in some ports for the Charterers to pay: Demurrage (Vessel) and Dispatch (Terminal)

14. Terminal Risk$ Dockage Charges – From $0.23 to $0.52 / GRT / 24 hours (Texas City, TX) – From $0.13 to $0.49 / GRT / 24 hours (Corpus Christi, TX) Other Common Terms – Maximum shift time (hatch to hatch) / deballast rate – Vessel characteristics / dimensions – Security fee charged to vessel – Requirement to keep lines tight (passing vessels) – Surcharge for loading small cargo amounts / partial hold loading – Charge for bunkering / spare delivery / require launch

15. Government Agency Risk$ Homeland Security (the holding company) – eNOAD (Notice of Arrival / Departure) – May result in a 96 hr delay and fine USCG (Coast Guard) – Offshore security boarding – Vessel inspection / deficiencies CBP (Customs Boarder Patrol) – Dockside security boarding – Immigration, APHIS inspection, etc.

16. Government Agency Risk$ (cont) ISPS Clause (BIMCO) – USCG / CBP use a Threat Matrix to determine whether a vessel needs to be inspected but they will NOT advise whether it is an owner or charterer issue – Clause outlines the responsible (paying) party TWIC Card – Background check / additional cost – Required for unsupervised access to the port – Implementation has been severely delayed

17. Weather Factor Risk$ Lunar Tide – US Gulf (about 1-2 ft and predictable) Wind Tide – Generally the wind forces water into the ports Winter Storms – Drives water out of the ports – May cause a 2 ft reduction in the draft – Dec 2003 (6 ft draft change within 24 hrs)

18. Weather Factor Risk$ (cont) Fog – Occurs during the winter months – Usually “burns off” within a couple of hours but may remain for several days – May result in one-way / priority traffic once the port reopens to vessel movements Hurricanes – Very unpredictable – Ports will close / all vessels ordered out – Ports are slow to reopen (check navigational aids)

19. Weather Factor Risk$ (cont) Example: Houston, TX (excluding channel closures) A daylight restricted vessel can sail: – With 39 ft draft about 95% of the time – With 40 ft draft about 35% of the time Deadfreight vs.Demurrage Tpi: 150 t / in / Rate: $90 / tRate:$60,000 Deadfreight (1 ft):1800 t Deadfreight Cost:$162,000Breakeven:2.7 days

20. So what will this cost me? Vessel Rate:$60,000per day HoursCost Documentation Issues4$10,000 Vessel Slow Deballasting10$25,000 One-way / Daylight Rest.12$30,000 eNOAD96$240,000 Offshore Security Boarding16$40,000 Winter Storm20$50,000 Fog6$15,000

21. Check Before Fixing An experienced, proactive agent adds substantial value for Suppliers, Charterers, Terminals and Owners Steamship Agents since 1905