1. Recovery or not? U.S. Clay Producers Traffic Association
Spring Meeting, March
Hilton Head, SC
Recovery or not?
Jack Mahoney
Trade & Marketing
Maersk Line
Martha asked that I address “Great recovery… or not?”.
ML is clear in our view: we will not go back to what we went through in 2009! (As for her question, it is not as b&w as hoped…)
But we say that knowing we have even more to offer in serving our shippers, even as we add needed disciplined to our approach

2. We got through this & we will not go through it again
Early 2008, before the troubles, ML implemented a turnaround strategy
We not only survived the crisis but emerged stronger / healthier & even more competitive

3. streamLINE has meant we’ve come out of the crisis stronger than ever
Work never stopped on initiatives, both those improving our performance & those improving the customers’ experience
Simpler inland network, chassis program, commitments delivered, Nansha, EEE
Reliability, ease-of-use, environment
More keep coming: especially related to reliability, ease-of-use, & environmental performance
EEE:
accommodation is same as 12 storey bldg
2 anchors each weigh same as 6 African elephants, 31 tons
600 plugs
19 crew
PAC VSA in May
APMT in Costa Rica

4. US economic indications?
Fragile…
Unemployment, housing market, household & gov’t debt (Federal & state/local), imported price rises, post-stimulus domestic demand

5. Emerging markets lead demand
Asian Demand and Imports
Emerging markets: strong rebound & demand pull
Global economy continues to recover: between % growth consensus
Emerging markets rebounded strongly during 2010
After a 2H10 slowdown, the US economy is regaining momentum
In Europe, Germany is recovering due to export growth. Challenges remain in other parts of Euro area
Global international trade volumes recovered to pre-crisis levels 5

6. Looking ahead Supply & demand Demand Growth: Supply Growth:
Maersk Line: 8-9%
SeaIntel: 10-13%
Goldman Sachs: 10.7%
Clarksons: 10.4%
JP Morgan: 8.7%
Deutsche Bank: 7.6%
OECD total: 7.4%
Drewry: 7.4%
IMF total: 6.3%
Supply Growth:
Alphaliner: 9.5%
Clarkson: 6.7%
Drewry: 8.5%
‘10 demand was 13%, after -10% in ’09
Slowing of demand seen during 2H10 will likely prevail 1H11
For full year 2011, we expect Supply & Demand to be in an overall balance & a relatively strong peak and 4Q vs ’10, and into ’12
Goldman Sachs view of ‘12 & ‘13 beyond…
2011 may be more volatile with supply additions sometimes out of step with demand growth

7. Panama Canal Expansion Global infrastructure change
Changes: known changes (like this, off in ‘14), new changes (eq sit’n), changED (bunker), Unchanged (imbalances)
Just toured it
Finish 2014, 100th anniversary
Expansion will allow substantially larger ships: VLCC, post-PMX, “aircraft carriers & submarines” per a tour guide (!)
Some USEC ports will have to increase channel/berth depth or air draft
Ocean carriers are ordering larger ships. Will US port productivity justify that?
Source: Panama Canal Authority

8. Equipment The lowest equipment-to-slot ratio ever
Total box production in 2011 needs to be around 4.2M TEU to maintain the current balance
This is close to production capacity
Due to bottlenecks (e.g., tight labor supply) the container factories are only operating at only 2/3 utilization
A shortage of 1.5M TEU…
“The reduced availability of container units means that the industry will need to adapt through faster equipment turnaround, increased upkeep of old containers and extending the lifespan of containers”
Source: Alphaliner

9. Slow-Steaming Here to stay (as is BAF)
And floating BAF too!
Yes, slow speeds increases the number of days of steaming
But, per Alphaliner, a 24% reduction in sailing speed from 25 knots to 19 knots could have a 55% reduction in daily fuel consumption
I.e., over 150 MT/day savings or $90,000/day for a 8,500 TEU ship
(NRA’s “black chart” is based on simulated 4 port FE-USWC rotation)

10. Equipment imbalances No prospects for that to change
People are here
Imports go here
Recall observations about eq being tight…
Production is here
Exports come from here

11. From here… Slow steaming has a limit
“Surplus” fleet has been largely absorbed due to strong recovery 2010 & slow steaming
’10-’11 rates: up on strong capacity utilization & equipment shortages, 1H10 especially
Equipment will remain tight. Impact to exports– when emerging market is demanding raw materials & imports?
Slow steaming has a limit
Added carrier awareness / discipline
Attention to “no shows” & free time
A return to the turmoil of 2009 is unlikely & it is not in the interest of shippers and carriers to see rates fall below breakeven levels
Another question of Martha’s was “What can they do better?”
A: Falldown ratio!

12. Thank you U.S. Clay Producers Traffic Association
Spring Meeting, March
Hilton Head, SC 12