Contents Economic Trends Market Dynamics Building a Sustainable - - PowerPoint PPT Presentation

Gene Seroka – APL President, Americas

March 7, 2013 Los Angeles, CA

Contents

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Economic Trends Market Dynamics Building a Sustainable Organization Integrated Partnerships

Economic Trends

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Market Size & Growth Rate

• Source: GI Dec 2012, Drewry CFQ Q4 2012

LATIN-AMERICA 2012 Size: 14.4 m TEU 2013 HH Growth: ~ 2.8% TRANS-ATLANTIC 2012 Size: 7.6 m TEU 2013 HH Growth: ~ 4.2% ASIA-EUROPE 2012 Size: 28.1 m TEU 2013 HH Growth: ~ -0.9% TRANS-PACIFIC 2012 Size: 21.8 m TEU 2013 HH Growth: ~ 4.1% INTRA-ASIA

• Est. 2012 size: 35.3 m TEU

2013 Overall Growth: ~ 4.3%

Overall Growth outlook is expected to be positive in 2013 for all trades. Asia – Europe trade projected to be near stagnant. Intra Asia is anticipated to have the highest growth

• Note: 1. Market size is based on GI Dec 2012.
• 2. TA, ASEU, and TP HH growth rate is based on Drewry CFQ Q4 2012, while IA and LTAM growth rate is based on GI Dec 2012

• 15.0%
• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0%

10.2% 5.3%

2013F

3.9% 7.7%

2012F

7.8% 3.2%

2011

3.8% 7.3%

2010 2006

11.0% 5.4%

2007

4.0% 2.8%

2008

• 9.9%
• 0.7%

2009

14.0% 5.2% 4.6%

2005

10.9%

2004

4.9% 13.9%

2003

3.6% 13.4%

2002

2.9% 11.1%

2001

3.8% 2.3%

2000

4.8% 11.2%

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Note: EIU data forecasts used for 2012 and 2013 Source: Drewry, Seabury, Clarksons, IMF WEO Sep2011/Jan 2012, EIU Global Forecasting

Global GDP Container Demand Growth

Global GDP and Container Demand Growth

Containerized trade has continued to grow in 2012 but at a more moderate pace

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This is largely driven by slower global growth in 2012 due to uncertainties arising out of the European government debt issues

Source: IMF WEO Sep2011/Jan2012, EIU Global Forecasting

• 5.0%

0.0% 5.0% 10.0% 15.0% 2003 2002 2008 2010 2009

• 0.8%

1.9% 2016F 3.2% 2015F 2007 6.9% 2014F 2006 8.2% 2013F 2005 2000 2012F 2004 2001 2011

GDP Growth

CAGR (2001-2007)

US Global EU27 China India

India 8.0% China 11.2% Global 4.4% US 2.6% EU27 2.6%

• 15
• 10
• 5

5 10 15 20 25 Jul-11 Oct-11 Dec-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10 Oct-09 Jul-09 Apr-09 Jan-09 Oct-08 Apr-08 Jul-08 Oct-07 Jan-08 Jan-07 Apr-07 Jul-07

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Consumption still positive in US and China while European consumers remain cautious

20 40 60 80 100 120

• 35
• 30
• 25
• 20
• 15
• 10
• 5

Jul-08 Apr-08 Jan-08 Oct-07 Jul-07 Jan-07 Oct-08 Apr-07 Apr-10 Jul-09 Jan-10 Apr-09 Jul-11 Oct-09 Oct-11 Apr-11 Jan-11 Jul-10 Oct-10 Jan-09 US, China Jan-12 Feb-12 EU27 US China EU27

Consumer Confidence Index Retail Y-o-Y Growth Rate

US China EU27 Source: National Bureau of Statistics of China, U.S. Census Bureau, and Eurostat

• 100

100 200 300 400 500 600 700 800 Mar-12 Jan-12 Nov-11 Nov-10 Sep-10 Jul-10 May-10 Mar-10 Jan-10 Nov-09 Sep-09 Jul-11 May-11 Mar-11 Jan-11 Sep-11

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Resulting in recent improvement in freight rates. However, rising bunker costs are offsetting some of the rate improvements

Source: Shanghai Containerized Freight Index (SCFI), Bunkerworld, UBS 500 1,000 1,500 2,000 2,500 3,000 Mar-12 Jan-12 Nov-11 Sep-11 Jul-11 May-11 Mar-11 Jan-11 Nov-10 Sep-10 Jul-10 May-10 Mar-10 Jan-10 Nov-09 Oct-09

SCFI Spot Rates Bunker Spot Rate

USWC ASEU

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• 10.0
• 8.0
• 6.0
• 4.0
• 2.0

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 2001 2006 2007 2010 2002 2003 2004 2005 2008 2009 2000 2013F 2012F 2011

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Demand and Supply Growth Rate Forecast

Oversupply will extend into 2013 due to orders of >8,000 TEU vessels during 2010 and 2011

Supply Growth Demand Growth

Source: Alphaliner, Drewry, Clarksons, Seabury, MDS

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2Q 13 1Q 13 4Q 12 3Q 12 2Q 12 1Q 12 50 550 400 150 500 3Q 13 1Q 15 4Q 15 3Q 15 450 250 300 350 1Q 14 4Q 13 4Q 14 2Q 14 2Q 15 3Q 14 200 100

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Lack of recent newbuild orders will result in diminishing deliveries from 2H 2013

Source: MDS March2012 % of Global Fleet Scheduled Newbuild

Thousand TEU

Delivery peaked in 2Q 2012

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Source: Alphaliner

Vessel Delivery by Carrier

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Challenging container shipping environment is forcing liners to manage capacity

Market Dynamics

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Market Dynamics

Significant industry losses have forced carriers to drastically reduce costs

The formation of super consortia is enabling carriers to operate bigger ships at reduced slot costs

• MSC and CMA
• G6 Asia – Eur & USEC
• Evergreen, CHKY, China

Shipping, Zim

Ambitious cost savings goals have been announced

USD500 million USD400 million USD350 million USD300 million

15 15

Carriers are more conscious of equipment matchback

• pportunities in order

to reduce repositioning costs

Trade flows to/from Asia have shifted significantly….

Vietnam

Repositioning

Japan North China South China UAE Malaysia

Shifting pattern in Asia is producing a significant increase in equipment repositioning as inbound flows are growing in countries other than China where the outbound demand is highest….

US Exports growing to SEA, M East which need longer transit Boxes need to be repositioned to major exporting regions e.g. North China Top EB countries are not growing their WB volumes as fast as

• ther Asian countries, creating

increasing mismatch of in/ out volumes in Asia

This relatively recent shift in flow creates longer equipment turn, drives up repositioning cost to get the boxes to China where they are needed to support

• utbound demand, and increases the size of the

equipment fleet carriers must have to service the market….increasing costs.

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World Containerized Trade Outlook

World containerized trade estimated to have moderate growth this year. TP growth is expected to pick up in 2013

17 Containerized Trade Growth

• Source: Equity analysts, shipping consultants

Transpacific HH Trade Growth Asia-Europe HH Trade Growth Global Trade Growth

• 13.9%

17.2% 0.4% 2.4% 4.9%

• 4.2%

15.0% 8.3% 9.3% 8.4%

• 15.1%

16.0% 5.9% 5.5% 6.4%

• 7.1%

15.3% 6.9% 6.8% 6.7% 2009 2010 2011 2012E 2013E

Intra-Asia Global Asia-Europe (HH) Transpacific (HH)

2011 2012 2013 Clarksons** (Feb 21, 2012) 3.3% 2.8% 6.1% Alphaliner* (Jan 10, 2012) 2.8% 1.5% 6.3% Drewry (Dec 22, 2011)

3.9% 2.0%

• 2011

2012 2013 Clarksons (Feb 21, 2012)

• 0.4%

4.2% 6.1% Alphaliner* (Jan 10, 2012)

• 0.8%

4.6% 5.1% Drewry (Dec 22, 2011) 0.4% 3.1% PIERS (Dec 2, 2011) 0.2% 2.7% 4.9% Note: *Alphaliner TP is FE-US, ASEU is FE-Europe **Clarksons’ growth is Far East to Europe 2011 2012 2013 Alphaliner (Mar 20, 2012) 7.7% 6.5% 7.5% Clarksons (Feb 21, 2012) 7.9% 7.7% 8.3% Drewry (Dec 22, 2011) 6.5% 5.4%

• JP Morgan (Nov 29, 2011)

6.4% 4.5% 6.3% Global Insights (Sep 30, 2011) 6.9% 6.8% 6.7%

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Panama Canal Expansion: Update

• Larger vessels with

increased deadweight

• Provide the capability to

serve USEC from Asia

• Post Panamax trade patterns

expected to shift, benefiting Atlantic Coast Ports

• Upgraded infrastructure is

required to increase capacity and efficiently move products for global import and export customers

Building a Sustainable Organization

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NOL Efficiency Leadership Program – Gaining the Edge

• Deep customer outreach
• Innovation

– Double-stack trains – Post-panamax vessels – Ocean guarantee – Supply-chain products

Efficiency Leadership Program NOL’s unique strengths Recent strategic investments

• Re-modeling our IT: Completed SAP

Finance module

• Modernizing our fleet:
• Invested in 34 large modern containerships

(US$4 billion in last 4 years)

• Challenging the way we do

business today

• Driving for smarter ways to accomplish our

tasks

• Discerning and meeting customer needs more

effectively

• Q4 2011 through 2012
• $500 Million Goal

Fleet Renewal

Note: 5 out of the 10 x 14,000 TEU vessels for delivery between 2013 and 2014 will be chartered out to MOL

Building a modern and cost-competitive fleet, six 10,000 TEU vessels already delivered in 2012

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Service Options: Investing in our Network

• New CGG Facility
• 43 Acres
• Container Capacity: 1,600 Stalls, 400 Decked
• Gates: 4 Inbound/3 Outbound
• M&R: 19,000 Sq. Ft. Shop

10 Bay Chassis/ Container Repair

• 700 Gate moves daily
• Fleet Expansion
• 34 Vessels ordered
• Delivery between Q4 2011 and 2014
• Best fuel efficiency in the industry
• 10x14,000 TEU Vessels
• Productivity Improvements at GGS
• Crane Backreach
• Opens up more traffic lanes “under the hook”
• Better traffic flow, increased efficiency
• Future growth
• Increased safety

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Chassis Divestiture - What is APL doing…

• APL started phasing out its

container chassis fleet in 2012 and will conclude by 2014.

• By relying on providers who

specialize in chassis management, this will ensure that equipment is deployed more efficiently.

• In August 2012, APL began a

pilot program at terminals in Denver and Salt Lake City.

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APL’s Carbon Reduction Statement

APL’s 2015 goal is to reduce greenhouse gas emissions associated with cargo transportation and handling to 30% below 2009 emissions levels.

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Container Shipping & Emissions

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Shipping is the most environmental friendly and energy efficient form of transportation

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Eco-responsible operations for a sustainable future

• Enforcement of Emission Control Area (ECA)
• Speed Optimization, schedule, weather

routing and best practices to reduce CO2 emissions

• Low Sulphur Fuel
• Cold Ironing
• Seawater Scrubber
• Ballast Water Treatment
• Environmentally friendly paint on ship hulls
• Voluntary Speed Reduction in Southern

California waters to reduce emissions

• Eliminating drayage thru on-dock rail
• Received Premier Marine Environment

Award

Continued Environmental Initiatives

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APL New Builds - Environmental Features

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Origin services Destination services

Our value chain

Warehouse Land Consol Terminals Container shipping Terminals Deconsol Land Warehouse

As supply chains become more complex, our “total value chain“ proposition offers strong advantages for customers. NOL’s container shipping and logistics businesses form a value chain which offers customers reliable, time-definite and cost- effective services from origin to destination.

Visibility

Value Chain

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• Export Industry Award
• Top Container Shipping Line
• Asian Freight & Supply Chain Awards
• Best Shipping Line for Transpacific
• Seatrade Asia Awards
• The Environmental Protection Award
• Hamburg Media (Logistics Week & Log.India)
• Best Shipping Line Award
• Port of Los Angeles and Long Beach
• Clean Air Action Plan Award

Industry Awards (2012)

• Port Metro Vancouver
• Blue Circle Award
• Logistics Management
• Quest for Quality Award – Ocean Carrier
• United States Coast Guard
• Marine Environmental Protection Award
• Port of Seattle
• Green Gateway Partners Award - Gold

Integrated Partnerships

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Integrated Partnerships

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Building a Sustainable Organization

Collaboration

Cost Efficiency Innovation Planning

Thank You