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

Gene Seroka – APL President, Americas March 7, 2013 Los Angeles, CA

Contents Economic Trends Market Dynamics Building a Sustainable Organization Integrated Partnerships 1

Economic Trends 2

Market Size & Growth Rate 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 TRANS-ATLANTIC ASIA-EUROPE TRANS-PACIFIC 2012 Size: 28.1 m TEU 2012 Size: 7.6 m TEU 2012 Size: 21.8 m TEU 2013 HH Growth: ~ -0.9% 2013 HH Growth: ~ 4.1% 2013 HH Growth: ~ 4.2% INTRA-ASIA LATIN-AMERICA Est. 2012 size: 35.3 m TEU 2012 Size: 14.4 m TEU 2013 Overall Growth: ~ 4.3% 2013 HH Growth: ~ 2.8% •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 •Source: GI Dec 2012, Drewry CFQ Q4 2012 3

Containerized trade has continued to grow in 2012 but at a more moderate pace Global GDP and Container Demand Growth 20.0% 13.9% 14.0% 13.4% 15.0% 11.2% 11.1% 10.9% 11.0% 10.2% 10.0% 7.8% 7.7% 7.3% 5.4% 5.3% 5.2% 4.9% 4.8% 2.8% 4.6% 3.8% 3.9% 3.6% 3.8% 5.0% 3.2% 2.9% 4.0% 2.3% 0.0% -0.7% -5.0% -9.9% -10.0% -15.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F 2013F Global GDP Container Demand Growth Note: EIU data forecasts used for 2012 and 2013 Source: Drewry, Seabury, Clarksons, IMF WEO Sep2011/Jan 2012, EIU Global Forecasting 4

This is largely driven by slower global growth in 2012 due to uncertainties arising out of the European government debt issues CAGR GDP Growth (2001-2007) 15.0% 10.0% India 8.0% 8.2% China 11.2% 6.9% 5.0% 3.2% Global 4.4% US 2.6% EU27 2.6% 1.9% 0.0% -0.8% -5.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F EU27 US Global China India Source: IMF WEO Sep2011/Jan2012, EIU Global Forecasting 5

Consumption still positive in US and China while European consumers remain cautious Consumer Confidence Index Retail Y-o-Y Growth Rate US China EU27 US China EU27 US, China EU27 120 0 25 20 -5 100 15 -10 80 10 -15 60 5 -20 0 40 Jul-11 Oct-11 Dec-11 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 -25 -5 20 -30 -10 0 -35 -15 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Feb-12 Source: National Bureau of Statistics of China, U.S. Census Bureau, and Eurostat 6

Resulting in recent improvement in freight rates. However, rising bunker costs are offsetting some of the rate improvements SCFI Spot Rates Bunker Spot Rate ASEU USWC 800 700 3,000 600 2,500 500 2,000 400 1,500 300 1,000 200 500 100 0 0 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 Oct-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 -100 Source: Shanghai Containerized Freight Index (SCFI), Bunkerworld, UBS 7

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Oversupply will extend into 2013 due to orders of >8,000 TEU vessels during 2010 and 2011 Demand and Supply Growth Rate Forecast 16.0 14.0 12.0 10.0 8.0 6.0 Demand Growth 4.0 2.0 Supply Growth 0.0 -2.0 -4.0 -6.0 -8.0 -10.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F 2013F Source: Alphaliner, Drewry, Clarksons, Seabury, MDS 9

Lack of recent newbuild orders will result in diminishing deliveries from 2H 2013 Delivery Thousand TEU peaked in 2Q 2012 550 2.5% 500 450 2.0% 400 350 1.5% 300 250 1.0% 200 150 0.5% 100 50 0 0.0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 Scheduled Newbuild % of Global Fleet Source: MDS March2012 10

Vessel Delivery by Carrier Source: Alphaliner 11

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Challenging container shipping environment is forcing liners to manage capacity 13

Market Dynamics 14

Market Dynamics Significant industry losses have forced carriers to drastically reduce costs The formation of super Ambitious cost savings Carriers are more consortia is enabling goals have been conscious of carriers to operate announced equipment matchback bigger ships at opportunities in order reduced slot costs to reduce USD500 million repositioning costs • MSC and CMA USD400 million • G6 Asia – Eur & USEC • Evergreen, CHKY, China USD350 million Shipping, Zim USD300 million 15 15

Trade flows to/from Asia have shifted significantly…. 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…. Top EB countries are not growing North China their WB volumes as fast as South China other Asian countries, creating increasing mismatch of in/ out Japan volumes in Asia Vietnam US Exports growing to SEA, UAE M East which need longer transit Malaysia Repositioning This relatively recent shift in flow creates longer equipment turn, drives up repositioning cost to get Boxes need to be repositioned to the boxes to China where they are needed to support major exporting regions e.g. North China outbound demand, and increases the size of the equipment fleet carriers must have to service the market….increasing costs. 16

World Containerized Trade Outlook World containerized trade estimated to have moderate growth this year. TP growth is expected to pick up in 2013 Containerized Trade Growth Global Trade Growth 2011 2012 2013 17.2% Alphaliner (Mar 20, 2012) 7.7% 6.5% 7.5% 16.0% Clarksons (Feb 21, 2012) 7.9% 7.7% 8.3% 15.3% Drewry (Dec 22, 2011) 6.5% 5.4% - 15.0% 9.3% JP Morgan (Nov 29, 2011) 6.4% 4.5% 6.3% 8.3% 8.4% Global Insights (Sep 30, 2011) 6.9% 6.8% 6.7% 6.8% 6.7% 6.9% 6.4% Transpacific HH Trade Growth 5.9% 4.9% 5.5% 0.4% 2011 2012 2013 2.4% Clarksons (Feb 21, 2012) -0.4% 4.2% 6.1% Alphaliner* (Jan 10, 2012) -0.8% 4.6% 5.1% Intra-Asia -4.2% Drewry (Dec 22, 2011) 0.4% 3.1% PIERS (Dec 2, 2011) 0.2% 2.7% 4.9% Global -7.1% Asia-Europe HH Trade Growth Transpacific (HH) -13.9% Asia-Europe (HH) -15.1% 2011 2012 2013 3.3% 2.8% 6.1% Clarksons** (Feb 21, 2012) 2009 2010 2011 2012E 2013E Alphaliner* (Jan 10, 2012) 2.8% 1.5% 6.3% 3.9% 2.0% - Drewry (Dec 22, 2011) Note: *Alphaliner TP is FE-US, ASEU is FE-Europe • Source: Equity analysts, shipping consultants **Clarksons’ growth is Far East to Europe 17 17

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 18

Building a Sustainable Organization 19

NOL Efficiency Leadership Program – Gaining the Edge Efficiency • $500 Million Goal • Q4 2011 through 2012 Leadership Program • Challenging the way we do business today • Driving for smarter ways to accomplish our tasks • Discerning and meeting customer needs more effectively Recent strategic NOL’s unique strengths investments • Re-modeling our IT: Completed SAP • Deep customer outreach Finance module • Innovation • Modernizing our fleet: – Double-stack trains • Invested in 34 large modern containerships – Post-panamax vessels (US$4 billion in last 4 years) – Ocean guarantee – Supply-chain products 20

Fleet Renewal Building a modern and cost-competitive fleet, six 10,000 TEU vessels already delivered in 2012 Note: 5 out of the 10 x 14,000 TEU vessels for delivery between 2013 and 2014 will be chartered out to MOL

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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 23

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. 24

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. 25

Container Shipping & Emissions Shipping is the most environmental friendly and energy efficient form of transportation 26