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3rd Polar Shipping Summit

May 30th & 31st 2012, London, UK

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Background Erik Rabjerg Nielsen

Education:

> Joined A.P. Moller – Maersk in 1993

> Master Mariner educated

> Sailed on primarily container vessels but also briefly on gas, supply & tank vessels

> MAESTRO management graduate

> B.Sc. Copenhagen Business School, Business Management.

Positions:

> Technical Organisation - Vessel administration

> Technical organisation - Nautical department

> Group Procurement Coordination - Initial strategic sourcing (Lube oil, Paint, Steel & Main engines)

> Europe Line Management – Cargo stowage coordinator

> Vessel Management – Centre Operations & Deployment

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Agenda

Brief overview of A.P. Moller – Maersk and Maersk Line

Commercial attractiveness of NSR

Comparison of routes

Conclusion

Q&A

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Heritage of more than 100 years

1994: Maersk Oil starts oil

production in Qatar

1928: First tanker added to the fleet

1977: Mercantile (now: Damco)

established

1904: Company established with

one freighter

1964: Dansk Supermarked

established

2001: APM Terminals

established

1975: First container vessel

added to the fleet

1972: Maersk Contractors (now:

Maersk Drilling) established

1959: Lindø Shipyard opened

1967: Maersk Supply Service

established

1972: Maersk Oil produces first oil in

the North Sea

2008: New global oil strategy

launched

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Group OverviewContainer activities Other businessesRetail activityTankers, offshore and other shipping activitiesOil & Gas activitiesTerminal activities

> 2011 revenue: USD 60.2 billion

> Some 70,000 shareholders

> Controlling stake held by A.P. Møller and Chastine Mc-Kinney Møller Foundation

1: Maersk Line

2: Maersk Oil

3: Maersk Drilling

4: APM Terminals

5: Maersk Tankers

6: Maersk Supply Service

7: Maersk FPSOs

8: Svitzer

9: Damco

10: Maersk Container Industry

11: Dansk Supermarked

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1,400 ships 60 container terminals

115 platforms and rigs 900 offices

1,100 retail activity + 3 million containers

Fleet and other assets

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World’s no. 1 container business

World’s largest container line

2011 revenue USD 25.1 billion

Fleet of 645 vessels 2.5 million TEU

Operates in 125 countries

+3 million containers

42 new vessels 2012-15 0.5 million TEU

Investing in innovative, record-setting vessels: Triple-E

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Maersk Line focus areas

Profitable cargo

Beat competitors cost levels and never accept unjustified cost

Organisation to deliver a superior customer experience

Be our customers’ first choice> Severe competition,

industry is struggling to make sustainable profit.

> Customer satisfaction

> High Competitiveness

> On-time delivery

> Environmental performance

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Agenda

Brief overview of A.P. Moller – Maersk and Maersk Line

Commercial attractiveness of NSR

Comparison of routes

Conclusion

Q&A

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Commercial attractiveness of NSR

> Can NSR present an opportunity for shorter transit time?

> Can NSR present an opportunity for offering a cheaper product?

> Can NSR present an opportunity for higher reliability?

> The joker!

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Agenda

Brief overview of A.P. Moller – Maersk and Maersk Line

Commercial attractiveness of NSR

Comparison of routes

Conclusion

Q&A

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Comparison of routes – Transit time

• Columbine Maersk

• Vessel size 8500 TEU

• 11.300 nautical miles

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Comparison of routes – Transit time

• 7.600 nautical miles?

• Average speed 13kn?

• 4 month transit window

• 11.300 nautical miles

• Average speed 13kn

• Full year transit window

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> Transit time in the traditional network 36 days

> Possible transit time YOK-ROT via NSR:

> Distance 7.600nm

> Average speed 13kn

> Days needed, including inspection etc. 26

> The NSR presents an opportunity for a shorter transit time during the “Ice free” period.

Comparison of routes – Transit time

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> Size limitation on NSR

> Ice damage (lack of repair facilities)

> Emergency - evacuation options

> Modifying machinery (especially if non-ice classed vessel)

> Ice and extra safety training of crew

> Ice-breaker assistance

> Upgrade of navigation-, communication- and safety equipment

> Actual cost of transiting

Comparison of routes – Costs

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Comparison of routes – Costs

Rate ? ?

Lifting capacity 2.000 6.500

Days 26 36

Distance 7.600nm 11.300nm

Vessel costs 575.000 1.250.000

Bunker costs 650.000 2.000.000

Port costs 1.250.000 250.000

Total Costs 2.475.000 3.500.000

* The above figures are only indicative as an example, and does not reflect a true picture of the full complexity of container transport

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Comparison of routes – Costs

Rate ? ?

Lifting capacity 2.000 6.500

Days 26 36

Distance 7.600nm 11.300nm

Total Costs 2.475.000 3.500.000

* The above figures are only indicative as an example, and does not reflect a true picture of the full complexity of container transport

Slot costs USD/TEU 1.238 538

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Present network

Repair flexibility

Piracy

Weather

Contingency

Casualty coverage

Port flexibility

Complexity

NSR

Comparison of routes – Reliability

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Present network> Reliability is a key driver

> On-time delivery +99%

NSR> Reliability factors are more

insecure and more dominant

> 99% reliability will be very expensive

Comparison of routes – Reliability

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Comparison of routes – The Joker

> Freight rates!

> Is a faster and more unreliable product, of higher value to customers, then a reliable slower product?

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Agenda

Brief overview of A.P. Moller – Maersk and Maersk Line

Commercial attractiveness of NSR

Comparison of routes

Conclusion

Q&A

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Conclusion

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> Shorter transit time?

> A cheaper product?> Vessel size / Ice breaker costs

> Higher reliability?

> The joker!

Conclusion

YES

???

NO

NO

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Agenda

Brief overview of A.P. Moller – Maersk and Maersk Line

Commercial attractiveness of NSR

Comparison of routes

Conclusion

Q&A

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Questions & Answers