Slide no. 1

Beyond the Storm - the Industry Our Customers Should Ask For

Trans-Pacific Maritime ConferenceMarch 1, 2010Eivind D. Kolding – CEO Maersk Line

Slide no. 2

• Current situation – weathering the storm

• 2010 – uncertain and fragile

• Long term – the industry our customers should ask for

Beyond the Storm - the Industry Our Customers Should Ask For

Slide no. 3

The worst crisis in the history of container shipping is not over

Growth in GDP and TradePercent, Real

-15%

-10%

-5%

0%

5%

10%

15%

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

GDP growth multiplier

x 2.3 x 2.9 x 3.8

Trade growth

Source: Annual and quarterly reports

GDP growth

Slide no. 4

Rates have been significantly impacted

Source: Drewry

75

80

85

90

95

100

105

110

115

120

2000

2002

2004

2006

2008

2010

2012

2014

Annual Avg. USD/ FFE

-29%

Index 2000=100

Slide no. 5

8.000

10.000

12.000

14.000

16.000

18.000

20.000

2007 2008 2009 2010 2011 2012

World Fleet in TEU (1,000)

Fleet Projection - 2009 Fleet Projection - 2010

Supply grows, but less than earlier expected

Source: AXS Alphaliner

CAGR 11%

CAGR 8%

Slide no. 6

Supply and demand balance deteriorates

…and remains fragile due to the

idle fleet readily available for

injection

Supply and demand balance developments

2009 2010• Supply growth adjusted for

cancellations, scrapping and delays -6% -8%

• Slow steaming +5% +2%

• Demand growth -13% +4%

• Idle fleet (Supply overhang) +11% ?

• Net developments -3% -2%

Source: Maersk Line estimate

Slide no. 7

Current supply and demand balance remains fragile

70

75

80

85

90

95

100

105

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2009 2010 Balance net idle and slow steaming

Slide no. 7

Source: Maersk Line estimate

Strong

WeakStrong

Weak

Slide no. 8

• Current situation – weathering the storm

• 2010 – uncertain and fragile

• Long term – the industry our customers should ask for

Slide no. 8Department

Beyond the Storm - the Industry Our Customers Deserve

Slide no. 8

Slide no. 9

Recently, global volumes have picked up…

Global Import VolumesIndex (2000=100), seasonality adjusted

Source: Reuters Ecowin

Slide no. 10

Driven mainly by US imports followed by the Euro Area…

…but apparently restocking is the driver as underlying demand has not yet picked up

Euro Area Import volumes Index (2006=100), seasonality adjusted

90

100

110

120

130

jan-06 jan-07 jan-08 jan-09

US Import volumes Index (2006=100), seasonality adjusted

90

100

110

120

130

jan-06 jan-07 jan-08 jan-09

Euro Area Retail SalesConstant Prices (Index 2006=100), seasonality adjusted

90

100

110

120

130

jan-06 jan-07 jan-08 jan-09

Import Volumes Retail Sales

US Retail SalesConstant Prices (Index 2006=100), seasonality adjusted

90

100

110

120

130

jan-06 jan-07 jan-08 jan-09

+13%

+3%

+1%

+1%

Source: Reuters Ecowin

Slide no. 11

Improving consumer confidence indicates some recovery in consumer spending

0

20

40

60

80

100

120

03 04 05 06 07 08 09 10-8

-6

-4

-2

0

2

4

6

8Core Retail Sales (Volume year-on-year % change)

>>>>>>>>>>>>>>

Consumer Expectations (Index 1985=100)<<<<<<<<<<<<<

Slide no. 11Source: Reuters Ecowin

Slide no. 12

Full recovery in Asian import volumes is rebalancing trades …

Asia Import VolumesIndex (2000=100), seasonality adjusted

90

120

150

180

210

2000 2003 2006 2009

Slide no. 12

Source: Reuters Ecowin

China Retail SalesConstant prices ( Index 2000=100), seasonality adjusted

0

100

200

300

400

2000 2003 2006 2009

Slide no. 13

Industry remains fragmented with no signs of consolidation

Operator Controlling owner Market Share

Maersk Line APM Foundation 15.8%

MSC Aponte family 11.0%

CMA CGM Group Saade family 7.6%

Evergreen Chang family 4.8%

COSCO Chinese state 3.9%

Hapag-Lloyd TUI 3.8%

APL Temasek 3.7%

China Shipping Chinese state 3.4%

NYK NYK 3.2%

Hanjin Hanjin Group 2.9%

Total top 10 60.0%

Source: AXS Alphaliner

Slide no. 14

Charter owners are faced with historically low rates

0

10

20

30

40

50

1998

2000

2002

2004

2006

2008

Charter ratesin USD 1,000/day

Source: Clarckson Research Services

Slide no. 15

Charter owners have significant new build commitments

0,00

0,50

1,00

1,50

2,00

2,50

3,00

100-999TEU

1000-2999TEU

3000-7999TEU

8000+ TEU

million TEUCharter owned

Carrier owned

Orderbook

Source: Clarckson Research Services

Slide no. 16

Main trends for 2010

• Managed supply side

• Slow demand recovery

• Rate increases remain fragile

• Break-even at best

• Continued financial distress

• Diminishing risk of defaults

• Reduced likelihood of consolidation

• Non-operating owners will be severely affected and casualties may happen

Slide no. 17

• Current situation – weathering the storm

• 2010 – uncertain and fragile

• Long term – the industry our customers should ask for

Beyond the Storm - the Industry Our Customers should ask for

Slide no. 17

Slide no. 18

Logistics cost is only a small portion of the total cost structure for a typical retailer…

Source: McKinsey Team analysis

Percent

75.2

100.0

Logistic 3.2

Sales

24.8

Store cost

Cost of goods sold

12.0

Gross margin

EBIT 5.0

Central cost 4.6

Slide no. 18

Slide no. 19

Transportation cost is insignificant part of the retail value

• Retail value shirt: USD 30

• Ocean transport cost: USD 0.25

• Transport cost is 0.85% of the retail price

• Retail value of flatscreen TV: USD 750

• Ocean transport cost: USD 15

• Transport cost is 2% of the retail price

• Commodity value of grain: USD 192/ton

• Ocean transport cost: USD 76/ton

• Transport cost is 40% of the value

Source: Maersk Line esimate

Slide no. 20

Customers should ask for reduced volatility

Why gamble by chasing short term savings instead of ensuring long term stability and partnerships?

Slide no. 20

Source: Drewry

USD/FTE

500

1000

1500

2000

2500

2009

2010

Hong Kong – Los Angeles container rate benchmark for FCLs

Slide no. 21

Customers should ask for less waste in the industry and reduced uncertainty

Slide no. 21

Downfall is evenly spread across customer segments, but forwarders tend to have a higher downfall ratio

Source: Maersk Line

Weekly downfall for US exports in % of bookings

20%

22%

24%

26%

28%

30%

32%

34%

01 06 11 16 21 26 31 36 41

Weeks

Slide no. 22

0% 20% 40% 60% 80%

PIL (Pacific Int. Line)COSCO Container L.

CSAV GroupK Line

Yang Ming LineHanjin Shipping

Mediterranean Shg CoZim

CSCLNYKMOL

OOCLHyundai M.M.

Evergreen LineAPL

UASCCMA CGM Group

Hapag-LloydAPM-Maersk

Hamburg Süd Group

Customers should ask for higher reliability

Slide no. 22

Source: Drewry Q4 2009 schedule reliability

In comparison, the parcel industry

claims to deliver more than 90%

reliability

Reliability above 95% would allow our customers to reduce inventory

buffer by 60%

Slide no. 23

Customers should ask for one-click-shipping - in an old industry and old habits

Slide no. 23

WWW

Slide no. 24

Air(Boeing 747-400)

Truck (Global average)

Rail Diesel

Rail Electric(Global average)

Ocean(Avg. ML vessels)

Customers should ask for better environmental performance

Slide no. 24

Source: NTM

CO2 (g/ton km)

Slide no. 25

Ocean transport accounts for a very small portion of the carbon footprint of retail goods

Rotterdam

370 g

CO2

20 km

3700 g CO2

Home18,600

km

Store

Shipping one pair of shoes

Hong Kong

Source: NTM

Slide no. 26

But we should set ambitious targets for ourselves and the industry…

…which is why I believe that slow steaming is here to stay

Average CO2 emissions from Maersk Line vessels

60

65

70

75

80

85

90

1997 2002 2007 2012 2017

Gra

m C

O2

/U

nit

Km

Maersk Linetarget

Slide no. 27

Time is right for customers to demand a new, efficient, less volatile and sustainable industry

Questions?