LATC – Executive Speaker Series

Gene Seroka – APL President, Americas

March 6, 2014San Pedro, CA

Contents

Economic Trends

Market Dynamics

Building a Sustainable Organization

Open Dialogue

Integrated Partnerships

1

Economic Trends

2

Source: Drewry CFQ Q4 2013

LATIN-AMERICA

2013 Size: 14.8 m TEU

2014 HH Growth: ~ 4.5%

TRANS-ATLANTIC

2013 Size: 4.8 m TEU

2014 HH Growth: ~ 3.1%

ASIA-EUROPE

2013 Size: 20.7 m TEU

2014 HH Growth: ~ 2.3%

TRANS-PACIFIC

2013 Size: 23.7 m TEU

2014 HH Growth: ~ 4.1%

INTRA-ASIA

2013 size: 28.6 m TEU

2014 Overall Growth: ~ 5.3%

Global growth outlook is expected to be positive in 2014, though not high at 4.4%.

Market Size & Growth Rate

3

Global economic cycle is improving although still far from a strong recovery

JapanNear-term growth remains intact, however proposed structural reforms still needed for bullish long-term growth prospects

Source: WEO, GPS Analysis

4%

8%

11%

22%

25%

3%

23%

Others

3%

EuropeSlow recovery in Europe continues. Economic activity is expanding again and growth is seemingly positive, however, the pace of expansion will remain weak

USAEnd of year data signals stronger 4Q growth, with consumer spending continues to surprise on the upside and housing market recovery remains relatively intact

ChinaGrowth has moderated and stabilised but double-digit forward growth now seen unlikely as the government tries to rebalance the economy

BrazilEconomy is growing slower than expected as economic headwinds dampens recovery

IndiaGrowth prospects remain weak with rupee’s volatility and weak demand exerts pressure on the economy

Market Exchange Rates 2012Middle East & North Africa Mixed views as some Arab countries that remain politically unstable are expected to experience economic difficulties. Non-oil sector in Saudi Arabia and UAE are gathering pace

=

Global GDP

=

4

Ports with VLCS Capabilities

Source: AlphalinerAs Of December 2012

5

VLCS Global New Build Orders

Source: Alphaliner

Vessel sizes above 7,500 TEU only

6

Source: Alphaliner

Challenging container shipping environment is forcing liners to manage capacity

Capacity Management

7

Market Dynamics

8

Forces Shape Container Shipping

A very different future

Industry Concentration

Slowing Industry Growth

High Fuel Cost

New vessel technology

CAPEX to Compete

Absence of Financing

9

Average carrier operating profit margin by quarter 2009-2013 (in %)

Average of APL, CMA CGM (Fr 2010), CCNI, CSAV, CSCL, EMC, Hanjin, HMM,Hapag-Lloyd, KL, Maersk, MOL, NYK, RCL, STX PO (until 2012), WHL, YML, ZIM

The shipping industry is ata crossroad

We are entering an era of low-growth and intense competition

Shipping lines are struggling through the worst slump on record (see annualized losses over last few years)

Developments are driving fundamental behavioral changes

The key to success:low cost position; attractive customer value proposition

Source: Alphaliner

Container shipping industry going through a profound transformation

10

Panama vs Suez Canal: A Comparison

Average Round Trip Slot Costs

Tolls on a Fully Loaded 4,800 TEU

Non-Stop Transit Time at 18 Knots

Distance from Hong Kong to New York-New Jersey

Total TEU Transited, % Change, 2012 vs 2011

Source: Journal of Commerce

11

Building a Sustainable Organization

12

Cost Saving Initiatives

Efficiency Leadership Program

Sustainable Savings

Efficiency Leadership

Program

SMART Procurement

Equipment Matchback

Strategy

Oakland Terminal Change

Chassis Divestiture

Capacity Management

• ELP– 2012 savings of

USD$500 million– 2013 target of

USD$400 million– Eco Steaming– Terminal Velocity

• SMART Procurement– Bunker Patterns– IT/Telecommunications

Sourcing– Transport

Requirements

13

Port Productivity Efforts – APL Global Gateway South4 new shore cranes and upcoming shore crane raising project to help accommodate the current 9,200 TEU vessels and larger vessels in the future

In the process of evaluating an appointment system for delivery of local cargo reducing the peaking of truck arrivals improving turn times

Changing the modality of operations. Collaboratively reviewing inbound vessel stow requirements and rail program to maintain optimal service levels.

Workforce collaboration, training and feedback

14

Schedule Reliability

Source: Sea Ship News Release, 02/04/2014

• Shippers are putting more emphasis on schedule reliability

• Proactive and prompt notice to shippers should service interruptions be encountered

15

Equipment Availability – USA Inlands

• Carriers’ emphasis will continue on equipment management

• General industry trend of focusing on roundtrip economics and matching back imports and exports expected to continue

16

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• Upsizing of SAX and PS2 vessels

0

50,000

100,000

150,000

200,000

250,000

2012 2013 2014

7,000 - 9,999 TEU 10,000 - 12,999 TEU > 13,000 TEU Number of vessels

10

20

4

TEUs

Fleet Renewal

17

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 Increased safety Future growth/additional cranes

18

Chassis Divestiture - What is APL doing…

• APL phasing out its container chassis fleet.

• 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.

• The USWC Ports remain under consideration.

19

Eco-responsible operations for a sustainable future

• Enforcement of Emission Control Area (ECA)

• Speed Optimization, schedule, weather routing and best practices to reduce CO2emissions

• 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

20

APL New Builds - Environmental Features

21

Journal of Commerce Port ProductivityPort Productivity Award – APL Global South

Terminal 2013

US Agricultural SectorPreferred Shipping Line 2013

AgTC’s Ocean Carrier Performance Survey Carrier of the Year 2013

Federal Maritime Commission Environmental Award 2013

Industry Recognition

Port of Los Angeles and Port of Long BeachAir Quality Award 2013

Logistics Management Quest for Quality Ocean Carriers – Top in

Customer Service Award 2013

Asian Manufacturing Awards Best Cold Chain Logistics Provider 2013

Asian Freight & Supply Chain AwardsIntra-Asia Best Shipping Line 2013

2013 International Maritime Awards (Maritime Authority of Singapore) Green Ship of the Year

22

Integrated Partnerships

23

Integrated Partnerships

Building a Sustainable Organization

Collaboration

Cost Efficiency

Innovation

Planning

24

Thank You