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Introduction (1958-1970)

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  1. World container development stages Introduction (1958-1970) Adoption (1970-1990) Maturity (2008 - ) Growth (1990-2008) • Introduction of the first “containerized” commercial services in the late 1950’s • Introduction of the first cellular containerships in the 1960’s • High risk investment with unproven technology • The container became acknowledged as a transport product • Intermodal facilities accelerated • Investments made in accordance to commercial opportunities • 1979 – 1990 CAGR: 8.1% • Containerization began to seriously impact global trade patterns • World container traffic growth fueled by globalization and China entering WTO • Post panamax containership gradually became a dominant vector • 1990 - 2002 CAGR: 9.8% • 2002 – 2008 CAGR: 10.6% • Maturation of container traffic linked to the development of the Global economic cycle • Global recession that began in 2008 has been associated with a significant reduction in containerized traffic • Economies of scale recognized as a significant factor in remaining competitive; also being reflected in newbuilding orderbook 2006 - 2008 2002 – 2008: 10.6% 1990 – 2002: 9.8% 1979 – 1990: 8.1%

  2. Cellular ships – Order and deliveries 2007 -2008 • With expectations that world trade would continue to grow at a fast pace (2008 – 2012: CAGR: 9%*), shipowners invested heavily in newbuilding programs in 2007. • The cellular ship orderbook reached an all time high of 63.7% of the existing fleet in 2007 and 50.7% in 2008. • * Q3 2007 Container forecaster (Drewry)

  3. 2008 Orderbook by size ranges • The orderbook for ships between 5,000 and 10,000 teu was equivalent to 32% in 2008. • ULCCsover 10,000 teu accounted for 36% of the orderbook in 2008. • The orderbook was clearly tilted towards ULCCs(10,000 Teus +) over vessels with smaller capacity in order to benefit from economies of scale. • High bunker prices during 2007-2008 prompted carriers to order big ships to benefit from economies of scale. • The larger ships enjoy significant cost advantages compared to smaller vessels • It becomes more cost effective to deploy additional ships at slower speeds as fuel prices increase. • Carbon dioxide emission per slot is significantly lower for this type of vessels • “The bigger the ship, the better”

  4. 2009 – The Crisis September 2008 Lehman Brothers files for bankruptcy protection, November 2008 The Eurozone officially slips into recession, the economy shrank by 0.2% in the third quarter. January 2009 World economic growth is set to fall to just 0.5% in 2009, its lowest rate since World War II May 2009 EU economies will shrink by 4% in 2009, the European Commission has forecast June 2009 Japan's economy contracted at an annualised rate of 14.2% in the first three months of 2009 July 2009 The UK economy contracted 0.8% between Apr-Jun 2009 Overview of World Economy in 2009 / 2008 - GDP

  5. 2009 – A Year to Forget ! • Global container volumes contracted by 7.7% • World container fleet increased by 6.0% • Idle fleet reached 1.5 Mteus (11.6% of world fleet) at the end of 2009 • Accumulated oversupply was estimated at 2.9 Mteus end 2009 • Gross carrier income in 2009 plunged by US$ 79.8 billion (33%) to US$ 161 billion • All major carriers had negative operating margins in 2009 –US$ 20 billion industry wide loss in 2009 * Source: Howe Robinson and Alphaliner

  6. Supply Outlook • Cellular container fleet capacity is forecasted to have a net growth of 3.1% in 2010, taking slippage, cancellations, scrapping and slow-steaming into consideration. • Capacity growth will be limited to 3-6% for the next 5 or so years * Source: Howe Robinson

  7. Demand Outlook • World container traffic is forecasted to expand solidly in 2010 and 2011, following a sharp contraction in 2009 • Growth projections vary among well-known market forecasters 5.4% - 9.0% in 2010 and 6.3% - 10.0% in 2011 “as the outlook remains unusual uncertain “ * Source: Global Insight, Drewry, Clarkson, Howe Robinson, IMF

  8. Demand/Supply Outlook • Supply- demand forecasts for 2010 suggest that growth in demand will outpace fleet growth for the first time since 2005. • There will be an annual shortfall in capacity of 681,000 teu by the end of 2010, which will reduce the capacity overhang from 2.9 million teus in 2009 to 2.2 million teus in 2010. This will then translate into a global projected fleet utilization level of 85% or higher in 2010. • Capacity overhang may drop to 1.55 million teus in 2011 and 1.02 million teus in 2012, representing global utilization level of 90% and 95% respectively. • When taking into consideration headhaul/backhaul variances, 2012 is a year where demand will exceed supply during the peak season on headhaul legs. * Source: Howe Robinson

  9. THANKYOU