North Carolina Ports: Poised for Growth Joint Transportation Appropriations Committee March 19, Paul J. Cozza, Executive Director

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1 North Carolina Ports: Poised for Growth Joint Transportation Appropriations Committee March 19, 2015 Paul J. Cozza, Executive Director 1

2 2 A conduit for economic activity

3 Ports Support NC 13,700+ jobs 1,700+ jobs 10,400+ jobs 12,500+ jobs 2,200+ jobs 9,800+ jobs 26,200+ jobs North Carolina jobs provided directly or indirectly by the ports statewide 76,700 + Annual tax revenues gained through the ports for the statewide economy $707 million + Annual economic contribution to the state s economy associated with goods moving through NC Ports $14 billion + 3 Economic Contribution of the North Carolina Ports Institute for Transportation Research and Education, N.C. State University (November 2014)

4 North Carolina Ports at a glance Own and operate two ports and two inland facilities Financial & volume statistics 300,000 containers annually More than 4 million tons of bulk cargo Generates revenue in excess of $40 million Directly employs 220 (1,842 rely on the port on any given day) Generates earnings and cash flow to meet annual operating requirements Actively promotes, markets and sells port services Full suite of container services Cargo stevedoring Container and bulk cargo storage Staging & warehousing Packing & stripping of cargo 4

5 The Port of Wilmington Goods moving through the Port of Wilmington contribute $12.9 billion to North Carolina s economy 5 Containers, bulk, breakbulk,roll-on roll-off 284+ acres Authorized 42 foot channel Rail Served by CSX

6 6 Port of Wilmington carriers

7 The Port of Morehead City Goods moving through the Port of Morehead City contribute more than $1 billion to North Carolina s economy 7 Bulk, breakbulk, and roll-on roll-off 128+ acres, plus an additional 150+ acres on Radio Island Authorized 45 foot channel Rail served by Norfolk Southern

8 8 Port of Morehead City customers

9 Volume leaders Agriculture Export Containers Forest Products 40,556 Woodpulp 16,344 Poultry 5,548 Animal feed, Pet food 2,975 Tobacco 1,456 Pork/ Hogs 536 Cotton, Baled Total 67,559

10 10 The competitive landscape

11 Current status 350,000 Port of Wilmington TEUs Fiscal Year , , , , ,000 TEUs 50,000 0 Fiscal Year 2011 Fiscal Year 2012 Fiscal Year 2013 Fiscal Year 2014 Fiscal Year 2015 Fastest growing port on U.S. East Coast Containers 21 % growth over prior year (fastest growing port on the U.S. East Coast by volume percentage) General Cargo 3% growth over prior year (POW), 36% growth over prior year (MHC excludes PCS Phosphate) Advancing the commercial business Set goals and objectives Create key performance indicators Monthly results meetings New projects wood pellets/cold storage/bridge girders Extended gate hours Headcount efficiency (FY14 approved 237/Est. 215 FY15) Prioritization of sales/business development 11 FY 2015 TEUs Estimate 300,000

12 Current status Profit Driven Millions $3.0 $2.0 $1.0 NC State Ports Authority Adjusted Net Income $0.0 -$1.0 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015* -$2.0 -$3.0 -$4.0 -$5.0 -$ Full Year Estimate $2.6M 12 Year to date Revenue : $2.7M over prior year (up 12%) Net income : $3.9 over prior year ($1.9M over budget) Cost savings: $602K

13 North Carolina Ports advantages Unmatched Performance - One of the highest crane productivity rates in the South Atlantic - Second to none truck turn times 13 Velocity Leader Cost Efficient - Fast, seamless service from the berth, to the yard, to the gate - Lack of congestion - We offer cost competitive solutions to our customer base Impeccable Service - Accolades from customer base

14 14 Strategic Success Measures

15 The industry leader in customer satisfaction They are easy to do business with and they are unwaveringly customer-centric. Dean Tracy Director, International Transportation Lowe s Home Improvement 15

16 Planning for growth / planning for success Market Based Assessment - Addressable market identification - Set goals for growth Operational Capabilities - Best in class - Maximize terminal utilization - Identify capital investment needs Execution - Sales coverage and goals - Second to none operational service levels - Facility investment 16

17 Port of Wilmington addressable market * Green dots indicate market clusters of large accounts 17

18 Data Overview PORTS OF THE WESTERN HEMISPHERE CONTAINER TRAFFIC RECAP TEUs June January - June January - December Country Port Change Change Change St. Johns2014_06-1 Antigua & Barbuda 2,153 1, % 13,743 12, % 24,842 24, % _AAPA_Rankings_June_2014(1).xlsx 2 Argentina Buenos Aires (Excludes Exolgen) n/a 101,300 #VALUE! n/a 549,200 ####### 1,137,800 1,091, % 3 Aruba Oranjestad 4,552 5, % 26,904 28, % 61,976 54, % 4 Bahamas Freeport (excludes Freeport Containerport) 1,697 3, % 12,798 14, % 26,639 36, % 5 Barbados Bridgetown 6,120 5, % 37,053 36, % 74,922 72, % 6 Brazil Itajai/Navagante 74,589 96, % 524, , % 1,104,923 1,015, % 7 Brazil Paranaguá 64,003 63, % 360, , % 738, , % 8 Brazil Rio Grande 54,914 56, % 364, , % 640, , % 9 Brazil Santos 301, , % 1,697,265 1,593, % 3,429,300 3,171, % 10 Brazil Suape 33,121 30, % 198, , % 386, , % 11 Canada Halifax 34,542 35, % 206, , % 442, , % 12 Canada Montreal 117, , % 692, , % 1,346,065 1,364, % 13 Canada Port Metro Vancouver n/a 226,122 #VALUE! n/a 1,341,644 ####### 2,825,481 2,703, % 14 Canada Prince Rupert 52,846 43, % 281, , % 538, , % 15 Canada Saint John (New Brunswick) 7,092 5, % 44,928 38, % 76,269 50, % 16 Cayman Islands George Town 4,015 3, % 25,535 24, % 49,691 48, % 17 Chile Iquique n/a 21,479 #VALUE! n/a 117,170 ####### 244, , % 18 Chile San Antonio 90, , % 547, , % 1,196,844 1,069, % 19 Chile Valparaiso 80,675 77, % 530, , % 910, , % 20 Colombia Buenaventura 59,241 40, % 291, , % 533, , % 21 Colombia Cartagena 165, , % 985, , % 1,865,233 2,024, % 22 Colombia Santa Marta 12,581 12, % 77,959 83, % 159, , % 23 Costa Rica Caldera 14,357 18, % 99,472 92, % 193, , % 24 Costa Rica Limón - Moín 92,613 80, % 568, , % 1,036, , % 25 Ecuador Guayaquil (Public Terminals only) n/a 82,215 #VALUE! n/a 502,645 ####### 1,056, , % 26 El Salvador Acajutla 15,688 12, % 92,968 85, % 177, , % 27 Honduras Puerto Castilla 8,196 7, % 49,802 51, % 96,438 85, % 28 Honduras Puerto Cortes 45,064 43, % 307, , % 571, , % 29 Jamaica Kingston 132, , % 766, , % 1,672,228 1,770, % 30 Mexico Gulf Altamira 51,933 51, % 297, , % 597, , % 31 Mexico Gulf Progreso 4,979 4, % 33,684 32, % 64,928 64, % 32 Mexico Gulf Veracruz 73,864 69, % 417, , % 866, , % 33 Mexico Pacific Ensenada 10,891 10, % 62,403 65, % 131, , % 34 Mexico Pacific Lázaro Cárdenas 81,382 93, % 463, , % 1,051,183 1,242, % 35 Mexico Pacific Manzanillo 207, , % 1,143,814 1,017, % 2,136,157 1,992, % 36 Mexico Pacific Mazatlan 2,759 2, % 15,888 14, % 28,094 39, % 37 Panama Balboa 243, , % 1,517,910 1,532, % 3,063,579 3,251, % 38 Panama Colon 200, , % 1,266,643 1,312, % 2,634,319 2,658, % 39 Panama Cristóbal 48,964 66, % 384, , % 721, , % 40 Panama Panama City (PSA Panama Int'l Terminal) 20,322 9, % 125,063 60, % 123,808 53, % 41 Perú Callao 168, , % 998, , % 1,855,019 1,813, % 42 Perú Matarani 2,190 1, % 10,380 6, % 15,391 16, % 43 Perú Paita 14,493 13, % 96,653 79, % 169, , % 44 Sint Maarten Phillipsburg 6,188 6, % 40,268 40, % 80,655 79, % 45 St. Lucia Port Castries 2,020 2, % 13,268 14, % 28,776 37, % 46 U.S. Atlantic Baltimore (MPA facilities only) 65,937 59, % 364, , % 705, , % 47 U.S. Atlantic Boston 16,525 17, % 101,194 91, % 195, , % 48 U.S. Atlantic Charleston 149, , % 872, , % 1,601,366 1,514, % 49 U.S. Atlantic Hampton Roads 186, , % 1,136,656 1,054, % 2,223,534 2,105, % 50 U.S. Atlantic Jacksonville 74,487 70, % 446, , % 924, , % 51 U.S. Atlantic New York/New Jersey 470, , % 2,727,554 2,621, % 5,467,345 5,529, % 52 U.S. Atlantic Palm Beach 20,570 20, % 129, , % 263, , % 53 U.S. Atlantic Philadelphia 41,725 31, % 219, , % 366, , % 54 U.S. Atlantic Port Everglades 79,544 70, % 514, , % 939, , % 55 U.S. Atlantic Savannah 268, , % 1,593,863 1,491, % 3,034,014 2,966, % 56 U.S. Atlantic Wilmington (NC) n/a 21,408 #VALUE! n/a 135,767 ####### 260, , % 57 U.S. Gulf Freeport (TX) 8,987 8, % 49,429 51, % 106,154 72, % 58 U.S. Gulf Gulfport (MS) 18,022 19, % 104, , % 209, , % 59 U.S. Gulf Houston 172, , % 960, , % 1,950,071 1,921, % 60 U.S. Gulf New Orleans 38,035 33, % 235, , % 451, , % 61 U.S. Pacific Long Beach 610, , % 3,303,134 3,222, % 6,730,573 6,045, % 62 U.S. Pacific Los Angeles 736, , % 4,052,228 3,710, % 7,868,572 8,077, % 63 U.S. Pacific Oakland 205, , % 1,176,950 1,152, % 2,346,460 2,343, % 64 U.S. Pacific Portland (OR) 13,468 13, % 83,923 89, % 178, , % 65 U.S. Pacific San Diego 6,119 9, % 55,320 51, % 98, , % 66 U.S. Pacific Seattle 104, , % 718, , % 1,575,389 1,869, % 67 U.S. Pacific Tacoma 210, , % 1,008, , % 1,886,678 1,717, % 68 Uruguay Montevideo 52,112 79, % 358, , % 804, , % (1) Loaded containers only; excludes empties n/a=not available 18

19 Planning for growth / planning for success Market Based Assessment - Addressable market identification - Set goals for growth Operational Capabilities - Best in class - Maximize terminal utilization - Identify capital investment needs Execution - Sales coverage and goals - Second to none operational service levels - Facility investment 19

20 The Five Year Strategic Plan Double container business to >500K TEUs Expand business of general terminals by 4M tons Execute an investment plan for terminal, road and rail infrastructure to support growth Channel enhancement in Wilmington and Morehead City Achieve long term financial stability to independently fund capital growth prospects 20

21 Investing in the future 21

22 22 Infrastructure investment plan

23 Immediate capital investment requirements Extend 50-ft gauge rail at Berth 7 Berth 8 Replacement Project Replace 645ft x 200ft of dock structure. Includes 645ft of new landside crane rail Extend 100-ft gauge rail into Berth 7 Extend landside crane rail an additional 115ft into Berth 7 for max working envelope of cranes Purchase two new Container Cranes Install submerged Toe Wall at Berth 9 Required to maintain stability of structure at depths below -42ft TOTAL $1.9 million $32 - $36 million $1.3 million $26 - $30 million $5.8 million $75 million 23

24 A sound investment Wilmington s Container Volume has Grown Significantly Following the Completion of the 42 Channel Project and Terminal Upgrades 180,000 January Channel Completed Hanjin adds second string Add 4 new container cranes ICL and Maersk add vessel calls Total Moves 160, , , ,000 80,000 60,000 40,000 20, Total Moves Estimate 158,500

25 The Panama Canal The Panama Canal expansion project is intended to double the capacity of the Panama Canal by 2016 by creating a new lane of traffic and allowing more and larger ships to transit. 25

26 26 With landside and waterside improvements, the ports would be positioned to respond to the next generation of shipping vessels that will be in service once the major Panama Canal enhancement project is completed. - NCDOT 25 Year Vision

27 In summary Five year goals Double container business to >500K TEUs Expand business of general terminals by 4M tons Channel enhancement in Wilmington and Morehead City Timing is perfect Panama Canal expansion North America port congestion Migration to U.S. East Coast distribution Forecast demographic shift to Southeast It s time to reclaim North Carolina s market 27

28 For more information: 28