David Goodwin CONTAINER SHIPPING: STATE OF THE INDUSTRY MLAANZ, QUEENSTOWN. 4 September 2009

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1 CONTAINER SHIPPING: STATE OF THE INDUSTRY MLAANZ, QUEENSTOWN David Goodwin 4 September 2009

2 The view from Singapore February 09 Page Source: 1 4 September DNV, March

3 Recent industry developments Carriers have suffered huge losses - although there are some positive signs in terms of freight rate restoration Page 2 4 September 2009

4 Container carrier alliances - overview Multi Carrier Alliances Major Independent Operators (3 main East-West trades) Grand Alliance 145 Vessels 20 Strings CHKY Alliance 187 Vessels 29 Strings Maersk Line 169 Vessels 22 Strings 994,532 TEU MSC 109 Vessels 14 Strings MISC 815,787 TEU 971,823TEU Evergreen Group 678,175TEU New World Alliance 119 Vessels 18 Strings 632,231 TEU UASC Cooperates in selected trades 29 Vessels 7 Strings 96,045 TEU 90 Vessels 16 Strings 444,584TEU China Shipping 44 Vessels 9 Strings 282,218TEU CMA CGM 106 Vessels 22 Strings 525,285TEU Page 3 4 September 2009

5 Container Shipping a highly cyclical industry Page 4 4 September 2009

6 NOL Five Year Financial Performance Revenues (US$M) 10,000 9,285 EBIT/Core EBIT (US$M) 1,500 8,000 7,271 7,264 8,160 1,250 6,000 6, , , , Page 5 4 September 2009 Revenue Core EBIT EBIT EBIT Margin 14.6% 12.5% 5.5% 7.5% 1.7% Core EBIT Margin 14.4% 12.4% 5.5% 7.3% 2.3%

7 Page 6 4 September 2009

The world has become an uncertain place Managing through current market conditions is a major challenge Fundamental changes to the world economy and resulting trade patterns may be underway Risks are

8 The world has become an uncertain place Managing through current market conditions is a major challenge Fundamental changes to the world economy and resulting trade patterns may be underway Risks are high - how they are managed will be critical to success Building flexibility into business models has become critical The industry faces complex near term challenges but there will be opportunities for those with foresight Page 7 4 September 2009

9 World GDP and containerized trade will the pattern of linked growth alter?? Page 8 4 September 2009

10 Negative containerized growth is expected for the first time in two decades Annual growth rate Percent World GDP & Containerized Trade Growth Rate % 9.8% 10.1% 9.8% Source: IMF Apr 2009; Clarkson s Page 9 4 September 2009

11 APL Vol & Av Revenue/FEU (2000-1H 2009) Volume Average revenue/feu % Volume growth over period 000 FEU 3,000 2,500 2,000 1,500 1, APL Volume (2000-1H 2009) US$/FEU 3,500 3,000 2,500 2,000 1,500 1, H08 1H09 7.7% -23.6% Source: APL Page 10 4 September

12 Asia-Europe Page 11 4 September 2009

13 Asia-Europe Page 12 4 September 2009

14 Asia-Europe ELAA s price index compares container freight rates for April and May with last year s rates. The data clearly shows the market decline Source: European Liner Affairs Association Page 13 4 September 2009

15 China s shift to infrastructure is a booster - increased demand in the backhaul Page 14 4 September

Industry capacity rationalization Almost all major carriers have responded to declining demand and freight rates by reducing capacity Major East -

16 Industry capacity rationalization Almost all major carriers have responded to declining demand and freight rates by reducing capacity Major East - West Trades* Capacity Rationalization Source: MDS Jul 09 Note : * East- West trades Transpacific, Asia Europe & Transatlantic Page 15 4 September 2009

17 APL capacity adjustment and idled vessels APL vessel deployment is adjusted according to market dynamics, including seasonality T EU s Idled Nominal Vessel Capacit y Operat ing Nominal Vessel Capacit y Number of idled vessels 6 0 0, , , , , , Q0 8 4 Q0 8 1Q0 9 2 Q0 9 Note: Figures are as of end of the respective quarters. Page 16 4 September 2009

18 The world s idle fleet The number of idle vessels continues to increase, though it has fallen from a high of 11% in March to 10%, indicating bigger new builds are being deployed into service and older and smaller tonnage is being idled Industry Idle Ships Estimate 10.3 % of the existing capacity Page 17 4 September 2009

World containerized supply outlook No orders have

19 World containerized supply outlook No orders have been placed in 2009, but current order book is extremely large with 5.65 million TEU on order, equivalent to 45% of existing capacity Containerships Orders Containerships Orderbook Page 18 4 September 2009 Source: Clarkson's Research Services, April 2009

20 Industry capacity rise of scrapping Page 19 4 September 2009

21 Bunker Bunker fuel fuel spot - spot prices prices After falling below $250 per MT in December 2008, bunker prices have started regaining lost ground, rising by about 87% since the beginning of the year Monthly Bunker Price (US$/MT) Jul 08 :$761 87% increase in Bunker price since December 2008 Aug 09 :$ 442 Dec 08 :$237 Source: Bunker world (IFO 380 Grade) Page 20 4 September 2009

22 Actions being taken to manage through downturn Pace of decision making 1 2 Management of costs choices being made about deploying assets or laying-up tonnage Shareholder funding injections 8 3 Review of business models Carrier/Shipper collaboration 7 4 Renewed focus on innovation Focus on productivity 6 5 Asset flexibility Page 21 4 September 2009

23 NOL undertook US$1Bn share rights issue Rationale Strengthen balance sheet of the Group to enhance financial flexibility Use of Proceeds Repayment of debts of the Group (approximately 50%) Balance to be used for: - Investments (if opportunities arise) - General corporate and working capital purposes - Further repayments of debt Page 22 4 September 2009

Global credit and capital markets reopen and recover Severe global recession Battered, but resilient Globalization revives Moderate global recession Page

24 Global credit and capital markets reopen and recover Severe global recession Battered, but resilient Globalization revives Moderate global recession Page 23 4 September 2009 Source: McKinsey Global Institute Long drought Global credit and capital markets close down and remain volatile Stalled globalization

Conclusions Some stability in operating environment in latter part of 1H09 Rates continue to be at unsustainable

overhang remains but signs the future order book is at risk due to delays and cancellations Great stress on the

discipline Lines with presence and positioning in Asia are benefiting from Asia being the engine of global trade M&A

25 Conclusions Some stability in operating environment in latter part of 1H09 Rates continue to be at unsustainable levels Softness in global demand continues to affect volumes for container shipping and related businesses Supply overhang remains but signs the future order book is at risk due to delays and cancellations Great stress on the vessel financing sector Large scale contractual disputation can be anticipated Lines continue to focus on cost discipline Lines with presence and positioning in Asia are benefiting from Asia being the engine of global trade M&A activity and business restructurings may increase as players look to take advantage of opportunities that may arise Page 24 4 September 2009

26 End of Presentation

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