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Outlook for Ocean Carriers & NVOCCs

Presenter: Ed Pizaepiza@ohl.com

1

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Small Ships/Capacity

Limited Competition

High Rates of Shipping

Non-Agreement

Past

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Growth Factors

3

Vessel Size Growth

Containerization

Non-Vessel Operating Common Carriers (NVOCC)

Large Retailers

Higher Demand

Emergence of New Shipping Lines (“Rust Buckets”)

New Conference Systems and Agreements

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Current Day

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Rate Conference Systems

Existed as early as 1916 until about 10 years ago

Established Federal Maritime Commission (FMC)

Used to stabilize rates and service

Limited negotiation options/Dual-rate contract

Prohibition of individual service contracts

Growth in global shipping led to a growing concern

with conference systems

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Discussion Agreements

Shipping laws more relaxed 1984-1998

Ocean shipping became differentiated/sophisticated

Created specifically for different markets/commodities

TACATACA

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NVOCC & Carrier Contract Negotiation

Spot market rates

52-week rolling average

13-week contracts (Asia-Europe)

Volume shippers and minimum shipment charges

GRI waiver and cap negotiation

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General Rate Increase (GRI)

Pre-May 2009

July 2009 GRI• NVO’s

• BCO’s

Current Day Status

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Fuel Surcharges

Service Fees

Handling Charges

Security Fees

Delivery Area Surcharge

Accessorial Charges

Chassis Surcharge

Additional “Add-On” Costs

As of 9/1/09As of 9/1/09

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Current Market Conditions & Outlook

General Rate Increase (GRI)

Vessel Capacity

Vessel Sharing Agreements

Ocean Carrier Customer Service

Expansion of Panama Canal

Suez Detours

“Idled ocean container capacity hit a new high of 1.41 million TEUs” - JOC

“Idled ocean container capacity hit a new high of 1.41 million TEUs” - JOC

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Ed Piza – epiza@ohl.com SVP, OHL Global Freight Management and Logistics

Thank you.