Confidential – not for third party distribution © Seabury Group 2016

Development of Temperature-

controlled Shipments in Asia

Asian Logistics and Maritime

Conference

22.Nov.16

1 Confidential – not for third party distribution © Seabury Group 2016

Perishables and pharma outperform global average Perishables has been a main driver of global air freight growth in the past decade, both in

terms of absolute as well as percentage growth; pharma in terms of percerntage growth

Global air freight by commodity group, 2006 - 2015 Million tonnes

Source: Seabury Global Trade Database; Seabury analysis (November 2016)

4

3

2

1

0

2.2

Machinery

parts

3.6

3.3

Raw

materials

3.8

3.0

High tech

3.9

4.0

Other

0.3

Pharma

0.5

0.4

Land

vehicles

1.0

0.8

Chemicals

1.0

0.8

Capital

equipment

1.2

1.1

Consumer

& fashion

2.8

2.9

Perishable

2.9 2006

2015 growth

-0.2% 2.6% 1.1% 2.8% -0.3% 1.4% 2.3% 2.3% 3.7% -0.1% % CAGR:

(2006-’15)

700,000 tonnes of perishables added to global air freight market

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Asian perishables driven by fresh foods The market share of Asia in the global perishable market has grown from 13% in 2006 to

20% in 2015, driven by a 6.8% p.a. growth of imports

Global perishables air trade, 2006-’15 Thousand tonnes

Note: 1) Share measured in air trade weight; 2) Asia is defined as North East and South East Asia; Pacific and Indian subcontinent are excluded

Source: Seabury Global Trade Database

2,859

20%

73%

2%

Asia imports2 (+6.8%)

Rest of world (+2.3%)

2015

5%

2011

2,484

16%

7% 3%

75%

2006

2,295

13%

7% 3%

77%

Asian perishable imports by air

7%

30%

3%

10%

4%

45%

558

Fresh seafood

Fresh fruit & veg

Frozen foods

Commodities

Other

Fresh meat

Flowers & plants

% of perishables air imports1

Asia exports (-1.0%)

Intra-Asia (0.3%)

% CAGR

(2006-’15)

Presenter Notes

• ~60% of the fresh seafood is just

fish, the rest is crab, other

molluscs and lobster

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Most perishable categories have strong year With the exception of frozen fruit and vegetables, most perishable categories experienced

very strong growth figures this year

Asian2 commodities winners and losers, 2015-2016 (Jan-Aug) Growth, thousand tonnes

Notes: 1) Growth from 2015 to 2016 (January to August); Only shows flows with absolute changes of >1,000 tonnes over the selected period; 2) Asia is defined as North East and

South East Asia, Pacific and Indian sub continent are excluded

Source: Seabury Global Trade Database (November 2016)

Frozen meat

Frozen fruit & vegetables

Frozen fish

Fresh meat

Fresh berries and grapes

Dairy

7.8

4.0

3.7

1.9

1.0

-5.4

1.9

11.4

10.8

9.7

Fresh vegetables

Fresh seafood (other)

Fresh fruit (other)1

Fresh fish

Growth1 (%)

8%

14%

13%

19%

28%

13%

9%

21%

13%

-50%

Decrease in frozen fruit and vegetables driven by strong 2015 due port strikes

Presenter Notes

• Frozen foods growth trend:

They have seen a significant

growth 2013 vs. 2014 and then

significant drop 2015 vs. 2016

• This was nearly fully

because of massive drops

to USA exports to JP, KR

and HK – went back to

ocean freight post-strikes

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Shifting trade patterns All stakeholders in the air cargo industry should watch shifting trade patterns as they drive

strong changes in demand, and should drive changes in supply of air transportation

Top growing and losing perishable trade lanes, 2015-2016 (Jan-Aug)

Source: Seabury Global Trade Database (September 2016)

Fresh fish from Norway into China and Hong Kong likely diverted via Vietnam

Fresh fish Fresh fruit Fresh seafood (excl. fish)

Fresh fish Fresh fruit Fresh seafood (excl. fish)

Growth, thousand tonnes

Norway – Hong Kong -6.9

Norway – China -4.7

Australia – China -1.5

USA – South Korea -4.2

Thailand – China -1.3

USA – Japan -0.7

USA – Vietnam -1.3

Madagascar – China -0.7

Japan – China -0.6

USA – Hong Kong 2.4

Canada – China 1.5

Bangladesh – China 1.2

USA – China 2.7

USA – Hong Kong 2.0

Australia – Singapore 2.0

Norway – Vietnam 8.0

Chile – China 4.9

Norway – South Korea 3.7

Presenter Notes

Trade-lane specific observations

• China is boycotting Norwegian

salmon (hence the decrease to

HK and China)

• Suppliers are finding

workarounds, e.g. importing into

VN and then trucking/shipping,

also they are finding alternative

origins (e.g. Chile)

• The drops in Norwegian salmon

into CN/HK is balanced out by the

increases into VN and KR

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Perishable air imports focus on three locations Perishable air imports in Shanghai, Guangzhou and Beijing has experienced tremendous

growth since 2006

China’s perishable air imports per region, 2006 - 2015

Thousand tonnes

Source: Seabury Global Trade Database; Seabury analysis (November 2016)

1

2

3

4

5

6

7

2015 incremental

2006

-5 60 30 10 20 15 5 25 40 0 35 55 45 50

Shanghai

Others

1 Chengdu

4

Fuzhou 4

4 Kunming

25 Guangzhou

56

Beijing 18

1

3

2

6

5 4

Presenter Notes

• PVG growth (46K)

• Fish 11K

• Shell fish 25K

• Fruit 10K

• Flowers -3K

• Guangzhou (21K)

• Fish 6K

• Shell fish 11K

• Fruit 3K

• Beijing (14K)

• Fish 6K

• Shell fish 4K

• Fruit 3K

The shell fish is -50% crabs ~25%

lobster

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34%

60% 63%54%

27%40%

66%

40% 37%46%

73%

90%

60%

10%0%

20%

40%

60%

80%

100%

Cheese Cherry

Other shippers

Other fruit

Top 10 shippers

Guava &

Mango

Fresh foods Plum Bovine meat

Small number of shippers have large market share Top 10 shippers control a vast part of the market in the various perishables air import

businesses

China market share of top 10 shippers by commodity Share of air imports1 (% of total weight)

1) Limited to shippers in China, based on air weight; chart not exhaustive, not showing all commodities.

Source: Seabury China Shipper Trade Database (November 2016); Seabury Analysis

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Pharma: fast growth from lower base Pharma has developed from a low base in 2006 to a substantial market by 2016 through

consistent growth in medicaments (6.3% p.a.) and non-medicaments (7.7% p.a.)

Perishable and pharma Asian1 cargo market, 2006-’15 Thousand tonnes air trade

Note: 1) Asia is defined as North East and South East Asia, Pacific and Indian sub continent are excluded

Source: Seabury global trade data; Seabury analysis

Medicaments

858

9%

9%

2011

796

10%

10%

2010

744

10%

9%

2009

661

10% 9%

2008

626

10%

2007

627

9%

2006

620

8% Non-Medicaments

2015

946

11%

7%

2014

921

11%

7%

2013

851

11%

8%

2012

Perishables

% CAGR

(2006-’15)

4.4%

6.3%

Non-medicaments likely to require cool chain capabilities

7.7%

Presenter Notes

- Non-medicaments is the fastest

growing sector.

- Non-medicaments are most likely

to be Pharam cold-chain

- As this sector grows new facilities

and regulation will be needed

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Pharmaceutical air trade in Asia is growing rapidly Asian pharmaceutical air freight is outpacing the rest of the world; pharmaceuticals requiring

cold chain are driving this growth

Global pharma air trade growth, 2006-2015 Thousand tonnes (% CAGR)

Notes:1) Asia is defined as North East and South East Asia, Pacific and Indian sub continent are excluded

Source: Seabury Global Trade Database

3.7%

Asia1 (+7.1%)

Other (+2.4%)

2015

545

31%

2012

561

2009

493

2006

395

23% 25%

27%

Pharma trade segment breakdown

2015

Medicaments

39%

Pharma

chemicals

24%

Lab/related

chemicals

24%

Other

12%

% of Asian pharma air trade, 2015

100%

Non-

medicaments

usually

require cold

chain facilities

Medicaments

are usually

shipped in

general cargo

Cold chain pharmaceuticals in Asia are a key growth driver for the region

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A need for cold chain care A trillion dollar global pharmaceuticals market continues to grow at 4-5% per year; and

products requiring cold chain facilities will represent 25% of the market by 2020

Global pharma sales trend, 2014-2020 US$ billion

Source: 2015 forecast by IMS Health and Evaluate Pharma

1,415

1,277

1,136

1,0061,054

968

876788

360309

260218

0

500

1,000

1,500

2016 2018 2020 2014

Non cold chain (+5.0%)

Cold chain (+8.7%)

Total (+5.9%)

Global pharma sales will continue to drive pharma trade growth in the medium term

% CAGR 2014-’20 (%)

General cargo

Temp. control

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Most of Asia’s major pharma trade lanes involve China Some of the largest Asian pharma trade lanes, mainly involving China, have seen rapid

growth in the past few years, and much of this trade requires temperature control facilities

Top 5 Asian2 pharma trade lanes, 2015

Notes: 1) The split is an estimate based on the generalized nature of these traded goods 2) 1) Asia is defined as North East and South East Asia, Pacific and Indian sub continent are

excluded

Source: Seabury Global Trade Database, Seabury analysis (November 2016)

Temperature control capabilities and facilities will need to be continually improved as the market grows

Germany-China 3.5 2.1

USA-S. Korea 4.9 4.9

China-USA 8.2 2.3

USA-Japan 8.2 11.2

USA-China 12.5 4.4

Trade lane

2015 growth 2010

Thousand tonnes, 2010-’15

75%

87%

72%

76%

74%

Gen. cargo Temp. control

% requiring temperature control1

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The air import market of China’s pharma is concentrated The 10 largest shippers in China for air imports of pharmaceuticals represent close to 40%

of total pharma imports, and are driving the growth for the sector’s trade

Chinese pharma imports, 2015-161

Thousand tonnes, top 10 share

Notes: 1) January to September (YTD)

Source: Seabury China Shipper Database (November 2016)

Top 10 importers growth, 2015-20161 Thousand tonnes, 2015-16

Top 10 shippers in China have a significant impact on the country’s import growth

Growth of the largest

importer represents

>80% of total growth in

Chinese pharma imports

3.2 1.6

0.5 0.5

0.5 0.3

0.5 0.5

0.6 0.5

0.7 0.4

0.8 0.6

0.8 0.8

0.9 1.1

1.5 1.3

Shanghai Yishixiang Logistics

2016 increment 2015

63% 63%

37%

23.5

2015

Other

Top 10

25.4

37%

2016

Presenter Notes

• The largest importers, Fresenius Kabi

and Sinopharm have experienced

significant growth in the last year

• The market is comprised both of

Chinese and foreign shippers

• A number of the smaller shippers can

no longer be seen in the data,

suggesting a growing trend of

consolidation

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Perishables

What are the trends in temperature-controlled trade The industry has seen strong growth in temperature-controlled air trade, this is driven by fresh

and frozen food and pharmaceutical products

Perishables will continue to drive trade growth

Perishables continue to outperform other sectors globally and in Asia

Fresh foods are the primary contributor to perishables air trade in Asia,

namely through imports from Europe

Overall growth in Asia is positive, however different trade lanes may see

strong volatility depending on market conditions and external factors

Pharma growth is resulting in changing requirements for cargo

While it is still relatively small, the pharmaceutical industry has one of the

fastest growing air trade sectors in the world

Recent growth in key trade lanes and future forecasts suggest temperature-

controlled pharma to be a major growth driver for air trade

Airlines, airports and handlers will need to adapt their capabilities to

serve this growth market in the future

Pharmaceutical