American Feeder Lines

The Realization of America’s Marine Highway

Transportation Research Board

Tuesday, July 12, 2011 - Boston

2CONFIDENTIAL – NOT FOR DISTRIBUTION

Disclaimer

THIS MATERIAL IS CONFIDENTIAL AND MAY NOT BE REPRODUCED OR PROVIDED TO OTHERS WITHOUT THE EXPRESS WRITTEN PERMISSION OF THE PYNE COMPANIES LTD (“PYNE”) OR KÖNIG & CIE. GMBH & CO. KG (“KÖNIG & CIE.”). THIS MATERIAL DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OTHER SECURITIES, TO OR FROM ANY PERSON IN ANY JURISDICTION. ANY SUCH OFFER OR SOLICITATION MAY ONLY BE MADE PURSUANT TO OTHER LEGAL DOCUMENTATION. BY ACCEPTING DELIVERY OF THIS MATERIAL, EACH RECIPIENT HEREOF AGREES TO THE FOREGOING.

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AFL will become America’s Marine Highway

Exec. Summary Partners Opportunity AFL Contacts

Our Mission

“We will completely transform North America’s

Coastal Shipping Network”


We will completely transform the pattern of America’s supply chain network!


Table of Contents

What I See

State of the U.S. transportation system and coastal shipping

American Feeder Lines (AFL)


A Perfect Storm

Containers move the worlds goods. Backbone of on-time logistics chains.

More and more goods are being containerized including food

The world depends on the free flow of containers

Container volumes are back at 2008 levels

Existing U.S. transportation system under growing stress and decay

No government infrastructure money to repair and maintain the existing system let alone any

future expansion

National driver shortage estimated at 75,000

Lack of equipment

Dramatic fuel price escalation

Deployment of the Mega Liner Ships

Panama Canal Expansion

EPA mandated compliance with the 1990 Clean Air Act

Projected highway toll increases

Growing U.S. emphasis on export trade


What I See


Road and rail capacities are not keeping pace with transport demands

Vehicle Miles Traveled vs. Lane Miles, 1980-2008 (1980 = 100)

80%

100%

120%

140%

160%

180%

200%

220%

Vehicle Miles Traveled

Lane Miles


Source: Global Insight for AASHTO Freight Bottom Line Report

U.S. Rail Network Extension Plans


U.S. has no coastal or international container fleet

Top 20 World Liner Companies and Ports


Source: US Dept of Transportation, Research and Innovative Technology Administration and Alpha Liner -Top 100 April 2011

Liner Companies Ports


1/3 of all bridges in the U.S. are older than 50 years

State of the Nation’s Bridge Infrastructure and Repair Funding

599,996 bridges in the United States

69,223 (11.5%) are rated as “structurally deficient” according to

government standards

23% of all bridges are located in urban areas

High commuter and truck traffic

Urban bridges carry approx. ¾ of the nations bridge traffic

1/3 of all bridges in the U.S. are older than 50 years (this number

will double by 2030)

Bridge Repair Funding

The current backlog on maintenance and repair of the

nation’s bridges amounts to approximately $70.9 bn

The current Federal Highway Bridge program has

approximately $5.2 bn in funding

U.S. bridge infrastructure is lacking $65.7 bn in maintenance

and repair funds

Source: The State of Our Nation‘s Bridges; Transportation for America; 2011


4,6

5,1

5,2

5,2

48,0

51,6

61,4

70,9

0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0

2006

2007

2008

2009

Yea

r

Billion US$

Actual Highway Bridge Program Appropriations Federal Estimates to Eliminate Backlog


Maritime falls behind in funding projects

Note the obvious disparity between spending and usage!


Less than .003% of the nation’s transportation budget is spent on the U.S. Marine Highway

Estimated ton-miles of domestic surface freight shipped by mode in 2007




Our Mission

Cost to create one mile of Urban Highway = $20.0 – 50.0m

Cost to create one mile of the Marine Highway = $0.0


The current transportation system is extremely costly

Costs to the U.S. Economy

• U.S. congestion responsible for $200 billion in costs each year

• Lost revenue

• Wasted time

• Wasted fuel

Economic Costs

• Significant environmental costs

• Transportation is the leading carbon emissions contributor

Environmental Costs

• Currently 68% dependency on foreign oil

Political Costs

CO2 Emissions Transportation Sector

+ 21 %

1998

2008

Source: Energy Information Administration

Source: U.S. Energy Information Administration



Market Opportunity

Jones Act fleet and estimated fuel savings


The value of the fuel savings alone makes chartering an AFL vessel attractive for existing Jones Act carriers.




“The idea that the U.S. cannot build ships is an excuse, not a

reason”


The U.S. CAN build ships

U.S built a ship in 4 days, 15 hours, 29 minutes!


Liberty Ship SS Robert E. Peary was built in 4 days, 14

hours, 29 minutes

After the first Liberty Ship, Patrick Henry, was built in

1941, over a hundred more followed before the end of

the year

Henry Kaiser built these ships of prefabricated modulesprefabricated modules

that were then assembled in series construction

Welding was used extensively for the first time

instead of riveting

In the first year and half of the year, construction time

for Liberty ships was reduced from 105 to 14 days

By the end of WWII, Kaiser had built one-third of the

Maritime Commission’s vessels and had set the

standard for all other yards

Kaiser’s system has been adopted by all the world’s

“commercial” yardsSource: The Abandoned Ocean by Andrew Gibson and Arthur Donovan

SS Robert E. Peary

SS Patrick Henry


Trading Partners with Cabotage Laws

Nations that support shipbuilding in their countries



The Game Changer

Container Fleet Capacity and Vessel Size Composition

Source: Clarkson’s Research Studies 2011


The Game Changer

Evolution of the world’s largest containerships 1985-2011

Source: Expansion of the Panama Canal: Potential Impact, Rodolfo Sabonge, March 2011


Panama- Logistics center of the Americas

Reaching full potential of its geographical position



Easy Access and benefits of expansion

Latin America, the Carribbean, North America, Asia and Europe


Before After


American Feeder Lines (AFL)


In Asia and Europe, the intermodal link between container-vessels and Truck/Rail is the Feeder-Ship

Container Transport Patterns in Asia and in Europe (Exemplified)

Exec. Summary AFL Partners Jones-Act Fleet ECA Opportunity Contacts

Asia Europe


For example: The port of Hamburg has 159 Feedership departures per week. Zero in the U.S.!

Feeder Connections from the Port of Hamburg* (2nd largest Port in Europe)

• Port of Hamburg had a container turnover of approx. 7 mil TEU in 2009 (10 mil TEU in 2007 and 2008)

• Intercoastal transport (Feedering/Short sea) accounts for 1.5 mil TEU (21.4%) of the total volume



AFL: The intermodal link

Current Route


Current Service Routes


Feedering helps to increase road and rail transport efficiency in the U.S.

Feedering/Short Sea as Transport System Efficiency Driver

Container flows to main hubs on U.S. East and

Gulf Coast

Feedering/short sea

makes the entire system more efficient

We are applying a world-wide proven transportation system to the U.S.

Exec. Summary AFL Partners Jones-Act Fleet ECA Opportunity Contacts


First fully U.S. Jones Act compliant feeder service

Who We Are and Our Approach

American Feeder Lines (AFL) is the United States’ first short sea/feeder shipping company

Officially designated by the U.S. Department of Transportation as “American Marine Highway Project” under Title XI—Energy Transportation and Infrastructure of the Energy Independence and Security Act 2007

AFL business model is based on successful international short sea/feeder operations that exist today in Europe and Asia

AFL will target domestic cargo moves, thereby reducing the existing and growing road system congestion as well as carbon emissions

AFL will build, own, and operate 100% U.S. built, flagged, and manned Jones Act container vessels

AFL will introduce and establish the hub and spoke container network in the U.S.

AFL will facilitate the deployment of the container cargos of “super ships” on the USEC

AFL will create many new jobs at sea, in ports, in shipyards and create an entirely new maritime sector along the U.S. East and Gulf Coast

AFL International will commence operations in Q2 2011 with our New England Shuttle connecting Maine and Massachusetts via water to 17 international trunk liner companies calling Halifax weeklyExec. Summary Partners Opportunity AFL Contacts


92% of all U.S. domestic truck/rail moves are in regions to which AFL plans to offer services

Domestic (Door-to-Door) Potential on the USEC and USGC

Origin

(in millions) New England NY/NY/PA Mid AtlanticSouth

AtlanticFlorida Gulf Totals

North-bound Traffic Flow

New England - 895 1,627 1,087 2,766 6,375

NY/NY/PA - 1,200 6,019 3,470 10,110 20,799

Mid Atlantic 527 457 1,265 2,716 5,920 10,885

South Atlantic 474 3,075 636 1,598 4,821 10,604

Florida 417 2,688 2,134 522 5,689 11,450

Gulf 737 2,995 2,123 3,701 2,667 12,223

Totals 2,155 9,215 6,988 13,134 11,538 29,306 72,336

Des

tin

atio

n

Source: Four Corridor Case Studies of Short Sea Shipping Service. Submitted to the DOT by Global Insight



Feedering is more economically efficient and environmentally friendly

CO2 emission to Transport 992 20’ Containers

1 American Feeder Ship

983 TEUs (14t/TEU homog. loaded, IMO, at 14 knots)

0.024 kg CO2/ton mile

246 Railcars

983 TEUs (TEU DBL stacked)

0.033 kg CO2/ton mile

655 Trucks

983 TEUs on 655 Trucks (at 1,5 TEUs / Truck)

0.105 kg CO2/ton mile.

Source: Adapted from U.S. Department of Transportation

CO2/ton mile



AFL: The intermodal link

AFL’s Targeted Routes


AFL’s first service: New England Halifax Shuttle

Prospective Routes


AFL can become your intermodal partner!

What can AFL do for Boston?

• Improvement of service pattern and intermodal transportation chain

• Connect Boston via water to the world via Halifax and Portland

• Intermodal partnership

• Less stress for truck driver community – shorter rotations, more short trips

• Weekly or better U.S.-Interregional Transportation service

• Reduction of costs

• Reduction of cargo-related inland costs

• Opportunity to streamline the equipment size

• Full load containers

• Green shipping

• Logistic chains with low carbon footprints

• Intermodal link relieves road congestion and offers reliable services

• Efficient management of inland weight limitations

Exec. Summary Partners C&O AFL Opportunities Contacts


Collapse of U.S. Infrastructure resulted in America’s Marine Highway Program

Why is this the Right Time?

• Collapse of U.S. infrastructure:

• Nation's existing road and rail infrastructure cannot adequately meet future

transportation needs

• U.S. government will cut investments in U.S. landside infrastructure projects

• We are focused on green projects that take into account community and

environmental costs

• Global economic crisis leads to pressure on U.S. shipyards with new buildings now

available at reasonable prices

• U.S. DOT made this a national priority by instituting America’s Marine Highway Program



Please feel free to contact us at any time


Your Contacts

TOBIAS KÖNIGCEO · FOUNDING PARTNER

American Feeder Lines Holding LP

40 Wall Street · 62nd Floor · New York, NY 10005 · USA

Telephone US + 1.212.269 4888 · Fax + 1.212.269 8108

Telephone GER + 49.40.36 97 57-100 · Fax GER + 49.40.36 97 57-199

Mobile + 49.172.40 31 327 · [email protected]

PERCY R. PYNE IVCHAIRMAN · FOUNDING PARTNER



Telephone + 1.212.269 4888 · Fax + 1.212.269 8108

Mobile + 1.646 824 2005 · [email protected]



Telephone 212.269 4888 · Fax 212.269 8108

Mobile 978 394 8856 · [email protected]

RUDY MACKCOO



Telephone + 1.212.269 8211 · Fax + 1.212.269 8108

Mobile + +1.732.763 2611 · [email protected]

ANDREW HAINESVICE PRESIDENT OF LINER MANAGEMENT

Please visit us on our website at www.american-feeder-lines.com

For additional information or to request copies of our presentation, please email [email protected]


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