Göteborg 25 November, 2009

•Lloyd’s Register-Fairplay and IHS

•General Overview

•2009

•2010-2014

Presented by: Christopher PålssonManager & Senior ConsultantLloyd’s Register-Fairplay Research

What We All “Know” ….

Net fleet growth exceeds demand in most shipping sectors• Downwards pressure on ship charter rates

— Non-operative ship owners in distress

• Downwards pressure on shipping rates, but…— Upwards correction to sustainable levels expected— Short lived temporary spikes likely

• No tonnage shortage, but…— Changing market structures – M&A

LRF Port Activity Indicator

0

20

40

60

80

100

120

140

160

2006 2007 2008 2009

Index J

anuary

20

07

=1

00

, 1

2 w

eek a

vera

ge

Crude (13 Ports) Bulk (13 ports) Container (64 Ports) Vehicle (24 Ports)

Sources: Lloyd's Register-Fairplay Research, AISLive

World fleet development

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Tot

al W

orld

fle

et,

mill

ion

dwt,

196

0-

Tanker Bulker & GC Container & Roro Passenger Misc.2009-11

Forecast

New vessel deliveries

0

20

40

60

80

100

120

140

160

180

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

To

tal

Wo

rld

, d

eliv

erie

s, m

illi

on

dw

t, 1

970-

Tanker Bulker & GC Container & Roro Passenger Misc.2009-11

Forecast

Vessel removals

0

10

20

30

40

50

60

1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

To

tal

Wo

rld

, re

mo

vals

, m

illi

on

dw

t, 1

978-

Tanker Bulker & GC Container & Roro Passenger Misc.2009-11

Forecast

Cancellations – no of vessels

0

50

100

150

200

250

300

350

400

450

500

2000 2003 2006 2009 2012

To

tal

Wo

rld

, ca

nce

llat

ion

s, n

um

ber

of

ship

s, 2

000-

Tanker Bulker & GC Container & Roro Passenger Misc.2009-06

Forecast

Cancellations – % of orderbook

0%

1%

2%

3%

4%

5%

6%

7%

8%

2000 2003 2006 2009 2012

To

tal

Wo

rld

, ca

nce

llat

ion

s, #

vs

the

ord

erb

oo

k, 2

000-

Tanker Bulker & GC Container & Roro Passenger Misc.2009-06

Forecast

Total world fleet development

0

50

100

150

200

250

300

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

To

tal D

eliv

eri

es,

MD

wt

0

500

1,000

1,500

2,000

2,500

3,000

To

tal F

lee

t D

ev

elo

pm

en

t, M

Dw

t

In Service Removed Orderbook

Cancelled Fleet Development

6.6% pa2004-2008

Total world fleet development

0

50

100

150

200

250

300

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

To

tal D

eliv

eri

es,

MD

wt

0

500

1,000

1,500

2,000

2,500

3,000

To

tal F

lee

t D

ev

elo

pm

en

t, M

Dw

t

In Service Removal Forecast Removed Late Deliveries Delivery Forecast

New Order Moved Cancellations Fleet Development Deliveries

6.8%forecast

2009-2013

New vessel ordering by month

0

1,200

2,400

3,600

4,800

6,000

7,200

2001 2002 2003 2004 2005 2006 2007 2008 2009

An

nu

alis

ed C

on

trac

tin

g,

>1,

000

Gt

no

of

Sh

ips.

0

100

200

300

400

500

600

Mo

nth

ly C

on

trac

tin

g,

nu

mb

er o

f S

hip

s.

Annualised 3 month average Monthly Contracting (Right axis)

Updated: 2009-11-03

And it is in China it is happening

0

300

600

900

1,200

1,500

1,800

2,100

2,400

2001 2002 2003 2004 2005 2006 2007 2008 2009

An

nu

ali

se

d C

on

tra

cti

ng

, >

1,0

00

Gt,

nu

mb

er

of

Sh

ips

0

25

50

75

100

125

150

175

200

Mo

nth

ly C

on

tra

cti

ng

, n

um

be

r o

f S

hip

s

Annualised 3 month average Monthly Contracting (Right axis)Updated: 2009-11-03

Capacity supply absorption

Changing trade patterns• New networks/routes

• Sourcing of cargo further away

Slow steaming & rerouting• Savings; bunker fuel & canal charges

Storage

Removals (scrapped & lost) • Already included in fleet forecast

Conversion

Idle• Warm or cold lay-up

• Maintenance & repairs

Queing outside ports

Why buy a new ship now?

• Price

• Spec

• Lowest cost position

• Delivery time

• Employment & Speculation

• The Godmother!

New ship ordering – dwt

0

50

100

150

200

250

300

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

To

tal

Wo

rld

, c

on

tra

cts

, m

illi

on

dw

t, 1

97

0-

Tanker Bulker & GC Container & Roro Passenger Misc.2009-11

Forecast

New ship ordering – no of vessels

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

To

tal

Wo

rld

, c

on

tra

cts

, n

um

be

r o

f s

hip

s,

19

70

-

Tanker Bulker & GC Container & Roro Passenger Misc.2009-11

Forecast

New ship ordering – no of vessels

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

To

tal

Co

ntr

ac

tin

g,

Nu

mb

er

of

Sh

ips

South Korea Japan China Other Asia Europe Americas Rest of World2009-11

Forecast

North & Baltic Sea region

No of ships Sum kDWT

Tanker 584 12,880

Bulker & GC 1,056 5,202

Container & Roro 388 3,599

Passenger 157 860

Misc. 244 1,107

Grand Total 2,429 23,647

Fleet

Present in ECA >49.9% 2009

>1,999dwt

No of ships Sum kDWT No of ships Sum kDWT

406 25,018 70% 194%

887 40,523 84% 779%

398 17,817 103% 495%

22 191 14% 22%

252 1,974 103% 178%

1,965 85,523 81% 362%

On order On order %

On order for group owners with vessels present in ECA >49.9% 2009

>1,999dwt

Excl unknown/unidentified owners

Business Implications and the Bottom Line

Cargo Owners/Shippers• Generally low transport costs, but “nervous” rates

• Unstable market conditions

• Changing market organization

• Treasure reliability!

Ship Owners & Operators• Very tough competition

• Difficult financing

• Newbuilding exposure?

• Lowest cost per unit

• Survival of the wealthiest

Tack! Christopher Pålsson, Lloyd’s Register-Fairplay Research, research@lrfairplay.com