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Matt Cox President, Matson. Todays Presentation About Matson Matson as a Jones Act Carrier: Challenges in D.C., Hawaii, Guam Expanding Beyond Jones Act.

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Presentation on theme: "Matt Cox President, Matson. Todays Presentation About Matson Matson as a Jones Act Carrier: Challenges in D.C., Hawaii, Guam Expanding Beyond Jones Act."— Presentation transcript:

1 Matt Cox President, Matson

2 Todays Presentation About Matson Matson as a Jones Act Carrier: Challenges in D.C., Hawaii, Guam Expanding Beyond Jones Act Markets The Role of the Ports of Los Angeles and Long Beach in World Trade

3 About Matson Serving the Pacific since 1882 Evolved with the industry: – from sail to diesel powered vessels Survived two world wars, enormous changes Historical ties to Southern California date back to 1926

4 Matson and the Development of Tourism in Hawaii Matsons white ships, Waikiki hotels helped make Hawaii a world class tourist attraction Artwork and memorabilia from era still popular today

5 Matson & Containerization Containerization is an American innovation: – Sea-Land in the Atlantic, Matson in the Pacific (1950s) – Matson featured in Smithsonian exhibit Transforming the Waterfront Matsons Wilmington facility: early 1960s 4

6 Matson Today Similar to most ocean carriers: – Ocean services – Logistics 5 OCEAN SERVICES & LOGISTICS Mainland Offices Pacific Offices Terminal Locations MIL Offices

7 Matson and the Jones Act Challenge in D.C. Nearly 100 newly elected members of Congress Lost several longstanding and vocal Jones Act supporters Need to build positive awareness of the contributions made by U.S. maritime industry MCTF renamed American Maritime Partnership – AMP AMPs board represents all elements of U.S. maritime industry – geographically dispersed Objective to preserve existing laws, level playing field 6

8 Matson and the Jones Act PricewaterhouseCoopers Study 40,000-plus vessels in our domestic fleet Half million jobs related to American domestic maritime industry $100.3 billion in annual economic impact $29 billion annually in labor compensation Over $11 billion paid in taxes each year 7

9 Matson and the Jones Act Focus Groups Average citizen believes Jones Act delivers three securities to our nation: – Economic security – National security – Homeland security 8

10 Matsons Domestic Ocean Services Core market is Hawaii, served continuously for 129 years Domestic services include Guam, Micronesia Carrier that specializes in serving island economies 9

11 Matsons Domestic Ocean Services: Hawaii Matson is the service leader in Hawaii, rate stability Recent recession third major down cycle in 30 years

12 11 Matsons Domestic Ocean Services: Hawaii Volumes expected to grow modestly for the first time since 2005 Most of Hawaiis key economic measures expected to improve: job creation, construction, tourism Service volumes still far below historical highs Hawaii Service Container Trend Annualized Combined Westbound and Eastbound 175,000 165,000 155,000 145,000 135,000 125,000 20062007200820092010

13 Matsons Domestic Ocean Services: Guam Similar to Hawaii Difference is upcoming Guam military buildup – 8,000 Marines and their families from Okinawa to Guam over the next five years, beginning in 2010 – All military and dependents, approx. 20,000 new residents – 12% increase in population Volumes expected to increase in late 2011

14 Matsons Domestic Logistics Services Spans continental U.S. Services include highway, intermodal, warehousing/distribution Non-asset based business, Matson does not own trucks/trains Customers include major manufacturers and retailers, as well as Matson and international carriers 13

15 Expanding Beyond Jones Act Markets: Matsons China Service China – Long Beach Express launched in 2006 Weekly service from Xiamen, Ningbo and Shanghai to Long Beach Service benefits: on time arrivals, fast transit times Dedicated Long Beach facility key feature: Sunday arrival, Monday availability 14

16 Expanding Beyond Jones Act Markets: Matsons China Service 2009: U.S. demand dropped precipitously Carriers strived to maintain market position Severe pressure on freight rates Nearly all carriers lost hundreds of millions, Matson made modest profit (benefited from having revenue in both westbound and eastbound lanes) 2010: – Favorable market conditions – Strong peak season rates – Increased volumes – Matsons profits for ocean services up by 70 percent

17 Expanding Beyond Jones Act Markets: Matsons China Service Added second string in 2010 New offices, personnel in Hong Kong, Shenzhen (Yantian terminal), staff additions in Shanghai Chartered foreign-flag ships sailing directly from Long Beach to China Building new westbound service 16

18 Expanding Beyond Jones Act Markets: Matsons China Service 17 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Apr 09May 09Jun 09Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10Apr 10May 10Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11Mar 11Apr 11May 11 Shanghai Containerized Freight Index (SCFI): Apr 2009 - May 2011 to U.S. West Coast Base Ports $/FEU SCFI Data 2011 environment more challenging (added capacity in trade, rising fuel costs, rate pressure)

19 Expanding Beyond Jones Act Markets: Matsons China Service Leveraging logistics expertise in China – Working with China customers in Shanghai, Hong Kong, Shenzhen, Xiamen and Ningbo – Working with importers to provide origin consolidation and other value added services 18

20 The Role of the Ports of Los Angeles and Long Beach in World Trade Environmental stewardship role in commerce Green port initiatives

21 The Role of the Ports of Los Angeles and Long Beach in World Trade Matson, SSAT and Port of Long Beach moving forward with cold ironing – Scheduled for summer 2011

22 The Role of the Ports of Los Angeles and Long Beach in World Trade Strong and vital port infrastructure on West Coast high priority Southern California hub for majority of shippers Quickly earning reputation as the most expensive gateway, lengthy menu of add-on costs

23 The Role of the Ports of Los Angeles and Long Beach in World Trade Carriers and shippers want to maximize economies of supply chain Growth in Mexican and Canadian infrastructure Panama Canal expansion five years away Ports should focus on remaining competitive and value added Shippers looking for new options for discretionary cargo

24 The Role of the Ports of Los Angeles and Long Beach in World Trade How can this trend be slowed or reversed? – Collaborative effort of all stakeholders: ports, carriers, terminal operators, labor unions, rail operators, truckers and environmental constituencies Not an easy task Essential that parties miti- gate costs and complexity of transportation system Everyones best interest to ensure region remain vital gateway

25 The Role of the Ports of Los Angeles and Long Beach in World Trade Measure D – concern that funds historically used for port purposes will be diverted to other city projects or initiatives – The City should acknowledge that the Port operates in a very competitive commercial environment Retirement of Dick Steinke – Successor must demonstrate comparable leadership as advocate for economic and environmental port issues, not political appointment

26 25 Q&AQ&A


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