1. September, 2010 ECC Discussion European Port Costs John Tercek September, 2010

2. Overview of Presentation Industry Outlook: New ship construction Survey of Operating Costs for a Panamax Ship on a Transit Call (not a Homeport) (Celebrity Millennium Class; 90,000 GRT; 2,000 Pax) Northern Europe-Baltic Eastern Mediterranean Western Mediterranean Observations

3. Port Demand: Growing Fleet of Ships, Expanding Operating Theaters Current world fleet 250+ ships built since 1980 30 ships under construction for delivery thru 2012. Few ships are retired; most cruise ships ever built are still sailing; every ship stops in at least four ports weekly plus a homeport. Over 50,000 port calls annually, increasing +/- 2,500 additional calls annually with new builds

4. Cruise Industry World Deployment 2010 Operating Theater%Capacity million bed days Caribbean35%40.9 Mediterranean25%29.5 Asia/Australia/India10%11.8 Baltic & UK9%10.1 Mexico Pacific/Hawaii6% 7.2 Alaska 6 % 7.2 South America5% 5.5 Bermuda/New England3% 3.1

5. Port Operators Northern Europe almost exclusively government or “quasi government” owned and operated cruise port facilities, “Port Authorities” including Scandinavian, German, Baltic, Benelux and UK ports. Southern Europe still predominantly government operated ports, (Port Authorities) with gradual privatization (or “quasi privatization”) (“Quasi” means PA still owns significant %, or shareholders include Airport Authority, Chamber of Commerce, etc.) Some “privatized” European cruise ports (or cruise operating concessions) include: –Malaga, Barcelona, Marseille, Valletta, Savona, Livorno, Civitavecchia, Napoli, Venice, Ravenna, & (St Petersburg, Tunis, Kusadasi)

6. Typical Port Costs Categories & Payees Basic “Head Tax” per passenger charge- Terminal Operator (TO) Harbor Dues per GRT- to Port Authority (PA) Dockage Fees per Length Overall- PA or TO Light/Anchorage Dues- sometimes an annual fee per each ship- PA Lines Fees- paid to stevedores for tying up the ship- TO Tug Boat Fees- per GRT, rarely compulsory today- direct fee (D) Pilots Fees- World’s most powerful local monopoly- direct fee (D) Security Fees per passenger (ISPN add-on)- TO Customs Fees- Federal Government (FG) Luggage Movement- stevedores- per passenger charge Miscellaneous Government taxes and fees (FG) Service expenses to suppliers: Agency Fees, Garbage Take Off, Water Supply, Tender Operations

7. Typical Port Costs Categories & PAYORS Basic “Head Tax” per passenger - Individual Customer (Ind Cust) Harbor Dues per GRT- Cruise Company Maritime Operating Expense (Cruise CO) Dockage Fees per Length Overall- Cruise CO Light/Anchorage Dues- Cruise CO Lines Fees- paid to stevedores- Cruise CO Tug Boat Fees- per GRT, Cruise CO Pilots Fees- Cruise CO Security Fees per passenger- Indv Cust Customs Fees- Indv Cust Luggage Movement- stevedores- Indv Cust Miscellaneous Government taxes and fees Cruise CO & Indv Cust Service expenses to suppliers: Cruise Co Agency Fees, Garbage Take Off, Water Supply, Tender Operations

8. Typical Port Charges to Each Individual Customer Basic “Head Tax” per passenger - Individual Customer (Ind Cust) Security Fees per passenger- Indv Cust Customs Fees- Indv Cust Luggage Movement- stevedores- Indv Cust Miscellaneous Government taxes and fees Cruise CO & Indv Cust Cruise Lines generally wrap these items into a category of: “Non-Commissionable Government Taxes & Fees” An add-on to the cruise ticket price. Example: 7 day Med Cruise out of Barcelona Ticket: E799 Non-commissionable Govt Taxes & FeesE65 Total Ticket CostE864

9. EUROPEAN Transit Call Head Tax Tariffs 2010 MED PORTSBALTIC PORTS Barcelona4,35 € Bergen 2,88 € Toulon 1,50 € Warnemunde 5,26 € Villefranche 4,68 € Helsinki 0 € Livorno 4,73 € Stockholm 3,03 € Civitavecchia 4,90 € Tallinn 1,72 € Naples 2,38 € Oslo 2,50 € Ajaccio 3,08 € Amsterdam 5,80 € Malta 5,98 € Copenhagen 1,50 € Messina1,14 € Brugges 1,02 € Venice 5,93 € Athens 0,92 € Santorini 0,40 €

10. Brugges, Belgium Bergen, Norway Warnemunde, Germany Copenhagen, Denmark Oslo, Norway Amsterdam, Holland Helsinki, Finland Stockholm, Sweden Tallinn, Estonia Northern European Port Call Costs

11. Northern European Port Call Costs: Millennium (Panamax) Ship (90,000 GRT, 2,000 pax) Port of Call Head Tax Transit Call Dockage Fees & Security Fees Harbor Dues & Govt Fees Light Dues Anchorage, Navigation, Lines, Dues Pilots Fees TugsTotal Fees per Call Bergen, Norway 5.770€7.250€2.270€14.420€29.710€ Warnemun de, Germany 10.530€7.690€10.200€2.070€5.600€36.080€ Helsinki, Finland 2.080€6.110€41.110€3.460€52.760€ Stockholm, Sweden 6.080€19.980€19.440€ 8.68 0€ 54.180€ Tallinn, Estonia 3.450€6.180€3.540€5.560€18.730€

12. Northern European Port Call Costs: Millennium (Panamax) Ship (90,000 GRT, 2,000 pax) Port of Call Head Tax Transit Call Dockage Fees & Security Fees Harbor Dues & Govt Fees Light Dues Anchorage, Navigation, Lines, Dues Pilots Fees TugsTotal Fees per Call Oslo, Norway 4.990€5.490€1.920€33.000€45.400€ Amsterdam, Holland 11.620€2.010€8.090€4.020€4.650€30.370€ Copenhagen Denmark 2.960€350€37.650€1.870€2.100€44.930€ Brugges, Belgium 2.040€ 16.75 0 € 1.11 0€ 6.590€26.490€ AVERAGE of 9 Northern ports 5.222€2.555€11.555€8.440€9.330€37.250€

13. Pilots Charges !! Oslo: E33,000 per call. Even if the pilot stayed on the ship for the entire 9 hour visit (which he doesn’t), if he works only the summer cruise season of about 100 days, that works out to E3,000,000 for the season! Northern Europe average daily pilot fee is E9,300, or nearly E1,000,000 for a 100 day season.

14. Ajaccio, Corsica Venice, Italy Livorno, Italy Villefranche, France Lisbon, Portugal Barcelona, Spain Valletta, Malta Messina, Italy Toulon, France Naples, Italy Civitavecchia, Italy Western Mediterranean Port Call Costs

15. Western Mediterranean Port Call Costs: Millennium (Panamax) Ship (90,000 GRT, 2,000 pax) Port of Call Head Tax Transit Call Dockage Fees & Security Fees Harbor Dues & Govt Fees Light Dues Anchorage, Navigation, Lines, Dues Pilots Fees TugsTotal Fees per Call Barcelona8.690€6.790€2.270€2.140€19.980€ Toulon3.000€2.890€5.080€2.380€5.050€85€18.570€ Villefranche9.370€2.080€11.450€ Civitavecchi a 9.180€120€ 89 0€ 1.980€ 3.42 0€ 16.220€ Naples4.770€4.010€370€2.600€11.760€

16. Mediterranean Port Call Costs: Millennium (Panamax) Ship (90,000 GRT, 2,000 pax) Port of Call Head Tax Transit Call Dockage Fees & Security Fees Harbor Dues & Govt Fees Light Dues Anchorage, Navigation, Lines, Dues Pilots Fees TugsTotal Fees per Call Ajaccio6.160€1.500€7.660€ Valetta11.960€420€1.230€1.980€15.590€ Messina2.270€1.880€3.490€200€7.840€ Livorno 9.470€ 47 0€ 4.40 0€ 4.15 0€ 18.500€ Lisbon6.890€ 6.790€1.750€4.150€19.580€

17. Venice, Italy Istanbul, Turkey Kusadasi, Turkey Dubrovnik, Croatia Athens, Greece Valletta, MaltaSantorini, Greece Messina, Italy Civitavecchia, Italy Naples, Italy Eastern Mediterranean Port Call Costs

18. Eastern Mediterranean Port Call Costs: Millennium (Panamax) Ship (90,000 GRT, 2,000 pax) Port of Call Head Tax Transit Call Dockage Fees & Security Harbor Dues & Govt Fees Light Dues Anchorage, Navigation, Lines, Dues Pilots Fees Tugs/Total Fees per Call Venice11.870€3.590€450€2.850€4.020€11.770€34.550€ Dubrovnik8.230€5.770€1.080€15.080€ Athens1.850€360€4.090€380€1.820€920€9.410€ Santorini780€ 36 0€ 170€1.310€ AVERAGE of 14 Med Ports 6.140€1.360€ 1.860 € 1.640€2.570€1.240€14.850€

19. Comparison Port Call Costs: Millennium (Panamax) Ship (90,000 GRT, 2,000 pax ) Port of Call Head Tax Transit Call Dockage Fees & Security Harbor Dues & Govt Fees Light Dues Anchorage, Navigation, Lines, Dues Pilots Fees Tugs/Total Fees per Call AVERAGE of 9 Northern ports 5.222€2.555€11.555€8.440€9.330€37.250€ AVERAGE of 14 Med Ports 6.140€1.360€ 1.860 € 1.640€2.570€1.240€14.850€

20. Comparison Port Call Costs: Millennium (Panamax) Ship (90,000 GRT, 2,000 pax ) Port of Call Head Tax Transit Call Dockage Fees & Security Harbor Dues & Govt Fees Light Dues Anchorage, Navigation, Lines, Dues Pilots Fees Tugs/Total Fees per Call AVERAGE of 9 Northern ports 5.222€2.555€11.555€8.440€9.330€37.250€ AVERAGE of 14 Med Ports 6.140€1.360€ 1.860 € 1.640€2.570€1.240€14.850€ St. Martin, Caribbean 11.540 €160 €3.090 €195 €912 €15,900 € St. Thomas, Caribbean 17.990 €3.120 €340 €20,450 €

21. Euro Port Issues: Who is Responsible for What? Port Costs are generally very local: Port Authority, Terminal operator, Stevedores, Pilots, Tugboats. Customs & Immigration Issues appear to be Federal (insufficient agents or inconvenient logistics)- mostly affects international crew movements. Port Regulations are generally EU mandated (Low Sulfur Fuel) Services costs such as garbage or water are competitive between ports. Congestion Issues are local and Federal: managing the process of creating more and larger facilities. Associations could possibly manage bookings calendar.

22. Euro Port Costs: How can we manage costs? “Head Tax” per pax- Negotiate w/Terminal Operator (TO) Volume incentives, seasonal variances; tariffs must be public & standard Harbor Dues per GRT- Neg w Port Authority (PA); cruise ship tonnage debate Dockage Fees per Length Overall- PA or TO, generally standard for all vessel classes Light/Anchorage Dues- neg w/ PA or Ministry- is GRT the correct formula? Lines Fees- Neg w TO or stevedores; volume incentives Tug Boat Fees- per GRT, rarely compulsory today- insurance style? Pilots Fees- World’s most powerful local monopoly- ask gov't help Security Fees per passenger (ISPN add-on)- TO typically per pax fee Customs Fees- Federal Government (FG)- arbitrary government fiat Miscellaneous Government taxes and fees (FG)- arbitrary Service expenses to suppliers: Agency Fees, Garbage Take Off, Water Supply, Tender Operations

23. Euro Port Costs: How can we manage costs? Panel Discussion!

24. September, 2010 ECC Discussion European Port Costs John Tercek September, 2010