1. NCBFAA Government Affairs Conference September 24, 2007 Vessel Operators and Non-Vessel Operators: Partners or Adversaries in Contract Negotiation? Tim Perry APL, Ltd.

2. AGENDA 1. Trade Outlook 2. We’re in This Together 3. Successes & Challenges 4. Summary

3. Trade Outlook

4. Rising US Exports and Imports US exports and imports expected to grow Trade Outlook

5. Containerized volumes expected to double from 2000 to 2020 Source: Global Insight World Containerized Trade Growing Trade Outlook

6. Capacity and Fleet Growth to Slow Gap between Supply & Demand growth narrowing by 2008 Source: GRD, MDS, Drewry Trade Outlook

7. TACOMA 1,776 2,557 SEATTLE 1,798 4,396  Container imports are expected to double by 2020  Rail freight tonnage is expected to increase by 50% by 2020  Air cargo volume is expected to increase by 5% every year through 2016  From 1970 to 2003, vehicle travel on highways rose by 161% but road mileage only increased by 6%  Half of the nation’s 257 locks on inland waterways are functionally obsolete  Of the 590,750 bridges, 27% are structurally deficient or obsolete  Most ports have not been dredged to handle the 10,000-TEU jumbo containerships being built OAKLAND 2,043 3,382 LA/LB 13,101 59,420 HOUSTON 1,437 6,165 2,152 1,010 MIAMI SAVANNAH 1,662 9,420 CHARLESTON 1,860 6,639 VIRGINIA 1,809 5,566 NY/NJ 4,478 15,835 2004 Volumes (‘000 TEUs) 2020 Volumes (‘000 TEUs) Legend: U.S. MARITIME CONTAINER TRADE GROWTH Source: American Society of Civil Engineers (ASCE) – 2005 Report Card for America’s Infrastructure, U.S. DoT  44.0%  144.5%  65.5%  353.6%  113.1%  256.9%  253.6%  207.7%  466.8% Trade Outlook Infrastructure Issues: Current & Future

8. Rail Growth in North America Intermodal traffic in US has almost doubled in the past 15 years – trend likely to continue Trade Outlook

9. Rail Constraints in North America US Rail infrastructure continues to be stressed in spite of significant investment by the railroads Trade Outlook

10. Global Insights forecast highly congested conditions on transcontinental railroads main lines by 2035 Rail Volume: 2005 vs 2035 Source: Global Insight Trade Outlook

11. Marine Terminals are stressed

12. Port of Long Beach 2004 Trade Outlook

13. Infrastructure Issues: Viewpoint The challenges which negatively impact ‘Flow’ today will become greater over time Pressure on ports will continue As rail volumes rise, and investment fails to keep pace with growth, rail velocity will continue to slip Highway congestion will hamper rail and truck distribution to major metropolitan areas throughout the US Trade Outlook

14. We’re All In This Together

15. It’s More than Port-to-Port OriginLocalTrain/Drayage Origin Feeder/ Barge Capacity Main Line-Haul CapacityDestination Intermodal/ Local DrayageCapacityOriginTerminal Capacity/ Productivity OriginTerminal Destination Warehouse/ Store Capacity TransshipmentHubCapacity OriginStorageCapacity We’re all in this together

16. Parties have everything to gain by partnering. “Closeness” – from booking through delivery. - Vessel Schedules - Port Rotation - Cargo Details - Info that Shipper is NVO → VOC must know in order to manifest properly. Demurrage is a symptom of low cargo velocity. We’re all in this together

17. Successes and Challenges

18. “24 Hour Rule” - Special BL - Master BL and House BL relationship Exams - Random VACIS, “Pop & Tap” - FDA - “1M” Successes and Challenges

19. “Zero Tolerance” – Gateouts - MTO Bond - Old World Penalties $2,500 - New World Penalties 1st - $10,000 to $25,000 2nd - $25,000 to $50,000 3rd - $50,000 to $75,000 - Incidents reduced from 27 to 7 per month Successes and Challenges

20. AMS Changes: i.e. Suppress “transportation messages” until conveyance is arrived. “2Z” – Master / House BL mismatch advisory. ACE PGA access to “holds” “10 + 2” Successes and Challenges

21. Summary

22. Know your partners Communicate - CESAC - NCBFAA Customs Committee - NCBFAA Legislative Advocacy - Ocean Carrier Best Practice Committee - COAC - Trade Support Network - TOPAS

23. Thank you. Tim Perry APL, Ltd. 1667 K Street NW, Suite 400 Washington, DC 20006 tim_perry@apl.com 202.496.2482 NCBFAA Government Affairs Conference September 24, 2007