1. HM Strategies /// January 2013Hammer Maritime Strategies 1 Shipping Forum, 23 January 2013 Shipping Forum, 23 January 2013 Shipping Market Update & Ecoship Considerations Shipping Adviser Jarle Hammer 22.01 Shipping Forum, 23 January 2013 Shipping Forum, 23 January 2013 Shipping Market Update & Ecoship Considerations Shipping Adviser Jarle Hammer 22.01

2. HM Strategies /// January 2013Hammer Maritime Strategies 2 18.01

3. HM Strategies /// January 2013Hammer Maritime Strategies 3 Countercyclical Investments 18.01

4. HM Strategies /// January 2013Hammer Maritime Strategies 4 ‘000 USD/d Volatility: Highest in % above Lowest Volatility 485% 293% 220% 260% 173% Source: Fearnleys 16.01

5. HM Strategies /// January 2013Hammer Maritime Strategies 5 TIME FOR M&A and Supply Measures

6. HM Strategies /// January 2013Hammer Maritime Strategies 6 Source: Clarkson Substantial Slow-Steaming Fleet Reserve Capacity Substantial Slow-Steaming Fleet Reserve Capacity

7. HM Strategies /// January 2013Hammer Maritime Strategies 7 VERY STRONG & WELL EQUIPPED – ABOUT SAME PRICE AS VLCC

8. HM Strategies /// January 2013Hammer Maritime Strategies 8 Source: Clarkson 18.01

9. HM Strategies /// January 2013Hammer Maritime Strategies 9

10. HM Strategies /// January 2013Hammer Maritime Strategies 10 JACK-UP G o MJACK-UP NWE SEMI’s 5,000 ft + SEMI’s 2 - 5,000 ft IHS Petrodata: Rig Utilization & Rates Index 1994 = 100

11. HM Strategies /// January 2013Hammer Maritime Strategies 11 Source: Clarkson World Shipyard Monitor

12. HM Strategies /// January 2013Hammer Maritime Strategies 12

13. HM Strategies /// January 2013Hammer Maritime Strategies 13 Economic Performance & Growth. Economist 17.01.13 % change IP-12m Infl-12m GDP-10 -11 -12 -13 USA 2.2 1.7 2.9 1.7 2.2 2.0 Euro area - 3.7 2.2 1.7 1.7 - 0.4 - 0.1 Japan - 5.8 - 0.2 4.2 - 0.7 1.8 0.7 S. Korea 2.9 1.4 6.1 3.6 2.2 3.3 China 10.1 2.5 1.9 9.2 7.7 8.5 India - 0.1 10.6 9.1 7.1 5.4 6.5 Russia 1.9 6.5 6.4 4.3 3.7 3.6 Brazil - 1.0 5.8 7.7 2.9 1.0 3.5 Thailand 83.3 3.6 7.0 1.2 5.8 4.2 Malaysia 7.5 1.3 6.9 4.8 5.2 4.5 Indonesia 20.1 4.3 6.1 6.5 6.3 6.4 Philippines 9.6 2.9 6.9 3.6 5.5 6.1 Vietnam 5.9 6.8 6.8 5.9 4.9 5.4 Economic Performance & Growth. Economist 17.01.13 % change IP-12m Infl-12m GDP-10 -11 -12 -13 USA 2.2 1.7 2.9 1.7 2.2 2.0 Euro area - 3.7 2.2 1.7 1.7 - 0.4 - 0.1 Japan - 5.8 - 0.2 4.2 - 0.7 1.8 0.7 S. Korea 2.9 1.4 6.1 3.6 2.2 3.3 China 10.1 2.5 1.9 9.2 7.7 8.5 India - 0.1 10.6 9.1 7.1 5.4 6.5 Russia 1.9 6.5 6.4 4.3 3.7 3.6 Brazil - 1.0 5.8 7.7 2.9 1.0 3.5 Thailand 83.3 3.6 7.0 1.2 5.8 4.2 Malaysia 7.5 1.3 6.9 4.8 5.2 4.5 Indonesia 20.1 4.3 6.1 6.5 6.3 6.4 Philippines 9.6 2.9 6.9 3.6 5.5 6.1 Vietnam 5.9 6.8 6.8 5.9 4.9 5.4

14. HM Strategies /// January 2013Hammer Maritime Strategies 14 Source: Fearnleys Potential Revival? Ballast reduction Excessive Ordering Small Demand Growth

15. HM Strategies /// January 2013Hammer Maritime Strategies 15 Million tonnes oil equivalent Source: BP

16. HM Strategies /// January 2013Hammer Maritime Strategies 16 N.AMERICA W.EUROPE JAPAN FSU M.EAST R-O-W

17. HM Strategies /// January 2013Hammer Maritime Strategies 17 M.EAST OPEC N.AMERICA N.SEA FSU DEPLETION PEAK OIL IRRELEVANT Supply is a function of Price & Technology

18. HM Strategies /// January 2013Hammer Maritime Strategies 18

19. HM Strategies /// January 2013Hammer Maritime Strategies 19

20. HM Strategies /// January 2013Hammer Maritime Strategies 20 Million dwt Sources: Fearnleys & HMS Slippage 2011: 30% 2012: 40%

21. HM Strategies /// January 2013Hammer Maritime Strategies 21 Million tonnes Source: Clarkson

22. HM Strategies /// January 2013Hammer Maritime Strategies 22 Billion cbm Source: BP

23. HM Strategies /// January 2013Hammer Maritime Strategies 23 Source: BP LNG very hot after closure of nuclear power plants However, shale gas a veritable negative game changer US could well become a net gas exporter Stokhman gas field shelved ?

24. HM Strategies /// January 2013Hammer Maritime Strategies 24 MINOR BULK Roughly 1,550 mt in 2012 Sources: Clarkson, Fearnleys, HMS

25. HM Strategies /// January 2013Hammer Maritime Strategies 25 Source: Clarkson

26. HM Strategies /// January 2013Hammer Maritime Strategies 26 Source: WSA 2012 11 months annualized

27. HM Strategies /// January 2013Hammer Maritime Strategies 27 Million tonnes. 3m av. China imp 2012 + 8.6%

28. HM Strategies /// January 2013Hammer Maritime Strategies 28 Forecast October 2012 2011 2012 2013 China 6.2 2.5 3.1 R-O-W 6.3 1.7 3.3 World 6.2 2.1 3.2

29. HM Strategies /// January 2013Hammer Maritime Strategies 29 Compiled by HMS

30. HM Strategies /// January 2013Hammer Maritime Strategies 30 BDI Million dwt. 3m av.

31. HM Strategies /// January 2013Hammer Maritime Strategies 31 Million dwtSource: Fearnleys

32. HM Strategies /// January 2013Hammer Maritime Strategies 32 Cheap Finance from Yards and Governments Eco ships ? 2012 8m annualized Million GT All Types

33. HM Strategies /// January 2013Hammer Maritime Strategies 33 HMS est Million dwtSources: Fearnleys, Clarkson, HMS

34. HM Strategies /// January 2013Hammer Maritime Strategies 34 HMS est

35. HM Strategies /// January 2013Hammer Maritime Strategies 35 Container Fleet Decisions & Deliveries HMS est

36. HM Strategies /// January 2013Hammer Maritime Strategies 36

37. HM Strategies /// January 2013Hammer Maritime Strategies 37 Sources: Fearnleys & Clarkson Million dwt Soucrces: Fearnleys & Clarkson

38. HM Strategies /// January 2013Hammer Maritime Strategies 38 ‘000 USD/d USD/t Source: Fearnleys Increased Focus on Fuel Economy

39. HM Strategies /// January 2013Hammer Maritime Strategies 39

40. HM Strategies /// January 2013Hammer Maritime Strategies 40 Containership Fuel Consumption by Size & Speed Size in teu 11 K Slow-steaming open for substantial cost savings 370 105 ULTRA LARGE from 25k to 17k (370 - 105 = 265 t) x USD 625 per t = about USD 165,000 reduction per day

41. HM Strategies /// January 2013Hammer Maritime Strategies 41 Target Source: Maersk Post -5% -13% -11% -12% -3% -10% 50% reduction over period. Considerably smaller reduction per teu transported due to slowsteaming

42. HM Strategies /// January 2013Hammer Maritime Strategies 42 ECO SHIPS – CENTRAL ISSUES ECO SHIPS – CENTRAL ISSUES Environmental benefits Less and cleaner fuel Environmental benefits Less and cleaner fuel What about Company Economics ? What about Company Economics ? - Eco Ship Newbuilding orders will delay market upturn - Eco Ship Newbuilding orders will delay market upturn - Additional costs for fuel saving measures ? - Retrofitting / New ship ? - Future bunker price ? - Additional costs for fuel saving measures ? - Retrofitting / New ship ? - Future bunker price ? - Vast majority of conventional vessels will decide rate levels - Vast majority of conventional vessels will decide rate levels - Lack of ability to skim future market peaks by speading up - Higher total fleet income per capital invested when using larger number of medium age vessels in fairly healthy markets ECO SHIPS – CENTRAL ISSUES ECO SHIPS – CENTRAL ISSUES Environmental benefits Less and cleaner fuel Environmental benefits Less and cleaner fuel What about Company Economics ? What about Company Economics ? - Eco Ship Newbuilding orders will delay market upturn - Eco Ship Newbuilding orders will delay market upturn - Additional costs for fuel saving measures ? - Retrofitting / New ship ? - Future bunker price ? - Additional costs for fuel saving measures ? - Retrofitting / New ship ? - Future bunker price ? - Vast majority of conventional vessels will decide rate levels - Vast majority of conventional vessels will decide rate levels - Lack of ability to skim future market peaks by speading up - Higher total fleet income per capital invested when using larger number of medium age vessels in fairly healthy markets

43. HM Strategies /// January 2013Hammer Maritime Strategies 43 ‘000 USD Source: HMS Panamax R/V Costs 4,500 n.m.

44. HM Strategies /// January 2013Hammer Maritime Strategies 44 PANAMAX BREAK-EVEN RATES New Eco Ship 10-yr Old PANAMAX BREAK-EVEN RATES New Eco Ship 10-yr Old Price usd 27.0 m usd 13.5 m Price usd 27.0 m usd 13.5 m Res. Value (300 USD/ldt) usd 3.6 m usd 3.6 m Res. Value (300 USD/ldt) usd 3.6 m usd 3.6 m Rest life/Calc.interest 25 yrs/8% 15 yrs/8% Rest life/Calc.interest 25 yrs/8% 15 yrs/8% Capital element ~ 7,000 usd/d ~ 4,100 usd/d Capital element ~ 7,000 usd/d ~ 4,100 usd/d Operating cost * 6,500 usd/d 6,500 usd/d Operating cost * 6,500 usd/d 6,500 usd/d Calculated B/E 13,500 usd/d 10,600 usd/d Calculated B/E 13,500 usd/d 10,600 usd/d Bunker advantage (270 days at sea) Bunker advantage (270 days at sea) 200 usd/t ~ 900 usd/d 200 usd/t ~ 900 usd/d 600 usd/t ~ 2,700 usd/d 600 usd/t ~ 2,700 usd/d 1,000 usd/t ~ 4,400 usd/d Source: HMS 1,000 usd/t ~ 4,400 usd/d Source: HMS PANAMAX BREAK-EVEN RATES New Eco Ship 10-yr Old PANAMAX BREAK-EVEN RATES New Eco Ship 10-yr Old Price usd 27.0 m usd 13.5 m Price usd 27.0 m usd 13.5 m Res. Value (300 USD/ldt) usd 3.6 m usd 3.6 m Res. Value (300 USD/ldt) usd 3.6 m usd 3.6 m Rest life/Calc.interest 25 yrs/8% 15 yrs/8% Rest life/Calc.interest 25 yrs/8% 15 yrs/8% Capital element ~ 7,000 usd/d ~ 4,100 usd/d Capital element ~ 7,000 usd/d ~ 4,100 usd/d Operating cost * 6,500 usd/d 6,500 usd/d Operating cost * 6,500 usd/d 6,500 usd/d Calculated B/E 13,500 usd/d 10,600 usd/d Calculated B/E 13,500 usd/d 10,600 usd/d Bunker advantage (270 days at sea) Bunker advantage (270 days at sea) 200 usd/t ~ 900 usd/d 200 usd/t ~ 900 usd/d 600 usd/t ~ 2,700 usd/d 600 usd/t ~ 2,700 usd/d 1,000 usd/t ~ 4,400 usd/d Source: HMS 1,000 usd/t ~ 4,400 usd/d Source: HMS

45. HM Strategies /// January 2013Hammer Maritime Strategies 45 ‘000 USD/dSource: HMS Bunker price & voyage rate in USD/t Investment 27 m USD