aapa/marad/nawe terminal training program october...

®

AAPA/MARAD/NAWE Terminal Training ProgramOctober 16th, 2007Anthony ChiarelloSenior Vice President, Customer Development

© 2007 AMB Property Corporation 2

AMB Property Corporation – Overview

▪ Strategy – Create long-term value through focused investment in facilities that support high-value, trade-based distribution globally

▪ Global Platform – 137 million square foot platform serving 2,800 customers in 44 markets in 13 countries(1)

▪ Assets Under Management – $13.1 billion; with 3rd party committed capacity, platform increases to $15.5 billion(2)

▪ Private Capital Franchise – Supporting global expansion through current co-investment funds in U.S., Mexico, Japan and Europe. Canada Fund expected to close in the second half of 2007

(1) As of June 30, 2007(2) AUM comprises Total Market Cap, AMB’s Share of Debt, Preferred Equity and Co-Investors Share of Fair Market Value of Fund Real Estate as of June 30, 2007


By Sea, Air and Land

High growth, high barriers-to-entry markets tied to global trade

▪ Specialized Presence – On-tarmac, on-airport and airport-adjacent real estate

▪ Location Driven Demand – Core real estate operations are optimized to serve the airline, air express carrier, logistics, freight forwarding and shipping industries

▪ Global Driver – Necessary to have a major seaport presence in Europe, Asia and North America, to target the top seaports globally

▪ Rising Demand – Larger vessels, fast turn-around times and increases in volume create new demand at terminals

▪ Major Metropolitan Markets – Population density, proximity to customers, diverse labor pools. Markets have barriers-to-entry

▪ Development – Brownfield and redevelopment opportunities; municipalities increasingly supportive of “green” development practices

AIR

POR

TSSE

APO

RTS

INFI

LL

AMB CDG Cargo Center in Paris

AMB Amagasaki Distribution Center 1 & 2 in Osaka

View of South San Francisco market near SFO airport


1.5

2.5

3.5

4.5

5.5

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

00.050.10.150.20.250.30.350.40.450.50.550.60.650.70.750.80.850.90.9511.051.11.151.21.251.31.351.41.451.51.551.61.651.71.751.81.851.91.9522.052.12.152.22.252.32.352.42.452.5

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

0

0.5

1

1.5

2

2.5

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

▪ Declining ratio of inventory to final sales fueled by technology and deregulation

▪ Acceleration of inventories and growth in global trade spur demand for facilities located at ports and airports

Graph 1 Source: World Trade Organization and AMB Property Corporation

World Trade(6.3% /yr)

World GDP(3.0% /yr)

0%

50%

150%

250%

200%

100%

19901986 1988 1992 1994 1996 2000 2002 2004 2006

Graph 2 Source: Bureau of Economic Analysis. Data through March 31, 2007.

Long-Term Global Trends

▪ World Trade far outpacing World GDP by 3x

Cum

ulat

ive

Gro

wth

Mon

ths

1950 19651955 1960 1970 1975 1980 1990 1995 2000 2006

5.5

1.5

2.5

3.5

4.5Interstate Highway

Oil Crisis

EDI

Internet

9/11

1985

Trucking Deregulation

1998


0.00

100,000,000.00

200,000,000.00

300,000,000.00

400,000,000.00

500,000,000.00

600,000,000.00

700,000,000.00

800,000,000.00

900,000,000.00

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Macro Drivers and Trends

0

50

100

150

200

250

300

350

199519961997199819992000200120022003200420052006200720082009201020112012201320142015

2001 2006 2011 2016

200

300

400

500

100

600

History Forecast

RTK

s(B

illio

ns)

TEUs= twenty feet equivalent units Source: Containerisation International

Annual World Air Cargo Growth – Projected 6.1% Annual Container Cargo Growth – Projected 8-10%

100

700

800

900

1996

TEU

s (m

illion

s)

History Forecast

RTKs = revenue tonne kilometers Source: Boeing World Air Cargo Forecast 2006/2007

200

300

350

1996 2001 2006 2011 2016

250

150

50


Sourcing Patterns Unlikely to Change

2.12.12.12.01.9Mexico

5.55.45.54.73.5Brazil

Latin America

8.38.06.76.05.2Slovakia

2.72.42.11.71.3Russia

9.08.77.87.16.0Poland

9.99.48.07.56.8Hungary

12.612.010.18.67.6Czech Republic

Eastern Europe

2625.224.523.622.9US

1.51.31.21.10.9India*

1.81.61.41.21.0China

20082007200620052004

2.12.12.12.01.9Mexico

5.55.45.54.73.5Brazil

Latin America

8.38.06.76.05.2Slovakia

2.72.42.11.71.3Russia

9.08.77.87.16.0Poland

9.99.48.07.56.8Hungary

12.612.010.18.67.6Czech Republic

Eastern Europe

2625.224.523.622.9US

1.51.31.21.10.9India*

1.81.61.41.21.0China

20082007200620052004

1.31.51.71.22.3Mexico

1.21.41.4-1.41.7Brazil

Latin America

4.543.93.95.1Slovakia

4.65.25.25.25Russia

3.13.43.213.9Poland

4.13.744.15.2Hungary

4.14.54.74.54Czech Republic

Eastern Europe

2.01.31.41.42.8US

4.654.96.16.1India*

77.38.699China

20082007200620052004

1.31.51.71.22.3Mexico

1.21.41.4-1.41.7Brazil

Latin America

4.543.93.95.1Slovakia

4.65.25.25.25Russia

3.13.43.213.9Poland

4.13.744.15.2Hungary

4.14.54.74.54Czech Republic

Eastern Europe

2.01.31.41.42.8US

4.654.96.16.1India*

77.38.699China

20082007200620052004

Table 1: Projected Labor Costs Per Hour (US$) Table 2: Productivity Growth (%)

Note: *Converted to US$ based on exchange rates provided by EIUSource: EIU, GRD Analysis

Sourcing Patterns Unlikely to Change

Table 1: Projected Labor Costs Per Hour (US$) Table 2: Productivity Growth (%)

Note: *Converted to US$ based on exchange rates provided by EIUSource: EIU, GRD Analysis


Infrastructures – North America

▪ Container imports are expected to double by 2020

▪ Rail freight tonnage is expected to increase by 50% by 2020

▪ World air cargo is expected to more than tripleover the next 20 years.

▪ From 1970 to 2003, vehicle travel on highways rose by 161% but road mileage only increased by 6%

▪ Congestion costs US$ 63 billion in wasted time & fuel

▪ Half of the nation’s 257 locks on inland waterways are functionally obsolete

▪ Most ports have not been dredged to handle the 10,000+ TEU jumbo containerships being built

2557

SEATTLE

TACOMA

OAKLAND

LA/LONG BEACH

1,776

4,396

2,0433,382

13,101

59,420

1,4376,165

1,662

9,420

1,0102,152

1,8606,639

1,8095,566

4,47815,835

HOUSTON

MIAMI

CHARLESTON

SAVANNAH

VIRGINIA

NY/NJ

44%

144.5%

65.5%

353.6%

329%

113.1%

466.8%

256.9%

207.7%

253.6%

2004 Volumes (‘000 TEUs)

2020 Volumes (‘000 TEUs)

1,798

2,557


Containerized Trade

▪ Global containerized trade growth will continue to outstrip growth in World GDP▪ Demand in US & EU for Asian goods will fuel trade growth▪ Strong Intra-Asia trade among China, India, ASEAN countries will also

contribute to trade growth

▪ Most in the industry hold the view that 2007 is likely the bottom of current cycle

▪ Analyst, research firms and ocean carriers forecast a narrowing supply-demand gap 2007 – 2010

▪ Supply of containerships will be affected by demand in other shipping sectors in 2009 in particular, limiting growth


Rail Growth in North America

4

6

8

10

12

14

16

'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06

Annual Intermodal Volume Figures, 2002-2006

14,234,07413,641,87212,923,03611,903,12111,191,142Total Rail Intermodal Volume

2,432,9282,584,2622,639,5452,424,4072,345,508Trailers

11,801,14611,057,61010,283,4919,472,5188,588,822Containers

20062005200420032002Rail Intermodal Activity

Source: IANA’s Intermodal Market Trends & Statistics Report

Intermodal Growth 1991-2006Container and Trailer Units (millions)

U.S. Intermodal traffic has nearly doubled over the past 15 years. Trend expected to continue


Air Trade

▪ Air volume is expected to triple in the next 20 years▪ Greatest growth in markets linked to Asia

▪ Areas in and around international and major gateway airports will continue to grow

▪ Over the next 20 years, the world freighter fleet will nearly double to 3,500+ airplanes

▪ Wide body freighters will dominate the future fleet growing from 27% in 2005 to 34% in 2025

Source: Boeing World Air Cargo Forecast 2006-2007


Infrastructures Issues – Viewpoint

Challenges negatively impacting ‘flow’ today will become greater over time

▪ Seaports: Pressure on ocean ports will continue as volume increases

▪ Airports: Significant migration to secondary airports is not expected

▪ Rail: The US will need to spend at least $250 billion over the next 20 years to catch up with development needs. As investment fails to keep pace with volume growth, velocity will continue to slip

▪ Highway: Highway congestion will hamper distribution to major metropolitan areas across the US

▪ It remains to be seen whether actions being taken to stimulate capital investment will increase the pace of development in infrastructure rapidly enough to support trade growth


A Fundamental Shift is Required

▪ Supply chain thinking of shippers/consignees will have to changedramatically

▪ New products and services providing greater certainty of delivery in spite of the growing effects of congestion will be required

▪ Public/Private partnerships will become the norm in development and funding of new infrastructure

▪ Environmental regulations will drive R&D to develop new equipment and operating modes that are more environmentally friendly

▪ The U.S. government — administrative and congressional level — must view transportation infrastructure as critical to the nation’s economic well being


Align Distribution with Upstream Capabilities

Store

Import warehouse services used to compliment deconsolidation programs & create additional synergies

Reduces ocean cost and demurrage by turning containers close to port

(West, East or Gulf Coasts)

Reduces shipping & handling by mixing productto updated allocation, building DC ready loads &other value-added servicesImproves domestic efficiency by

Transloading to 48’/53’ equipment

Postpone allocation to meet demand reroute & expedite product more efficiently

By-pass DCs with customerready loads where feasible

InternationalTransportation

DECON

DECONCompany

DC

Intermodal Equipment

StoreDECON

DECON

Supply chain leaders are complementing origin activities with deconsolidation & transloading activities in strategic import gateways


Domestic Distribution Changes

Distribution Centers located to take advantage of multiple gateways will be required to alleviate congestion


Supply Chain Redesign Example 1

National Department Store Chain▪ Challenge

▪ FOB volume increasing and sourcing areas diversifying ▪ Supply chain costs were rising▪ Productivity in domestic distribution network declined

▪ Solution▪ Streamline origin operations through origin consolidation and cargo

management program▪ Exit many of the company-owned distribution centers▪ Outsource domestic distribution through crossdock programs on

West and East Coasts▪ Results

▪ Vendor compliance exceeded defined standards▪ On-time performance increased significantly for in-store deliveries▪ Reduce distribution network costs for investments and operations



Global Beverage Brand Importer▪ Challenge

▪ Import volume increasing▪ Dwell time on-dock increasing ▪ Declining product quality▪ Loss of market share

▪ Solution▪ Drayage program developed with warehouse & distribution providers

to pull ocean containers from terminal before free-time expiration▪ First-in-First-Out (FIFO) tracking system implemented in warehouse

providers’ facilities▪ Results

▪ Significant reduction of demurrage charges paid to ocean carriers▪ Product quality improved and returns from distributors reduced▪ Market share increased in the U.S.



National Footwear Distributor▪ Challenge

▪ Acquisitions and licensing agreements expand product portfolio▪ Increase in FOB volume and sourcing locations▪ Multiple handling of products within distribution network causing

significant rise in supply chain costs▪ Solution

▪ Allocation of product at origin to the store/customer level to by-pass distribution centers

▪ Holding inventory at a 3rd party warehouse for direct to customer shipments via parcel and less-than-container-load providers

▪ Results▪ By-pass operation significantly reduced the number of touch points,

lowering handling costs▪ Direct to store/customer shipments reduced transportation costs


Concluding Thoughts

▪ EDC’s (Export Distribution Centers) will continue to be developed at origin points, in many various configurations▪ Value Added Services of providers will drive these variations

▪ IDC’s (Import Distribution Centers) will continue to be developed in and around major import hubs▪ Size will vary but expected in the 500K SF – 750K SF range

▪ Transloading is here to stay. Configurations will vary but narrow/long configurations with significant trailer parking (5 slots/door minimum) will be required

▪ Inland transload facilities, on or in close proximity to major Intermodal hubs, will continue to be developed to support the higher volumeimporters


Concluding Thoughts - Continued

▪ East Coast hubs will see significant growth over the next 1-3 years

▪ Mexico/Canada alternatives will become more viable, but with limited short term capacity

▪ Facility location and design is directly tied to product type and client specific supply chain networks. One size does not fit all!

▪ Multi-story development is a better use of land and has been proven inAsia. U.S. multi-story sites will come as land values continue to grow and supply becomes more constrained

This document contains forward-looking statements such as the size, completion and total investment in development projects which are made pursuant to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements involve numerous risks and uncertainties and should not be relied upon as predictions of future events. The events or circumstances reflected in our forward-looking statements might not occur. We assume no obligation to update or supplement forward-looking statements. For further information on factors that could impact AMB and the statements contained herein, reference should be made to AMB’s filings with the Securities and Exchange Commission, including AMB’s annual report on Form 10-K for the year ended December 31, 2006.

aapa/marad/nawe terminal training program october...

Documents