april 4, 2012 · americas region 1000 apm terminals boulevard portsmouth, va 23703-2361 t...

Americas Region 1000 APM Terminals Boulevard Portsmouth, VA 23703-2361 T 757-686-6500 www.apmterminals.com

April 4, 2012 Sean T. Connaughton Secretary of Transportation Commonwealth of Virginia Patrick Henry Building, 3rd Floor 1111 East Broad Street Richmond, VA 23219 Dear Secretary Connaughton: APM Terminals is pleased to submit the enclosed unsolicited conceptual proposal for the concession of the Port of Virginia facilities. This proposal is in accordance with the guidelines established in the Public Private Partnership Act of 1995. APM Terminals has been a long time partner of the Commonwealth of Virginia and the Virginia Port Authority. We have made major investments and contributions in the Commonwealth, best illustrated by the more than $500 million invested to develop the APM Terminals Virginia facility, the United States most technologically advanced facility. This proposal outlines how we propose to strengthen our cooperation in a mutually beneficial way through this public-private partnership. Our suggested arrangement would create value for the Commonwealth, the Virginia Port Authority, as well as the local community. APM Terminals will increase the competitiveness of the Port of Virginia during a time when the landscape in the industry is rapidly changing. We appreciate your consideration of this proposal for a public private partnership. Should you have any questions, please don’t hesitate to contact me. Sincerely,

Eric A. Sisco President APM Terminals Americas Cc: David Tyeryar, Deputy Secretary of Transportation

Strategic Partnership with The Port of Virginia

APM Terminals

1000 APM Terminals Boulevard

Portsmouth, VA 23703-2631

Eric Sisco

[email protected]

Phone: 757-686-6501

Fax: 757-686-6508

April 4, 2012

Unsolicited Conceptual Proposal

“Commonwealth of Virginia PPTA Implementation Manual and

Guidelines Page 54” Proposal

Unsolicited Conceptual Proposal – PPTA Act 1995

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Table of Contents Introduction ........................................................................................ 05

Executive Summary ............................................................................. 06

I. OUTLINE OF THE PROPOSAL ....................................................... 07

A. Fixed Concession Payments .............................................. 07

B. Revenue Sharing Payments .............................................. 07

C. Capital Investment .......................................................... 08

D. Tax Benefits ................................................................... 08

E. Ownership of APMTVA ...................................................... 08

II. BENEFITS TO THE COMMONWEALTH OF THE APMT PROPOSAL ....... 08

A. Optimizes port operations at important juncture .................. 09

B. Realigns VPA’s risk and operating profile ............................. 09

C. Limits Commonwealth’s capital obligations ......................... 10

D. Establishes ownership of a premier container facility ............ 10

III. APMT IS A PROVEN AND REPUTABLE PARTNER ............................. 11

Tab 1 – Project Description and Approach ............................................ 12

I. APM TERMINALS’ PROPOSAL ........................................................ 12

A. Concession structure ........................................................ 12

B. Transition of APM Terminal Virginia to VPA .......................... 12

C. Payments to VPA and Commonwealth................................. 13

D. Capital investment program .............................................. 15

II. PROJECT CONCEPT AND SCOPE ................................................... 15

A. Map of proposed locations ................................................ 16

B. Description of facilities covered in proposal ......................... 16

III. INTEGRATION PLAN .................................................................. 20

A. Virginia International Terminals transition ........................... 20

IV. OPERATING PLAN ..................................................................... 21

A. Excellence in marine terminal operations ............................ 21

B. On-dock rail operations .................................................... 22

C. Inland logistics services experience .................................... 22


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V. COMMERCIAL BUSINESS PLAN .................................................... 23

A. Growing The Port of Virginia.............................................. 23

B. Increasing Market Share ................................................... 24

C. Capitalizing on Virginia’s connectivity ................................. 25

D. Volume projections .......................................................... 26

E. APMT’s experience and customer relationships ..................... 26

F. Non-container business focus ............................................ 28

VI. EXPANSION PLANS ................................................................... 28

VII. APM TERMINALS’ CONTACT INFORMATION ................................... 29

Tab 2 – Desirability of the Project ........................................................ 30

I. IMPORTANT TIME FOR THE PORT OF VIRGINIA ............................ 30

II. THE RIGHT PARTNER FOR THE COMMONWEALTH .......................... 31

A. APM Terminals overview ................................................... 31

B. Operational and Developmental excellence .......................... 31

C. Safety and Security ......................................................... 32

D. Environmental Stewardship ............................................... 32

III. REDUCING LIFE CYCLE COSTS .................................................... 35

IV. IMPROVING RISK PROFILE ......................................................... 36

Tab 3 – Feasibility of the Project .......................................................... 38

I. INDUSTRY STANDARD CONCESSION AGREEMENT ......................... 38

II. APM TERMINALS’ CAPABILITIES ................................................. 39

A. Development of APM Terminals Virginia ............................. 39

B. Developments in the United States ................................... 40

C. Global Developments ...................................................... 41

III. APM TERMINALS’ FINANCIAL BACKGROUND ................................. 44

A. Company financials .......................................................... 44

B. Capital raising capabilities................................................. 45

C. Letters of support ............................................................ 46

IV. APM TERMINALS’ TECHNOLOGY AND INNOVATION ........................ 46

A. FastNet cranes ................................................................ 46


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B. ECO-RTGs ...................................................................... 47

C. Hybrid Yard trucks ........................................................... 48

D. Lift AGV’s ....................................................................... 48

Appendices

I) Bank References

II) APM Terminals Company Brochure

III) APM Terminals Americas Region overview

IV) APM Terminals Sustainability report 2011

V) APMTVA Technical report and overview


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Introduction

APM Terminals (APMT) has been a long time partner of the Commonwealth of Virginia

(Commonwealth) and the Virginia Port Authority (VPA) and proposes to take the next

step in the evolution of this important and strategic relationship.

This ‘unsolicited conceptual proposal’ entails the Commonwealth granting APMT a

concession for the operation of The Port of Virginia facilities of Norfolk International

Terminals (NIT), Newport News Marine Terminal (NNMT), Portsmouth Marine Terminal

(PMT), APM Terminals Virginia (APMTVA), and Virginia Inland Port (VIP). In return APMT

will contribute our existing terminal asset (APMTVA) and make annual financial

contributions and investments to the Port of Virginia.

This public private partnership rebalances the risk and responsibility for the daily

operations of the Port to APMT and provides a more stable and dependable cash flow to

the VPA. APMT’s offer limits the VPA’s impending capital investment burden by shifting

expansion programs to APMT. This allows the Commonwealth to free up cash flows to

other important transportation related infrastructure projects. It also provides certainty

surrounding the development and expansion of capacity in the Port.

Through APMTVA, the Commonwealth is provided with permanent ownership of the

most technologically advanced, environmentally friendly container facility in The

Americas. Ownership ensures the VPA fully controls The Port of Virginia and the

direction of this essential gateway to the Commonwealth’s development.

The Commonwealth will be collaborating with a proven partner capable of improving

operational performance and delivering on the future needs of The Port of Virginia.

This proposed transaction follows the standard landlord-tenant model which is in place

in more than 80% of the world’s ports, and is presented at an opportune time as port

authorities around the country aggressively pursue new business.

Core Components of the Proposal to the Commonwealth:

1) Ownership of the APM Terminals Virginia facility

2) Upfront payment to cover current obligations

3) Annual fixed concession payments to VPA

4) Variable payment based on revenue, aligning VPA and APMT on the

commercial value proposition of The Port of Virginia

5) Capital investments by APMT in port facilities

6) Tax contributions through earnings and personal property taxes


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Executive summary

I. OUTLINE OF THE PROPOSAL

In exchange for the transfer of ownership of APMTVA and substantial monetary

payments and investments, APMT proposes establishing a concession agreement for 48

years to operate VPA’s facilities. At the end of the concession period, the operations and

physical assets invested in by APMT will revert back to the VPA.

Where the Commonwealth and VPA have certain ambitions and requirements for

specific facilities (such as Portsmouth Marine Terminal and the Richmond facility) APMT

will coordinate with the VPA to optimize these locations and business needs.

The financial benefit of our proposal to the Commonwealth consists of the five core

components which address revenue streams, annual expenditures, and the acquisition

of assets.

*Represents the amount of capital investment and not the full commercial benefit and investment avoidance of owning the facility


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A) Fixed Concession Payments

At the outset of the concession, as part of the fixed concession payment, APMT will

provide initial payment(s) to apply to current VPA financial commitments. This will free

up cash flows and limit immediate funding pressures on the VPA.

On an ongoing basis APMT will pay the VPA fixed concession payments on a monthly

basis. The fixed payment provides a stable cash flow from which the Commonwealth

can allocate towards administration costs of running the VPA, contribute towards debt

service and/or plan for future capital expenditures.

The fixed concession payment will be set to increase at specified intervals taking into

account inflationary considerations.

B) Revenue Sharing Payment

A shared interest in future port growth is important to the development of our strategic

partnership. A variable monthly payment calculated as a percentage of operating

revenues will be paid to the VPA. This allows for full transparency and aligns both

parties’ interests more closely than a profit sharing arrangement.

C) Capital Investment

As the long-term concessionaire of the facilities of The Port of Virginia, capital

expenditures for new and replacement superstructure will be assumed by APMT.

In addition APMT will take full responsibility for the investment and development of the

next phase of APMTVA (APMT II), which will increase capacity by an estimated 1.2

million TEU. This expansion equates to more than 60% of the current Port of Virginia

total throughput.

APMT II offers an expansion opportunity that cannot be matched in terms of investment

amount per TEU of capacity created. This investment and expansion limits the VPA’s

need for identifying other mechanisms to handle potential growth in the market.

D) Tax Benefits

As a public agency, the VPA and its operating arm VIT are tax exempt. In the proposed

structure, the Commonwealth and political subdivisions in Hampton Roads will have a

net increase in tax receipts resulting from Port operations by APMT.

APMT will pay:

Corporate income taxes to the Commonwealth as 6% of APMT taxable income Personal property taxes to Portsmouth, Norfolk and Newport News Business license fees paid to municipalities as a percentage of revenues


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E) Ownership of APMTVA

The rights and ownership of APMTVA, including the future expansion area and land

improvements (APMT II) is transferred to VPA at the outset of the concession. As

owner VPA secures:

Title to the most technologically advanced and environmentally friendly container

terminal in The United States, which will continue to be a focal point for global container shipping lines following the Panama Canal expansion

To date a total of $540 million has been invested in capital construction,

equipment, access and connections, and environmental mitigation Reversionary interest in operational assets upon the APMT concession expiration,

trued up for transfer of physical assets from APMT to VPA

II. BENFITS TO THE COMMONWEALTH OF THE APMT PROPOSAL

A) Optimizes port operations at an important juncture

The Port of Virginia sits at the core of the Commonwealth’s transportation and

economic development plans. The maritime industry has entered a new generation in

terms of ship deployment and ever increasing demands for high quality, low cost

service. By 2014 the expanded Panama Canal will be open and mega vessel will be

finding their way to the U.S. East Coast, looking for the most service oriented and cost

effective options available.

Partnering with a private entity, who has vast global operating and developmental

experience, will allow the VPA to position the daily management of the facilities with a

company that can improve on the standard set by VIT and deliver upon both the

customers and the Commonwealth’s needs at this decisive period.

APMT will bring technical and developmental excellence to the Port, global commercial

reach, and world class safety and environmental expertise. APMT will maximize

performance through our global relationships with the world’s ocean carriers and our

contractual frame agreements with key vendors and suppliers.

B) Realigns VPA’s risk and operating profile

Reallocating the operational component of The Port of Virginia to a global terminal

operator lowers the risk profile of the public entity, the VPA.

While eliminating the daily operating and developmental risk of The Port of Virginia,

VPA receive a stabilized and predictable flow of cash and investments. As a public entity

this simplifies the annual and long term budgetary process, thereby making fund

allocation and public works planning a more effective process for the Commonwealth.


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C) Limits the Commonwealth’s capital obligations

Ports around the world and especially on the US East Coast are focusing on improving

their business model and expanding the physical attributes to capitalize on the future of

maritime trade. There are, however, many financial and investment needs to be met

and government fiscal budgets are stretched.

According to recent VPA financial reports, the VPA has $565.8 million in debt obligations

to pay for port related infrastructure projects. In addition, planned and forecasted new

investments total of approximately $3.5 billion, when including the Craney Island plans.

A total of nearly $300 million will be required to build and equip APMT II. In addition,

no equipment replenishment forecasts have been included in the VPA’s Master Plan,

which will be mandatory to maintain current operations and future growth.

APMT’s obligation to fund equipment and superstructure investment during the life of

the concession and to build and fully fund APMT II significantly reduces the

Commonwealth’s capital requirements. APMT projects that this commitment reduces

the Commonwealth’s capital investment requirements in The Port of Virginia by more

than $1.1 billion.

D) Establishes ownership of a premier container facility

APMT will transfer ownership of APMTVA to the VPA free of any debt or other obligations

at the beginning of the concession. This unique opportunity allows the Commonwealth

to own and fully control all terminal assets in The Port of Virginia and unifies the Port on

a permanent basis.

Establishing the VPA’s ownership of APMTVA ensures the VPA can succeed with its 2040

Master Plan vision:

“Overall VPA, APM and the Commonwealth are best served when the combined assets

of The Port of Virginia compete for cargo not currently moving though Virginia...”

Ownership accomplishes this alignment in perpetuity for the VPA. The key business

benefits of this ownership are:

Development plans: Standardizes capacity expansion and ensures most cost

efficient additions to capacity.

Marketing: VPA can focus all marketing efforts on The Port of Virginia and not

specific facilities or short term and mid-term commercial issues

Cargo flow: APMTVA’s location, on the west side of the Elizabeth River is ideal

for future port expansion. It is away from the major Hampton Roads population

center, and has favorable road and rail connections.


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Volume preservation: Permanently adding APMTVA to VPA’s portfolio ensures

VPA’s full retention and financial benefits of the volumes handled at The Port of

Virginia

Without the ownership of APMVA, the VPA is exposed in the midterm to a reduction in

volume and capacity. Today, the APMTVA facility handles about 45% of all container

traffic and represents a similar percentage of total capacity for the entire Port of

Virginia. The lease arrangement executed in 2010 between APMT and VPA temporarily

unified the Port on an operating level. However, APMT’s ownership contribution of this

proposal solidifies a permanent value creation and eliminates the VPA’s impending risk

of losing volume and capacity and need to invest heavily in costly new infrastructure to

retain current volume and secure new business.

III. APMT IS A PROVEN AND REPUTABLE PARTNER

APMT has been a partner of the VPA and the Commonwealth since 1975 when it began

operations as a tenant in the Portsmouth Marine Terminal. In 2001, APMT purchased

nearly 600 acres of land to develop APMTVA.

Quoting from the VPA’s 2040 Master Plan:

“In 2007, APM opened the first major private container terminal in the U.S. in

Portsmouth, Virginia, investing more than $500 million, the largest private

investment in Virginia’s history. As the most automated, technologically

advanced terminal in the U.S., APM will continue to attract international attention

and bring more cargo to Virginia”.

APMT has a rich history in port operations. In 1958, APMT’s parent, A.P. Moller Group

(APM), opened its first facility in the U.S. Today APMT has a presence in 9 ports in the

U.S. and 56 worldwide. In 2011, APMT handled more than 33 million TEU, ranking as

the third largest terminal operator in the world. Last year APMT committed more than

$3 billion to new projects and developments, more than any other operator.

As a part of the APM Group, APMT has nearly 110 years of transportation experience

and expertise. APMT has a proven track record of delivering on our commitments and

we have the backing of one of the most financially sound businesses in the industry.

Since the beginning, long term vision and focus has been central to our business

philosophy, with constant care and good corporate citizenship taking priority over short

term objectives. This approach has allowed APMT to grow into the most geographically

diversified port operating company in the world.


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Included in APMT’s long term perspective and

corporate citizenship philosophy is our dedication

to safety and the environment. Recently, APM

Terminals North America’s commitment to

employee and workplace safety was recognized

by the industry workers compensation insurer,

Signal Mutual, with the Gerald H. Halpin Safety

award. The Halpin award recognizes sustained

and proven dedication to safety. In addition,

APMT received Lloyd’s List Global Safety Award in

2011 and several other local awards and

recognitions in the U.S. and around the world.

Community and environmental consciousness are at the forefront of our business.

When we developed APMTVA, the environmental impact was of great importance. We

embraced the opportunity to work with multiple governmental agencies and private

organizations at the Federal, State, and Local levels. We are quite proud of the

Environmental Protection Agency’s (EPA’s) recognition of APMTVA as an example of a

company “doing the right thing” and proving that port infrastructure development can

be achieved in an environmentally conscious manner.

Since 2008, Portsmouth has been home to APMT’s Americas Regional Corporate

headquarters, and we look forward to further cementing our relationship with the

Commonwealth with the execution of this proposal.


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Recent USA Concession Awards

Port Location Operator Length

Baltimore (USA) Ports America 50 Years

Oakland (USA) Ports America 50 Years

Philadelphia (USA) Consortium 50 Years

Long Beach (USA) OOCL 40 Years

Sources: Drewry, JOC, Press, Internal

Tab 1 – Project Description and Approach

I. APM TERMINALS’ PROPOSAL

A) Concession structure

APMT proposes to establish a standard landlord-tenant port concession for a period of

48 years. APMTVA, NIT, PMT, NNMT, VIP will be operated by APMT. We are open to

operating Richmond if beneficial to the Commonwealth, but we understand today there

is a third party operator in place.

The arrangement and term is in line with other recent concessions in the U.S., as

illustrated by the following exhibit.

An important consideration in

determining concession duration is the

amount and timing of the investments

undertaken by the concessionaire.

APMT proposes to undertake a

considerable capital investment

program and thus a 48 concession

year should be an appropriate period

for APMT and the VPA.

As illustrated in further detail in section D below, APMT will retain ownership over the

life of the concession for superstructure assets in existence today and invested in over

the life of the partnership. A mechanism will be established in the concession

agreement for the transfer of superstructure assets to the VPA at the expiration of the

concession.

B) Transition of APM Terminals Virginia to VPA

APMTVA will transfer to the VPA, the title to all land and improvements at the terminal,

as well as preserved wetlands and undeveloped property. In total, 576 acres of land

will transfer to the VPA along with the capabilities of one of the most technologically

advanced container terminals on the globe. The transfer of assets to the VPA will be

free of debt.

The original development of APMTVA including all environmental mitigation,

infrastructure, superstructure and IT constituted an investment of over $540 million.


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Container Terminal Facilities OverviewVolume figures in TEU 000s (Based FY 2012 Est.)

Total Volume Rail Volume Developed Capacity Expansion Opportunity

Total Port 1,940 389 3,800 2,100

APMTVA 827 173 1,450 1,200

- Pct of Total 43% 44% 38% 57%

Excludes PM T (decommissioned) and inland Ports

Terminals in Operation

The value of the terminal, however, is far greater than the capital investment. The

VPA’s ability to mitigate development risk by securing the most cost effective and

feasible plan for port expansion in APMT II is a critical component for the VPA.

APMTVA is an integral facility in terms of capacity and ability to service the largest

vessels deployed today. The below table highlights the volume and capacity overview

of existing terminals in The Port of Virginia:

C) Payments to VPA and Commonwealth

The VPA and therefore the Commonwealth will benefit from a combination of fixed and

variable payments, capital expenditure reductions, tax benefits, in addition to the

ownership of the APMTVA facility.

Fixed Concession Payment

APMT will make upfront, cash contributions to help VPA offset its financial obligations.

The amount and timing of this payment(s) will be included in the concession

agreement.

The VPA will receive a fixed concession compensation for APMT’s operational and

commercial use of the APMTVA, NIT, PMT, NNMT, VIP facilities. The fixed fee of the

concession will contribute to the VPA’s interest and principle obligations under the

current debt schedule, (shown on the following page), as well as to the operating costs

of administering the VPA.

The payment will take into consideration the growing business in The Port of Virginia

and the time value of money over the life of the concession. In the concession

agreement we will establish in a mechanism for how to develop these payments over

time.


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Revenue Sharing

The second component of compensation is a variable payment which is tied to Net

Revenues (less pass through charges) of the facilities.

This concession payment to VPA is linked with performance to ensure alignment in

growing the commercial business. A calculation based on revenue rather than payments

made based off of APMT’s profitability unburdens the VPA’s operating risk and avoids

potential disputes related to business controls and cost allocation.

Tax Benefits

In addition to these two incomes streams of the VPA, payments will be made to the

local governments and to the Commonwealth by APMT. These will include business

license fees and anticipated personal property and income taxes.

Business license fees grow with revenues based on a scheduled percentage established

by each city.

The personal property taxes are assessed on equipment owned by APMT.

Corporate income taxes of 6% on taxable income generated by the port will be paid to

the Commonwealth under our proposal. Today, VIT is a tax exempt entity.

D) Capital investment program

APMT will purchase, maintain and replace equipment necessary to operate at each port

facility. APMT’s assumption of these investments is estimated to be between $750

million to $1.1 billion over the life of the proposed lease. A better estimate will be

VPA Aggregate Debt Schedule (millions)Commonwealth Port Fund Bonds 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Beginning Balance 229.0 233.1 243.7 254.7 265.9 275.7 284.5 293.4 302.6 312.1 321.9 332.1 342.6 353.5

Repayment (4.1) (10.6) (10.9) (11.2) (9.9) (8.7) (8.9) (9.2) (9.5) (9.8) (10.2) (10.5) (10.9) (11.4)

Ending Balance 233.1 243.7 254.7 265.9 275.7 284.5 293.4 302.6 312.1 321.9 332.1 342.6 353.5 364.9

Interest Expense (7.1) (8.7) (8.4) (8.1) (7.8) (7.5) (7.3) (7.0) (6.7) (6.4) (6.0) (5.7) (5.3) (4.9)

Revenue Bonds


Repayment (4.3) (4.5) (4.7) (4.9) (6.7) (7.0) (7.3) (7.7) (8.1) (8.4) (8.9) (9.3) (9.7) (10.2)

Ending Balance 278.6 283.1 287.7 292.6 299.3 306.2 313.6 321.2 329.3 337.7 346.6 355.9 365.6 375.7

Interest Expense (13.4) (13.2) (13.0) (12.7) (12.5) (12.2) (11.8) (11.5) (11.1) (10.7) (10.3) (9.9) (9.4) (9.0)

Equipment Lease


Repayment (9.4) (9.7) (10.0) (9.4) (6.5) (6.3) (6.5) (4.2) (0.5) 0.0 0.0 0.0 0.0 0.0

Ending Balance 53.1 43.4 33.4 24.0 17.6 11.2 4.7 0.5 0.0 0.0 0.0 0.0 0.0 0.0

Interest Expense (2.0) (1.7) (1.4) (1.0) (0.7) (0.5) (0.3) (0.1) (0.0) 0.0 0.0 0.0 0.0 0.0

Total Debt Service Requirement (40.3) (48.3) (48.3) (47.4) (44.0) (42.2) (42.2) (39.6) (35.8) (35.3) (35.3) (35.3) (35.3) (35.3)


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available once we have insight into the current equipment and superstructure inventory

and review the future needs and useful lives of the superstructure at each location.

APMT will invest in the expansion of port capacity to accommodate customer demand.

APMT II offers an expansion opportunity within the port that cannot be matched in

terms of investment per additional TEU of capacity. The ownership of APMT and the

expansion of APMT II allows for comprehensive capacity planning in the Port by the

VPA.

Design estimates for APMT II have been

reviewed and are presented at right. Portions of

the expansion can be phased in as capacity

constraints dictate. The most capital intensive

portion of the expansion lies in the equipment

and technology needs. During the construction

of APMTVA the dredging was completed along

the existing and future berth areas, while certain

aspects of the yard and rail areas were designed

for phased expansion.

APMT is the most qualified entity to develop APMT II. We designed, built and operated

APMTVA and have detailed knowledge of existing infrastructure and preparatory work

undertaken to ensure a smooth process for establishing APMT II. Our project

management will save the VPA time, money and limit risk.

II. PROJECT CONCEPT AND SCOPE

APMT proposes entering into an agreement with the VPA for an operating concession for

all VPA port facilities which currently include:

APM Terminals Virginia

Norfolk International Terminals

Portsmouth Marine Terminal

Newport News Marine Terminal

Virginia Inland Port

Richmond facility (subject to discussion)

APMT II Expansion EstimateFigures in USD millions (November 2011 Estimate)

Cost Estimate

Berth (650 foot extension) 18.3$

Yard & Gate (15 stacks, 8 lanes) 86.5$

Rail (2 spurs x 3 tracks) 11.1$

Equipment & IT 170.3$

Total 286.2$

Review Source: CH2MHill


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A) Map of proposed locations

B) Description of facilities covered in proposal

APM Terminals Virginia

Between 2001 and 2007, APM Terminals invested in excess of $540 million in the

development of a greenfield port facility with one of the highest levels of technology of

any container terminal globally.

The 3,200 foot long pier has 3 berths and 50 feet of water depth adjacent to the quay.

The terminal is currently serviced by 8 post-Panamax STS cranes, 30 RMG cranes, a

fleet of over 20 shuttle carriers, and is accessible through 26 truck lanes. The current

capacity of the terminal is about 1.44 million TEUs.

The terminal includes 310 developed acres, of which 141 are dedicated to a highly

automated container storage yard, and 125 underdeveloped acres capable of

accommodating a warehousing unit. The facility has access to Virginia’s interstate

Port of

Virginia

Virginia

Inland Port

(VIP)

Portsmouth

Marine Terminal

(PMT)

APM

Terminals

(APMT)

Norfolk

International

Terminals

(NIT)

Newport News

Marine Terminals (NNMT)


17

highway system through a direct road link and is fully integrated with both Norfolk

Southern’s (NS’s) and CSX’s Class 1 rail networks through on-dock rail tracks.

Norfolk International Terminals

Norfolk International Terminals (NIT), in operation since 1960s, is the largest facility in

the Port. NIT is situated on 648 acres of total usable land for terminal and yard

operations and warehousing. The facility has 14 post-Panamax capable cranes that can

reach across 22 to 26 containers. The main channel leading to the terminal is 50 feet

deep.

NIT is divided into two parts: the North terminal and the South terminal. NIT Central

bisects the terminal and contains the Central Rail yard which provides NIT with capacity

for over 500,000 on-dock rail lifts per year. NIT accommodates containerized, break-

bulk and Ro-Ro cargoes. The annual capacity of the terminal is about 2.0 million TEU.


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Portsmouth Marine Terminal

The footprint of the Portsmouth Marine Terminal (PMT) is 285 acres. The facility has

4,515 feet of wharf with pier depths up to 43 feet. The facility currently has 8 cranes.

PMT can handle break bulk and Roll-on/Roll-off (Ro-Ro), but is not suited for modern

container handling operations.

Newport News Marine Terminal

Newport News Marine Terminal (NNMT) has operated since the 1960s and is currently

the Port’s main break bulk and Ro-Ro terminal. NNMT is situated on 140 acres. The

facility has 3,480 feet of pier space with depths up to 40 feet, serviced by five cranes.

The terminal has 42,720 feet of direct rail access/rail tracks provided by CSX. The

terminal offers direct cargo loading to and from CSX break bulk rail service, covered

storage, container storage, and accessibility from three major Virginia roadways.


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Virginia Inland Port

The Virginia Inland Port (VIP) is an inland Intermodal Container Transfer Facility (ICTF),

providing rail service directly to NIT. It is located, in Warren County, VA, about 220

miles from the Hampton Roads terminals. The facility encompasses 163 acres and is

located within 1 mile from I-66 and within 5 miles of I-81. VIP is also a U.S. Customs-

designated port of entry, meaning that a full range of customs functions are available to

customers.

III. INTEGRATION PLAN

A) Virginia International Terminals transition

One of the most important factors for the overall success of this transaction is the

successful hand-over of operations and integration of VIT to APMT.

On the effective date of the transaction, APMT will assume responsibility for the

operation of the port facilities. Senior executives of our organization will lead the

integration pursuant to a comprehensive integration plan that will be developed in

cooperation with the VPA. The plan will address all aspects of the integration, including:

1. Customer relations and commercial considerations

2. Staff and Human Resources issues

3. Local community relations

4. Operations

5. Labor relations

6. Stevedores and other on terminal contractors


20

APMT has extensive experience in

similar transitions. Recently, we took

over the operations of Scandinavia’s

largest and most important container

terminal in the Port of Gothenburg,

previously operated by a State

entity. The facility handles 800,000

TEUs annually which is

approximately 60% of Sweden’s

total container traffic. The facility is

also the gateway for Swedish and

Norwegian inland points.

In 2011, two other similar transitions were executed: in Callao, Peru and in Poti,

Georgia. In Callao APMT also took over the operations from a government entity,

whereas in Poti the operations were previously run by a private company.

The Callao transaction required transition of the full operation of the facility within 50

days of signing the concession agreement. APMT successfully took over the operations

from the government entity Empresa Nacional de Puertos S.A. (ENAPU) within that

period.

The complex process of assuming operational control required the assistance of dozens

of APMT colleagues. Highlights of the successful integration are:

Employment of over 500 staff from the previous government entity including

completion of payroll, benefits and pension programs.

Integration of the local operating and financial systems into APMT and ensuring a

seamless process for the customers and end users

Applying APMT’s global best practices and standards to the operation, resulting

in a 50% crane productivity improvement and reduction of 50% in trucker turn

times.

Transfer of tangible assets and completion of financial and accounting

transactions related to the transfer.

The Poti facility is also the largest in the country of Georgia and a strategic gateway for

their economy. Though not taken over from a public entity similar challenges were

encountered including stakeholder engagement with the selling party, the local

government, employees and our partner.

These 2011 transactions, and other previous hand over processes, exemplify APMT’s

strong capability and professional approach to integrating new operations in a seamless

manner for both the end users, but also equally important, the employees of the

business and the governmental stakeholders.


21

IV. OPERATING PLAN

A) Excellence in marine terminal operations

APMT believes the three most important aspects for our customers are reliability,

efficiency and cost. APMT will base the operations on metrics that drive reliable, safe

operation that are cost efficient. We will benchmark our performance against our global

portfolio and against the performance of competing U.S. ports.

APMT applies the Process Excellence (PEX)

Lean Six Sigma methodology to all of our

operations and administrative activities. PEX

creates a culture which focuses on exceeding

the expectations of our customers and

stakeholders through continual improvement

of end-to-end business processes.

The technology employed at the APMTVA

terminal allows for significantly greater

operational and cost efficiencies. APMT will

continue to maximize the utilization of that

facility.

Given its size, potential depth alongside and rail access, the NIT facility is well

positioned today and holds long-term potential. APMT will continue to optimize the

facility with containerized cargo utilizing the existing mode of operation with straddle

carriers and non-containerized cargo utilizing the existing infrastructure.

We will develop comprehensive operational plans for NNMT and VIP to ensure there is a

distinct focus driving the performance in these respective facilities. APMT will manage

PMT in close coordination with the VPA to ensure the optimal use of the land. APMT is

experienced in the full range of service that may eventually be offered at PMT. These

include stevedoring, break bulk, free trade zone operations and warehousing and

distribution operations.

B) On-dock rail operations

Intermodal Rail capability is a critical component of The Port of Virginia. The median

rail, the Heartland Corridor, and the National Gateway projects provide superior

intermodal connections to key Midwest destinations. APMT is well qualified to ensure

intermodal traffic growth and an increased share of volume handled by the port of

Virginia.

APMT has extensive experience with the major Class 1 and shortline rail operators. For

instance, at APMT’s Pier 400 facility in Los Angeles, we operate the largest on-dock rail


22

facility in North America. Currently, Pier 400 handles more rail volume annually than

the entire Port of Virginia.

We worked closely with the railroads and other key stakeholders to ensure the

development of full access to rail connections during the development of APMTVA, the

only facility capable of providing services by both Class 1 railroads in The Port of

Virginia. We will apply this skill set to the continual improvement of on-dock rail

services within the port complex and beyond.

C) Inland Logistics Services experience

APMT operates 39 Inland Logistics Services facilities in the Americas Region. We

understand the important value proposition for our customers by having an inland

services network linked to marine terminals. APMT will work closely with the VPA to

provide services needed to expand manufacturing and distribution centers, the Virginia

Inland Port, and logistics parks linked to the Port. This integration will help drive cargo

demand through the Port of Virginia and offer customers a more integrated transport

solution.

V. COMMERCIAL BUSINESS PLAN

A) Growing The Port of Virginia

The Port of Virginia is a leading North Atlantic port hub consisting of two major

container facilities, one break bulk facility and an inland port. In 2011, the volume

handled in The Port of Virginia was 1.92 million TEUs, representing a 1% increase over

2010, and a 9.9% increase over 2009. Container traffic is balanced; export 54% and

import 46%. In 2011, the facilities also handled close to 350 thousand short tons of

general cargo, representing a 37% increase over the previous year, though not nearly

as significant a player in this market as has been achieved on the container trade or

compared to competing ports. In total, there were 1,828 ship calls in the Port which is

in line with 2010 numbers.

The Port is the second largest in the U.S. North Atlantic region, accounting for 18.1% of

the region’s total container traffic. It is well positioned for the opening of the widened

Panama Canal in 2014. While a number of East Coast ports are still competing for

dredging funds, The Port of Virginia has already dredged to a depth of 50 feet (and has

permission to further dredge to 55 feet) and is not encumbered by any air draft


23

limitations. In addition, the Port is only 18 miles, less than two hours, from open sea

and the harbor is ice-free, hence operates year-round.

Virginia’s market share demonstrates the strategic significance of the Port’s location

and the importance of delivering quality service and ease of access for the captive local

markets. The Commonwealth of Virginia has 8 million residents across a number of

regions, including eight cities with over 125,000 residents.

Port of Virginia – Historical Throughput

Unfortunately, The Port of Virginia has lagged behind competing US East Coast ports

since the financial crisis period of 2009. Between 2009 and 2011 the Port has grown by

less than 10%. This growth lags behind nearby ports of New York / New Jersey (18%),

Baltimore (20%), and Savannah (25%). Our view is that there is much more that can

be done by APMT to benefit The Port of Virginia to grow its market share.

B) Increasing Market share

The Port of Virginia has preserved its market share of approximately 18% to 20% of

the North Atlantic market, ranking second, trailing the Port of New York and New

Jersey.

0

500

1000

1500

2000

2500

1990 1994 1998 2002 2006 2010

Throughput

(‘000 TEUs)

Throughput CAGR 1990-2010: 4.5%

Source: Virginia Port Authority


24

U.S. Port Regions – Historical Market Share

Port of Virginia – Historical Market Share within the North Atlantic Region

The Port attracts traffic for its regional centers due to its capabilities in handling both

the new generation post-Panamax vessels and the expected growth in Asia-to-U.S. East

Coast traffic following the completion of the Panama Canal expansion in 2014. The

completion of additional lock complexes and new dredging projects tailored towards

post-Panamax vessel classes is expected to double tonnage through the Canal by 2025.

APMT will pursue increased market share of containerized and general cargo through

the Port. This will be accomplished through increased productivity and reliability and

through the focused efforts of our global commercial network. One aspect of increasing

the volume in a port versus what is happening on a macroeconomic level is to provide

superior service at the right price, which will be the cornerstone of APMT’s strategy.

C) Capitalizing on Virginia’s connectivity

Virginia’s port access, infrastructure and recent economic development initiatives have

led to a concentration of more than 80 distribution centers within the Commonwealth,

serving major retail customers and cities within the Mid-Atlantic region. The

Commonwealth’s 1,000 miles of four to ten lane interstate highways carry 200 billion

ton-miles annually through the main I-81 and I-95 corridors throughout the region. The

Port of Virginia is located within 325 miles of approximately 16.2 million residents in the

Mid-Atlantic region, including urban centers of Baltimore, MD; Charlotte and Raleigh,

NC; Philadelphia, PA; and Washington, DC.

Source: AAPA

24.1 24.7 24.9 24.3 24.2 23.8 23.5 23.8 24.7 24.4 24.0

17.4 17.5 16.9 16.4 16.1 16.4 16.0 16.2 16.6 16.7 16.5

5.7 5.7 5.3 5.2 5.3 5.2 5.0 5.6 5.8 6.9 6.4

52.8 52.0 52.9 54.1 54.4 54.6 55.5 54.5 52.9 51.9 53.2

0%

20%

40%

60%

80%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

North Atlantic South Atlantic Gulf Pacif ic

Source: AAPA

45.1 46.6 47.1 47.6 47.5 48.3 48.8 48.9 49.1 50.6

17.7 17.9 19.0 19.2 19.7 19.4 19.6 19.3 18.8 18.113.5 13.1 12.8 13.0 12.5 12.2 12.5 13.7 13.4 12.76.7 6.3 6.1 5.9 6.0 6.0 5.6 5.7 5.7 5.917.0 16.2 15.0 14.1 14.4 14.1 13.5 12.5 13.0 12.7

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

New York/New Jersey Hampton Roads Montreal Baltimore Other


25

Geographically Well Positioned Access to Virginia and Beyond

The Port of Virginia benefits from easy access into the Midwestern, Northeastern and

Southeastern U.S. markets through a close collaboration with major Class 1 rail

operators, CSX and Norfolk Southern.

As illustrated in APMT’s operating plan in section 4, we have a firm grasp on the

requirements needed to make effective intermodal rail business through the Port. APMT

will engage the customers proactively, in conjunction with the railroads, to pursue

greater percentages of rail volume and continue to find best possible options to route

cargo to the hinterland markets.

D) Volume projections

An independent consultant commissioned by APMT, Mercator International LLC,

developed a 25-year traffic forecast using two methods: (1) a GDP multiplier technique

and (2) a regression analysis. The forecasted figures below show the more conservative

GDP-multiplier technique.

Lillian Vernon Corp

Nash Finch

Charleston

Richmond

Washington DC

Raleigh

New York

Miami

Savannah

Charlotte

Philadelphia

Baltimore

Mid Mountain Foods

Ford

Sysco

Ferguson Enterprises

Family Dollar

The Home Depot

Von Holtzbrinck Publishing Services

Wal-Mart

Banta Books

Wal-Mart

Rite AidKohl’s

Best Buy, Inc.

Target Stores

J. Crew

Orvis Co.

Advance Auto Parts

Hanover Direct

Home Shopping Network

Vovo

Bacova Guild Ltd.

Camrett Logistics

Hooker Furniture Corp. Inc.

NauticaE Toys Direct

Diversified Distribution, Inc.

Dollar General Corp.Jones Apparel Group, Inc.

PeeblesWal-Mart

Ace Hardware

Food Lion

Country Vintner

McLane Foods

Value City Furniture

CVS

Hewlett Packard

Richfood

Sharper Image

DSC Logistics

Wal-Mart

HUDD

Dai Ei Papers

Sysco Food Systems

QVC Network, Inc

Dollar Tree, Inc

Cost Plus World Markets

Nautilus

Target Stores

Big Stone Gap

Bristol GalaxMartinsville South Boston

Danville

RadfordRoanoke

Bedford

Lynchburg

Blacksburg

Buena Vista

South Hill

EmporiaFranklin

Chesapeake

RICHMOND

Colonial HeightsPetersburg

Hopewell

Newport News

Williamsburg

Hampton

Virginia Beach

Alexandria

ManassasFairfax CityFront Royal

Winchester

Falls Church

Fredericksburg

Harrisonburg

Waynesboro

Charlottesville

Staunton

Lexington

Clifton Forge

Covington

Fincastle

PortsmouthSuffolk Norfolk

Hampton Roads


Lillian Vernon Corp

Nash Finch

Charleston

Richmond

Washington DC

Raleigh

New York

Miami

Savannah

Charlotte

Philadelphia

Baltimore

Mid Mountain Foods

Ford

Sysco

Ferguson Enterprises

Family Dollar

The Home Depot

Von Holtzbrinck Publishing Services

Wal-Mart

Banta Books

Wal-Mart

Rite AidKohl’s

Best Buy, Inc.

Target Stores

J. Crew

Orvis Co.

Advance Auto Parts

Hanover Direct

Home Shopping Network

Vovo

Bacova Guild Ltd.

Camrett Logistics

Hooker Furniture Corp. Inc.

NauticaE Toys Direct

Diversified Distribution, Inc.

Dollar General Corp.Jones Apparel Group, Inc.

PeeblesWal-Mart

Ace Hardware

Food Lion

Country Vintner

McLane Foods

Value City Furniture

CVS

Hewlett Packard

Richfood

Sharper Image

DSC Logistics

Wal-Mart

HUDD

Dai Ei Papers

Sysco Food Systems

QVC Network, Inc

Dollar Tree, Inc

Cost Plus World Markets

Nautilus

Target Stores

Big Stone Gap

Bristol GalaxMartinsville South Boston

Danville

RadfordRoanoke

Bedford

Lynchburg

Blacksburg

Buena Vista

South Hill

EmporiaFranklin

Chesapeake

RICHMOND

Colonial HeightsPetersburg

Hopewell

Newport News

Williamsburg

Hampton

Virginia Beach

Alexandria

ManassasFairfax CityFront Royal

Winchester

Falls Church

Fredericksburg

Harrisonburg

Waynesboro

Charlottesville

Staunton

Lexington

Clifton Forge

Covington

Fincastle

PortsmouthSuffolk Norfolk

Hampton Roads



26

Port of Virginia – Projected Volume and Regional Market Share

The Port of Virginia should benefit in 2014 – 2016 from the widening of the Panama

Canal. However, relative market share is expected to remain relatively flat over the

midterm.

Traffic growth at the Port of Virginia was forecast to increase 3.6% in 2012 to 2.0

million TEUs, though it appears this level of growth may not fully materialize.

E) APMT’s experience and customer relationships

APMT’s global Port, Terminal and Inland Logistics Services network spans 57 port

locations and 154 diverse inland port services businesses around the world. APMT has

unparalleled commercial experience and knowledge managing the business. In the

Americas Region alone, APMT is present in 13 port and 39 inland services locations in

13 countries. Three additional terminal development projects are underway with a total

capital commitment approximately $2 billion.

APMT has in-depth

knowledge of The Port of

Virginia, having been not

only an operator, but also

the owner, developer and

manager of a terminal in

the Port.

Due to our broad network

of facilities, APMT can

employ best practices and

our wide ranging expertise

to handle any type of cargo

and solve any commercial

issues that may arise.


27

As the operator for The Port of Virginia, APMT can leverage the full weight of our

experience to maximize the efficiency and overall customer experience in the Port.

Our existing customer base includes over 60 shipping lines and some of the world’s

leading beneficial cargo owners. We have built strong relationships with all major

shipping lines, at both Global and Local levels. Given our multi-layered commercial

activities that include not only a local sales force but also a global network of Key Client

Managers, we are well positioned to approach our customers to increase the share of

their business through The Port of Virginia. Joint marketing with the VPA will further

enhance and strengthen our mutual success in terms of customer retention and

satisfaction.

Globally based customers are extremely important for The Port of Virginia. APMT has

established a commercial office located in Hong Kong to expand our partnerships with

Asia-based customers. The office serves customers in Hong Kong, mainland China,

Singapore, Taiwan, South Korea and Japan. Through the Hong Kong office, APMT brings

its Global Terminal and Inland Logistics Network even closer to its Asian based

customers to identify opportunities for servicing their activities. This strong presence in

Asia positions APMT to attract new business to The Port of Virginia.

European trade and carriers are particularly important to the market. APMT’s global

headquarters are centered in The Netherlands where we employ a team of professionals

dedicated to serving the needs of the key players. The access and relationship we

maintain with European customers allows us to establish strategic relationships,

anticipate needs and address issues in an expedited fashion.

The U.S. military also plays a significant role in the Port and the Commonwealth as a

whole. APMT and our sister companies have enjoyed a long and successful relationship

with the U.S. Government by servicing its cargo needs. We see the military and

government as one of our vital customers and will continue to build upon our working

relationship to suit their future needs through The Port of Virginia.

F) Non-container business focus

APMT will actively engage a full range of businesses to help spur general cargo growth

in the Port. We have been successful in APMT’s Americas Region in servicing a wide

array of products. We handle break bulk cargo at most of our North American facilities

and have several multi-purpose terminals in South America. For example, our terminal

in Callao, Peru handles both containerized cargo and general cargo, such as metals,

grains, fertilizers, chemicals, coal, vegetable and fish oil, and machinery. Our terminal

in Buenos Aires serves not only the largest container vessels in South America but also

the cruise ship industry, and grain producers.

Roll-on/Roll-off (Ro-Ro) cargo is an area for potential growth. The market on the U.S.

East Coast is sizeable, comprising new and used passenger vehicles, transportation


28

equipment, machinery, and project cargoes. Today, the majority of this business moves

through other ports near Hampton Roads.

APMT will leverage our global sales/marketing

network and work with domestic and foreign

vehicle and machinery manufacturers, as well

as with dedicated Ro-Ro carriers, selected

vehicle processors, and both the Norfolk

Southern and CSX Transportation, to further

develop Ro-Ro marketability.

Break-bulk shipments, project cargoes, and

certain smaller-volume dry bulk commodities

will also be targeted by APMT. VPA statistics

indicates that the Port handled approximately 350,000 tons of break-bulk cargoes in

2011, primarily through NNMT. However, there are several commodities moving

through neighboring ports via the break-bulk mode that could potentially be captured.

Forestry products, rubber and steel are the most likely candidates for The Port of

Virginia.

Many commodities are transported under long-term contracts that require the terminal

operator to work collaboratively with the supplier, ocean carrier and distributor/buyer to

create an effective and efficient supply chain. Several of the decision-makers for these

break-bulk and Ro-Ro supply chains are located around the world, and therefore the

APMT would:

Provide local marketing coverage across a wide array of countries

Negotiate with producers/manufacturers, exporting companies, specialized ocean

carriers, and distributors/buyers for different commodities

Sustain long-term negotiations and deliver the product requirements generated

by the process

VI. EXPANSION PLANS

APMT II is by far the most cost-competitive option for capacity expansion at the VPA’s

disposal and is fully secured through this strategic partnership. APMT’s proposal

eliminates any uncertainty about if APMT II will be available to meet The Port of

Virginia’s capacity expansion requirements. As previously outlined, the Commonwealth

will own this property and APMT will undertake the investment and development

responsibility on behalf of the VPA. We will work closely with the VPA to optimize the

project and deliver the expansion in a timely fashion to increase the Port capacity to

meet the volume requirements. There are no expected barriers to the permitting of

APMT II as much of the environmental leg work was completed for the original


29

development of APMTVA. All building and local permits will be established prior to

commencement of construction.

Expansion opportunities at NIT, NNMT and PMT

will be evaluated and planned based on the

overall development of the market and

business growth. We envision the Port of

Virginia as a long-term option for both

container and conventional cargo growth, and

the available capacity must remain abreast

with cargo development.

Similarly, the VIP facility and future capacity

needs as an ICTF hub will be reviewed and a plan put in place to maximize the efficient

flow of intermodal traffic through the Commonwealth.

In addition to physical expansions of the port facilities, APMT will maintain the

responsibility to handle the superstructure investments, namely equipment, as outlined

in section 1 D. We believe that optimizing the equipment within the respective facilities

will also incrementally increase the overall handling capacity. Therefore, APMT believes

our proposal offers the VPA the capability and capacity to handle long term cargo

growth.

VII. APM TERMINALS’ CONTACT INFORMATION

The headquarters for APM Terminals’ Americas Region is located in Portsmouth,

Virginia.

For additional information, please contact:

Eric A. Sisco

President

Address:

1000 APM Terminals Boulevard

Portsmouth Virginia, 23703

E-mail: [email protected]

Phone: 757-686-6501

Fax: 757-686-6508


30

Tab 2 – Desirability of the Project

I. IMPORTANT TIME FOR THE PORT OF VIRGINIA

The Port of Virginia is a growth engine for the Commonwealth. It accounts for nearly

$50 billion in economic impact and 200,000 Virginia jobs are linked to Port activity.

The Panama Canal’s third set of locks will open in 2014 with dramatically increased

capability for handing larger ships. At the same time, shipping lines are ordering bigger

vessels to drive down costs. In conjunction with this is an increase in mega-vessels

calling the U.S. East Coast from Asia via the Suez Canal. Amidst this background the

Atlantic Coast states are at an important juncture in the competition to be the long

term maritime business center for the global commerce and must be able to deliver on

the key value drivers.

The Port of Virginia is well positioned to deliver on all of these criteria. It has a natural

advantage over regional competitors in terms of greater water depth and no air-draft

restrictions. Additionally, the presence of the two Class 1 railroads and highway system

described previously provide excellent connectivity into the hinterland. Being that

Virginia is home to one of the most technologically advanced terminals in the world,

APMTVA, it can provide customers superior levels of efficiency and value for money

when servicing larger ships.

U.S. East coast ports must provide the following value drivers:

Ensure the physical ability to service +10,000 TEU ships (water depth, air draft

and terminal infrastructure all required)

Provide high vessel productivity (crane moves per hour) so shipping lines can

minimize port stays

Ensure cost effective and efficient connectivity to access a wide range of

markets

Provide the best value proposition in terms of total cost and total benefits.


31

II. THE RIGHT PARTNER FOR THE COMMONWEALTH

A) APM Terminals Overview

APMT has been a major part of the development of the container terminal industry, a

role and responsibility we do not take lightly. The company’s history in the terminal

operations began more than half a century ago with a general cargo facility at the Port

of New York. Since then, containerization and growing maritime trade have played an

increasingly important role in the world economy and APMT has been at the vanguard

of the industry.

Dedicated to setting the industry standards for efficiency, safety and sustainability, it is

our goal to ‘be the best port operator’ every day, at every port facility and every

location throughout the APM Terminals global Port, Terminal and Inland Services

Network.

B) Operational and developmental excellence

APMT has a long history of operating

ocean terminals in North America and the

rest of the world. In the Americas

Region, APMT has 3 terminal facilities

currently under development, 2 of largest

terminals in U.S. and 2 of largest

terminals in South America at Santos,

Brazil and Callao, Peru.

In each of our locations we recognize

that properly maintained equipment is

vital to support a high performing operation. Preventative maintenance ensures

operational reliability and the lowest cost of ownership and operation of our operating

equipment.

APMT has extensive maintenance experience in the fields of ship-to-shore gantries

cranes of all types, including cranes that employ older types of electrical installations,

mobile harbor cranes, RTGs/RMGs, straddle carriers, reach stackers, forklifts, terminal

tractors, refrigerated gensets, reefer installations, medium voltage switch gear.


32

C) Safety and security

Safety is our first priority in the global APMT organization.

APMT adopted a “Safety for Life” program in

2007 to improve continuously safety practices

throughout our Global Terminal Network.

Safety education, training, drills and rigorous

measurements are designed to bring focus,

awareness and industry leading safety

performance.

In the broadest metric of workplace safety, APMT measures the Lost Time Injury

Frequency (LTIF). APMT continues to be the industry leader in safety performance. In

2011 LTIF rate decreased by 21% compared to the 2010 figure to 3.46 per million

man-hours. APMT’s goal for 2012 is a further 15% reduction in the LTIF rate.

APMT’s commitment to safety and our good safety record has been recognized by

several prestigious awards globally and in the Americas Region:

In 2012 we were awarded:

Signal Mutual Gerald H. Halpin Safety Excellence Award

APM Terminals’ U.S. operations’ overall safety performance was recognized with

the Signal Mutual Gerald H. Halpin Safety Excellence Award for 2010-2011,

Signal’s highest accolade. The award is given in recognition of the Signal Member

company which has best exemplified the promotion of employee safety and

health throughout their organization, and is presented only for exceptional safety

performance and achievement.

Signal Mutual Industry Leader Safety Award

APM Terminals Pacific Ltd., which operates APM Terminals Pier 400 at the Port of

Los Angeles, and APM Terminals Tacoma, was named winner of the annual

Signal Mutual Industry Safety Leader Award for attaining best safety

improvement for the past three consecutive years.

Pacific Maritime Association’s Coast Accident Prevention Award

APM Terminals’ Pier 400 Los Angeles facility, the largest container terminal in the

North America, was awarded First Place in the ceremony in the category of

Terminal Operations, Group A for the fifth consecutive year. APM Terminals

Tacoma won Coast Award and Terminals Safety Award in the Group C category

and also won the award for the “Greatest reduction in injury rates for the

Washington Area”.


33


Lloyd’s List Global Safety Award

APM Terminals was named winner of the 2011 Lloyd’s List Global Safety Award,

presented in recognition of APM Terminals’ “exceptional commitment to

improving safety standards in the shipping industry”.

Lloyd’s List Middle East and Indian Subcontinent Safety Award

The Port of Salalah, operated by APMT, was named the winner of the Safety

category of the Lloyd’s List Middle East and Indian Subcontinent 2011 Awards.

The award recognizes “exceptional commitment to improving safety standards in

the shipping industry” through “robust and effective improvements to their

operations at sea or ashore”.


Safety at Sea International Award

APM Terminals was named the winner of the Safety at Sea International (SASI)

Award in the category of Management and Operations. The award, which is

presented annually, recognized the APM Terminals’ company-wide Safety Culture

program as “an initiative that demonstrates improved safe working practices or

attitudes as a result of its implementation, either onshore or aboard-ship”.

New York Shipping Association

For the third consecutive year, the New York Shipping Association recognized

APM Terminals Elizabeth with an award for Lowest Lost Time Accidents

Frequency in the Port of New York and New Jersey – Group A Facilities.

APMT works closely with governments, law enforcement agencies, our industry partners

and our customers to institute and maintain the highest standards of terminal security

in the industry.

APMT has created guidelines to assist our operating locations in the development of

their own local Facility Security Program (FSP), required by the International Maritime

Organization (IMO) and described in the International Ship and Port Facility Security

Code (ISPS). All APMT facilities are compliant.

D) Environmental stewardship

APMT’s company policy, principles and standards require proactive efforts to design,

develop, operate and maintain the most environmentally sensitive and advanced

facilities. It is a responsibility we embrace as corporate citizens, and as members of


34

every community in which our world-wide network of terminals and offices conduct

business.

APMT’s portfolio seeks to employ the most modern and technologically advanced

terminal handling equipment available to minimize power usage and the emission of

pollutants and greenhouse gases. We have made

efforts to reduce the environmental impact often

associated with terminal development and

construction, and have made environmental

awareness a major company goal, including the our

aspirations to be the world’s first “green energy”

powered container terminal, and the world’s first all-

electric RTG fleet.

We carefully monitor our Carbon Footprint through a

detailed annual survey covering the environmental

impact and performance of the APMT’s terminal network. The information gathered

allows us to determine the best measures to reduce CO₂ emissions as part of our overall

strategic corporate goal of becoming eco-efficient.

In 2011, APMT exceeded the target of a 15% decrease in CO₂ emissions. APMT has

established a target of a 25% reduction in CO₂ emissions per TEU by 2020 for all

terminal operations.

APMT’s reporting standards and audits are in compliance with the Greenhouse Gas

Protocol (GHG Protocol), and our sustainability metrics are aligned with the World

Resource Institute (WRI) reporting level C+, with our results submitted annually to the

Carbon Disclosure Project (CDP), with the data audited by Det Norske Veritas (DNV),

and independent foundation dedicated to safeguarding life, property, and the

environment.

We are working to reduce any negative influences on the local community and we are in

close dialogue with global and local stakeholders as part of our ongoing effort.

We work to preserve the integrity of established neighborhood communities, and give

full consideration to wildlife and the natural environment when designing and

developing new terminals. At Pier 400 in Los Angeles, APMT invested $18 million for a

bridge to enable migratory fish patterns to be unaffected by terminal expansion.

APMTVA preserved 110 acres of woodlands onsite, planted 110,000 wetland plants, and

contributed $5.3 million toward cleaning up the Elizabeth River.

We have partnered with established environmental organizations such as Friends of the

Earth and United Nation’s Environmental Protection Agency to find ways to work

together to minimize our environmental impact on local communities and wildlife as

much as possible.


35

Besides the development of the APMTVA facility, below are some other environmental

highlights from APMT global network over the past few years:

Port Elizabeth, New Jersey, USA

APMT joined efforts with the EPA and several other industry partners to integrate

advanced hybrid power train technology into a yard hostler, a type of vehicle used to

move freight containers within a marine terminal and rail yards. The EPA projects that

this high efficiency yard hostler could save over 1,000 gallons of fuel per year, improve

stop-and-go fuel efficiency by 50 to 60 percent, and reduce greenhouse gas emissions

by more than 30 percent.

Rotterdam, Netherlands

In October 2009, APM Terminals Rotterdam officially opened its new power station at

the terminal distributing electricity generated through wind power to its terminal

equipment. The electricity is sourced from two windmill farms which provide electricity

to 14 gantry shore cranes, all the refrigerated containers stored on the terminal, light

poles, workshops and other power consumption needs. By switching to green

electricity, the terminal is able to reduce its CO₂ emissions by 45 percent per year.

Shanghai, China

At the Shanghai East Container Terminal (SECT) 48 RTGs were converted from diesel to

electricity in 2008 and 2009, making SECT the world’s first marine terminal to use

primarily electric-powered RTGs. This has reduced the annual CO₂ emissions at the

facility by 7,500 tons.

Itajaí, Brazil

Truck traffic flows and request procedures were streamlined based upon crane

productivity, and terminal speed limits. A calculation was made to determine the

expected performance of moves per hour, and the number of trucks required for any

given day. This is projected to reduce truck engine CO₂ emissions by 186 tons per year.

III. REDUCING LIFE CYCLE COSTS

Our proposal provides a substantial reduction in the Commonwealth’s costs. This

opportunity reduces the cost to the public of port developments and enhances the Port

effectiveness as an engine of economic growth.

The VPA Master Plan outlines a capital investment program for NIT, NNMT, PMT and

VIP. Our proposal greatly reduces the Commonwealth’s investment obligations and

financing needs. Illustrated below is an outline of the capital expenditures we forecast


36

for the VPA in the absence of the proposed concession with APMT, including the

financial burden to develop Craney Island Marine Terminal. We have not considered

any other projects outside the port or the Master Plan or other publically announced

port projects.

As can be seen in the graph the Commonwealth and VPA have extensive capital

commitments. Avoiding existing obligations, and pushing out the development of

Craney Island through other previously discussed capacity expansion programs will

allow the Commonwealth to minimize a considerable financial burden.

In a period where the Commonwealth is embarking on several important transportation

projects there is great value to the Commonwealth in securing private funds to develop

state infrastructure.

IV. IMPROVING RISK PROFILE

The typical function of a public entity is to engage in governance and regulatory related

roles. The ambition of most government agencies is to provide a service to the public

while minimizing the financial burden on the taxpayer.

When public agencies are consumed with the operation of businesses, in a for profit

fashion, there is a risk exposure placed upon the sovereign which makes it more

difficult to predict and plan for public cash flows and use of funds.

$ mill.

VPA Cumulative Capex Investments (with and without Craney Island)


37

As has been seen in the port industry, especially within the US, returns on port

operations are far from stable or assured. The VPA and VIT financials over the past few

years have been under pressure from increasing costs, lower volumes and rate

pressure as the customers manage their own business expenses more closely. Cost

overruns in the development and construction of port infrastructure are also

commonplace as the costs of input components and raw materials swings based on

general economic pressures, as well as supply and demand issues.

The following graphic illustrates

the financial pressures on the

VPA over the last few years,

seeing the net cash base at year

end fall nearly $100 million from

the highs of 2008 to 2011.

APMT’s proposal will yield the

VPA and Commonwealth a very

stable, cash flow for which the

public entity can better plan and

manage long term funds and

projects. This risk allocation is

much more in line with a

targeted profile of a

governmental agency.


38

Tab 3 – Feasibility of the Project

I. INDUSTRY STANDARD CONCESSION AGREEMENT

This proposal ensures an alignment between the public entity, VPA, and private

enterprise APMT which optimizes the business today, as well as creates a desirable

option for growing the Port’s value proposition in the future.

The VPA’s mission, below, is similar to other sovereign port authorities. It centers on

the development of the Commonwealth port assets to generate economic prosperity in

the Commonwealth.

“…foster and stimulate commerce of the ports of the Commonwealth, to promote

shipment of goods and cargoes through the ports, to seek to secure necessary

improvements to navigable tidal waters within the Commonwealth, and in

general perform any act or function which may be useful in developing,

improving, or increasing the commerce, both foreign and domestic, of the ports

of the Commonwealth while conducting those activities in an Environmentally

sensitive and sound manner.”

The mission of APMT is ‘to become the leading port operator in the world’ – achieving

this through being the best in our customers’ eyes, best operationally, and best with

our people.

The proposal to grant APMT a concession in return for ownership of APMTVA and

financial considerations strikes the ideal balance between public and private interests.

Over 80% of the estimated 877 million TEU of global capacity is managed by private

sector operators. The growth rate of publicly managed terminal capacity is projected to

lag behind private operations as fiscally constrained governments continue to turn to

the private sector to ensure improvement of vital operational capacity.

In North America, approximately 85% of the total container traffic flows through

terminals with a landlord-tenant relationship. This relationship is characterized by the

public entity owning and acting as the steward of the ports, maintaining the overall


39

responsibility for the general economic and port development while the private entity

takes on an operating concession.

APMT believes our proposal sets forth not only a feasible relationship, but also the most

optimal and attractive outcome for the future of The Port of Virginia, based on a model

which is proven to be effective throughout the global port industry.

II. APM TERMINALS’S CAPABILITIES

A) Development of APM Terminals Virginia

The best illustration of the feasibility of our proposal and exemplification of APMT’s

overall approach and capabilities is APMTVA. Between 2001 and 2007 APMT invested in

excess of $540 million in one of the world’s most automated terminals.

APMTVA was constructed on an undeveloped parcel of waterfront. Planning for the

terminal focused on delivering a semi-automated operation, with a mix of manual and

automated container handling equipment. The design is unique in that many on-

terminal operations are activities remotely completed from a centralized terminal

operations center, promoting efficiency, accuracy, and worker safety.

The terminal establishment was made possible through cooperation with local

stakeholders and expert execution by a professional implementation team. Thorough


40

planning pushed the project forward through the environmental permitting and

construction in an accelerated timeframe.

The challenges of the implementation included:

- Coordinating the biggest private dredge project in U.S. history,

- Careful preservation of wetlands,

- Construction management of a highway overpass to provide truck access,

- Working with local tribes in the discovery of Native American artifacts

- Construction of the berth and paving of the container yard created a demand for

aggregate and paving materials that could not be sources within the state of

Virginia alone. APMT worked together with the Port to utilize demolition

materials from the Navy pier to recycle into new concrete at the facility.

APMTVA also delivered on-dock access to the CSX and the NS Class 1 railroads, a first

in The Port of Virginia. The terminal officially opened for business on July 30, 2007.

Phase I of the terminal has 1.44 million TEU of annual throughput capacity. At full

build-out the terminal will accommodate an estimated 2.6 million TEU in annual

throughput capacity. The terminal is designed for the future of the Port, serving super

post-Panamax class vessels and accessible by a 50 feet deep navigation channel, the

interstate highway system, and double-stack intermodal service.

One of the best examples of innovation and technology is the APMTVA facility. The level

of automation exhibited at our facility in Virginia is exceptional, particularly as it relates

to the gate process. The gate employs Optical Character Recognition (OCR) and Radio

Frequency Identification (RFID) to satisfy the needs of line operators and the trucking

companies that serve them. The OCR equipment captures a series of images of each

truck, chassis and container as they transition a covered portal the size of a small

garage. RFID tags are also installed on over-the-road truck that enters the facility.

These two systems allow gate stages to be linked together electronically and have

resulted in much more accurate and streamlined gate transactions as well as produced

significant savings in real-estate and system costs.

B) Developments in the United States

APM Terminals Pier 400, Los Angeles

APM Terminals’ Pier 400 facility is a result of

close cooperation between us and the Port of

Los Angeles. The two staffs working together

showed a strong commitment to give their

customers a terminal product which meets

their needs. The Pier 400 facility was

designed to offer the customers the best

safety and efficiency, using advanced


41

technology and security.

Phase I of the nearly 500-acre complex opened for business in 2002; Phase II was

completed in 2004. Over 53 million cubic yards of soil was dredged to accommodate

the necessary 55-foot drafts of the largest containerships, and 11 million tons of quarry

stone was barged from Santa Catalina Island to build the retaining walls. The

centerpiece of the terminal is a 40-acre on-dock rail facility.

Environmental concerns factored heavily in the planning of the landfill and terminal

facility, which includes special bridges to accommodate water circulation, an on-site

asphalt plant and maintaining an annual nesting site for the California Least Tern, an

endangered seabird.

APM Terminals Mobile, Alabama

In 2005, APMT in partnership with CMA CGM and the Alabama State Port Authority

(ASPA) created a public-private partnership to develop a terminal in Mobile, Alabama.

The $300 million project saw the transformation of a brownfield site to a state of the art

terminal complex.

APMT/CMA and ASPA worked in tandem to

fund and develop all aspects of the project

over the course of nearly three years.

Prior to opening, a local labor force was

identified and trained to operate the

facility safely and to the standards of

APMT.

APM Terminals Mobile opened for business

in September 2008 and offers a

competitive option in the U.S. Gulf for

reaching Midwest markets as well as

Alabama and neighboring states. A 45 feet deep channel and 2,000 feet of deepwater

berth ensure the terminal is able to handle most post-Panamax vessels. The project

led to the completion of turning basin to facilitate larger container vessels, and the

development of an intermodal container transfer facility and to draw greater traffic to

the Port.

The terminal has had a big impact on the local community by creating new jobs and

drawing in four of the largest shipping lines – including the global top three, and

connecting the port to Asia, South America, and Europe.


42

C) Global Developments

APM Terminals Liberia, Liberia

The Liberian government elected to privatize the Freeport of Monrovia in response to

the urgent need for port infrastructure improvement, as the original facility was

developed prior to the introduction of containerized cargo transportation. In addition,

the port was heavily damaged during civil war a few years ago, leaving the terminal

nearly inoperable for international shipments. The Freeport of Monrovia is the main

gateway for goods to enter and exit Liberia and is fundamental to the Liberian

economy.

APMT won the bid to take over the concession from the Government in 2010 for a 25-

year term. APM Terminals Liberia represents the first port facility in Africa in which

APMT has 100% ownership. APMT officially opened the terminal on February 1, 2011,

ahead of the proposed transition period. This was achieved by sending a task force

consisting of experts from various functions around the world, including members of

our North American team, into Liberia to work with the local officials.

Preparations for the takeover started in September 2010 already and it was a task that

required a lot of creativity, problem-solving attitude, team spirit and collaboration. The

first weeks, the team focused on exchanging knowledge and experiences. Knowledge of

the sensitivities and political situation was especially important.

One major challenge was recruitment. Liberia

has an unemployment rate of 85%, and since

the educational system has hardly functioned

since 1980, due to political unrest and civil

wars, it became a challenge to find skilled

candidates with the right personality and

attitude to learn and develop. However, by mid

November around 2,000 applicants had been

tested and the right people had been selected.

By now, a training center providing operations

and IT training for the employees has also

been completed.

APMT has committed to investing $120 million in reconstruction and equipment

upgrades over the course of the concession period. Since assuming control of the Port,

APMT has already installed a state-of-the-art Navis N4 Container Tracking System, a

24-hour dedicated power supply to protect refrigerated cargo, new lighting, and

refurbished structures. Obsolete buildings have also been demolished and removed to

make space for an upgraded modern cargo storage area. The Port of Monrovia’s wharf

reconstruction, a major milestone of the planned modernization and upgrading of the


43

facility under the terms of the concession agreement, is well ahead of schedule and will

be completed prior to the previously estimated target date of August 2013.

APMT’s infrastructure investment in Liberia will allow the country to more fully

participate in the global trade that will in turn help to drive economic growth in the local

market. APMT sees its presence in Liberia as a great opportunity as well as

responsibility to make a huge positive impact on the country and its people.

Aqaba Container Terminal, Jordan

In 2006, APMT signed a 25-year Joint Venture agreement with Aqaba Development

Corporation (ADC), to manage, operate and expand the only container terminal in

Jordan - Aqaba Container Terminal (ACT). ADC is the Jordanian Government’s central

development vehicle for the Aqaba Special Economic Zone (ASEZ). Implementation of

the Joint Venture was the culmination of the initial two-year Management Service

Agreement that was signed in 2004 between ADC and APMT.

This Joint Venture represents the first

public-private partnership initiative

launched by ADC as part of its program to

rehabilitate and expand port terminals of

Aqaba. The goal of the Joint Venture was

to achieve additional capacity and improve

operational efficiency while ensuring the

highest levels of productivity and customer

service. Since the signing of the

concession agreement, Aqaba Container

Terminal has become the leading job

creator in the ASEZ, employing over 700 local staff, and indirectly supporting 33,820

jobs. All the staff has been very supportive of the efforts to improve the facility and has

embraced the change.

Since the 2004 management agreement, APMT has successfully implemented upgrades

to the port and focused on establishing world-class performance standards. Vessels now

berth on arrival per guaranteed berthing windows. Truckers benefit from streamlined

landside operations and strict safety measures. Equally important, APMT has

established strong training and development programs for the workforce to ensure

operational excellence. The results exhibit great improvement in all aspects.

Consequently, shipping lines have long-since cancelled the congestion surcharges that

once marred Jordanian trade to the extent that Lloyd’s has nominated ACT as one of

the three top container terminals in the Arab region and Indian Subcontinent.

In addition to operational improvement, ACT has actively been involved in community

outreach through various programs and initiatives, such as donating money to


44

rehabilitate Aqaba Secondary School for Girls, planting 150 trees within the terminal’s

facilities to reduce the impact of CO₂ emissions by the port’s machinery, organizing a

free medical day in two local villages and partnering with Jordan’s Business

Development Center to provide high-level training and potential employment

opportunities for members of the local community, to name a few.

In 2011, the terminal also released its first ever sustainability report called “Developing

the Most Sustainable Gateway to Jordan and Beyond”, covering a five-year period

between 2006 and 2011. This report is modeled after the United Nations Global

Compact and encompasses five key areas: terminal operations, safety, community

investment, environmental performance and financial transparency and accountability.

In order to focus on the long-term goals, this report will now be published on a yearly

basis. ACT has emphasized that only by considering issues ranging from employee

professional development to preserving Aqaba's marine ecosystem, can the terminal

fulfill its potential and serve Jordan and the region for generations to come.

III. APM TERMINALS’S FINANCIAL BACKGROUND

A) Company financials

Below are the highlights of APMT’s financial

performance in 2011:

APMT’s Global Terminal Network

aggregate throughput of 33.5 million

TEUs (weighted with ownership share);

this is an 8% increase compared to

year 2010

A revenue growth of 10% year-on-year

and an EBITDA of $1,059 million

makes APMT’s result for 2011 “the

strongest ever”

Net operating profit after tax was $649

million. Profits of $793 million in 2010

were heavily influenced by

extraordinary items including

divestment gains. The profit in 2011

before gains and special items was

$611 million, 24% higher than the

previous year.


45

The return on invested capital reached 13.1%. This is a significant improved

from 2010 (10.4% when corrected for divestment gains and special items).

If there were such a thing as a ‘market share’ for expansion, APM Terminals

would be the #1 global port operator in 2011 in the category. We committed

more than $3 billion to infrastructure development and facility expansion in 2011

and expect similar investment levels in 2012.

During 2011, APMT secured 5 new locations as a result of the company’s active

portfolio development efforts: Poti in Georgia, Moin in Costa Rica, Callao in Peru,

Gothenburg in Sweden and Lazaro Cardenas in Mexico. These complement the

project pipeline of Santos, Brazil; Rotterdam, Netherlands; Wilhelmshaven,

Germany and Vado, Italy. APMT has recently announced investment

commitments in Izmir, Turkey.

B) Capital raising capabilities

APMT is a core business unit of the A.P. Moller-Maersk Group, an organization with

representation in 130 countries and revenues (2011) of over $60 billion.

The 2011 APM Annual Report includes the following relevant comments:

APM Terminals will continue to invest strategically to handle the growing

container volumes and also to accommodate the tendency among container

carriers to deploy larger vessels, creating a need for increased port specifications

and more sophisticated operations. (Page 31)

The fundamental financial requirements for pursuing the Group’s growth

ambitions are in place and the financial position continues to be strong with no

larger refinancing risks in the coming years. The Group will continue to broaden

its funding base through the corporate bond market when terms are attractive.

This gives the Group strength to continue to execute on its growth strategy as

well as take advantage of opportunities created by the current market

conditions. (Page 14)

The Group’s long-term objective is to maintain a conservative funding profile,

matching that of a strong investment grade company over the business cycle. As

a consequence of fluctuations in the payment schedule of investments and

fluctuations in the Group’s cash flow, fluctuations in the financial profile are

expected. Based on the size of the committed loan facilities, including loans for

specific asset financing, the maturity of the loan facilities and the existing

investment profile, the Group’s funding position is satisfactory. (Page 45)


46

C) Letters of support

Shown in Appendix I to this proposal are three bank letters of reference provided by a

selection of APMT’s North American finance partners. Our partnerships with domestic

and international credit institutions are also strong and carry the backing of the A.P.

Moller-Maersk Group.

IV. APM TERMINAL’S TECHNOLOGY AND INNOVATION

As the container transportation industry has evolved, so has the need for innovative

equipment, technology and practice in terminal operations. APMT remains at the

forefront in innovative research and applications to provide the most efficient, cost-

effective service to our customers around the world. We will be able to deliver state-of-

the-art technology and innovation to make The Port of Virginia a more competitive

option for our customers.

Customers will benefit from reduced terminal costs, higher productivity and faster

access to cargoes that such innovative measures can produce. The benefits to the

community at large from the development of advanced and sustainable environmentally

sensitive innovation in methods and equipment are achievements in which we take

particular pride as a company.

Other recent innovation initiatives undertaken by APMT currently in use or in advanced

stages of development include:

A) FastNet Cranes

APMT recently concluded a three-year, multi-million dollar project to develop a

breakthrough ship-to-shore (STS) crane design. The objective of the project was to

develop a crane design which would eliminate the limitations resulting from the width of

current STS crane designs. The width of the supporting leg structures of current STS

cranes prevents two cranes from simultaneously working in adjacent bays on a ship.


47

This limits the maximum number of STS cranes which can be simultaneously deployed

on large container ships, limiting the maximum productivity which can be achieved.

The breakthrough crane design developed by APMT enables STS cranes to work

simultaneously in adjacent bays on container ships. This eliminates the constraints

imposed by the width of current STS crane designs, enabling productivity to be doubled

in comparison to what can be achieved today with conventional crane designs.

APMT has been working on the design specifications and conducting computer

simulations to perfect the technology and procedure for implementation. Patents on

FastNet crane technology have been filed in 17 countries, as well as the 27 European

Union member states.

FastNet is a specialized solution for high volume terminals regularly handling very large

vessels with large container exchanges.

B) ECO-RTGs

This improved rubber tired gantry crane (RTG) technology, developed in cooperation

with Siemens AG of Germany, optimizes the unit’s energy utilization and benefits users

through reduced fuel costs, emissions, noise and fumes. Over 100 ECO-RTGs are now

in service or on order for use at terminals around the world within the APMT network,

and with other terminal operators.

ECO-RTGs employ a variable speed drive and diesel engine energy hybrid management

system to increase efficiency and reduce diesel fuel consumption by as much as 40%.

The reduction in diesel fuel consumed produces commensurately reduced levels of CO₂

as well as particulate and other harmful emissions.

Diesel engines on conventional RTGs generate electrical power which is used to raise

and lower container weighing up to 20 tons. Though more energy is required to lift a

container than to lower it; energy production on standard RTG generators remains

constant, with the excess energy lost, as it is converted into heat as containers are

lifted and moved in the yard.

The ECO-RTG employs technology which enables the diesel generator to operate at

variable speeds, matching the power output to the energy required by the RTG at any

given time during the raising and lowering cycle. Modifying existing technology used on

other vehicles, hybrid power industry-leading Siemens was able to produce a new drive

design for use on RTGs.


48

C) Hybrid Yard trucks

Together with the Environmental Protection

Agency (EPA), Kalmar, Parker Hannifin and

other parties in the United States, APMT piloted

a hydraulic hybrid yard tractor. The hybrid

tractors use hydraulic fluid pressure captured

while breaking and store it in an accumulator

tank to power the tractor during acceleration.

This technology, while reducing air pollution

and creating fuel savings of up to 40%,

represents potential lower operating costs.

D) Lift AGVs

APM Terminals is building a new container terminal in Maasvlakte II in the Port of

Rotterdam. The terminal design concept is based on using STS cranes that unload

containers from the vessel and place them directly onto a fleet of Lift Automated

Guided Vehicles (Lift AGVs). The Lift AGVs can carry two containers at a time and

shuttle them at a speed of 22 kilometers per hour from the quay to the container yard

using an onboard navigation system that follows a transponder grid. Once the Lift AGV

arrives at its programmed destination, it lifts the containers into a series of storage

racks. Next, an Automated Rail-Mounted Gantry (ARMG) crane arrives to take the

container from the rack to its next designated location which could be to the rail

terminal, a trucker or stacking it somewhere else in the container yard. For the first

phase of the Maasvlakte II terminal, the fleet will consist of 36 Lift AGVs in combination

with 128 storage racks.

This ability to lift the container off the

vehicle and place it into a storage rack

system is the first of its kind in the world. In

the past, AGVs could not perform this

action. The Lift AGV consists of two lift

platforms, which are able to load and

unload containers independently of each

other. APM Terminals Maasvlakte II is the

first terminal in the world to be equipped

with Lift AGVs. In short, a new process has

been formed for managing container flows

by having automated equipment transport -

lift - and stack - containers.


49

PPTA Manual checklist

PPTA Reference APMT Proposal page Reference(s)

Table of Contents Manual Appendix F 2 - 4

Executive Summary Manual Appendix F 5 - 10

Project Description and Approach (Tab 1) Manual Appendix F 12 - 29

A topographic map (1:2,000 or other appropriate scale) indicating the location of the proposed container terminals

Act § 56-560 (A) 16 - 20

A description of the port terminals that are part of the proposal

Act § 56-560 (A) 12 - 15

The proposed date to commence terminal operations, concession term length, and an estimate of the projected capital investment, lifecycle costs and any other investment that will be made by the private entity

Act § 56-560 (A) 12, 13, 15, 35, 36

A statement setting forth the private entity's general business plan to transition terminal operations, accommodate existing port labor pool, enhance terminal operations efficiencies, maximize port traffic and competitiveness, expansion of container terminal facilities and handback considerations

Act § 56-560 (A) 12, 20 – 28

Information on how the private entity's proposal will address the needs identified in the appropriate state, regional, or local transportation plan by improving safety, attracting more shipping lines, impacting container growth, reducing congestion, increasing capacity, and/or enhancing economic efficiency

Act § 56-560 (A) 21, 22, 28, 31, 32 - 34

Identification and description of payments to the Commonwealth, sources of funds to make payments to Commonwealth, proposed debt or equity investments and proposed concession structure

Act § 56-560 (A) 12 - 15

A statement setting forth the method by which the private entity proposes to secure any property interests required for further development of the container terminals (if required)

Act § 56-560 (A) Not Applicable

A list of permits and approvals required for developing and/or operating the container terminals from local, state, or federal agencies and a projected schedule for obtaining such permits and approvals (if required)

Act § 56-560 (A) 28

The names and addresses of the persons who may Act § 56-560 (A) 29


50

PPTA Reference APMT Proposal page Reference(s)

be contacted for further information concerning the request

Desirability of Project (Tab 2) Manual Appendix F 30 - 37

The estimated cost of operating the container terminals is reasonable in relation to similar facilities

Act § 56-560 (C) 20 - 23

The private entity's plans will result in the timely transition of the container terminal to be more efficient and competitive

Act § 56-560 (C) 20 - 21

Select policy review requirements in Section 4.1 of Manual including:

Manual Appendix F

Achieves select Commonwealth objectives

The proposal makes the container terminals more cost effective and will help the terminals to be financially self-sustainable

The proposal is consistent with federal requirements and potential agreements for federal funding and/or approval including constraint requirements for PPTA projects

Manual Section 4.1.2

13 – 15

Feasibility of Project (Tab 3) Manual Appendix F 38 - 48

Financial plan must contain enough detail so an analysis can be completed to determine if it is financially feasible

Manual Appendix F Submitted under confidential package

A detailed financial model to support the proposal price/payments. A financial model manual will be needed to provide model operating instructions.

Submitted under confidential package

Detailed description and sources of expected financing instruments and equity contributions. Letters of support from debt and equity providers would be required.

44 - 46

Detailed cargo traffic forecasts and documentation of assumptions of, operating expenses, and planned capital expenditures

23 - 28

Documentation of assumptions of all operating expenses, capital expenditures and capacity improvements

14, 15, 21 – 25, 36

Financial plan should disclose any public financing or funding requirements contributions from the Commonwealth (also required in Tab 1)

Manual Appendix F Submitted under confidential package

Appendices as needed Manual Appendix F See Table of Contents

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