SCOOP

Indiana University – September 21, 2004

Steve Thomson

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OCEAN SHIPPING

Trade name for the containerized shipping operations of A.P. Moller – Maersk Group.

The world’s largest container shipping operator

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The History of Shipping

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History of Shipping

Modern container shipping has changed the way we transport goods around the world and has led to worldwide “Globalization.”

Thousands of tons of diverse cargo can be delivered for many customers to several dozen ports from a single ship. But it was not always this way…

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History of Shipping

Before containerships, cargo was painstakingly moved in cargo nets. The name for this type of cargo movement, “breakbulk,” seems appropriate.

Disadvantages• Labor intensive• Greater handling• Slow to load & unload• Subject to damage from weather• Theft

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History of Shipping

The pallet was the next evolutionary stage in containerization. Although an improvement over breakbulk, there were still problems.

Advantages • Quicker • More load per lift • Less damage to cargo • No special shore equipment needed

Disadvantages • Expensive • Not all cargo can be palletized• Broken stowage • High investment

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History of Shipping

The concept of shipping cargo in containers was not new. In fact the German company “Schenker AG,” began sea freight container shipments in 1931.

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History of Shipping

During the early days of cargo shipping, containers were lashed to the deck of ships. Later, containers were placed below deck. Eventually, full container or cellular-built vessels were designed that are now the mainstay of the cargo revolution.

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History of Shipping

Malcom McLean invented containerized shipping in the 1930s and later founded Sea-Land Service, Inc. in New Jersey.

At this time, trucks were used to transport cargo to the docks in order to be loaded on to vessels. It was McLean who realized that rather than loading and unloading trucks onto vessels, the truck body itself—with some minor modifications—could be the container that was transported.

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History of Shipping

Containerization is a system of freight transport using standard containers that can be loaded on container ships, trains and trucks.

» Advantages

• Rapid transit times – “from factory floor to customer door”

• Quick and efficient operation at port and inland

• Reduced cargo damage, pilferage, handling costs, claims

• Greater economies of scale – fewer, large ships

• Disadvantages

• Capital intensive (vessels, ports, roads, railways)

• Administration

• Specialized equipment / port facilities

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History of Shipping

One 40 foot reefer container can contain 90,000 lamb chops, equivalent to the average consumption of a four-person familyfor 450 years.

A 40 foot high cube container has the same dimensions as a city bus (12m x 2.5m x 2.9m).

One 45 foot high cube container can contain 28,000 Barbie Dolls, which put in a line, is equivalent to 9.3 km.

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History of Shipping

Containerization has revolutionized cargo shipping. Today, approximately 90% of cargo moves on containerized vessels. Over 200 million containers per year now move between ports worldwide.

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History of ShippingVessels

As the container business has grown, so too have the vessels. In the early 1960’s capacity was approximately 1,700 TEU. Today, capacity surpasses 8,000 TEU.

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The Shipping Industry Today

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The Shipping Industry Today

Globalisation / Economic Development

Demand > Supply

Shifting Trade Patterns

Continued Containerization

Increasing Vessel Size (subject to infrastructures)

Fierce Competition Low Carrier Profitability

Industry Consolidation (M&A) / Alliances

Service Customization

Focus on Security

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1988-2007 (Million TEU)Growth in World Trade

The Shipping Industry Today

Source: Clarkson Research Studies and WestLB Panmure

0

10

20

30

40

50

60

70

80

901

98

8

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

8.5% Average Annual

Growth Rate(compounded annually)

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Source: Containership Databank © MDS Transmodal

Global Vessel Capacity2003

The Shipping Industry Today

0

100

200

300

400

500

600

700

800

900T

EU

'000

Mae

rsk

Seala

ndM

SC

Everg

reen

P&O Ned

lloyd

CMA-C

GMHan

jin APLNYK

Cosco

K-Lin

e

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Source: Top 25 (2003) Container Liner Operators © Dynamar B.V.

Global Cargo Volumes2003

The Shipping Industry Today

0

1000

2000

3000

4000

5000

6000

7000

8000

9000T

EU

'00

0

Mae

rsk

Seala

nd

Everg

reen

MSC

P&O Ned

lloyd

Hanjin

Cosco

APL

CMA C

GM

China

Shippin

g

OOCL

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Maersk Sealand “S-Class Vessels” (23 Total)

Fun Facts

An “S” class vessel can load about 6,600 twenty foot containers. Fully loaded this is equivalent to 4,989,600 cases of beer, or about 150,000,000 bottles.

The five auxiliary engines of an S-type vessel produce 15.6 MW per day - equivalent to the consumption of 5,000 European single-family houses per day.

An “S” class vessel is 1,138 feet long, which is 154 feet longer than the Eiffel Tower.

1,138 ft.

984 ft.

The main engine on an S-type weighs roughly 1,900 metric tons – equivalent to the weight of more than 1,275 small cars!

The Shipping Industry Today

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Fun Facts

If all Maersk Sealand’s operated containers were put in a line they would stretch more than 4,350 miles, approximately the same distance between Miami and Paris.

In 2003, Maersk Seland sailed approximately 30,000,000 miles, making over 32,000 port calls and circling the world over 1,300 times!

The Shipping Industry Today

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• Over 70,000 employees

• Operating in over 100 countries

• Comparable to high 200’s of the Global Fortune 500

A.P. Moller – Maersk Group

Esplanaden

Copenhagen, Denmark

A Global Enterprise

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Mærsk Mc-Kinney MøllerSr. Partner

Tommy ThomsenPartner

Knud StubkjaerPartner

Jess SøderbergPartner & CEO

Michael Pram RasmussenChairman of the Board

Senior Management

A.P. Moller – Maersk Group

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• While accompanying her husband on a voyage, Anna Møller suffered a serious illness which left a lasting impression on the deeply religious captain, who felt himself to be responsible.

• Several years later in a letter to his wife (October 1886), the captain explained the background for the company's new emblem:

•"The little star on the funnel is a reminder of the evening I prayed for you so dejectedly and anxiously, asking for the sign that I might see in the grey, overcast sky, a reminder that the Lord hears our prayers".

A.P. Moller – Maersk GroupOur Logo

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325 Offices in more than 100 countries

20,000+ Employees

A Global Organization

The Container Business

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1,700 TEU

2,305 TEU

3,220 TEU

4,848 TEU

7,598 TEU

TEU CAPACITY

Vessels & Containers

Vessels 300+

TEU Capacity 750,000+

Containers 950,000+

Reefers 110,000+

Chassis 80,000+

The Container Business

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Customers

Maersk Sealand Customers

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Source: JOC Statistics

2003 Market Shares

Others41.5% Evergreen

6.7%

Hanjin6.7%

APL6.6%

Hyundai4.0%

MSL12.9%

MSC4.8%P&O4.6%OOCL

4.3%COSCO4.1%

NYK3.9%

2003 Total Market Volumes

TEU (000) 2003 2002 Change

PACIFIC 13,196.112,084.

3 9.2%

TRANSATLANTIC 2,648.9 2,654.3 -0.2%

MECL 2,276.8 2,091.9 8.8%

CAM / CAR 1,562.7 1,516.2 3.1%

ECSA 652.5 572.8 13.9%

WCSA 494.6 440.9 12.2%

OCEANIA 371.5 351.3 5.7%

AFRICA 198.1 161 23.0%

TOTAL 21,401.1 19,872.8 7.7%

Total U.S. Market Imports & Exports

The Maersk Inc. Group of Companies

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Top U.S. Trading Partners

Source: Journal of Commerce (JOC)

Rank Country 2002 TEU 2003 TEU Growth Rank Country 2002 TEU 2003 TEU Growth

1 PRC 901,588 1,220,649 26.1% 1 PRC 4,119,354 4,688,525 12.1%2 Japan 890,425 888,804 -0.2% 2 Hong Kong 1,272,020 1,364,797 6.8%3 Puerto Rico 501,413 529,149 5.2% 3 Japan 738,736 781,224 5.4%4 Korea 430,109 436,212 1.4% 4 China 633,807 689,830 8.1%5 Hong Kong 329,932 332,671 0.8% 5 Korea 523,603 510,045 -2.7%

All Other 4,390,347 4,606,650 4.7% All Other 6,269,887 6,647,668 5.7%

Top 5 % Total 41.0% 42.5% 1.5 pts. Top 5 % Total 53.8% 54.7% 1 pt.Total U.S. Exports 7,443,813 8,014,136 7.1% Total U.S. Exports 13,557,408 14,682,089 7.7%

U.S. Exports U.S. Imports

Ranked by Total Market 2003 TEU

The Maersk Inc. Group of Companies

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Top U.S. Traded CommoditiesRanked by Total Market 2003 TEU

Rank Commodity Rank Commodity

1 Waste Paper 1 Misc. / General Cargo2 Chemicals 2 Furniture3 Misc. / General Cargo 3 Garments4 Refrigerated Cargo 4 Electrical Goods5 Groceries 5 Refrigerated Cargo

U.S. Exports U.S. Imports

The Maersk Inc. Group of Companies

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INTERESTED IN MAERSK SEALAND?

• M.I.S.E. Program

• 2yr Rotational Management Training Program

• www.mise.edu

• Recruiting On Campus

• Oct 13 – Pre Night Info Session

• Oct 14 - On Campus Interview

• Maersk is registered with your career svc dept.

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THANK YOU

Any Questions???