Container Shipping 2010 Outlook

1. Tufton oceanic hedge Fund Container Shipping 2010 Outlook

2. An equity investor’s view on container shipping in 2010 • The container shipping industry is turning around • Full year volume growth could reach double digit • Trans-Pacific may come as close to black as ever since 2006 • Asia-Europe may peak out this year with significant downside risk by year end Tufton oceanic hedge fund

3. Turned around in spot market Trans-Pacific Operating Profit Margin: close to profit Asia-Europe Operating Profit Margin: highly profitable Source: Tufton estimates Source: Tufton estimates • Key assumptions • Based on simple base port-to-base port model • Freight rates based on Shanghai Shipping Exchange’s CCFI and SCFI releases • Average spot 380cst bunker price at Singapore for the period • Utilization from 75% to 95% for AE head haul and 80% to 95% for TP head haul Tufton oceanic hedge fund

4. Low base assures volume growth • We think volume could grow up to 10% • Both US and Euro zone turned into growth in 2010, after contraction in 2009, as per IMF • Drawing a line from January level, volume at major Chinese ports would grow 11-12% Y/Y 2010. Throughput at principal Chinese ports Million TEU Source: Ministry of Communication, China; Tufton estimates Tufton oceanic hedge fund

5. Two signals to be bullish on Trans-Pacific this summer US retail sales Y/Y growth: passing the valley of death Source: US Census Bureau Wholesalers’ inventory/sale ratio: record low on low denominator Source: US Census Bureau Tufton oceanic hedge fund

6. Trans-Pacific contract rates could be up • +ve Spot TP WB rates up 21% versus 2009 average • +ve US retail sale volume would be up 2.4% Y/Y in 2010 if December volume maintained • -ve 10% unemployment in US key drag • Capacity correlation with capacity growth broken on cargo draught and capacity discipline US retail sale growth versus TP WB rates Capacity growth versus TP WB rates Source: Clarkson, CI and Tufton estimates Source: US Census Bureau, CI and Tufton estimates Tufton oceanic hedge fund

7. Asia-Europe may be peaking CCFI Asia-Europe Westbound rates: as good as 2007 peak Source: Shanghai Shipping Exchange Euro zone retail sales growth Y/Y: narrowing decline Source: Bloomberg Tufton oceanic hedge fund

8. Too good is no good: return of idle ships • Existing operators launching new service • New ventures entering on low charter rates and high box rates Contex 2500TEU: TCE rate up 16% YTD US$ per day Source: Hamburg Shipbrokers’ Association Tufton oceanic hedge fund

9. European sovereign risks stands high Greece CDS rate Portugal CDS rate Spain CDS rate France CDS rate Source: Bloomberg Tufton oceanic hedge fund

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11. Container Shipping 2010 Outlook Tufton oceanic hedge Fund