Intermodal A Few Current Hurdles

1
IntermodalA Few Current Hurdles

• National Customs Brokers and Freight Forwarders
  Association
• Orlando, Florida
• April 8, 2008
• Peter I. Keller
• President, NYK Line (North America), Inc.

2
The Market

• Over the past 10 years Global containerized
  growth has been near 11
• In 2008, current estimates for major trade lanes
  are
• Transpacific 0-2
• Asia Europe 13-18
• Intra Asia 12
• Post May 1 economics of TransPacific will dictate
  how much tonnage continues to be reallocated to
  AE and IA from the TransPacific

3
For the U.S., TEU growth has shifted to exports.
2007 2008 2009 Exports 9.4 6.6 5.3 Imports 0.
2 4.4 6.3
Source Global Insight 2008
4
Market Outlook

• U.S. growth in 2008 is likely to come in between
  0 and 2
• The main culprits are still the housing/subprime
  crisis and high oil prices the double-shock
  economy
• Consumer spending will continue at a reduced pace
  as employment growth slows but is expected to
  recover in 2009
• The net exports will continue to increase based
  on depreciating dollar
• Despite the U.S. economic slowdown, global
  container traffic growth within the next 5 years
  is expected to have a CAGR of 8-10 due to strong
  Europe trade demand and emerging market export
  boom

5
Fuel

• 8,000 TEU vessel burns about 200mt per day. One
  dollar of fuel cost increase equates to about
  1/TEU of cost on an Asia/WC trip
• Last years rates were generally based upon fuel
  at /- 290mt. Current costs /- 525mt
• Average vessel string 6 vessels to WC, 9 or more
  on EC deployments

6
Bunker Cost Escalation
7
Current Operational Issues

• Labor ILWU/PMA negotiations
• Proceeding as anticipated
• Positive mood on both sides with constructive
  dialogue
• Difficult issues, as always
• Inland Cost
• Continued pressure on IPI rates and inland
  conditions
• Rail pricing makes the market

8
Current Operational Issues

• Chassis
• Consolidated Chassis Management (CCM) expanding
  Lines owned chassis pools
• South Atlantic
• Denver/SLC
• Memphis/Nashville
• St. Louis/KC
• Gulf implementing next 90 - 120 days
• Chicago starts at year end
• Significant service and operational efficiencies

9
Corporate Social Responsibility

• Environmental Clean Trucks
• Industry has a responsibility but must be given
  the opportunity for a private enterprise solution
• Disenfranchising the Owner operator is not the
  answer
• There will be an impact on truck availability and
  cost
• Security
• Continues to be a non negotiable requirement
• We need to concentrate on origin procedures and
  compliance