There are many challenges ahead for container port operators. The biggest challenge of all is the economic downturn that took a dramatic turn for the worst in the last quarter of 2008. The declining throughput has dramatically reduced the revenues of port operators. This scenario, coupled with increasing costs from the security and green initiatives, make 2009 a very challenging environment for port operators. To meet this challenge, port operators are exploring new revenue opportunities through new services and expanding their hinterland reach. Frost & Sullivan\'s Consultant, Michael Lee, will share his findings on: - Insights on container ports industry structure across major Asia Pacific countries - Container ports’ growth opportunities & future prospects - Insights on container ports driver, restraints and challenges - Implication of security and emission trading have on container ports across the region.

1. Growth Opportunities in Container Ports: Are
the Boxes Flowing or Just Floating?
Mike Lee, Consultant
Transportation & Logistics Practice
Research by
Transportation & Logistics Practice
Frost & Sullivan Asia Pacific
May 19, 2009

2. Focus Points
1 Definition of Container Ports and its Microenvironment
2 Review of 2008 Asia Pacific Container Ports
3 Market Restraint and 2009 Container Ports Outlook
4 Challenges and Issues for the Container Ports
5 Long Term Drivers and Container Ports Outlook
6 Container Ports Opportunities in Asia Pacific
7 Questions and Answers
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3. 1 Frost & Sullivan: Transportation & Logistics Consulting Competencies
Forwarding,
Forwarding,
Contract
Contract
Supply Chain
Supply Chain Supply Chain
Supply Chain Express and
Express and
Logistics
Logistics Transportation
Transportation
Services
Services Technologies
Technologies Support
Support
Services
Services Services
Services
Ports
Ports Infrastructure
Infrastructure Equipment
Equipment Services
Services
Strategy Development
Freight Markets
Freight Markets Air
Air Ocean
Ocean Land
Land Business Planning
M&A Analysis
Market Opportunity Analysis
Rail
Rail Systems
Systems Aftermarket
Aftermarket B2B Branding
Transportation
Transportation
Addressing Trends & Issues
Competitive Benchmarking
Urban
Urban Support
Support
Systems
Systems Technology Benchmarking
Transportation
Transportation Services
Services
Product/ Service Concept
Intelligent
Intelligent Customer Assessment
Transportation
Transportation Systems
Systems Customer Satisfaction Surveys
Systems
Systems
Growth Coaching, Workshops & Training
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4. Container ports industry structure across major Asia
1 Pacific countries
Ports Classification Ports Operating Environment
Gateway River Feeder
Emission Trading
Ports
Ports
Economy
Security Needs
Hinterlands
Connection
Equipments
Ocean Shipping
Transshipment
Ports
Competitors Repositioning Shipping
Liners
Containerization
ICD Trade
Gateway Container
Road / Rail
Ports Ports
Feeder
Ports
4

5. 1 Scope of the Study
Container Ports: Container Ports Throughput, 2000 - 2008
140
Millions of TEU
China is split from East Asia to illustrate its significant China
contribution to Asia Pacific Container Throughput
120
100
80
Southeast Asia
60
East Asia
40
20
South Asia
Oceania
0
2000 2002 2004 2006 2008
5

6. 2 Review of 2008 Asia Pacific Container Ports
2007 and 2008 Ports Throughput review (in ‘000 TEU)
Top 40 Asia Pacific Ports has grown 6% on average between 2007 and 2008
6

7. 2 Key Ports Regions in China
China’s Major Ports Regions Bohai Rim (23,326,000 TEU)
5. Ports of Qingdao
(10,320,000 TEU)
Beijing
Ningxia
Tianjin
6. Ports of Tianjin
Jiangsu
(8,503,000 TEU)
Shanghai
8. Ports of Dalian
(4,503,000 TEU)
Guangdong
Pearl River Delta (61,930,000 TEU) Yangtze River Delta (42,048,000 TEU)
2. Ports of Shenzen 1. Ports of Shanghai
(21,400,000 TEU) (28,006,000 TEU)
4. Ports of 3. Ports of Ningbo
Guangzhou (11,226,000 TEU)
(11,001,000 TEU)
9. Ports of
7. Ports of Xiamen Lianyungang
(5,035,000 TEU) (3,001,000 TEU)
Include Hong Kong
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8. The new 2008 Shipping Law will strip the regulatory power from the
2 current Ports corporations and create new opportunities
Under the 1992 Shipping law currently under
Pelindo I implementation in Indonesia, the Indonesian
commercial and strategic ports are controlled by
Pelindo IV the four state owned Indonesian Ports
Corporations (IPCs) that have a monopoly over
the region they control. The IPCs function and act
as both sole operator and Ports authority
controlling the supply of all major Ports services
Pelindo II such as vessel traffic movement, anchoring and
berthing, pilotage and towage and Ports facilities
for stevedoring, warehouses and stacking
container and bulk terminals
Pelindo III
Ports Authority Ports Operator
The new Ports law draws a clear distinction between Ports operator and Ports The new Ports law transfers the role of Ports Operator to IPCs. The law
regulator. The new Ports Authority will have the most regulatory authority at removes the IPC’s legislated monopoly and opens the Ports sector up for
the Ports level. Their primary responsibility will be to regulate, price and participation by private operators and including foreign investors. The new law
supervise access to basic Ports infrastructure and services including Ports offers a clear demarcation in the role and functions of the new Ports Authority
land and waters, navigation tools, pilotage, breakwaters, Ports basins, Sea and Ports operator.
channels (dredging) and Ports road networks.
The IPCs (Ports Operators) would participate in providing cargo handling,
The Ports authority will also be responsible for developing and implementing passenger facilities, mooring services, refuelling and water supply, towage as
the Ports master-plan. The new master plan is to implement restricting the well as storage and other Superstructure. They would also be responsible for
number of ports with direct international links to the 25 Strategic Ports determining Ports service tariffs based on tariff types, structure and categories
(commercial ports) As per the new law these special terminals can apply to as determined by the government.
become general cargo terminals if approved by the relevant Ports authority
and ‘consistent’ with the local Ports master-plan, amongst other requirements.
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9. Major investments are flowing into Vietnam to support its
2 trade growth
Ho Chi Minh City
Ports
Group 1 New Ports
Cat Lai
Saigon Ports
Ports Cai Mep – Thi Vai
Ports
Ben Nghe Ports
Group 2 VICT Go Dau Ports
(planned))
Group 3
Baria Serece (Phu My) Ports
Hiep Phuoc Ports (existing)
(under construction)
Thi Vai Ports Complex
(under construction)
Group 4
Long An Ports
Cai Mep Ports Complex
(planned))
(under construction)
Group 5 Existing Channel
Vung Tau Ports
Group 6 (planned)
Group 7
Source: APL Vung Tau
Group 8
Ports
9

10. 3 Market Restraints and 2009 Container Ports Outlook
• Compared to land and air, trade by sea
remained relatively stable.
$87.094 Billion
$180.11 Billion • Exports from EU-27 to U.S declined by
0.3% in 2008 compared to the previous
year.
$190.53 Billion $213.14 Billion
• The imports from Asia to EU-27 grew by
a modest 5.9%, while the exports
$392.38 Billion
showed a comparatively healthy growth
of 9% compared to 2007.
$614.26 Billion
Year on Year growth by Month (2007 and 2008)
Asia to EU-27
EU- Asia to U.S U.S to EU-27
EU-
14%
11.7%
10% 11.3% 10.4% 30.9%
7.3% 8.1% 9.1% 23%
6.8% 6.4% 6.2% 5.5% 6.6%
3.2% 5.1%
3% 3.5% 3.1% 18.5%
0.1% 16%
12.5%11.5%10.9% 11.2%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 6.5% 4.5%
-2.3% -0.5% 1%
-7.8% -7.0% -6.5%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-3.9%
EU-27 to Asia
EU- U.S to Asia
26.5% 23.6% 29.0%
EU-27 to U.S
EU-
27.2%
18.7% 20.5% 21.6%
16.2% 20.3% 21.0%
15.6% 16.1% 16.5% 16.7%
13.7%
8.9% 9.6% 8.8%
7.9% 7.4%
3.4% 0.1%
3.0% 3.0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -6.0% -8.6% -0.3% -1.60% -7.3% -6.0%
-0.7% -1.3%
-2.7% -14.1%
-9.6%
-23.9%
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11. 3 Short Term Outlook for Asia Pacific Container Ports
Country 2008 2009
Japan 15,714 14,366
South Korea 16,939 15,169
140
China 115,946 107,079
Millions of TEU
China Hong Kong 24,494 21,918
120
Taiwan 12,971 11,804
100 Singapore 29,918 27,225
Malaysia 15,448 14,371
80
Thailand 6,503 5,739
Southeast Asia
60 Indonesia 6,169 5,398
Philippines 3,043 3,043
East Asia
40
Vietnam 3,253 3,253
India 5,535 5,231
20
South Asia Oceania Australia 5,060 4,773
0 New Zealand 1,450 1,396
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
In ‘000 TEU
11

12. The government of APAC countries are implementing short-term as
4 well as long-term initiatives to counteract the effects of the current
slowdown.
Policies
Initiatives taken by countries:
• Delay or provide concession on emission
- Industry-friendly policies
restrictions
Effects of Recession on Ports: - Rebates
• Export incentives for specific goods
- Lower trade volumes - Trade agreements with other countries
- Lesser investment opportunities - Allocation of funds for infrastructure
- Delayed infrastructure projects development
P
Trade Agreements
• Free trade agreement between
ASEAN and Australia and New
APAC Rebates
• Waiving of taxes and fees
Zealand • Reduced Ports fees
• Creation of free trade and free • Fuel price discounts
investment region accelerated • Rental rebates for office
• India-ASEAN free trade and warehouse spaces
agreement • Ports dues cuts
• Plans for a multi-lateral and T R • Incentives for Ports
multi-national financial co- services
operation to boost companies
from liquidity,
12

13. 4 Challenges with the Hinterland Connections
Container Ports and its Hinterland
Country Gateway Ports and its Hinterland
Japan Tokyo, Yokohama Greater Tokyo
24
South Korea Busan South Korea
13 33
4 16
China Shanghai Yangtze River Delta
9 9 17
22
6 Hong Kong Hong Kong Pearl River Delta
15
2
22
7 Expanding Hinterland Reach Taiwan Kaoshiong Taiwan
7
8 19
7 8
Rail to 6 2
Singapore Singapore Johor, Singapore, Riau
address
4 Malaysia Ports Klang Selangor, Kuala Lumpur
Hinterland 3 4
Thailand Laem Chabang Bangkok
Moving Ports 15
3
3 Indonesia Tanjung Priok Jakarta, Banten, Java
to address
congestions Philippines Manila Manila
Vietnam Saigon South Vietnam
2
India Jawaharlal Nehru West, Central, North India
4
1
Australia Melbourne Victoria
4
Ports Hinterland
New Zealand Auckland New Zealand
Congestion
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14. 4 Implication of emission trading have on container ports
• The Kyoto Protocol legally bind the countries classified under “Annex I” (industrialized) to
94% reduce Greenhouse Gases (GHG), hydrofluorocarbons and perfluorocarbons.
• The GHG include carbon dioxide, methane, nitrous oxide and sulphur hexafluoride
• The Annex I countries are obligated to reduce their GHG emission relative to their 1990
emission by 2012. For instance, Japan is required to reduce to 94% of their 1990 GHG
108% emission
100%
The percentage is the quota of
the country relative to the 1990
GHG emission level
Power Generation Hinterland Transport Ports Operation & Shipping
Development
• Promote and enable generation of • Use efficient and innovative • Promote co-siting and shared • Support the development of clean
renewable energy (e.g. wind, logistics to reduce the need for utilities to capture energy shipping
solar, geo-thermal) in public and hinterland transport. efficiencies and use waste • Consider speed reductions were
private domains. • Institute, facilitate and program energy. effective and possible with regard
• Use renewable energy where the modal shift towards clean and • Develop sustainable nautical to nautical safety.
possible for Ports authority energy efficient modes of services, such as those • Develop transparent incentives
operations and advocate the use transport. represented by tugs and other based on a shared system of
of renewable energy for • Stimulate the environmental harbor craft. environmental indexing of ships.
Ports operations more broadly. performance of all transport • Encourage shore-side supply of • Urge the IMO to accelerate
• Promote the transport and modes (e.g. by environmental (renewable) electricity for inland incorporating best practices in
processing of certified biomass for zoning). navigation reducing CO2 in IMO treaties and
the production of renewable • Improve the energy efficiency of to accelerate adoption of the
energy. buildings, cargo handling and current proposals to amend
transportation MARPOL Annex VI.
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15. 4 Implication of security have on container ports
Major Ports Security Regulatory Initiatives
Secure Freight Initiative Authorized Economic Operator IMO’s ISPS Code
• Combine threat intelligence • Part of the World Customs • Special measures to ensure
• 100% security scan of containers Organization (WCO) Framework of security of ships and Ports facilities.
Standards to Secure and Facilitate • The Ports is required to conduct an
Container Security Initiative
global trade (SAFE) security assessment identify the
• Identify and target high risk containers • Certification program for supply critical asset, assess the threats to
• Pre-screen the containers at Ports of departure chain industry participant including the assets and identify and address
• Use of detection technology terminal operators weakness.
• Use temper-evident containers • Similar to program such as C-TPAT • Functional requirement includes
in U.S., Secure Trade Partnership in • Ports Facility Security Plan
Mega-ports
Singapore, Secure Export Scheme • Ports Facility Security Officer
• Radiation detection technology
in New Zealand
• Security Equipment
Share of U.S. Container Origin, 2007 Region Country CSI Ports in Asia
Japan Yokohama, Tokyo, Nagoya, Kobe
South Korea Busan
North Asia China Shanghai, Shenzhen
CSI Operational
Ports Coverage Hong Kong Hong Kong
86% Taiwan Kaohsiung, Keelung
14%
Singapore Laem Chabang
Southeast
Malaysia Singapore
Asia
Thailand Ports Klang, Tanjung Pelepas
15

16. 4 Understanding the Uncertainty and Impact is essential
High Impact
Fuel Price Increase
Green Logistics
Ongoing Infrastructure
Financing
On-Demand Supply Chain
Hinterland Connection
Improvements
Security Initiatives
Future Trade Movement
Projected
Impact on the
Logistics
Industry Containerization and inland
transportation
Inter-modal
Transportation
Cold Supply Chain in
emerging markets
Low Impact
Low High
Uncertainty
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17. 5 Long Term Outlook for Asia Pacific Container Ports
0 50,000 100,000 150,000 200,000 250,000
Greater China 6%
East Asia 2.6% 2008 2015
Southeast Asia 5.2%
South Asia 9.8%
Oceania 5%
in ‘000 of TEU
Regional Growth Outlook (in Millions of TEU)
Greater China East Asia Southeast Asia South Asia Oceania
250 60 100 12 10
200 50 80 10 8
40 8
150 60 6
30 6
100 40 4
20 4
50 10 20 2 2
0 0 0 0 0
2006 2009 2012 2015 2006 2009 2012 2015 2006 2009 2012 2015 2006 2009 2012 2015 2006 2009 2012 2015
17

18. 5 Long Term Drivers of Container Ports Throughput
Asia Pacific’s Container Ports Market Drivers, in ‘000 TEU
11,368
23,432
24,360 Containerization
is growing at a
56,840 Trade imbalance rate of
will continue to approximately
be a problem for 1.4% a year
the liners
378,442
262,443
2008 Vol Trade Growth
Increasing Repositioning
Trade Transshipment
Transshipment Containerization
Increasing share 2015 Vol
2015 Volume
2008 Volume
Trade volume Imbalance of Containers of cargo are
(Empty Container) containerized
18

19. Container Ports Opportunities in Asia Pacific:
6 Transshipment
• Consolidation and
privatization of Ports
America
’05 Share of Major Container
Region Ports
Transshipment Lines
Busan 43.7% Hanjin
North Asia Kaoshiung 50.9% Evergreen,
• Indonesia’s reform of Hong Kong 44.9% Hanjin
Europe the ports and rail Klang 40.9% CMA CGM, CSCL
market
Tanjung Maersk, MISC,
Southeast 96.0%
Pelepas Evergreen
Asia
PIL, COSCO, APL,
• Inland Rail Corridor Singapore 81.0%
MSC, Swire, NYK,
• Transshipment Ports
investment in India South Asia Colombo 71.3%
• New operator for
major Australia ports
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