Panama has built a leadership position in global trade through investing in infrastructure and innovation. The Panama Canal was an important start. How will Panama build on that position to expand its logistics capabilities? Here is a full analysis by Cambridge Capital's Benjamin Gordon.

1. Supply Chain Disruptions:
Growth, Transformations, and Implications for Panama
Panama Invest Chicago
June 16, 2017

2. - 1 -
Introduction
About Cambridge Capital
Entrepreneur Dealmaker Investor
Ben Gordon
Managing Partner
Cambridge Capital
▪ Founded in 1999
▪ Internet platform for
matching freight with
capacity
▪ Raised $28M of outside
capital
▪ Sold to Maersk, now part
of IBM
▪ Founded in 2002
▪ Investment bank advising
supply chain companies
▪ Executed over 50 M&A
transactions
▪ Host of industry-leading
conference
▪ Range of clients across
supply chain sector
▪ Founded in 2009
▪ Private investment firm
focused on supply chain
sector
▪ Emphasis on growth,
innovation, disruptive
technology
▪ Invested in emerging
leaders such as XPO
Logistics and Bringg

3. - 2 -
Game-Changing Opportunities in the Supply Chain
Billion dollar fortunes in the supply chain sector
19th
Century:
The Railroad
20th
Century:
The Box
21st
Century:
The Digital Supply Chain
▪In 1869, Leland Stanford drove
the Golden Spike into the
ground in Utah, creating the
first coast-to-coast railroad
▪Railroad fortunes were built by
the Vanderbilts, Carnegies, and
Flaglers
▪In 1956, Malcolm McLain
refitted an oil tanker to carry
58 shipping containers from
Newark to Houston
▪Containerization helped fuel
the fortunes of shipping and
trucking empires like Maersk
and JB Hunt
▪“The Amazon Effect” sparks a
new ecosystem in automation,
e-commerce fulfillment, and the
digital supply chain
▪New billion-dollar winners
emerge, including Uber,
GENCO, Descartes, and XPO

4. - 3 -
Growing Pace of Change
Rapid technological innovation and intensifying competition
▪ The profound impact of technological innovation and the growing pace of change on all sectors of the
economy is inevitable
▪ Industry boundaries are being erased as the digital economy paves the way for new billion dollar winners
▪ More users are adopting new technologies faster than ever before
▪ The growing pace of change puts incumbents at risk of obsolescence
Technology Adoption: Years until used by 25% of American populationTechnological innovations permeate economy faster than ever before
Years Until Adopted by 25% of U.S. Population
Electricity (46)
1873
Telephone (35)
1876
Radio (31)
1897
Television (26)
1926
PC (16)
1975 Mobil Phone (13)
1983
The Web (7)
1991
Facebook (5)
2004

5. - 4 -
Innovators Emerge as New Leaders
Existing corporations face greater challenges to maintain leadership positions
Incumbent corporations in the auto industry outpaced by technological innovators
2009
2003
1908
1903
Founded
Neither Uber nor Tesla existed yet in 2002.
Today, only 15 years later, they have each
surpassed GM and Ford — despite the latter
two companies having a 100-year head start.
Market Capitalization *
GM makes
post-bankruptcy
IPO
Tesla
IPO
Uber Series G
financing
* Venture financing valuations shown for Uber, excluding debt. Market cap data as of June 5, 2017.
Ford peaks
at $79B

6. - 5 -
Explosive Growth of New Technologies and Businesses
Startups create more disruptions to existing business models than ever before
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Growing power of disrupters…
Dramatic Acceleration in Number of New Unicorns
(Private startups worth $1B+)
Emerging businesses now grow so
fast that, on average, last year, a new
unicorn was created every week.

7. - 6 -
Increasingly Fast Turnover Among Biggest Companies
Incumbent corporations face growing challenge to stay relevant
…leads to growing risk of obsolescence
▪ New companies are capturing market share from incumbents faster than ever before
▪ Only 12% of the Fortune 500 companies from 1955 remained on that list sixty years later in 2015
Average Company Lifespan on S&P 500 Index
Projected

8. - 7 -
How Can Incumbents Adapt?
Strategic investing as a form of innovation
M&A Direct Investing Fund Investing
Acquire and integrate
specific targets
spends $3.3B
to acquire
invests
$500M in
invests
$125M in
Buy minority stakes in
emerging companies
Invest in sector-focused
fund to gain a portfolio
Strategy
Example

9. - 8 -
Corporations Invest to Access Emerging Technology
Traditional M&A is no longer sufficient for achieving strategic goals
Growth of corporate venture capital financing Growth of corporate VC units
Quarterly Global Corporate Venture Capital Financing
Source: CB Insights
New VC Units Launched Annually
Corporate leaders across all sectors of the economy are pursuing direct and fund investing

10. - 9 -
Case Study: UPS Strategic Enterprise Fund
A large-scale direct investing portfolio with targeted strategic focus
Source: UPS
▪ Develop critical partnerships and acquire knowledge returns from its investments within
information technology companies and emerging market-spaces sectors
▪ Enable UPS to access emerging technologies and build partnerships with businesses that
can fuel the company’s future growth and provide key competitive advantages
Founded:
1997
Investments:
40+
Invested Capital:
$380M+
▪ The Strategic Enterprise Fund is the private equity investment arm of UPS
▪ The SEF is a business development tool that enables exploration of
emerging markets and technologies
▪ The Fund monitors external business environments and allows UPS to
learn from companies directly involved in the new economy
▪ Supports mission of becoming the leading provider of technologically
advanced services in the transportation and logistics industry
Overview
Investment Objectives
Representative Investments

11. - 10 -
UPS Strategic Investing Strategy
A large-scale initiative applying a complementary mix of M&A and direct investing
Source: CB Insights

12. - 11 -
Panama Success Story
A centralized hub for global trade
Panama’s Global Reach
An 80 km stretch
creating an 8,000 mile
shortcut by bypassing
South America
Generating billions
in tolls for the
Panama economy
annually
Over a million
vessels passing
through the canal
since it was first built
Connecting 85% of
countries by 144
maritime routes,
reaching 1,700 ports

13. - 12 -
Panama Success Story
A leader in global growth, trade, and logistics infrastructure
GDP Growth Rate (%)
4 Average historical GDP
growth of over 7%
4 20 trade agreements,
more than any other
Central American country
4 Home to Latin America’s
two most active ports
4 Top ranked infrastructure
and logistics performance
by the World Bank
4 6% projected GDP growth
through 2021
Infrastructure Quality Rating
Note: Infrastructure quality rating reflects 2015-2016 average. Source: Proinvex Panama, World Economic Forum.

14. - 13 -
Disruption
Multiple threats to cross-continental shipping
Connect to More
Shippers and
Carriers
Panama
4 Regulatory and
geopolitical risk
Trade Disruptions
4 Enabling more efficient
last mile logistics
Drones
4 Unforeseen developments
Other New
Technologies
4 Technology supporting
domestic production
3D Printing

15. - 14 -
Solutions
Capitalize on disruption to strengthen competitive advantage
4 Invest in Innovation
– Drone technology
– Last mile
– eCommerce platforms
Value Creation
4 Strengthen Position
– Infrastructure
– 4th
canal bridge
– Customs center
Value Protection Panama

16. - 15 -
Conclusion
The opportunity ahead
4 Rapid pace of change is disrupting business models and economies
4 Panama has built a leadership position in global trade through investing in
infrastructure and innovation
4 Opportunity to secure leadership position through strategic investing in supply chain
infrastructure and innovation