This document discusses challenges and opportunities in the reefer cargo market. It notes that the top container lines control close to 50% of the total market, with an even higher share for reefers. Reefer trade is projected to grow at around 5% annually through 2021. While reefer trade is increasing, production of reefer containers has remained flat in recent years. The document outlines several mega trends, such as population growth and concerns over food safety, that will impact the reefer market. Key implications are that carriers have improved profitability through consolidation, reefer rates are expected to increase, digitization will be embraced by market leaders, and regulatory barriers may rise.

1. Confidential – not for third party distribution © Eskesen Advisory, Seabury Consulting 2017
05. March.18
Challenges and Opportunities
TPM Long Beach
Reefer Cargo – State of the Union

2. 2Confidential – not for third party distribution © Eskesen Advisory, Seabury Consulting 2017
Agenda
1. Overall Liner Industry
2. Overview of Global Reefer Trades incl. future outlook 2021
3. Reefer Mega Trends
4. Key implications

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Top 3 container lines control close to 50% of the total market
For reefers, the share concentration is even higher not least at trade level
Top 20 container lines in 2010
Carrier Market share1, %
1) Market share is based on total fleet capacity per container line as a percentage of the entire cellular fleet as per August 2017
Source: Alphaliner; Eskesen Advisory analysis (September 2017)
14%
3%
12%
8%
4%
4%
3%
2%
4%
4%
1%
3%
3%
2%
4%
3%
8%
19%
15%
12%
12%
7%
7%
0%
8%
5%
Same container lines in 2018
Carrier Market share1, %
Major Disruption

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Lowest orderbook vs fleet ratio in recent history
We have seen some new build activity in the last quarter however scrapping and new Low
Sulphur regulation by 2020 will likely change the game
Source: Alphaliner (January 2018)
15
0
5
0%
10
25
20
25%
50%
75%
’13’06 ’15’12’03 ’17’04’00 ’01 ’02 ’07’05 ’08 ’09 ’10 ’11 ’14 ’16
Fleet
Order book
Order book / fleet ratio
Global order book to fleet evolution, 2000-2017
Million TEU Share of current fleet, %

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Overall sector result in 2017 much improved
CMA and Hapag results before interest leading industry. Will Maersk be able to return to
No. 1 in profitablility in 2018 with Hamburg Sued synergy effects ?_
Financial performance top container lines, Q3 2017
Operating margin, %
* Q3 results are displayed for carriers that have not yet reported full year earnings at the time of reporting
Note: Operating margin is calculated as EBIT / Container shipping revenues
Source: Carriers’ financial reports, The Wall Street Journal, Alphaliner; Eskesen Advisory analysis (September 2017)
-5%
0%
5%
10%
5000 1.5001.000 2.500 4.5002.000 5.0003.5003.000 6.5005.5004.000 6.000
K Line
Hapag Lloyd
NYK
Hyundai
MaerskYang Ming
ZIM
MOL
Wan Hai CMA CGM
Evergreen
Revenues, bn US$
Global Carriers
Scale Leaders
Niche focused

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Reefer commodities growth 2017 – Projected at ~3% growth
Trade barriers, Rate of exchange and weather patterns influence trade patterns more and
more and large variation by trade. All growth in 2017 was in frozen
Source: Seabury Global Ocean Trade Database & Seabury Ocean Dashboard, excluding UN Comtrade; Eskesen Advisory analysis (February 2018)
Perishables ocean trade growth, 2017 Jan-Dec
YoY growth, %1
7
6
2
2
6
-5
14
-105 12
3
1
-1
12
-1-10
12
12
-1
3%
Chilled products 0%
Global perisables
Frozen products 7%
3

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Which is forecasted to continue at ~5% CAGR until 2021
Latin America will remain the most important sourcing area
Containerized reefer trade per origin region, 2000-2021
Million TEU
Source: Seabury Global Ocean Trade Database, Seabury Global Ocean Trade Forecast Database; Eskesen Advisory analysis (February 2018)
24%
12%
35%
18%
23%
9%
Asia Pacific
20162000
14%
13%
36%
2008
Europe
10%
13%
24%
33%
9%
15%
15%
21%
34%
2021
Africa
North America
Middle East&South Asia
Latin America
3.1
5.7
7.7
9.7
5.8%
4.6%
2000-2016
All origins
2016-2021CAGR:
5% 5%
2% 4%
11% 6%
7% 7%
6% 2%
5% 5%
5.8% 4.6%
Trade growing 1.6 TEU until 2021, significant opportunities for cold chain players

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Asia and Middle East imports over 50% of the Global market
Asia Pacific will remain most important market. China has potential to explode and change
availability of products for other markets. Africa is a wild card in the longer years
Containerized reefer trade per destination region, 2000-2021
Million TEU
Source: Seabury Global Ocean Trade Database, Seabury Global Ocean Trade Forecast Database; Eskesen Advisory analysis (February 2018)
20%
15%
7%
23%
28%
16%
38%
2000
13%
Asia Pacific
21%
32%
6%
15%
16%6%
2016
6%
16%
20%
3.1
37%
2021
Africa
North America
Middle East&South Asia
Europe
Latin America7.8
2008
5.7
9.7
36%
5.8%
4.6%
2000-2016
All origins
2016-2021CAGR:
9% 6%
4% 6%
4% 5%
11% 4%
5% 4%
5% 5%
5.8% 4.6%
Trade growing 1.6 TEU until 2021, significant opportunities for cold chain players

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What happened to all the Reefer Boxes ?
While trade of perishables continues to grow, production numbers of new-built reefers are
largely flat for the past 10 years, the 2017 production figure is even below the 2007 level
Source: World Cargo news, Chinese production data
350
250
0
200
150
50
300
100
’12’05
102
’10
148
’00 ’01 ’02 ’03
223
132
’04 ’06 ’11’07 ’08 ’09 ’13 ’14 ’15 ’17
101 95
115
170
224
195
305
225
205
176
275
160
210
’16
225
+1%
Reefer production per year, 2000-2017
Thousand TEU

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In comparison Investments in dry was record high in 2017
Reasonable evidence that Lines are using $$$ investment funds in Dry rather than RF
Source: World Cargo news, Chinese production data
0.0
0.5
1.0
2.5
1.5
2.0
3.0
3.5
2.5
’16’13
3.0
’15
1.9
’08 ’09 ’10 ’11 ’12 ’14 ’17
2.5
0.2
2.6 2.5 2.4
3.1
3.3
+4%
Dry-box production per year, 2008-2017
Million TEU

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Mega Trends – Reefer Segment
Overall still room for optimism but the picture is increasing complex and unpredictable
POPULATION
GROWTH
FOOD SAFETY EXTREME
WEATHER
GLOBAL CONNECTIVITY
● 10 billion by 2050 (7.6)
● Middle class of 40%
● Food shortages
● Food contamination
● Legislation
● Traceability
● Global warming
● Unpredictability
● Forecasting
● One market
● Trade barriers
● Digital, Blockchain

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To Uber or not to Uber
Will you be the Uber Driver ?

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Reefer – State of The Union
Key Implications and takeaways
1. Historically Carriers struggled with consistent profitability but case has improved
a) Consolidation b) Change in Conduct c) Capacity Management (fewer RF units)
2. Industry consolidation put pressure on suppliers across the board
3. RF container rate pricing should trend upward if any logic prevails
4. Reefer Trades remain a bright growth market at 4% CAGR = Opportunities
5. Digitization will be embraced by market leaders.
- Customers drive for transperency will accelerate adoption
6. Regulatory/Trade barriers may increase i.e. Food Safety, Trade agreements
7. Segment is unique, require expertise and capital to win, otherwise stay out