Maersk Line

1. Short history of the shipping line

a. When was the shipping line founded ?

b. What are the main historical events ?

2. Financial details of the shipping line:

a. Turnover, profit/loss, etc.., also in light of the economic crisis

b. Is the shipping line part of a larger group or holding ?

3. Growth of the shipping line (container volumes transported) and impact of the economic crisis

on volumes

Maersk Line, which moves almost one-sixth of the worlds containers

Total value of goods transported estimated at USD 675bn in 2014. Now, nearly than 5,000 container
vessels transport over 34 million containers (TEU) around the world, every year.

http://www.maersk.com/en/industries/transport

http://www.maerskline.com/~/media/maersk-line/Countries/int/Files/facts-figures/maerskline-facts.pdf

Impact

At the beginning of 2009 the volumes for Maersk Line were affected negatively by the falling demand,
and the volumes transported in the first quarter of 2009 totalled 1.3 million FFE (Forty-Foot Equivalent
container units), which was a decrease of 14% compared to the corresponding period of 2008 (1.5
million FFE). Overall, Maersk Line is estimated to have maintained its market share in the declining
market.
Average freight rates were 24% below the corresponding period of 2008 due to the deterioration in
market terms and lower compensation for higher fuel costs. Rates fell during the first part of 2009.

Volumes on the TRADES between Asia and Europe were 8% below the corresponding period of 2008.
The falling volumes and increase in new tonnage placed considerable pressure on rates which fell
throughout the quarter and were on average approximately 44% below the same period of 2008. The
result for this market is considerably lower than for other TRADES and only significant rate increases can
change this situation.

For the Transpacific TRADES volumes fell by 14%, while average rates were 5% below the corresponding
period of 2008. Maersk Line has achieved reasonable volume cover for the contract season as of 1 May
2009, but at considerably lower rates. Volumes for the Latin

America trades fell by 25% and rates were on average 15% below the first quarter of 2008.

On the Transatlantic and Africa trades volumes fell by respectively 21% and 17%. Rates for the
Transatlantic trades were by and large unchanged, while rates for the Africa routes were overall 12%
below the corresponding period of 2008.

Falling volumes had a negative impact on capacity utilisation for all routes. Maersk Line has taken 18
vessels out of service, equivalent to a capacity of approximately 110,000 TEU - approximately 6% of the
total fleet - at the beginning of May 2009. Despite this laying up of vessels, capacity utilisation fell from
the corresponding period of 2008.

The average fuel price was 45% below the corresponding period of 2008, and fuel costs accounted for 14%
of total unit costs in the first quarter of 2009, compared to 23% in the corresponding period of 2008.

The current market conditions have reduced opportunities to levy compensation for higher fuel costs. A
number of initiatives to further reduce fuel consumption have been launched.

Maersk Line is continuing the process of optimising the route network and realising considerable cost
reductions. In the first months of 2009 the number of employees was reduced by 800. Total unit costs
per transported FFE were 6% below the corresponding period of 2008. The number of positions in
Maersk Line has been reduced by more than 5,000 in total since 1 January 2008.
The segment result after tax for Maersk Line was USD -555 million compared to USD 9 million in the
corresponding period of 2008. In the first quarter of 2008 the result was affected positively by sales gains
of USD 93 million and negatively by non-recurring costs relating to streamLINE of USD 57 million.

The segment result for the period is affected negatively by exchange rate adjustment of working capital
of USD 98 million, compared to a positive effect of USD 78 million in the corresponding period of 2008.

Safmarine transported a total of 168,000 FFE in the first quarter of 2009, an increase by 2% from the
same period of 2008 (164,000 FFE). Rates were 25% below the corresponding period of 2008.

For both Maersk Logistics/Damco and Container Inland Services activity has declined as a consequence of
the global economic crisis.

http://www.blankrome.com/index.cfm?contentID=37&itemID=1873

4. Fleet of the shipping line

a. Vessel sizes

610 container ships . 4.1 million TEU containers (or 2.55 million containers)

Vessels are classified in different classes according to the TEU.

b. Share of ships owned vs. share of ships chartered

18% market share

Total capacity 2,128,836 TEU

610 vessels: 262 owned, 348 chartered

5. Liner service network of the shipping line:

a. What are the main areas served ?

b. Type of liner services (hub-and-spoke, line-bundling services, etc..)

c. Patterns in terms of ports of calls
d. Does the shipping line have specific hubs ?

e. How has the economic crisis affected the lines liner service network ?

6. Liner strategy

a. Horizontal integration: has the shipping line been subjected to mergers and acquisitions?

Why ? Were the M&As successful ?

On May 2005, Maersk have stated its plans to buy P&O Nedlloyd for 2.3 billion euros. As P&O Nedlloyd
was merging its accomplishments in industry-leading process excellence and top international system
execution, which was seen in a share increase from 9 euro to 57 euro in only 2 years, the shareholders
were concerned at the preparations for acquisition. At the time of the take-over, P&O Nedlloyd held 6
percent of the worldwide industry market share, and Maersk-Sealand had 12 percent. The joined
company would undoubtedly be the largest shipping company worldwide, with approximately 18
percent of the world market share. Maersk accomplished the acquisition on August 13, 2005. Royal P&O
Nedlloyd shares ended trading on September 5 of the same year. On February of 2006, the new merged
companies took on the name Maersk Line.

Shares in P&O Nedlloyd pitched to an all-time high of 57.45 euros and had an increase of 12.3 percent at
56.70 euros by 1003 GMT. The stock had by then increased 22 percent subsequent to the establishment
by the companies that they were planning a merge. Prior to the offer was stated the firms stock traded
at a cut rate of up to 40 percent to its peers due to low efficiency at maintaining full ships. On August 5,
2005, Maersk took over 95.6 percent of P&O Nedlloyd, all but maintaining its top position in the
worldwide container shipping market

b. Horizontal integration: is the shipping line part of strategic alliance ? How many vessels

are assigned to the alliance ?

An alliance of the worlds top three container shipping firms, which could control more than a third of
the market, is likely to start operating in mid-2014, No.1 player Maersk Line said after the tie-up was
approved by U.S. regulators.

The industry has been battling overcapacity since the financial crisis because new vessels ordered
before the downturn have flooded the market. This has driven rates on the main route between Asia
and northern Europe to loss-making levels.
c. Is the shipping line following a path of organic growth ?

d. Vertical integration: the involvement of the shipping line in:

i. Terminal operations (where?, joint venture/minority shareholding/full

ownership ?)

ii. Shortsea shipping or feeder operations

iii. Inland transport road/rail/barge (own, lease, contract supplier, common-user).

iv. Value-added activities (freight forwarding, warehousing, distribution, etc.).

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