OVERCOMING INDUSTRY CHALLENGES AND ELEVATING CUSTOMER EXPERIENCE

Karsten Kildahl, Regional Chief Executive, Europe Region, Maersk Line

2016 – decisive year for container shipping was characterised by four factors

Financial pressures due to record low

freight rates

Subdued global trade levels – we

are in the “new normal”

More consolidation in the past two

years than the past twenty

An increased focus on the role of

technology and digital in supply

chains

The average operating margins of the13 main container carriers remained negative in the second half of 2016

Source: Alphaliner, Volume 2017, Issue 15

Triggered by low profitability, consolidation has picked up unprecedented pace – and we could potentially see more…

• Consolidation wave is rolling again – 8 top 20 players have disappeared in 2 years

• Top 5 market players accumulate higher collective market share than ever before

• Many carriers’ balance sheets are unhealthy, having been impacted by the rate war. Improvements are necessary to safeguard stability

Unless industry profitability is restored, we find it hard to imagine that further consolidation will not take place…

Maersk Line has participating in this consolidation trend by announcing our intention to acquire Hamburg Süd

Disclaimer: The proposed transaction is subject to regulatory approvals. None of the information provided in this presentation should be construed in any way as a representation or undertaking with regard to the position to be adopted by Maersk Line

Note: Illustrative networkSource: maerskline.com and hamburgsud.com

Less is more! Fewer, but larger alliances are forming a new shipping landscape for our customers – especially in Europe

Tighter partnership between carriers

and customers are necessary to unlock

mutual benefits –beyond zero-sum

items

Fewer networks prompt customers to be increasingly

deliberate about their carrier

portfolio

Consolidation as much needed

impulse for improving industry

profitability

For exporters from Europe there is another trend that needs to be considered – periods with space constraints

Latin America

North America

Intra Europe

AfricaWest-Central Asia

Oceania

Asia

3.5 3.2 5.0

-1.3

3.1

1.5 5.1

2016 y/y market growth in EUR Export (%)

Total Europe exports

2.3

XX

Source: CTS,

Exports to Asia from Europe are outgrowing imports from Asia, and we expect this trend to continue

Source: CTS, based on latest numbers until and including February 2017. Maersk Line forecast

• Between 2010 and 2016 the Eastbound trade has grown by 4.6% YoY on average while Westbound has grown 2.0%;

• The Eastbound trade is expected to significantly outgrow Westbound in 2017, partly driven by the strong start to the year;

• Future trend: Eastbound is expected to outgrow the Westbound trade across North Europe and Mediterranean.

95%

100%

105%

110%

115%

120%

125%

130%

135%

140%

2010 2011 2012 2013 2014 2015 2016

WB growth EB growth

Index (2010:100%)

CAGR: 2.0%

CAGR: 4.6%

2016 FFEs (mill.)

Similarly, total European exports are outgrowing imports

95%

100%

105%

110%

115%

120%

125%

130%

135%

140%

2010 2011 2012 2013 2014 2015 2016

Imports Exports

Index (2010=100%)

Source: CTS, based on latest numbers until and including March 2017. Maersk Line forecast

CAGR: 2.5%

CAGR: 4.4%

13.5

15.3

The Europe Eastbound supply/demand gap has narrowed since October 2016

TEU/week

Source: CTS, based on latest numbers until and including February 2017. Maersk Line forecast

• Between October 2016 and February 2017 the Europe Eastbound supply/demand gap has narrowed, driving the significant Eastbound rate increase;

• The Europe Eastbound trade differs from Westbound via its nature of carrying a significant amount of empties and a generally higher cargo weight

• Over the past quarters we have seen a significant growth among multiple trades loading on the Europe Eastbound network

170,000

190,000

210,000

230,000

250,000

270,000

290,000

310,000

wk 1

wk 3

wk 5

wk 7

wk 9

wk 1

1

wk 1

3

wk 1

5

wk 1

7

wk 1

9

wk 2

1

wk 2

3

wk 2

5

wk 2

7

wk 2

9

wk 3

1

wk 3

3

wk 3

5

wk 3

7

wk 3

9

wk 4

1

wk 4

3

wk 4

5

wk 4

7

wk 4

9

wk 5

1

wk 1

wk 3

wk 5

wk 7

SupplyDemand

The supply/demand situation has sparked an Eastbound rate re-bound

Source: CTS, based on latest numbers until and including February 2017. Maersk Line forecast

55.0

60.0

65.0

70.0

75.0

80.0

85.0

90.0

2016-1 2016-2 2016-3 2016-4 2016-5 2016-6 2016-7 2016-8 2016-9 2016-10 2016-11 2016-12 2017-1 2017-2 2017-3 E 2017-4 E

Index (2008:100)

Europe Eastbound rate index

+24% points

Actuals Estimate

Rotterdam-Shanghai rate of USD 1,723/TEU

end-April

What do our customers expect?

Stability of the physical flow

A good customer service

Innovation

We need to keep up pace with the way customers want to do business in shipping

The customer expectation

• Ecommerce has changed how transactions and trades are done domestically and cross borders.

• Customers expect increased use of digital services

• Various shipping and logistic portals mushroomed in China and other markets

• Unpredictable and high booking no-shows in our industry

• The current pricing and booking practice in the industry is flawed

• Current carriers and shippers: trust level is low, transaction cost is high and customer experience is poor.

The industry pain points

Web-Only Product can become reality|15

INITIAL OFFERING ON 3RD PARTY PLATFORMS WITH A LIMITED SCALE

AE1: Ningbo - Shanghai - Yantian - Felixstowe - Rotterdam - Hamburg – Bremenhaven

AE5: Xingang (Tianjin) – Qingdao – Ningbo - Shanghai - Yantian - Bremenhaven - Hamburg

CHX: Qingdao – Xingang (Tianjin) - Shanghai - Nansha – Chennai – Krishnapatnam - Vizag

Product Feature

Price is locked when abooking is placed

(Price calculation date = booking date)

Down payment (*partial initially)

to secure booking and equipment

Charge occurs for not honouring the booking*

*Penalty applies to no-shows, COV, rollings or equipment unavailable.

There has been an exponential increase in technology solutions aimed at addressing evolving customer needs

|16

2012 2013 2014200720052003 20082001 20062002 2004 2009 2010 2011

Number of players1 operating in the digital space within shipping

Examples of latest developments

2015 2016

Maersk’s partnership with IBM and its block chain technology

|17

1

2

3

Shipping Information Pipeline

From Kenya to Europe, the travel of these documents looks like this:

1

6 7 8 9 10

2 3 4 5

With the Shipping Information Pipeline

it would look like this:

Farm fills out PhytosanitaryCertificate regarding cargo

Freight forwarder fills out Certificate of Origin

Courier brings them for approval to the Mombassa Port authorities

Courier brings them back to Nairobi for copying and archival

Original documents airfreighted to European Freight Forwarder

Courier transports them to a consulting company to prepare and package with other import related paperwork

Courier that transports them to Antwerp port terminal gate

If documents are in order, a truck driver picks up the container

Transports it to a Dutch customs controlled area for phytosanitary inspect

Documents in order? Container released to customer

Kenyan Farm fills out the Phytosanitary Certificate and gives it to a Freight Forwarder

Freight Forwarder fills out Certificate of Origin

Freight Forwarder uploads both documents into the cloud.

Consumer Forwarder Authorities Shipping company

Trader Grower

Greater cargo care visibility and enable our customers to focus on their business ambitions

|18

Remote Container Management

• Launching in Q3

• Unique to the market

• Maersk Line customers will have greater visibility of crucial data at no additional cost, and the option to access richer / upgraded functionalities for a subscription fee

Digitization - The industry's biggest challenge

MAERSK LINE VESSELSSend real-time data to the RCM team in the office

SATELLITE

EQUIPMENT MANAGEMENTREPAIR VENDORS

OFFICEAble to monitor data from 270,000 Maersk Linereefer containers

TERMINALS

Alarm notification sentif problems are encountered

VSATis a dome installedon each vessel which transmits data gathered from the reefers to the satellite

VSAT EQUIPPED VESSELS THE RCM SOLUTION CONSISTS OF:

~270 + ~130VESSELS OWNED

LONG-TERM CHARTER VESSELS

1 2 3GPSUNIT

GSMANTENNAE

Wi-Fi

We are building the required capabilities within digital technology and changing the way we work and the talent we foster

|19

Capabilities & people

Organisation

Culture

Infrastructure

Mixing a new breed of talent with our world class shipping people – hired numerous PhDs and Post docs in fields such as Machine Learning, Applied Mathematics, and Operational Research

Separate IT and Digital organisationsworking directly with business product owners to unlock value

Training and using Scrum methodology; created Design Centre for facilitating agile working methods

All digital product development will take place on one common platform

THANK YOU!