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The Outlook for Sea Trade in The Americas

Robert WestPrincipal – Trade & TransportationHalcrow, Inc.The Henderson Carriage BuildingCambridge, MA 02140+1-617-576-5484WestRO@halcrow.com

9 July 2009

XVIII Latin American Congress of PortsJuly 8-10 2009

Biltmore Hotel, Coral Gables, FL

USA

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Agenda

• What have we just been through?• What can we expect now?• Conclusions, the bottom line

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Emerging markets are holding up the world outlook. ALL of the industrialized countries are basically in recession in 2009.

Emerging Markets

World

Industrialized Countries

Source: INS Global Insight

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

% G

row

th, R

eal G

DP

World Emerging Markets OECD

2009 2010USA -2.1% 1.9%EU -2.0% 0.2%

World

Emerging

Industrialized

Source: IHN Global Insight & Halcrow

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Economically, we have hit bottom.

• There will continue to be lots of bad news– All in the past

• The major banks are now fairly healthy– USA (19), Colombia, Mexico, Brazil

• Lending is increasing, even to small businesses• Businesses have no inventories now• Shipping lines are reducing laid-up capacity

– Currently 9.7% – Yes, this might be seasonal

• Cruise lines are moving prices up: bit by bit

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World container trade is still in a slump, but 2010 will bring signs of life, if not sooner.

W orld Total TEUs (full)

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

A 2-year stall

The years of 2-digit growth are past!

5.8%

IHS Global Insight

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Agenda

• What have we just been through?– Where are the good routes? - and the bad

ones!• What can we expect now?• Conclusions, the bottom line

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No, this is NOT your lunch!!

Real GDP Growth

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Peru Colombia Central America Argentina ChileBrazil Caribbean Mexico United States

PERU

Mexico

USA

Country/Region 2009 2010Peru 3.9 6.1Central America 1.0 2.5Argentina 1.0 4.3Chile 0.6 3.1Brazil -0.6 3.2Colombia -0.7 4.7Caribbean -0.9 1.9Mexico -2.3 2.3United States -2.7 2.0

IHS Global Insight

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US TEUs

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Imports Exports

The biggest container market is suffering the biggest downturn! The USA.

A 6-year bad spell

2009 2010 2010-15Imports -12.0% 5.9% 5.7%Exports -14.9% 4.2% 4.7%IHS Global Insight

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For Colombia, the domestic market will revive in 2010, pushing up imports.

Colombia TEUs

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Imports Exports

2009 2010 2010-15Imports -0.5% 7.0% 6.3%Exports -1.8% 5.1% 5.1%

Over 1.2 million full TEUs in 2010

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Venezuela – not a pretty picture

• Economic drop in 2009: -5.6%• Worse in 2010: -6.4%• Budget deficit growing from zero to

6% of GDP.• Keeping gasoline at US$.30/gal

costs US$10 Billion per year.• Deficit spending will fuel 40%

inflation by year-end.• Declining incomes, weaker Bolivar• Bank takeover: BIV• Still strong import prospects, but

for the wrong reasons!

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Argentina weathers the storm!

ARGENTINA TEUs

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Imports Exports

2009 2010 2010-15Imports 0.1% 6.9% 6.4%Exports 1.7% 5.7% 6.1%

Just 1 year of moderate slowdown

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Brazil’s exports have been suffering – but, “We have hit bottom.”

BRAZIL TEUs

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Imports Exports

2009 2010 2010-15Imports -1.4% 7.6% 6.6%Exports -2.4% 5.9% 5.6%

In 2 more years – back to strong growth

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Central America: Up’s and (mainly) Down’s

• Panama– One of the fastest growing this year and next

• Costa Rica– Hurt by semiconductor downturn, weak ‘09 and ‘10, possible

Atlantic port development. Big energy investment.• Nicaragua

– A disaster in slow motion• Honduras

– Weak maquiladora growth, but Cortes investments will hold up– Democracy or something else? Temporary or permanent?– Big Roatan developments

• Guatemala– Remittances are down, -0.6% real GDP growth in 09– Rosenberg – Colon?

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Central America and the Caribbean – a smalldip in both imports and exports this year.

Central America & Caribbean

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Imports Exports

0.7% CAGR

2009 2010 2010-15Imports -0.9% 4.9% 5.3%Exports -1.3% 5.4% 4.4%

1-year slowdown

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P. CABELLOP. of SPAIN

RIO HAINASAN JUAN

CAUCEDO

Caribbean Transshipment Triangle

FREEPORT

COLON/MIT

KINGSTON

CARTAGENA

CUBA

The best transshipment options are now becoming clear.

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Cuba: now and maybe

USA

• US Exports – ag, building materials, consumer goods, technology

• Immediate export potential (reefer) to USA

• New maquiladora haven? China at our doorstep?

• New transshipment hub for the Americas?

• Deep water (200m)

• Possible development of Mariël for cargo, Havana for cruise

NOW

• Tourism

• Remittances

MAYBE

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Accomplishments under Raul to date

• Shorter speeches• The soap operas start on time• Cubans can buy cell phones & DVDs,

and stay at hotels, so long as they have the money.

• Showing modest change by taking small steps – very slow but in the right direction.

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Agenda

• What have we just been through?– Where are the good routes? - and the bad

ones!• What can we expect now?• Conclusions, the bottom line

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Conclusions

• It should not get worse from here.– But the news will sound terrible!

• The economic picture will improve before the shipping volumes, but 2010 will see positive growth in both.

• The “big opening” with Cuba may start in 2009 in earnest.

• Now, when everything seems so bad, is the time to plan your strategy to capture market share.