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Prepared by: Hutchison Port Holdings Limited 1

Elevating Sohar Port to New Heights

GCC Supply Chain & Logistics Conference 2015 16 April 2015

Eric S.C. Ip, Group Managing Director

Hutchison Port Holdings Limited


Hutchison Port Holdings Limited (HPH)

The world’s leading port investor, developer and operator

The network of port operations comprises 319 berths in 52 ports, spanning 26 countries

The HPH port network handled a combined throughput of 82.9 million TEU worldwide in 2014

Offers a wide range of transportation-related services

Hutchison Port Holdings The world’s leading port investor, developer and operator


Hutchison Port Holdings Network of port operations comprises 319 berths in 52 ports, spanning 26 countries


Changing Needs


Age of mega alliances …

Alliances and vessel sharing agreements driven by practical needs:

Mega vessel dilemma – order mega vessels or risk losing market share Partner up to fill vessels – alliances have 95% of market share on major East-West trades Expanding service coverage – access wider network that would be hard to accomplish alone Sharing resources, costs, risks

Source: Alphaliner, by capacity deployed

Market Share on Major Trades

2M, 16%

O3, 13%

CKYHE, 35%

G6, 31%

Others, 5%

TRANS-PACIFIC

2M, 41%

O3, 8%CKYHE,5%

G6, 36%

Others, 11%

TRANS-ATLANTIC

2M, 36%

O3, 21%

CKYHE, 23%

G6, 19%

Others, 1%

EUROPE-FAR EAST

Prepared by: Hutchison Port Holdings Limited

770

670

570

350

450

550

650

750

10k 14k 20k

Slot

Cos

t ($/

TEU

)

Nominal Vessel Size

6

… and mega vessels

Cost savings a prime driver:

Upsizing to realize economies of scale & reduce operational costs

Increasing number of shipping lines joining the 18,000+ club

Even for vessel orders above 10,000+ TEU, 13 out of top 20 shipping lines currently have deliveries coming in the next few years. All except two of top 20 will ultimately have these vessels after current orderbook is fulfilled.

Source: Internal estimates

-13%

-15%

Asia-Europe

18,000+ Club

Source: Alphaliner, news sources

>100 vessels in place/on order


64%60%

56%56%

53%

23%

21%

23%

25%

26%

13%

18%

21%

19%

21%

0

5

10

15

20

25

2002 2006 2010 2014 2018

(Mill

ion

TEU

)

Middle East Imports Middle East Exports Intra Middle East Trade

7

The attractive growth rates of the Middle East market …

Robust past growth, with a strong outlook:

Strong import/export and intra-

regional growth above world average, and expected to continue

Becoming an increasingly important component in the vital Asia-Europe corridor

Middle East Volumes

Source: Seabury

+10%

+8%

CAGR


… drive vessel cascading in the region

20%

14% 14%

9% 8%5%

3%

7%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

(TEU

)

CAGR (2012-2014)Average Vessel Sizes (Middle East trades)

Source: Drewry

Cascading of larger vessels in the Middle East region:

Typical vessels calling the Middle

East region grew 50-60% in the past five years.

Largest vessel calling Port of Sohar is 9,200 TEU, while 14,000 TEU vessels have also started to reach Middle East transhipment hubs.

Vessel sizes grew on average +7% over the past two years alone, with most Middle East-related trades seeing high single to double-digit growth.

2,500 – 5,000 TEU

8,000 TEU

4,000 – 7,500 TEU

14,000 TEU

2010 2015

Typical

Largest

+50-60%

+75%


Challenges to Terminals


Higher peak requires more supporting resources

10

Source: Internal simulation

Bigger vessels bring higher fluctuations …

Workload (Quayside) by Vessel Type


Bigger vessels resulting in higher peak workload, which require new and upgraded facilities to maintain smooth cargo flow:

11

… and require more terminal investment and expertise

Facilities requirement Post-Panamax - 9,000 TEU 10,000 - 18,000 TEU

Deeper and longer berths

Berth Length: 350 m 450 m

Draft: 13-15 m >15-18 m

Higher and longer cranes

Outreach: 15-17 rows across 18-23 rows across

Lifting Height: >32-43 m >43-52 m

Yard storage capacity Peaks can typically be accommodated with existing yard space

Around 30% more capacity required to accommodate higher peak factor

Berth productivity >75-120 MPH >120-200 MPH

10

11

23

Cross-section diagram of

container vessel 8

10

17 18,000 TEU 9,000 TEU


But … terminals are just one part of the supply chain


Shipping lines

Terminal operators

Government

Port Authorities

Logistics Providers

Shippers & Consignees

13

An integrated multi-player approach is required

Enhancing cooperation and integration to efficiently distribute cargo


Automation – automated equipment & gate operations Mega Vessel – new peak workload

Capability – new and upgraded facilities to handle the largest size of vessels

Capacity – ample yard capacity

Connectivity – well connected inter-modal facilities and superior infrastructure (e.g. rail, canal, roads)

Intermediary Buffer – availability of intermediary logistics facilities (e.g. depot, CFS, free trade zone etc) and logistics services

Distribution Channel – low costs and high reliability

Regulatory – simplified customs procedures with sophisticated technology

14

The elements that shape the port

Shipping Lines

Terminal Operators

Information flow – port community system connecting all players

Government & Port Authorities Shippers &

Consignees Logistics Providers


HPH’s vision for Oman International Container Terminal


Terminal C A modern and efficient gateway port

Oman’s gateway port:

HPH has achieved its mission to consolidate Muscat and Sohar cargoes and to develop Sohar Port into a modern and efficient gateway port for the North Batinah and the Sohar Freezone

Development of Terminal C is being fast tracked to bring facilities up to full capacity to meet the future needs of Oman

… but we don’t stop here


Expanding hinterland and building bigger base Building upon the world class infrastructure and network being established in Oman

Source: GPCA / A.T. Kearney

Rail

Source: Sohar Port and Freezone

Road

Source: Sohar Port and Freezone

Sohar Freezone

Expanding our reach:

To take advantage of the world class road and rail network being established by Oman, we envision OICT as an integral part of Sohar Industrial Park and Freezone’s rapid development and one of the key gateways for origin/destination cargoes in the GCC.


Ambitions for Terminal D A transhipment hub serving the needs of the region when a strong base has been built up

A modern transhipment hub to serve future needs:

Joint vision of HPH, the Sultanate of Oman

and Sohar Port to develop Terminal D as a modern, automated transhipment hub.

Potential to serve container vessels of 20,000 TEU class.

Autogate Operations Remote-controlled QCs Remote Control Center Automated Stacking Cranes


Elevating Sohar Port to New Heights …

Increased integration and cooperation amongst key stakeholders to jointly develop efficient and competitive supply chain solutions for GCC

… And more


Our Mission

To be the global market leader in port development, operations and logistics services

20

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