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Investor Presentaiton

☐ Ponce - Transshipment Hub (cont'd) Increased Vessel Sizes Side effects of increased vessel sizes transiting through the Panama Canal Knock-on or cascade effect: This effect is basically the knock-on effect that the introduction of Ultra Large Container Ships (ULCS) elicits on the type of vessels deployed in other trades around the world. The deployment of ULCS on the North Europe/Far East trade is pushing current smaller classes into the Far East/South America trades and the Trans Pacific trades. Thereafter those trades are also affected and their vessels move on to other trades. Growing importance for transshipment: With the increased vessel size and the corresponding increased call sizes, these vessels put a lot of pressure on port infrastructure and handling equipment. Transshipment is used to serve the smaller spoke ports from the main hubs (hub & spoke) and the feeder vessels are used to fill the main liner vessels. ■ Shipping Consolidation The trend for the consolidation of Shipping lines leads to a higher concentration of container handling. The container shipping industry has seen a large number of mergers and alliances forming over the past decades. The recent economic downturn drove another consolidation wave as shipping lines were forced to reduce costs and to further optimize the deployment of ships and the services offered to their customers. Consolidation amongst shipping lines affects the services offered in their destinations. In an alliance, shipping lines reassess their services and the ports they serve, in an attempt to optimize the combined market coverage. Combined with the trend of increasing vessel sizes, this is likely to lead to concentration of transshipment activity, as alliances aim to optimize utilization to/from the transshipment hub ports. Snapshot of Regional Transshipment Trade "Deep Sea Trade Small Island Service Regional Transshipment Continental Service ■1 The Opportunity Increasing vessel sizes and the continued consolidation of shipping will lead to a greater use of transshipment in the Caribbean basin. The Opportunity: Review the changes in transshipment trends as a result of larger vessel transits and increased capacity control by ocean carriers Further review Ponce's strength in its ability to attract Deep Sea Liner Trade as Primary Transshipment Hub as compared to its neighboring ports Come to a long-term agreement with the shipping lines, or even better, have the shipping lines co-invest in the facility. As such, a level of guarantee is created on future volumes. Embrace technology to accommodate hub and spoke operations that accommodate both Main liner and Feeder operations. SEABURY MARITIME Source: Caribbean Development Bank - 2018 Transforming the Caribbean Port Services Industry towards the efficiency frontier 36
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