BREAKING THE ICE

Prospects of the Transarctic Route

Akureyri, Iceland March 28th

Industry perspective

Guðmundur NikulássonExecutive Vice President

• The Iceland Steamship Company Ltd. was founded in 1914 and was the first Icelandic owned steamship line

• Founding shareholders were 14,000 or over 15% of the nation’s population at that time • Emskip began scheduled

sailings in 1915 when the vessel Gullfoss entered service

• Eimskip has since then remained the prime maritime transportation company in Iceland

The first Icelandic Steamship Line

our MissionTo run a total transport network as cost-effectively as

possible for customers and the company

our Vision To consolidate our position as a transport market leader offering total services in the North

Atlantic

To be the leading short sea supplier in the Baltic states and Russia

To be a key international player in temperature-controlled cargo globally

our StrategyEimskip is a unique company operating according to three carefully defined markets strategies.

The company has a strong market share in the North-Atlantic transportation market and aims to use that foundation to build further growth and diversification into other areas of transport services, mainly the global temperature controlled cargo market and the short sea market in the Baltic states and Russia.

Our activities last three yearsJan 2007

Eimskip acquires 100% equity stake in Daalimpex

Business Snapshot

Approximately 8,500 employees163 operational bases in 21 countries40-50 vessels30.000 teus – container unitsAround 100 coldstores1,350 trucks and trailers

Empty container

Plant/ware-house

Domestic transport to

portExport port

Internationaltransport Import port

Domestic transport from port

Plant/ware-house

Empty container

Complete transport services

Worldwide service network

Coldstore facilities

Eimskip Activities in North-Atlantic

• The region is comprised of:– Eimskip Iceland– Faroe Ship– Eimskip-CTG / Euro Container Line

• Main emphasis:– Eimskip North-Atlantic offers total transportation

services to its customers with specialized focus on this market area

– Eimskip aims to be the leader in terminal operation warehousing and distribution services in Iceland and Faroe Islands

N-Atlantic locations

N-Atlantic sailing network

Iceland as center point• Eimskip has been using Iceland as a center point for its

North Atlantic sailing system– Hub to connect US/Canada services with European services– Various connection possibilities

• Between container vessels• Seafood to/from North Norway via Iceland to US/Canada• US/Canada via Iceland to/from Baltic/Russia/Scandinavia and

continental Europe

– Infrastructure has been developed for such transshipment services

• TA cargo is 4-5% of total volume via Iceland

Biggest terminal operator in Iceland

Container cranes

• Eimskip has two container cranes – Jarlinn and Jakinn in Reykjavik

• Combined liftings approx. 100,000 containers per year

• Eimskip is builing up a new terminal with one container crane in Reydarfjördur to service the east cost of Iceland as well as stevedoring services for Alcoa

• Vessel cranes are used in discharging in other portsContainer transfers

• 750,000 container transfers per year

• 1,200,000 TEUs/2.000.000 tonnes

• 370.000 container transfers in Sundahöfn

Sundahöfn terminal is the sixth largest Nordic port, with an annual container throughput of 160,000 TEUs – state of the art IT system from COSMOS in Antwerp

Sundahöfn terminal Reykjavik

New Trans-Arctic route• World leading carriers

– Have made huge investments in container terminals worldwide

• thinking long term• will continue to be World leading carriers

– Fleet of larger container vessels• are not ice-classified• 25-30 years lifetime

– These facts will most likely affect the interest for new Trans Arctic route

• time perspective ?• maximum size of vessels ?• Shorter transhipment time ?• Cost effective solutions !

Summary• With this new arctic sailing route Eimskips sees

various possibilities– Eimskip strength is its sailing network which is the best one

in the North Atlantic• Eimskip has over 90 years experience to operate transportation

vessels in North Atlantic• Eimskip sees more opportunities in US and Canada instead of

main ports in Europe– Smaller terminals in US/Canada– Deep sea carriers have done big investments in its container vessel

fleet that is non ice class and terminal operation in Europe» In the main stream of the cargo traffic Iceland will not be

competitive as transshipment hub for containers in Europe» Sailing time from Iceland to main Europian ports only 2-3 days» Container terminal operation can though be competitive

• Also opportunities in specilized traffic and project cargo

Summary• Eimskip is ready to participate in developing new

sailing routes and services for the transportation industry– operating vessels on certain routes– terminal operation in Iceland

• Would transhipment port in Iceland be competitive ?– Skilled labour and good service– Closeness to TA shipping routes– Close to oil shipping routes– Close to international airports– Good natural port conditions– Privatized ports– Access to fresh water and electricity– Good conditions to ensure port security

Summary• Transhipment-Hub in Iceland:

– Eimskip has very long experience in terminal operation in the N-Atlantic region

• Unit cost for terminal handling service in Iceland can be competitive

– New transportation network has to result in lower cost for the carriers compared to existing sailing routes

• Cost leadership is the key issue !• Small terminal = Big terminal

Summary• Transhipment-Hub in Iceland

– Eimskip professional approach to all new projects:• Powerful management & high skilled people• Stable labour environment• Contracts with world leading container handling

equipment manufacturer• Resonable price of electricity • Global Contract with Cosmos for IT solutions

– We are in the buisness to serve the industry• always looking for new opportunities !