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January 6 2020

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50 The Journal of Commerce | Januar y 6 2020 Maritime | Executive Commentary 2020 ANNUAL REVIEW & OUTLOOK APM Terminals North America Wim Lagaay President & CEO Terminal gates are one of the most import - ant customer touchpoints we operate and are subject to all kinds of delays and issues, as well as affecting the trucker experience and their profitability. An appointment system is neces - sary at high-volume terminals. We're implementing that in our Elizabeth, New Jersey, terminal, and we already have an appointment system in Los Angeles at Pier 400. When it comes to truck appointments, we use the comparison to airports. You wouldn't show up at the airport to get on a plane without a reservation, and the same holds true for truck appointments at larger terminals. Every terminal has their individ - ual challenges in the yard — whether it be safety, yard size, type of container handling equipment used, traffic flows, trucker navigation ease, sig- nage, etc. Safety is the most important issue, especially with so many truck- ers driving inside terminals and all the working cranes. One of the container yard solu- tions we are excited about is currently being developed at Pier 400 now. Using semi-automated straddle carriers will completely change the challenges of trucks in the container yard. The truck will stay in a protected space in the container yard perimeter, and the straddle carrier will bring the container to the truck. North America has experienced the most growth in both average ship size and average call volume size of any world region. This has implica - tions for yard densities and landside surges, and generally makes operating container terminals more complex. To respond, we are focused on creating higher productivity and safer handling of the larger vessels through better use of data to plan ahead, work - ing with shipping lines to arrive and depart on schedule, and decoupling operations within the terminal — berth, yard, rail, and gate — so that each activity's run rate is not affected by the others. BBC Chartering Ulrich Ulrichs CEO The outlook for 2020 will come with two major variables, compared to 2019. One of the major hurdles will be the new International Maritime Organization (IMO) bunker regulations, which will affect all who participate in the ship - ping market. The new IMO bunker regulation comes into effect on Jan. 1, requiring ocean carriers without scrubbers to switch from high-sulfur fuels that they have burned in the past to lower-sulfur fuels to reduce the global environmental impact of shipping. This comes with major implications to the carrier due to the increase in fuel costs and concerns over global supply of compliant fuel. With a worldwide fleet of over 150 vessels and over 1,800 bunker calls worldwide per year, the global impact on a carrier like BBC will be significant from a planning and cost perspective. Another change the market will experience is an increase in carrier consolidation. Although we have seen this trend over the past few years, we believe it will only accelerate. There are many contributing factors, but the main reasons for this will be challeng - ing market conditions, IMO 2020, and others trying to expand their global market share. With the increase in mergers and some forming larger shipping alli- ances, we believe this will bring more efficiency and a better overall return for the shipping market. This consol- idation will benefit both the carriers as well as shippers, as the market will be able to offer an improved service and have a more transparent market view globally. Even though 2020 will bring greater challenges than 2019, we believe we will see a stronger, more stable market as we progress through the year. AMA Capital Partners Peter S. Shaerf Managing Director Just when you thought it was safe to get back on the growth wagon, along came tariffs! The container market has been so adversely affected by the US–China tariff wars, that it is in fact easy to pre - dict 2020 as a year of eventual repair and a slow climb back to normalcy. Until then, however, we will continue to be faced with a reduction in trade and the global impact of oversupply. Trans-Pacific trade, the bellwether of the container industry, is headed for its first annual decline in ten years. While the first three quarters were relatively robust — with a large amount of front-loading in anticipation of the tariffs — the last quarter has shown a significant decline, with volumes expected to be off around 5 percent for November and December once year-end figures are calculated. With the IMO 2020 legislation about to take effect, we would expect to see annual fuel bills for the carriers rise signifi - cantly, especially for the lines that do not fit scrubbers to their ships. It takes time to install the scrubbers, and while Med - iterranean Shipping Co. (250 scrubbers either fitted or on order), Evergreen (150) and Maersk (140) lead the pack, there are many other lines that are well behind the proverbial "eight ball' in this regard. The current orderbook for new ships has slowed to around 10 percent of capacity, but this still represents just under 4 percent annual growth at a time when demand is somewhat stagnant and might even be negative for 2019 when all is said and done. We expect liner profitability in 2020 to be severely challenged at least for the first half of the year. The sun will come out, but it may not be tomorrow! "The sun will come out, but it may not be tomorrow!" "Consolidation will benefit both the carriers as well as shippers, as the market will be able to offer an improved service and have a more transparent market view globally." ▶ Ulrich Ulrichs ◀ "You wouldn't show up at the airport to get on a plane without a reservation, and the same holds true for truck appointments at larger terminals." Wim Lagaay

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