Morgan Stanley Infrastructure Partners

For exclusive use with 5th Annual Canada Maritime Conference and may not be used with the general public

Morgan Stanley Infrastructure Partners

Worldwide Port Update

15 September 2010

IU10-03161I-T09/10


Table of Contents


2

Section 1 2010 Performance & Developments

Section 2 Volumes & Rates

Section 3 Montreal Trade Routes

Section 4 Panama Canal Expansion

Section 5 2010 Port Industry Banking Transactions



3

Section 1

2010 Performance & Developments


2010 Performance at Various Ports


2010 PERFORMANCE & DEVELOPMENTS

4

• Americas Overview

–Panama Canal traffic and tonnage declined during the quarter ending June 30. Total canal transits declined 2.8% from the same quarter last year. Transits of supers – larger ships that require greater time and navigation skills to transit the canal – decreased 3.1%

–Container volume at the Port of Vancouver, B.C. increased 12% in the first six months of 2010 as demand for consumer goods rebounds from last year’s recession

• Europe Overview

–Port of Rotterdam saw an 8% increase in throughput of roll on/off vessels in the first six months of 2010 compared with the same period last year; 14.8% year-on-year recovery in cargo throughput for first-half 2010

–Port of Antwerp reported container volumes were up nearly 20% for the first six months of 2010, to 4.2 million TEUs

Source Journal of Commerce


2010 Performance at Various Ports



5

• Asia Overview

– Container traffic at major ports in India for the April-July period increased 14% over the same period last year. Indian Ports Association estimates total volume for the first four months of fiscal 2010-11 at 2.5 million TEUs

– Container traffic through Chinese ports hit an all-time monthly high of 12.44 million TEUs in May 2010, up 21.9% from May 2009, as the nation’s foreign trade surged by nearly 50% from a year ago

– Hong-Kong based Hutchinson Port Holdings, EBIT rose 35% as container throughput increased 17% to 35.3 million TEUs in the first-half 2010

– International Container Terminal Services, Inc. net income increases 83% for the first six months of 2010. The Company handled a consolidated volume of 2.0 million TEUs in the first-half 2010, 26% higher than the same period in 2009

Source Journal of Commerce; Portworld; Capital IQ


Current Developments in 2010



6

Carriers were exposed when rates collapsed last year, losing billions in the process, and shippers were similarly exposed this year when rates turned upward

• Emergence the Container Freight Swap Agreement (CFSA)

– Based on the Shanghai Shipping Exchange index developed by ship broker Clarksons and marketed by Morgan Stanley

– Cash-settled agreement between two parties which allows hedging against price movements in Asian containerized export markets

– Lock-in future costs (price in US$ per container for a given number of containers on an agreed route during a specified period) and crystallize future margins up to 23 months ahead

• During August 2010, Compañía Sud Americana de Vapores (CSAV), the largest Chilean shipping company in Latin America and the world’s eighth-largest container fleet, became the first shipper to make a container-derivative trade with Morgan Stanley

Source Economist; Journal of Commerce; ifw-net.com; Freight Investor Services website


CSX National Gateway Corridor Project



CSX plans a major set of construction projects across the Midwest and along the Atlantic seaboard allowing for stacking boxes two high across its entire system

– Digging out major remaining obstacles

– Raising numerous line clearances across four states

– 185-acre Ohio hub under construction expected to save up to two days on cross-country moves from West Coast ports

– Cost for the National Gateway corridor estimated at $850 million, including $175 million for its 185-acre hub Ohio hub

Florida

NorthernCalifornia

SouthernCalifornia

Cascadia

Gulf Coast

Southeast

Northeast

Midwest

7

NG Opportunities

Existing Flows

National Gateway Projects

NW Ohio Intermodal Transfer Hub


Montreal



8

Section 2

Volumes & Rates


Atlantic Coast Volumes YTD 2010 vs. YTD 2009


VOLUMES & RATES

9Notes1. GPA and VPA are through July as data was available2. PA NY/NJ is loaded only

27.6

12.7

18.7

14.5

34.6

9.7

22.8

11.1

14.8

11.0

23.4

6.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

GPA VPA SCSPA PANYNJ Halifax Montreal

Imports Exports

(1) (1) (2)

Jan–Jun 2010 vs. Jan–Jun 2009 (Measured in TEUs)

%

Source Port Websites; Press Releases; Norbridge research

YTD North American East Coast Port Volumes Increase/Decrease


Pacific Coast Volumes YTD 2010 vs. YTD 2009


VOLUMES & RATES

10Notes1. POLB, Oakland, and Tacoma are loads only2. Seattle is international only

14.4

23.5

16.4

64.2

(3.5)

17.019.9

16.2

0.4

56.8

(29.4)

12.0

(40.0)

(20.0)

0.0

20.0

40.0

60.0

80.0

POLA POLB Oakland Seattle Tacoma Vancouver

Imports Exports

(1) (1) (2) (1)

Jan–July 2010 vs. Jan–July 2009 (Measured in TEUs)

%

Source Port Websites; Press Releases; Norbridge research

YTD North American West Coast Port Volumes Increase/Decrease


Drewry Container Rate Benchmark August 2009 to August 2010


VOLUMES & RATES

11

• The rate benchmark is based on Drewry Shipping Consultants' research and derived from NVOCCs shipping Hong Kong to Los Angeles. The rate is in dollars and based on a full 40-foot containerload, excluding terminal-handling charges in Hong Kong

• While the 16 Aug 2010 average spot rate dipped 3.1% sequentially, it was up 110.5% year-over-year and up 113.2% from the beginning of the year. The 2 Aug 2010 average spot rate was a record high, surpassing all previous rates since the index began at year-end 2005


$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

8/24 9/

79/

2110

/510

/19

11/2

11/1

611

/30

12/1

412

/28

1/11

1/25 2/

82/

22 3/8

3/22 4/

54/

19 5/3

5/17

5/31

6/14

6/28

7/12

7/26 8/

98/

23

Rate Per 40-foot Box

-100%

-50%

0%

50%

100%

150%

200%

250%

8/24/09 9/21/09 10/19/09 11/16/09 12/14/09 1/11/10 2/8/10 3/8/10 4/5/10 5/3/10 5/31/10 6/28/10 7/26/10

Week-to-week percent change Year-over-year percent change

Rate Percentage Change


Rate Increases at Various Port RatesEffective October 2010


VOLUMES & RATES

12

• Orient Overseas Container Line Limited (OOCL) to raise rates on services in both directions on the trans-Atlantic and on services from the Middle East, South and Southeast Asia to Australia

–Between Europe and the U.S., Canada and Mexico, rates will be $320 per TEU and $400 per FEU

–Increase rates by $300 per TEU shipped from Southeast Asia (Singapore, Malaysia, Thailand, Indonesia, Vietnam, Cambodia, Philippines, Indian Subcontinent and Middle East) to Australia

• Port of NY/NJ to raise some handling fees by 2 percent and impose new charges for early delivery of export containers and for improperly documented hazardous-materials exports at its five marine terminals

–Additional charge of $125 per load for export cargo delivered to terminals ahead of schedule

–Documentation fee of $50 per cargo unit for additional services required for hazmat exports that arrive with improper documentation



Rate Increases at Various Port RatesEffective October 2010


VOLUMES & RATES

13

• Nippon Yusen Kaisha (NYK) to increase freight rates on containers moving in both directions on its trans-Atlantic services

– Applies to all cargo under NYK Line independent tariffs and service contracts; $150 per TEU and $300 per FEU

• Maersk Line to increase rates on all container cargoes shipped across the North Atlantic

– Extra $250 for a 20-foot dry container, $350 more for a 40-foot box and an additional $500 for a 40-foot reefer container for cargo moving in both directions between the U.S. and northern Europe

– Rates will rise by $250 per TEU and $350 per FEU and reefer boxes moving to and from Canada and North Europe

– Cargo moving from the U.S. and Canada to the Mediterranean will rise by $200 per container

– Cargo moving westbound from the Mediterranean to the U.S. and Canada will rise by $200 per container




14

Section 3

Montreal Trade Routes


Montreal Gateway’s Trade Lanes


MONTREAL TRADE ROUTES

15

Montreal Container Traffic by Trade Region: 2004 and 2009

U.K. ContinentalEurope75.8%

Mediterranean19.2%

Asia & Middle East1.0%

Africa / Oceania1.0%

Canada3.0%

Source POM Reported Data. Norbridge Analysis

U.K. ContinentalEurope51%

Mediterranean19%

Asia &Middle East16%

Latin America8%

Africa / Oceania3%

Canada3%

Total TEUs: 1.2M Total TEUs: 1.2M

• North Europe and the Mediterranean are Montreal Gateway’s largest trade lanes

North Europe and the Mediterranean


2004 2008 2009




16

PANYNJ35%

Montreal33%

Norfolk16%

Halifax4%

Other US Ports (11)11%

Source POM and Halifax Reported Data; PIERS; Norbridge Analysis

• Montreal Gateway maintained its share on the Northern Europe-North Atlantic trade between 2004 and 2008, but lost share during the global economic downturn in 2009

PANYNJ35%

Montreal34%

Norfolk17%

Halifax3%


PANYNJ36%

Montreal30%

Norfolk19%

Halifax4%


Total TEUs: 2.8MM Total TEUs: 2.1MMTotal TEUs: 2.7MM

North Europe-North AtlanticContainer Traffic


2004 2008 2009




17

PANYNJ48%

Montreal20%

Norfolk18%

Halifax7%


Source POM and Halifax Reported Data; PIERS; Norbridge Analysis

• Montreal Gateway gained share on the Mediterranean-North Atlantic trade between 2004 and 2008–2009

PANYNJ45%

Montreal26%

Norfolk17%

Halifax6%


PANYNJ48%

Montreal26%

Norfolk16%

Halifax6%


Total TEUs: 1.2MM Total TEUs: 0.9MMTotal TEUs: 1.1MM

Mediterranean-North Atlantic Container Traffic


China - North Atlantic’s Largest Trading Partner



18Notes1. Excludes Halifax as data not provided

North Atlantic Container Traffic by Trade Region: 2004 and 2009

N. Europe30%

China18%

Mediterranean13%

S. America10%

Caribbean/C. America7%

All Other Regions23%

Source POM Reported Data; PIERS; Norbridge Analysis

China26%

Northern Europe23%

Mediterranean10%

Caribbean/C. America8%

S. America8%

Other Regions26%

Total TEUs: 8.8M Total TEUs: 8.9M



19

Section 4

Panama Canal Expansion


Panama Canal Expansion


PANAMA CANAL EXPANSION

20

• More than doubling the annual capacity of the Panama Canal primarily through a doubling/tripling of the maximum vessel size

• The expansion project is currently ahead of its Q4-2014 schedule

• Adding two sets of locks to handle vessels of up to 12,500 TEUs and with drafts of up to 50’

• High-value time-sensitive goods expected to continue to West Coast ports

• Navigating cargo through the Panama Canal and up the East Coast will take more time

• Non-time sensitive commodities and goods will likely choose the retrofitted Panama route

Source Norbridge Analysis


Big Ship Realities: 10,000 TEU Ship


PANAMA CANAL EXPANSION

21

• U.S. Atlantic Coast ports anticipate significant diversion of Asia-North American cargo in very large (8,000–10,000 TEU vessels) from U.S. Pacific Coast ports to U.S. Atlantic Coast ports in a 2015–2017 timeframe.

• Assumption is 5,000–7,000 TEU ships will cascade into other Atlantic Basin trades

• Big ships require high utilization rates in order to deliver their scale economy advantages

• Generate 900,000-950,000 TEUs of round-trip capacity per year on a weekly service

• Five weekly strings generate an annual capacity equivalent to the entire 2009 throughput for the Port of New York

– New York’s total 2009 traffic was handled by 20+ container lines operating on 10+ trade lanes

• Requires 2+ days to discharge and reload 50% of its capacity assuming 24x 7 operations, four cranes and 30 moves per hour

• Requires a minimum 3,000–3,500 ground slots

Source Norbridge Analysis



22

Section 5

2010 Port Industry Banking Transactions


2010 Banking Transactions in the Port Industry


2010 PORT INDUSTRY BANKING TRANSACTIONS

23

M&A Debt Offerings Bankruptcies and RestructuringsEquity OfferingsPrivate Placements

Source Capital IQ; Press Releases


DP World Portfolio–Operating Terminals and Developments



24

Committed Future Portfolio

Terminals New Development

Source Dubai World website


2010 M&A Transactions



25


(ReportedAcquirer / Target Target Currency mm) Transaction

Date Target Description Location Size Status08/18/10 Intl. Ports of South America and Logistics, S.A.

/ Tecplata, S.A.

Operators of a port termina in the Port of La Plata

Buenos Aires, Argentina ND Closed

07/29/10 Salamanca Capital Investments / Marina Port Vell, S.A.

Port operator Catalonia, Spain € 30.0 Closed

07/05/10 SK Energy International /Euro Tank Terminal BV

Europoort terminal Rotterdam, Netherlands ND Closed

06/28/10 Harbour Center Port Terminal, Inc. / Manila North Harbour Port, Inc.

Engaged in developing, managing, operating and maintaining the north harbor port

Manila, Philippines PHP 350.0 Closed

06/25/10 The Port Authority of New York & New Jersey / Global Terminal

98 acre container terminal Jersey City and Bayonne, NJ ND Closed

06/02/10 Aosta / Terminal Puerto Rosario S.A.

Operator of a multipurpose port Santa Fe, Argentina ND Closed

06/01/10 K-AATerminals Pty Ltd. / Australian Amalgamated Terminals Pty. Ltd.

Operator of terminals with facilities for importing and exporting motor vehicles and general cargo

Queensland, Australia ND Closed

05/28/10 Shanghai International Port Group Co. Ltd. (SHSE:600018) / APM Terminals Zeebrugge N.V.

Provides container handling services for the shipping industry

Belgium € 108.6 Closed

05/28/10 Antwerp Port Authority / Beverdonk Container Terminal

Open access terminal aong the bank of the Albert canal

Belgium ND Closed

04/22/10 Noble Group Ltd. (SGX:N21) / Terminales Portuarias del Pacífico S.A.P.I. de C.V.

Operator of a public terminal that specializes in bulk minerals and steel by-products

Mexico State, Mexico ND Closed

04/13/10 Hans Lehmann KG / Hamburger Hafen und Logistik AG, Premises of the Former Container Terminal

Port logistic terminal Schleswig-Holstein, Germany ND Closed

03/31/10 PT Cahaya Pratama Lestari / PT Mitratama Perkasa

Owner and operator of a barge port facility used to transport coal mined from the Bengalon mine

Indonesia $120.0 Closed


2010 M&A Transactions



26


(ReportedAcquirer / Target Target Currency mm) Enterprise Value

Date Target Description Location Size03/27/10 Global Liman Isletmeleri A.S. /

Ortadogu Antalya Liman IsletmeleriOwner and operator of the Antalya Seaport

Turkey $49.3 Closed

03/08/10 Kansas City Southern (NYSE:KSU) / Puerta México

An inland port that provides terminal, transportation and stevedoring services in North and South America

Campeche, Mexico ND Closed

02/12/10 FINICAPITAL - Investimentos e Gestão SA, GLOBALPACTUM, Gestão de Activos, SA / Sadoport SA

Multi-purpose marine terminal Setúbal, Portugal ND Closed

10/07/09 Brookfield Asset Management Inc. (TSX:BAM.A), Brookfield Infrastructure Partners L.P. (NYSE:BIP) /

Ports and logistics service company Cleveland, United Kingdom € 315.0 Closed

08/18/10 APM Terminals Management B.V. / Brasil Terminal Portuário S/A

Port terminal developer São Paulo, Brazil ND Announced

08/06/10 J.P. Morgan Asset Management / Dragados Servicios Portuarios y Logisticos, SL,

Comprised of ports in Bilbao, Málaga, Las Palmas and Port of Valencia; port and logistical services

Spain € 720.0 Announced

08/03/10 Martin Midstream Partners LP (NasdaqGS:MMLP) / Martin Resource Management Corp., Two

Two marine terminals serving the oil and gas industry

United States $11.7 Announced

08/02/10 Chu Kong Shipping Development Co. Ltd. (SEHK:560) / Civet (Zhuhai Bonded Area) Logistics

Owner and operator of the Civet Port Guangdong Province, China ￥77.7 Announced

07/08/10 Terminal Link (Miami) LLC / Nord France Terminal International O.U.

Container terminal operator Nord-Pas-de-Calais, France ND Announced

03/09/10 Celco S.A. / Socep SA (BVP:SOCP)

Port operator Romania RON 33.7 Announced

07/07/10 Maher Terminal, LLC / Melford International Terminal Inc.

Container terminal, currently under development

Nova Scotia, Canada ND Agreement Signed

05/18/10 Shenzhen Chiwan Wharf Holding / Zhonghai Port Development

Container operator of Laizhou Port Shandong Province, China Agreement Signed

N/A Acquirer [OPEN] / Port of Brisbane

Australia’s most strategically situated Ports

Queensland, Australia ND N/A


2010 Private Placement Transactions



27


(ReportedTarget Issue (mm) Currency mm)

Date Issuer Investor(s) Location Price Shares ProceedsPublic Companies8/17/2010 Open Joint- stock company Port Perm Permskaya obl., Russia RUR 1.00 35.0 RUR 35.0

8/13/2010 Jiangsu Lianyungang Port Co., Ltd. (SHSE:601008)

Lianyungang Port Group China ￥4.26 130.0 ￥554.0

4/29/2010 Cosco Pacific Ltd. (SEHK:1199) China COSCO Holdings Company Limited (SEHK:1919)

Hong Kong HKD 10.40 449.0 HKD 4,669.6

4/23/2010 Rizhao Port (Group) Co., Ltd. (SHSE:600017)

Shandong Province, China ￥5.91 260.0 ￥1,536.6

01/12/10 Tianjin Port Development Holdings Ltd. (SEHK:3382)

Hong Kong HKD 2.50 986.5 HKD 2,466.3

Private Companies6/29/2010 Jiangyin Sunan International Container

Terminal Co., Ltd. PYI Corporation Ltd. (SEHK:498), Shanghai International Port Group Co. Ltd. (SHSE:600018)

Jiangsu Province, China NA NA $44.0

6/9/2010 Port Adhoc Aurel NextStage Transmission 2007, FIP, Esfin Gestion, Naxicap Partners, NextStage Références 2008, FIP, NextStage SAS, Phillimore Investissement s.a.s.

Brittany, France NA NA € 3.6

04/28/10 T-Grão Cargo Terminal de Graneis S/A Darby Brazil Mezzanine Fund, L.P., Darby Stratus Administracao Investimentos Ltda

Sao Paulo, Brazil NA NA $19.9

3/1/2010 Karaikal Port Private Limited IDFC Project Equity Company Limited, India Infrastructure Fund

Tamil Nadu, India NA NA $32.6


2010 Debt Offering Transactions



28


Filing Offering OfferingDate Date Issuer Amt. (mm)08/23/10 08/26/10 Transnet Ltd. Johannesburg, South Africa ZAR 96.8

08/16/10 08/19/10 Transnet Ltd. Johannesburg, South Africa ZAR 748.8

06/24/10 07/01/10 Shanghai International Port Group Co. Ltd. (SHSE:600018)

Shanghai Province, China ￥2,000.0





04/29/10 International Container Terminal Services Inc. (PSE:ICT)

Manila, Philippines $205.3

04/23/10 06/30/10 Port Autonome d'Abidjan Abidjan, Ivory Coast XOF 30,000.0





03/16/10 Rizhao Port (Group) Co., Ltd. (SHSE:600017) Shandong Province, China ￥1,300.0

03/10/10 03/17/10 International Container Terminal Services Inc. (PSE:ICT)

Manila, Philippines $250.0

03/08/10 Santos-Brasil Participacoes S.A. (BOVESPA:STBP11)

Sao Paulo, Brazil

01/21/10 01/25/10 Jiangsu Lianyungang Port Co., Ltd. (SHSE:601008) Jiangsu Province, China ￥650.0


Other 2010 Transactions



29


TargetDate Company Location SummaryBankruptcies / Restructurings08/29/10 Dubai World Corporation Dubai Seeking to renegotiate $14.4 billion of loans with its creditors and is prepared

to sell assets including ports firm DP World

06/15/10 Coastline Terminals of Conn. Parent, Inc. Connecticut, USA Filed Chapter 11 in the US Bankruptcy Court for the District of CT

03/30/10 Dunhill Terminals LP Alabama, USA Filed Chapter 11 in the US Bankruptcy Court in Mobile, AL

11/20/09 Babcock & Brown Infrastructure (ASX: BBI) Toronto, CanadaBermuda

Brookfield Asset Management Inc. and Brookfield Infrastructure Partners L.P. complete the recapitalization of B&B Infra, changing its name to Prime Infrastructure

08/24/10 CMA CGM Group Negotiating with a Lebanese investor group in an effort to restructure its $5.3 billion debt taken on to increase its fleet

Filing Pricing Offering Issue (mm) (mm)Date Date Issuer Type Price Shares ProceedsEquity Offerings07/13/10 Pending Gemadept Corporation (HOSE:GMD) Ho Chi Minh City,

VietnamFollow-on 51.8

06/05/10 Pending Ningbo Port Shipping & Cargo Transportation Agency Co.,Ltd.

China IPO 2,500.0 ￥13,250.0

04/15/10 07/04/10 TangShan Port Group CO.,LTD. (SHSE:601000)

Hebei Province, China

IPO ￥8.20 200.0 ￥1,640.0

12/21/09 Pending Gujarat Pipavav Port Limited Mumbai, India IPO INR 42.00INR 48.00

115.9 INR 5563.6


DP World - Developments



30

L:\MSIP\Asset Management\Presentations\Journal of Commerce Presentation\Watt Presentation v1.ppt\A2XP\01 SEP 2010\7:35 PM\30

• Dubai World seeking to renegotiate $14.4 billion of loans and may sell ports firm DP World in a bid to raise as much as $19.4 billion to repay creditors; has also considered selling off assets over a period of eight years of pay off creditors

• DP world handled 23.7 million TEUs across its portfolio of 50 operating terminals in the first-half 2010, an increase of 16% against the same period last year. The Company also announced EBITDA was up 8% to $580 million for the six month ended June 30, 2010

• Dubai World postponed a plan to list some of its shares on the London Stock Exchange. DP World turned to the option of listing shares in London after talks to sell a stake to regional private-equity company Abraaj Capital collapsed

• In February 2010, DP World announced it was considering floating parts of its Australian assets in an initial public offering valued at $884 million. DP World planned on calling the newly listed entity DP Australia.

Source Dubai World website; Portworld; Reuters, Journal of Commerce; Capital IQ


Disclosures


31

The information in this presentation (the “Presentation”) is highly confidential and is being provided solely for informational and educational purposes. It is to be used exclusively at the 5th Annual Canada Maritime Conference on September 15, 2010. This Presentation may not be reproduced or distributed to any other persons. The information herein does not contend to address the financial objectives, situation or specific needs of any individual recipient. In addition, this Presentation is not an offer, or a solicitation of an offer, to buy or sell any security or instrument or to participate in any trading strategy.

Any views expressed are those of the presenter as of the date of the presentation and are subject to change at any time due to changes in market or economic conditions. The views expressed does not reflect the opinions of all portfolio managers at MSIM or the views of the firm as a whole, and may not be reflected in the strategies and products that the Firm offers.

Charts and graphs provided herein are for illustrative purposes only. Past performance is not indicative of future results.

Information regarding expected market returns and market outlook is based on the research, analysis, and opinions of the presenter. These conclusions are speculative in nature, may not come to pass, and are not intended to predict the future of any specific Morgan Stanley investment. No representation or warranty can be given with respect to the accuracy or completeness of the information.

All investments involve risks, including the possible loss of principal.

Morgan Stanley Infrastructure Partners

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