Speech by Michael Behrendt

Ladies and gentlemen,

In recent years, Hapag-Lloyd has invariably grown faster than the market on average. We have continuously expanded our fleet – as Dr. Frenzel mentioned – as well as our market position and achieved record results in the last two years. We owe this success to our ever increasing productivity and thus profitability. With our profit margins, we top the world in our sector, while in terms of ship capacity we occupy a good central position.

We have so far grown only organically, without acquisitions. There are limits to this growth, however. The planned acquisition of CP Ships now gives us the opportunity to expand our market position significantly and establish ourselves among the Top 5 container shipping carriers worldwide.

We have always emphasized that size alone is not the key factor. With an acquisition, we are concerned primarily to achieve the required growth without reducing our profitability. The acquisition of CP Ships fits in perfectly with these objectives. By acquiring CP Ships, we can play an active part in shaping the ongoing process of consolidation in our sector.
 
We are active in a market for which all the research institutes forecast continued long-term growth. Transport volume is expected to surge by 20 million containers or 25 percent to over 100 million TEU by 2008. This forecast, I am sure you will agree, shows how dynamic the growth process is in container shipping. Owing to the increase in tonnage deployed, a slight decline in rates is expected in 2006, despite a further rise in volume. In any case, we anticipate a possible dip. So far, volume growth forecasts have always been too conservative. Last year, they had to be revised upwards twice.

We expect that there will be a return to the currently high rate level in 2007 and 2008, also as further tonnage will be needed because, for instance, many ports are no longer able to handle the dramatic rise in transhipment volume and the resulting tailbacks bind further capacity.

Ladies and gentlemen, the merger of our companies is what may be described as a perfect "strategic fit". While a number of competitors have suffered losses, Hapag-Lloyd and CP Ships have put in a respectable performance over the entire shipping cycle. Both companies have an excellent reputation in the market and complement one another optimally in terms of liner services and customer structure.

Although at CP Ships the focus of shipping activities is on the North Atlantic, different routes are served, so there is little in the way of overlapping. Furthermore, the company is represented on selected and attractive North South routes, such as to Latin America, Australasia and the Middle East. Our liner networks supplement one another excellently, so that we can further expand our position in various trades.

The fleets also complement one another very satisfactorily. CP Ships has 82 vessels capable of carrying approximately 195,300 containers and Hapag-Lloyd 57 units with 215,500 container capacity. While CP Ships has mainly vessels with a capacity up to 4,000 containers – because of the trades served – Hapag-Lloyd focuses on mega ships with up to 8,750 container capacity. Both companies own a high share of their respective fleets. This is a cost advantage that should not be underestimated in view of the currently high charter rates. The joint fleet would comprise 139 ships with a total capacity of over 400,000 TEU. Both fleets, Hapag-Lloyd and CP Ships, have a further 17 vessels on order.

Last year, CP Ships achieved a transport volume of over 2.3 million TEU and sales of €3 billion, with EBITDA at about €200 million, while Hapag-Lloyd carried 2.4 million TEU and achieved sales of €2.7 billion, with EBITDA at €388 million. This shows that CP Ships is a very successful company, but still has considerable potential.

With the merger of Hapag-Lloyd and CP Ships, we have considerable optimization potential for achieving significant increases in efficiency and productivity.

The management of Hapag-Lloyd is convinced that after complete integration it will be able to achieve synergies of €180 million, as we have a first-rate management, which was responsible for our high productivity and profitability in the past and is thus also a guarantee for the future, and the necessary management tools, including our globally standard IT systems, which are leading in our sector, and our decentralized organization.

Ladies and gentlemen, after the successful integration of CP Ships, we will continue to achieve our accustomed high profitability and even improve on it.

- The spoken word applies -
TUI information regarding planned acquisition of CP Ships.