ASF SERCASF Shipping Economics Review Committee
c/o Japanese Shipowners’ Association
Kaiun-Building, 6-4 Hirakawa-cho 2-chome
Chiyoda-ku Tokyo Japan 102-8603
E-mail : int@jsanet.or.jp
Tel:+81-3-3264-7180 Fax:+81-3-5226-9166

30 November 2010, Okinawa

NOTE OF UNDERSTANDING
adoptedat the 23rd Interim Meeting of the Asian Shipowners’ Forum (ASF)
Shipping Economics Review Committee (SERC)

The 23rd Interim Meeting of the ASF SERC was held in Okinawa on 30 November
2010. The meeting was attended by 24 delegates from the ASF member associationsof ASEAN, China, Chinese Taipei, Japan and Korea. The attendance list is attached.
1. World Economy
The global economy has passed through its worst economic period, which featured anegative growth of the world's real GDP, coupled with a considerable decline in cargovolume in 2009. The current economy has recovered at a gradual pace, but there arestill downside risks, due to factors such as the sluggish housing market in the US andthe spectre of sovereign debt default in the Eurozone. Under these circumstances, wenoted that emerging Asian countries, such as China, India, Vietnam and so on, willcontinue to play key roles as the engine of global growth through a strong export
recovery and robust private demand.
2. Dry Bulk and Tanker Shipping
1) As for the dry bulk sector, the Capesize market has struggled until the summer of2010, partly due to iron ore price hikes and slower steel demand in China, but
afterwards, the market improved, despite turbulent swings, due to an increase in
shipments of lower priced iron ore to China. It was also noted that introduction of thequarterly pricing system for iron ore in 2010 would lead to further fluctuation of themarket. As for the prospect of the market, it was reported that the demand for dry bulk
could likely will grow over the next 5 to 10 years and that the supply side, which isfacing a glut of new vessel deliveries, may reach a more balanced level from 2013
onwards based on factors such as the postponement of new deliveries and thecancellation of new orders.
2) With regard to the tanker sector, the meeting noted that the seaborne cargo volumeof both crude oil and petroleum products remains stagnant, partly due to the sluggish-1PR1 NOU 23rd SERC (final).DOC

oil demand in developed countries.
However, there is the potential that the short-term market could improve on the basis ofvarious anticipated factors such as the recovery of the global economy, theaccelerated withdrawal of single-hull tankers, as well as an increase in long-haul tradeand off shore storage.
At the same time, it is possible that the market could continue to be sluggish for a few
years because the withdrawal and retrofitting of single-hull tankers and a steadyrecovery in oil demand mainly in non-OECD countries might not alleviate thesupply-demand gap, taking into account the resumption of the operation of tankers
previously used for floating storage and the prospect of huge new vessel deliveries.
3. Liner Shipping1) In connection with the container business worldwide, it was noted that the overall
container market has returned to a period of relative stability from a huge loss of morethan 15 billion US dollars in 2009, owing largely to an unexpected rapid recovery incargo movements, as well as more balanced supply and demand conditions.
2) Looking at the US Transpacific and the Intra-Asia trades, delegates noted the reportthat the projected capacity increase is likely to slightly exceed the forecast for demand
growth in 2011. While carrier response to supply and demand conditions in thesetrades in light of recent years’ experience remains to be seen, the meeting recognised
the importance of ongoing development and investment by the liner industry in order tomeet the growing needs of the global economy in these trades. In order to ensure ahealthy liner industry, it is a prudent practice for liner company senior management tobase decisions on a complete and rational assessment of relevant historical andcurrent trade data, rather than on emotion or insufficient data.
3) While the Intra-Asia trade volumes in 2009 contracted by 2 - 3% on a year-on-yearbasis, the market continues a steady recovery in volume for the first nine months of2010, showing growth of 11.3% compared to the same period in the previous year.
With the common view that the market continues to grow in light of increased tradeliberalisation in the ASEAN countries and transport infrastructure investment inemerging Asian countries, the accelerated entry of new additional services into thededicated market during 2010 could impact the supply and demand balance.
4) The US Trans-Pacific trade recorded double digit volume growth in the first eightmonths of this year in comparison with the same period in 2009, but the lower
consumer confidence in the US was expected to continue due to the depreciation ofasset values and current high unemployment rates. In addition, it was reported that thetrade, although not showing a significant increase, would see a steady cargo flow
throughout the year, which is against past trends, due to some changes in the patternof consumer spending in the US.

-2PR1 NOU 23rd SERC (final).DOC

4. Antitrust Immunity
With regard to the antitrust immunity system for ocean carrier agreements, reports
were made on the recent developments, including the US and Singapore, and themeeting expressed its full support for proposed extension of the current system inSingapore through the end of 2015. The delegates reaffirmed the ASF's long-standing
view that the antitrust immunity system is indispensable for the healthy development of
the international shipping industry as well as the whole international trading industry,and requested the national associations to keep in touch with their governments forbetter understanding of the necessity of the antitrust immunity. Furthermore, in order
to avoid repeat occurrences of the container space and equipment shortages that
happened earlier in 2010, the members recognised the necessity of various forms ofclose communication with shippers to facilitate mutual understanding and a better
estimation of future cargo flows.
5. International Financial Reporting Standards (IFRS)
A report was made on the proposed changes of accounting standards on leases underthe IFRS. The delegates shared their concern over the proposals which will create
loose definitions on leases. It would cause uncertainties on a treatment of time charter
contracts of vessels. It was therefore agreed to bring this issue back to eachassociation to consider necessary steps respectively including submissions to theInternational Accounting Standards Board (IASB) in order to make our stance clearthat practices of time charter contracts should not be accounted for as leases.
6. Others1) The meeting noted the EU advance cargo declaration regime (so-called EU 24 hourrules) will be implemented from 1 January 2011, which applies to all goods being
imported to and exported from the EU.
2) The delegates also exchanged their views on recent topics surrounding the shippingindustry, such as Rotterdam Rules.
***
The ASF Shipping Economics Review Committee (SERC) is a forum for senior
executives of Asian shipping lines to review macroeconomic trade information anddevelopments, as they relate to shipping and trade. The objective of the SERC is toimprove the quality of executive decision-making by the review of available
macroeconomic data and the sharing of perspectives on major trade and shipping
policy issues.
-------------------------------------------3PR1 NOU 23rd SERC (final).DOC

ASF SERCASF Shipping Economics Review Committee
c/o Japanese Shipowners' Association
Kaiun-Building, 6-4 Hirakawa-cho 2-chome
Chiyoda-ku Tokyo Japan 102-8603
Tel:+81-3-3264-7180 Fax:+81-3-5226-9166
E-mail :int@jsanet.or.jp

As of 30 November 2010
The 23rd Interim Meeting ofthe ASF Shipping Economics Review Committee (SERC)
in Okinawa on 30 November 2010

Attendance List
CHAIRMAN< Japanese Shipowners’ Association >Mr Yasumi Kudo

Executive Director, Japanese Shipowners’ Association(President, Nippon Yusen Kaisha)

VICE CHAIRMAN< Korea Shipowners’ Association >Mr Young Min Kim(President & CEO, Hanjin Shipping Co., Ltd.)MEMBERS< China Shipowners’ Association >Mr Zhang Guofa
Mr Li Zhen
Mr Zhang Shouguo
Mr Li Cunyin
Mr Mu Yunan(Vice President, China Shipping (Group) Company)(Assistant President, SINOTRANS & CSC Holdings Co., Ltd.)(Executive Vice Chairman & Secretary General,China Shipowners’ Association)(Deputy Secretary General, China Shipowners’ Association)(Secretary, General Sect. General Affairs Dept.
China Shipping Container Japan Co., Ltd.)< Federation of ASEAN Shipowners’ Association >< Indonesian National Shipowners’ Association >Mr Djoni Sutji
Mr Paulis A. Djohan(President Director, PT. Indonesia Bulk Carrier)(Managing Director, PT. Pelayaran Era Indoasia Fortune)< Malaysian Shipowners’ Association >Mr Zulkafli M Amin

(General Manager, MISC AGENCIES SDN BHD)

< Singapore Shipping Association >Mr Kenneth A Glenn(President, North Asia, APL Limited)< Thai Shipowners’ Association >Mr Teoh Tee Hien

(Executive Vice President (Business),Regional Container Lines Group)-1-PR2 23SERC Attendance List.doc

< Federation of ASEAN Shipowners’ Association >< Vietnam Shipowners’ Association >Mr Vu Huu Chinh
Mr Ngo Xuan Hong

(Chairman, Vietnam Ocean Shipping Joint Stock Company)(General Director(CEO),Transport and Chartering Joint Stock Corp.(Vietfracht))*As an observer of VSA*Mr Pham Dang Khoa (Deputy Manager, Sea-Transport Dept.,
Transport and Chartering Joint Stock Corp.(Vietfracht))< Japanese Shipowners’ Association >Mr Takatake Naraoka
Mr Toshiyuki Suzuki
Mr Junichiro Ikeda
Mr Shogo Terajima(President, NYK Container Line Ltd.)(Executive Officer, Kawasaki Kisen Kaisha, Ltd.)(Managing Executive Officer, Mitsui O.S.K. Lines, Ltd.)(Executive Secretary to the President, Corporate Planning Group,
Nippon Yusen Kabushiki Kaisha)< Korea Shipowners’ Association >Mr S D Lee(Senior Vice President, Head of Liner Unit,
Hyundai Merchant Marine Co., Ltd.)< National Association of Chinese Shipowners >Mr Wilson Yeh
Mr C K Ong
Mr Randy Chen
Mr J G Lin(Executive Vice President,Evergreen Shipping Agency (Japan) Corporation)(President, U-Ming Marine Transport Corp.)(Director, Wan Hai Lines Ltd.)(President, Yang Ming (Japan) Co., LTD)ASF SECRETARIATMr Yuichi Sonoda(Secretary General, Asian Shipowners’ Forum)

LEGAL COUNSELMr Jeffrey F Lawrence (Cozen O’Connor)

SECRETARIAT
Takashi Ishikawa
Daijiro Mizushima
Eiko Kasahara(General Manager, Planning Division,Japanese Shipowners’ Association)(Planning Division, Japanese Shipowners’ Association)(Planning Division, Japanese Shipowners’ Association)-------------------------2-

PR2 23SERC Attendance List.doc