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					                                                                                   MORGAN                STANLEY                 RESEARCH
                                                                                   NORTH             AMERICA


                                                                                   Morgan Stanley & Co. LLC                  Fotis Giannakoulis
                                                                                                                             Fotis.Giannakoulis@morganstanley.com
                                                                                                                             +1 (1)212 761 3026

                                                                                                                             Ole Slorer
                                                                                                                             Ole.Slorer@morganstanley.com
                                                                                                                             +1 212 761 6198

                                                                                   Morgan Stanley & Co. International Doug F Hayes
                December 13, 2013                                                  plc+                               Doug.Hayes@morganstanley.com



Industry View   Maritime Industries
In-Line
                Upgrading Industry to In-Line
                                                                                   MS Segment Outlook
                With global GDP on the mend and shipping capacity
                muted, we see improved fundamentals across most                     Sector:                                    Medium-term Long-term
                shipping segments. Pockets of weakness exist, but
                                                                                    Dry bulk carriers                          Strong                      Firm
                on balance, we see upside in rates and values, led
                by dry bulk and LPG segments. Top Picks: SB, DSX,                   Crude tankers                              Weak                        Neutral
                SBLK, VLCCF, GLNG, ASC, CMRE.
                                                                                    Products tankers                           Firm                        Firm
                Dry Bulk: We expect dry bulk to outperform other shipping           Containerships                             Weak                        Strong
                segments as tonnage demand is set to exceed vessel supply
                                                                                    LNG carriers                               Neutral                     Strong
                in 2014 for the first time since 2008, driven by i) slower fleet
                growth, ii) increased Chinese steel production, iii) new low        LPG carriers                               Strong                      Neutral
                cost seaborne iron ore supply, and iv) reduced average
                speed as fuel prices are high. Supply growth should fall until
                2015, after which it may accelerate. We are upgrading DSX
                and VLCCF to OW, moving SB to OW, and initiating
                coverage of SBLK at OW (see our separate note, published
                today, for details on these changes).
                Crude Tankers: Relatively less upside as non-OPEC
                short-haul production will displace long-haul Middle East
                crude through 2015e, although the increased importance of
                emerging cross-trades suggests the worst is past. Crude
                fleet likely to grow only 1.5-2.0% in 2014 and 2015 allowing
                rates to mover modestly higher albeit from very depressed
                levels. Trading patterns might benefit VLCC and Aframax
                over Suezmax tankers, but substitution will likely keep rates
                highly correlated. Demand should accelerate with
                increased call on OPEC from 2016, but recent ordering of a
                large number of VLCCs threatens any long-term optimism.
                Product Tankers: We see steadily improving fundamentals
                on dislocation between refining capacity and products
                demand, but substitution suggests this segment will never
                fully decouple from weak crude oil tanker fundamentals.
                Containers: Recovery as European GDP should help                   Morgan Stanley does and seeks to do business with
                support improved global volume growth, but 7-8% capacity           companies covered in Morgan Stanley Research. As
                growth in 2014 suggests that containership will remain             a result, investors should be aware that the firm may
                                                                                   have a conflict of interest that could affect the
                under pressure for another year. We therefore prefer               objectivity of Morgan Stanley Research. Investors
                exposure to companies with solid contracts and ability to          should consider Morgan Stanley Research as only a
                take advantage the weakness to expand their fleet.                 single factor in making their investment decision.
                Gas Shipping: LNG to remain soft through 2015 on limited           For analyst certification and other important
                                                                                   disclosures, refer to the Disclosure Section,
                new cargo availability & shipping supply growth. LPG to stay       located at the end of this report.
                strong for 2 years before weakening for opposite reasons.          += Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be
                                                                                   associated persons of the member and may not be subject to NASD/NYSE restrictions on
                                                                                   communications with a subject company, public appearances and trading securities held by a
                                                                                   research analyst account.
                                                                    MORGAN                    STANLEY                     RESEARCH

                                                                    December 13, 2013
                                                                    Maritime Industries




Investment Case
Dry Bulk Shipping
                                                                    Exhibit 1
Dry bulk fundamentals have been improving in 2013 and               Dry bulk supply/demand balance to improve in 2014
look even more attractive for 2014-15. We have increased            18%
                                                                                  Demand             Supply               16.9%
                                                                                                                                                                      Baltic Dry Index

conviction in the dry bulk segment and adjusted our shipping                                                                                                                           7,000
                                                                    16%
                                                                                                                                  14.7%
rate forecasts upward. During 4Q13, the Baltic Dry Index has                                                                                                                           6,000
                                                                    14%
risen above 2,000 points for the first time since 2011, but                                                                     12.5%
                                                                                      11.6%
remains over 80% below its 2008 peek. We expect rates to rise       12%                                                 11.3%                                                          5,000
                                                                                                                  10.0%                   10.3%
~30-40% from current levels, driving earnings and vessel            10%
                                                                                                                                                                                       4,000
values higher. We therefore see significant upside in dry bulk        8%        6.9% 6.7%                                               6.9%                             7.1%
stocks going forward, as these are set up to benefit from strong                          6.5%
                                                                                                           6.0%                                   6.3%6.3%            5.8%             3,000
                                                                      6%                                                                         5.2%         5.5%
                                                                                                               5.1%
fundamentals in the next two years.                                            4.4%           4.1%
                                                                                                         4.5%
                                                                                                                                                          5.0%
                                                                                                                                                                  3.8%
                                                                                                                                                                                       2,000
                                                                      4%

Rates are expected to ramp as demand is set to outpace                2%
                                                                                                                                                                                       1,000

supply in 2014 and then peak in 2015. In 2014, rates are set
                                                                      0%                                                                                                               -
to be driven higher by slowing fleet growth paired with additions               05      06      07         08      09     10      11      12      13      14     15         16
in ton-mile demand through new low cost seaborne iron ore           Source: Morgan Stanley Research
export capacity in Australia and Brazil. Growing Chinese steel
                                                                    Exhibit 2
production will increasingly be serviced by seaborne iron ore       Rates are likely to rise in anticipation of the market
imports, as falling domestic iron ore production is replaced. We    recovery approaching 2011 levels during 2015
expect ton-mile demand to grow by 6.0-6.5% in 2014 against
                                                                          60 $kpd                                                                        Forecast (base case)
fleet growth of ~5% (Ex. 1). Rates will be driven up further by
fleet utilization moving higher as the fleet continues to operate         50
at reduced speeds due to high fuel prices (Ex. 3). Capesize
rates will likely remain highly volatile, due to flow and ebb of          40
Chinese iron ore imports during periods of destocking and
                                                                          30
restocking. However, we expect Capesize rates to average
$26kpd in 2014, while Panamax rates should increase to $14kpd,            20
equivalent to a BDI level of 1,760 points. Average rates should
                                                                          10
then peak in 2015 at $34kpd for Capesize and $18kpd for
Panamax corresponding to the BDI at 2,280 points, as growth           -
in the supply of tonnage falls to ~4%. Although shipping demand                1Q09      4Q09        3Q10         2Q11         1Q12     4Q12 3Q13E 2Q14E 1Q15E 4Q15E
growth is set to stay above supply growth in 2015, it should
                                                                                                 Capesize                Panamax               Supramax          Handysize
moderate to ~5.5% growth, as Chinese steel making capacity          Source: Clarkson’s, Morgan Stanley Research estimates
cuts are expected in 2H14. We therefore expect the positive
                                                                    Exhibit 3
trend in rates to reverse during 2016, although rates should
                                                                    Base Case Dry Bulk Rate Assumptions
stay at healthy levels due to iron ore export capacity coming                         Capesize                     Panamax                     Supramax                 Handysize
online and Chinese domestic ore production falling further.                      New     Old         %          New     Old      %        New      Old     %      New            Old       %
                                                                      2013 11.8           9.5    24%             9.5     8.0     19%       9.0     8.2     10%        7.7        7.3       5%
                                                                      2014 26.0          16.5    58%            14.0    11.0     27%      12.0    10.0     20%    10.0           8.5       18%
Chinese economy and overcapacity cuts in steel industry
                                                                      2015 34.0          21.0    62%            18.0    14.0     29%      15.5    12.5     24%    13.0           9.5       37%
as well as fleet growth are key risks to our outlook. As
                                                                      2016 25.0          21.0    19%            15.0    14.0      7%      13.0    12.5      4%    10.5           9.5       11%
Chinese economic growth drives imports of both coal and steel,      Source: Clarkson’s, Morgan Stanley Research estimates
through industrial development and steel production, we see
this as a key risk to our demand expectations. Shipping demand
assumptions could also be adversely affected by lower than
expected iron ore imports due to a renewed push by the Chinese
government to cut overcapacity in its steel making industry. On
the supply side, we see a key risk in continued strong ordering,
especially looking at the dry bulk market balance in 2016.



                                                                                                                                                                                            2
                                                                                            MORGAN            STANLEY           RESEARCH

                                                                                            December 13, 2013
                                                                                            Maritime Industries




Exhibit 4
Dry Bulk Shipping Supply – Demand Balance
                                                     2005        2006     2007     2008     2009     2010      2011      2012     2013E    2014E    2015E    2016E
Dry Bulk Shipping Demand (DWT million)
  Iron Ore                                                95      106      117      126      138      158      182        192      212      229      241      257
       % change                                           5.1%    11.5%    10.8%     7.4%     9.5%    14.4%    15.3%       5.8%     9.9%     8.1%     5.2%     6.9%
  Coking Coal                                             33       34       33       34       30       39         43       42       46       48       49       52
       % change                                           0.2%     2.9%    -2.4%     4.3%   -11.3%    30.1%    10.3%      -2.4%     7.7%     4.9%     3.0%     4.8%
  Thermal Coal                                            55       59       64       67       75       79         92      104      105      110      116      123
       % change                                           3.5%     8.0%     7.8%     4.2%    11.9%     6.5%    16.0%      13.4%     0.6%     4.4%     5.9%     6.2%
  Grains                                                  44       56       51       52       59       59         63       62       60       64       68       72
    % change                                              6.7%    29.0%   -10.2%     3.4%    13.7%    -0.3%       6.3%    -1.5%    -3.2%     7.1%     6.2%     4.7%
  Other Minor Bulks                                       79       85       91       91       81       94      108        113      119      125      131      137
       % change                                           4.0%     7.2%     7.5%    -0.2%   -10.8%    15.7%    15.0%       4.8%     5.6%     5.0%     4.9%     4.7%
Total Tonnage Demand                                  305   339            355      370      383   429   488              514      541      576      605      641
 % change                                            4.2% 11.3%           4.7%     4.0%     3.6% 12.1% 13.7%             5.3%      5.3%     6.3%     5.2%     5.9%

Dry Bulk Shipping Supply (DWT million)
 Capesize                                             111         121      132      144      170      209      249        279      295      306      321      350
       % change                                           8.4%     8.9%     8.7%     9.0%    18.4%    23.1%    19.1%      11.9%     5.6%     3.9%     5.0%     8.8%
  Panamax                                                 93      101      108      114      120      135      152        170      187      200      204      214
       % change                                           8.5%     8.5%     6.3%     5.7%     5.4%    12.0%    12.7%      11.9%     9.9%     7.1%     2.3%     4.7%
  Handymax                                                67       72       77       84       93      111      130        145      157      168      175      189
       % change                                           8.9%     7.4%     7.4%     8.4%    11.0%    19.5%    17.3%      11.7%     7.7%     7.0%     4.6%     7.7%
  Handysize                                               73       73       75       76       76       82         84       85       85       85       86       91
       % change                                           1.3%     0.4%     2.4%     1.7%    -0.5%     7.5%       3.4%     1.0%    -0.6%     0.2%     1.4%     5.6%
Total Dry Bulk Dwt Supply                             345         368      392      418      459      537      616        680      723      759      787      843
Less: inactive fleet                                       2        2        2        5        5        6          7        8         9      10       11       12
Total Active Dry Bulk Dwt Supply                      343         366      390      413   454   531   609   672                    714      749      777      832
  % change                                           6.9%        6.7%     6.5%     6.0% 10.0% 16.9% 14.7% 10.3%                    6.3%     4.9%     3.7%     7.1%

Avg Dry Bulk Dwt Supply                               332         354      378      401      434      493      570        640      693      731      763      804
       % change                                           6.9%     6.8%     6.6%     6.2%     8.1%    13.6%    15.7%      12.3%     8.2%     5.6%     4.3%     5.4%


Difference in Suppy/Demand balance                  -2.7%         4.7%    -1.8%    -2.0%    -6.3%    -4.8%    -1.0%      -5.0%    -1.0%     1.4%     1.4%    -1.2%
Fleet Utilization (Demand / Avg Supply)             91.9%        95.8%    94.0%    92.1%    88.3%    87.1%    85.6%      80.3%    78.1%    78.7%    79.4%    79.7%
Change in utilization                               -2.4%         3.9%    -1.7%    -2.0%    -3.8%    -1.2%    -1.5%      -5.3%     -2.1%    0.6%     0.7%     0.3%

Source: Company Data, Morgan Stanley Research estimates




                                                                                                                                                                 3
                                                                        MORGAN                     STANLEY                      RESEARCH

                                                                        December 13, 2013
                                                                        Maritime Industries




Crude Tankers                                                           Exhibit 6
                                                                        Tanker supply/demand balance
Crude tankers remain challenged by growth in short-haul
                                                                                             98%      98%       98%
crude production and hanging fleet oversupply. Although                                                                                                               Average Fleet Growth
                                                                                                                          94%
VLCC rates have recently rallied above $50kpd from a low of                                                                                                           Ton-miles growth
                                                                         95%         92%                                                                              Fleet Utilization
~$9kpd in 1Q13, we believe that there is still less upside than in
                                                                                                                                   88%         90%
other segments. Crude tankers continue facing problems of slow           90%
                                                                                                                                                     88%
                                                                                                                                                                87%
                                                                                              9.9%
demand growth, as the expected 1.0-1.2mmbpd annual growth                                                                                                                   86% 85%           85%

in oil demand through 2015 are to come mainly from Asia, Latin           85%                                                                  7.5%
                                                                                                                                                  6.2%
                                                                                                                                           5.3%
America and Middle East, which only require medium-haul,                                                4.3%
                                                                                                     4.2%                4.1%
                                                                                                                                  4.8%               4.6%
                                                                         80%               3.7%                3.5%
                                                                                                                  3.4%                                      3.4%
short-haul and land transport. Furthermore, Middle Eastern                         3.2%
                                                                                                                                                                2.0%                         2.4%
                                                                                                                                                                       1.5%        1.7%         1.5%
exports are being replaced by non-OPEC short-haul output.                75%                                               0.2%
                                                                                                                                                                                      1.1%
                                                                                                                                                                            0.0%


Emerging cross trades and slow fleet growth should allow                 70%
                                                                                     -0.9%
rates to increase slightly above depressed level. Although                                                                          -2.2%
                                                                         65%
fundamentals remain challenging, the worst should be over, as
emerging cross trades are increasingly important. Fleet growth                       05      06        07       08        09       10        11      12      13E 14E 15E 16E
is likely to stay at 1.5-2.0% in 2014 and 2015, which should            Source: Morgan Stanley Research
allow rates to move up modestly from low levels. VLCC rates
                                                                        Exhibit 7
should reach $22kpd and $28kpd in 2014 and 2015, while we
                                                                        Historical Crude Tanker Rates
expect $18kpd and $22kpd respectively for Suezmax. Changes               $kpd
in crude trading patterns are mostly likely to benefit VLCC and           100
Aframax, but higher rates should also spill over to Suezmax, as               90
these are highly correlated. The Aframax fleet is set to shrink               80
slightly in 2014 and only increase by ~0.5% in 2015, which                    70
should allow Aframax rates to go to $17.5kpd and $20.5kpd in                  60
2014 and 2015. In 2016, tanker demand should strengthen, as                   50
OPEC will account for an increasing proportion of additions to                40
crude production, but a growing number of VLCC orders with                    30
delivery in 2016 weighs on a more positive long-term outlook.                 20
                                                                              10
                                                                          -
                                                                                   2005      2006        2007        2008        2009       2010      2011         2012        2013
                                                                                                                      VLCC          Suezmax          Aframax

                                                                        Source: Clarksons

Exhibit 5                                                               Exhibit 8
Crude Tanker Capacity Growth                                            US Seaborne Crude Oil Imports
                 VLCC (>200k dwt)                                        8.5        mbbd
   6.0%
                 Suezmax (120-200k dwt)
   5.0%          Aframax (80-120k dwt)                                   8.0
   4.0%          Total Capacity growth

                                                                         7.5
   3.0%

   2.0%                                                                  7.0
   1.0%
                                                                         6.5
   0.0%

  -1.0%                                                                  6.0
  -2.0%
                                                                         5.5
  -3.0%

  -4.0%                                                                  5.0
               2013E                2014E               2015E   2016E              Jan     Feb       Mar        Apr        May       Jun       Jul        Sep         Oct      Nov           Dec
                                                                                                  2013                             2012                               2011
                                                                                                  2010                             2009                               Avg '09-12
Source: Clarkson’s, Morgan Stanley Research estimates
                                                                        Note: US Crude imports PADD1, PADD 3, PADD 5 (one week lag)
                                                                        Source: EIA, Morgan Stanley Research




                                                                                                                                                                                                   4
                                                                                      MORGAN            STANLEY       RESEARCH

                                                                                      December 13, 2013
                                                                                      Maritime Industries




Tanker Supply / Demand Model
Exhibit 9
Oil Supply and Demand Balance
Oil Consumption                                    2005       2006    2007    2008     2009     2010        2011    2012    2013E    2014E    2015E   2016E
World                                              84.7       85.6    87.0    86.3     85.5     88.4        89.0    90.0     90.6     91.8     93.1    94.4
YoY growth                                         1.6%       1.1%    1.7%    -0.8%   -1.0%     3.4%        0.7%    1.2%     0.7%     1.3%     1.4%    1.4%
OECD                                               50.5       50.2    50.1    48.4     46.4     47.0        46.5    45.9     45.5     45.2     45.1    44.9
YoY growth                                         0.6%       -0.6%   -0.2%   -3.4%   -4.2%     1.4%        -1.2%   -1.1%   -1.1%    -0.5%    -0.4%   -0.4%
  North America                                    25.6       25.4    25.5    24.2    23.3      23.8        23.6    23.3     23.4     23.4    23.3    23.2
  YoY growth                                           0.6%   -0.8%    0.3%   -5.1%   -3.6%     2.2%        -0.8%   -1.5%    0.5%    -0.1%    -0.3%   -0.4%
  OECD Europe                                      15.7       15.7    15.6    15.5    14.7      14.7        14.3    13.7     13.4    13.3     13.2    13.1
  YoY growth                                           0.6%    0.0%   -1.2%   -0.6%   -4.8%     -0.2%       -2.8%   -3.8%   -2.8%    -0.7%    -0.5%   -0.6%
  OECD Pacific                                         9.2     9.1     9.1     8.8     8.4       8.5         8.6     8.9      8.7      8.6     8.6     8.6
  YoY growth                                           0.7%   -1.3%    0.0%   -3.5%   -4.5%     1.7%         0.7%    4.2%   -2.7%    -1.0%    -0.3%   -0.1%
Non-OECD                                           30.3       31.4    32.8    33.7     35.1     37.2        38.1    39.6     40.5     41.8     43.2    44.5
YoY growth                                         3.3%       3.6%    4.6%    2.7%    4.1%      6.2%        2.4%    3.8%     2.4%     3.2%     3.2%    3.1%
  China                                                6.7     7.2     7.6     7.5     7.9       8.9         9.3     9.8     10.2     10.6    10.9    11.3
  YoY growth                                           3.9%    6.8%    5.3%   -0.9%    5.5%    12.6%         4.4%    5.2%    3.8%     3.7%     3.3%    3.1%
  India                                             2.6        2.7     2.9     3.0     3.0      3.1          3.2     3.3     3.4      3.5      3.6     3.7
  YoY growth                                       -0.8%       6.4%    4.8%    3.9%    2.2%     2.3%         2.5%    4.6%    1.4%     3.1%     3.3%    3.1%
  Other Asia                                           6.4     6.5     6.8     6.7     7.1       7.6         7.8     8.0      8.0      8.2     8.5     8.8
  Latin America                                        5.0     5.2     5.3     5.7     5.7       6.1         6.2     6.4      6.7      6.9     7.0     7.2
  Middle East                                          5.9     6.1     6.4     6.8     7.2       7.3         7.4     7.7      7.8      8.1     8.4     8.7
  Africa                                               3.0     3.0     3.1     3.2     3.4       3.5         3.5     3.7      3.7      3.9     4.0     4.2
  Non OECD Europe                                      0.7     0.7     0.7     0.7     0.7       0.7         0.7     0.7      0.7      0.7     0.7     0.8
  FSU                                                  3.9     4.0     4.1     4.2     4.0       4.1         4.4     4.5      4.6      4.8     4.9     5.0

Oil Production                                     2005       2006    2007    2008     2009     2010        2011    2012    2013E    2014E    2015E   2016E
World                                              84.7       85.6    87.0    86.3     85.5     88.4        89.0    90.0     90.6     91.8     93.1    94.4
YoY growth                                         1.6%       1.1%    1.7%    -0.8%   -1.0%     3.4%        0.7%    1.2%     0.7%     1.3%     1.4%    1.4%
  North America                                    13.9       13.9    13.8    13.4    13.6      14.1        14.6    15.9     17.2     18.4    19.4    20.4

  North Sea                                         5.2        4.8     4.5     4.3     4.1       3.8       3.4       3.1     2.9      2.8      2.8     2.9
  YoY growth                                       -8.2%      -7.9%   -5.3%   -4.7%   -4.4%     -8.4%    -11.1%     -9.4%   -6.8%    -2.5%     2.0%    2.5%
  M. East (ex Syria, ex NGLs)                      22.5       23.0    23.7    22.8    21.3      22.4        23.3    22.5    21.0     20.3     20.0    20.0
  YoY growth                                        2.1%       1.8%    3.2%   -3.8%   -6.7%      5.5%        4.0%   -3.4%   -6.8%    -3.3%    -1.4%   -0.1%
  FSU                                              11.8       12.3    12.8    12.8    13.3      13.5        13.6    13.7     13.8     13.9    13.8    13.7
  YoY growth                                        3.5%       3.9%    4.2%    0.1%    3.4%      2.0%        0.2%    0.6%     1.0%     0.6%   -0.3%   -0.6%
  Other                                            31.2       31.6    32.2    33.0    33.2      34.6        34.1    34.9     35.8    36.5     37.0    37.3
  YoY growth                                        4.8%       1.5%    1.6%    2.6%    0.6%      4.1%       -1.4%    2.4%     2.6%    1.9%     1.5%    0.9%

Source: Clarkson’s Morgan Stanley Research estimates




                                                                                                                                                         5
                                                                                        MORGAN            STANLEY         RESEARCH

                                                                                        December 13, 2013
                                                                                        Maritime Industries




Exhibit 10
Crude Tanker Supply and Demand Balance
Split between longer-haul and shorter-haul crude oil shipments
M Bls/d                                             2005       2006    2007     2008     2009     2010         2011     2012    2013E    2014E    2015E    2016E
  Middle East production                          26.7        27.2     28.0     27.3     26.4     28.0        29.2      28.8     27.6     27.1     26.9     27.0
  (-) NGLs & inventory movements                  (1.4)       (1.3)    (1.2)    (1.3)    (1.3)    (1.3)        (1.3)    (1.3)    (1.4)    (1.4)    (1.3)    (1.3)
  (-) refinery production                         (5.9)       (6.1)    (6.4)    (6.8)    (7.2)    (7.3)        (7.4)    (7.7)    (7.8)    (8.1)    (8.4)    (8.7)
  Crude exports                                   19.4        19.8     20.3     19.2     17.9     19.3        20.5      19.9     18.3     17.6     17.2     17.0
  (-) pipelines
  (-)    Sumed                                    (2.5)       (2.5)    (2.5)    (2.5)    (2.5)    (2.5)        (2.5)    (2.5)    (2.5)    (2.5)    (2.5)    (2.5)
  Longer-haul shipment from Middle East           14.8        15.2     15.0     15.3     13.7     15.3        16.0      16.2     16.3     14.9     14.5     14.3
  Shorter-haul shipment                           23.1        23.6     24.8     24.2     24.4     22.2        21.3      22.0     21.6     23.0     23.6     24.1
Total Crude Shipments                             37.9        38.8     39.8     39.5     38.1     37.5         37.3     38.2     37.9     37.8     38.1     38.4
Shipments growth                                  1.9%        2.5%     2.6%    -1.0%    -3.6%    -1.4%        -0.5%     2.4%    -0.8%    -0.2%     0.7%     0.9%


Total Tonnage demand (DWT million)               214.0       235.2    245.4    253.8    254.3    248.8        267.5    279.7    285.3    285.2    288.2    292.6
YoY growth                                       -0.9%        9.9%     4.3%     3.4%     0.2%    -2.2%         7.5%     4.6%     2.0%     0.0%     1.1%     1.5%

VLCC
  # of vessels                                     471        484       500      511      534      541       580         611      623      634      644      673
  Capacity (DWT million)                         136.6      141.2     146.7    151.6    159.9    163.6     176.0       186.9    191.1    194.8    198.1    207.4
  YoY growth                                       5.5%       3.4%      3.9%     3.3%     5.5%     2.3%      7.6%        6.2%     2.2%     2.0%     1.7%     4.7%
Suezmax
  # of vessels                                     280         301      312      315      343      365         398       424      437      449      461      468
  Capacity (DWT million)                          42.0        45.1     46.6     47.2     51.7     55.2        60.5      66.2     68.3     70.1     72.0     73.1
  YoY growth                                       8.6%        7.5%     3.2%     1.3%     9.6%     6.6%        9.6%      9.5%     3.2%     2.6%     2.8%     1.6%
Aframax
  # of vessels                                     526         545      577      587      611      634         651       646     626      623       626      626
  Capacity (DWT million)                          54.7        57.2     61.0     62.6     65.7     68.7        71.0      71.5    69.6     69.4      69.9     69.9
  YoY growth                                       7.9%        4.6%     6.8%     2.5%     4.9%     4.6%        3.4%      0.6%   -2.7%    -0.2%      0.6%     0.1%
Total Crude Tanker Capacity                      233.3       243.6    254.4    261.4    277.3    287.4        307.6    324.6    329.0    334.3    340.0    350.4
Capacity growth                                   6.6%        4.4%     4.4%     2.8%     6.1%     3.6%         7.0%     5.5%     1.4%     1.6%     1.7%     3.1%


Average tonnage supply (DWT million)             231.7       240.2    250.3    259.0    269.7    282.7        297.8    316.4    327.1    332.0    337.5    345.5
YoY growth                                        3.2%        3.7%     4.2%     3.5%     4.1%     4.8%        5.3%      6.2%     3.4%     1.5%     1.7%     2.4%

Difference in supply/demand balance               -3.8%       5.6%     0.1%    -0.1%    -3.7%     -6.3%        1.8%    -1.4%    -1.2%    -1.3%    -0.5%    -0.7%
Fleet Utilization (Demand / Avg. Supply)          92.4%      97.9%    98.1%    98.0%    94.3%    88.0%        89.8%    88.4%    87.2%    85.9%    85.4%    84.7%
Change in utilization                             92.4%       5.6%     0.1%    -0.1%    -3.7%     -6.3%        1.8%    -1.4%    -1.2%    -1.3%    -0.5%    -0.7%

Source: Clarkson’s, Morgan Stanley Research




                                                                                                                                                               6
                                                                                         MORGAN                       STANLEY           RESEARCH

                                                                                         December 13, 2013
                                                                                         Maritime Industries




Product Tankers                                                                          Exhibit 12
                                                                                         Historical Product Tanker Rates and MS Forecasts
Product tanker should experience a steady improvement
in demand as the trade in products develops. MR rates have                                     25   $kpd
                                                                                                                                                                  Forecast (base case)
risen to an average $13kpd in 2013, up from $10.5kpd in 2012.
We expect shipping demand for product tankers to continue to                                   20
improve due to increasing refinery dislocation and strong exports
of products out of the US. Refinery dislocation is being driven                                15

by the development of large-scale export orientated refining
capacity in regions close to the source of crude, such as the                                  10

Middle East and India, which is increasing ton-mile demand.
                                                                                               5
Furthermore, shutdowns of uneconomical refineries in Europe
and the Pacific will require imports of product to replace lost
                                                                                           -
domestic supply. Developing countries in Latin America and
                                                                                                    1Q09       4Q09     3Q10     2Q11        1Q12   4Q12    3Q13E 2Q14E 1Q15E 4Q15E
West Africa, such as Brazil, have experienced growing demand
                                                                                                                                               Panamax       MR
for seaborne product imports, as domestic refining capacity
has not kept pace with demand. On the other hand, the US has                             Source: Clarkson’s, Morgan Stanley Research c
become a large exporter of products due to a boom in shale oil
exploration that has resulted in an ample supply of cheap crude                          Exhibit 13
for US refiners. US Gulf exports have become a substantial                               Refinery dislocation from Additions and Shutdowns
demand driver, especially during the peak winter refining                                 YoY change (mmbpd)
season. This demand is expected to drive MR rates to $17.5kpd                             2.5
                                                                                                                                            China
and $19kpd in 2014 and 2015, while LR1 should earn $18kpd                                                                                                         Middle
                                                                                                2
and $20kpd respectively.                                                                                                                                           East

                                                                                          1.5                                                        Asia (Ex.
                                                                                                                                                      China)
Fleet growth may become a concern, while switching of
                                                                                                1      OECD             OECD
vessels from dirty trades could add further supply. Fleet                                             Americas          Europe
                                                                                                                                                                             OECD
growth is set to accelerate, as we expect owners to place                                 0.5                                                                                Pacific
around 275 contracts for product tankers in 2013 compared to
                                                                                                0
85 in 2012. This has increased our fleet growth estimates to
~5.5% in 2015 and ~6.5% in 2016, which could dampen strong                                -0.5


                                                                                                                                                                  2015
                                                                                                                                                                  2014
                                                                                                                                                                  2013
                                                                                                                                                    2014
                                                                                                                              2015




                                                                                                                                                    2013
                                                                                                             2014




                                                                                                                              2014




                                                                                                                                             2015
                                                                                                      2013




                                                                                                                                     2013
                                                                                                                                             2014




                                                                                                                                                                                   2015
                                                                                                             2015




                                                                                                                                                    2015
                                                                                                                       2013




rate increases. Furthermore, a substantial number of larger LR


                                                                                                                                                                            2013
                                                                                                                                                                                   2014
product tankers are still in the dirty trade transporting crude and                            -1
could switch to the clean product trade. Therefore, unless the                           Source: IEA, Morgan Stanley Research
crude tanker market improves these vessels may put a ceiling
on product rates, as switching LR vessel add supply once rates                           Exhibit 14
for product tankers become more attractive.                                              Areas of Changing Seaborne Product Export and
                                                                                         Import patterns
Exhibit 11
Main MR trade routes



                                                Western
                                                Europe

                US Gulf         US East Coast             Middle East     Asia

                                                                  India


                                                                                                    Exports growing
       Traditional Trades
                                                                                                    Imports growing
        New Trades
                                                                             Australia
                            Latin America




Source: Morgan Stanley Research                                                          Source: Morgan Stanley Research




                                                                                                                                                                                          7
                                                                                                  MORGAN                STANLEY              RESEARCH

                                                                                                  December 13, 2013
                                                                                                  Maritime Industries




Product Tanker Rates
Exhibit 15                                                                                        Exhibit 17
MR | Clarkson’s –Selected Routes                                                                  MR | Clarksons – US Gulf to East Coast South America
 30     $kpd                                                                                          30      $kpd
                                        Atlantic Triangulation
                                          (USG-USAC-USG)                                              25
 25


 20                                                                                                   20


 15                                                                                                   15

                                                             1-yr timecharter
 10                                                                                                   10


  5                  Average Major Routes                                                              5


  0                                                                                                    0

  Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov-            Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov-
   11 11 11 11 11 11 12 12 12 12 12 12 13 13 13 13 13 13                                                11 11 11 11 11 11 12 12 12 12 12 12 13 13 13 13 13 13


Source: Clarksons                                                                                 Source: Clarksons


Exhibit 16                                                                                            Exhibit 18
MR | Clarkson’s – UK Coast to US Atlantic Coast                                                   MR | Clarksons – West Coast India to Japan
                                                                                                      30      $kpd
        $kpd
27
                                                                                                      25

22
                                                                                                      20

17
                                                                                                      15

12
                                                                                                      10

  7
                                                                                                       5

  2
                                                                                                       0
                                                                                                       Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov-
 -3Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov-            11 11 11 11 11 11 12 12 12 12 12 12 13 13 13 13 13 13
    11 11 11 11 11 11 12 12 12 12 12 12 13 13 13 13 13 13

Source: Clarksons                                                                                 Source: Clarksons




Exhibit 19
Medium Range Product Tanker Spot Rates
                                                        Annual Average                                     Quarterly Average       A Week Ago Last       Change
thousand $ per day                     2008      2009     2010 2011 2012               2013    4Q12        1Q13 2Q13 3Q13 4Q13         29-Nov 6-Dec WoW MoM                                 YoY
Europe to US Atlantic Coast            24.7       8.6     10.1 10.7    9.1              10.4    9.7        17.4 13.3      7.9  0.6        7.3   7.2  -1% -871%                              -44%
Europe to West Africa                  21.4       9.4     12.2 11.8 13.0                16.6   16.7        23.9 17.4 13.8      9.7       15.8  15.7  -1% 47%                                -20%
US Gulf to South America               NA        NA      NA      10.8 12.4              16.6   16.5        14.8 16.7 18.0 17.0           17.8  14.1 -21% -33%                                37%
Singapore to Australia                 NA         8.6     10.1    9.2  9.3              14.5   14.7        16.2 15.2 12.9 13.3           12.9  13.0   0%    -1%                             -27%
India to Japan                         15.8       8.7      9.5 10.2 10.2                10.7   16.6        13.5 10.3      8.8 10.2        8.1  11.4  40% 27%                                -40%
Arabian Gulf to Europe                 NA         7.7     10.8 10.7    9.1              10.6   14.9        13.9 12.2      7.3  8.5        3.9   8.1 111%     0%                             -55%
Average major routes                   21.2       9.1     10.6 10.5 10.5                13.2   14.9        16.6 14.2 11.4      9.9       11.0  11.6   6% 14%                                -29%
Triangulation (USG-USAC-USG)             NA        NA       NA 15.3 14.1                19.2   18.2        21.6 18.3 19.6 16.8           21.6  19.4 -10% 118%                                 2%
1-yr Timecharter                       23.5      15.2     13.2 13.7 13.5                14.3   13.0        13.9 14.2 14.3 14.8           15.0  15.0   0%     5%                              13%
Source: Clarkson’s




                                                                                                                                                                                                   8
                                                                                                         MORGAN           STANLEY          RESEARCH

                                                                                                         December 13, 2013
                                                                                                         Maritime Industries




Exhibit 20
Product Tanker Fleet
in # of ships                                       2005         2006      2007       2008      2009         2010      2011     2012   2013E   2014E   2015E   2016E   Y TD 2013

Contrac ting       LR2 (80-110k dwt)                    -         -         -          -         -               10      2        6      74      41      35      30          59
                   LR1 (60-80k dwt)                     -         -         -          -         -               12      2        7       2       5       4       3         -
                   MR2 (45-60k dwt)                     -         -         -          -         -               12     35       51     151      90      77      65        131
                   MR1 (25-45k dwt)                     -         -         -          -         -                5      8        6      26      22      19      16         21
                   Total MR (25-60k dwt)                -         -         -          -         -               17     43       57     177     112      96      81        152
                   Small (10-25k dwt)                   -         -         -          -         -                5     41       15      21      17      14      11         17
                   Total # of ships                     -         -         -          -         -            44         88       85     274     175    149     125         228
                   Capac ity (DWT million)              -         -         -          -         -           2.9        2.7      4.1    17.3    10.5    9.0     7.6        14.3

Ac tual &          LR2 (80-110k dwt)                     12       15            13     30        41              28     13       19       8      15      39      40           7
Projec ted         LR1 (60-80k dwt)                      28       28            41     41        36              28     26       13       9       9       4       9           9

Deliveries         MR2 (45-60k dwt)                      58       64        86        123       121           90        55       44      75      82      77      95         70
                   MR1 (25-45k dwt)                      41       50        47         43        36           16        17       11       6      24       6      19          6
                   Total MR (25-60k dwt)                 99      114       133        166       157          106        72       55      81     106      83     114         76
                   Small (10-25k dwt)                       8     11            18     13        10              12      5        6       4       5       3      11           2
                   Total # of ships                     147      168        205        250       244         174       116        93    102     135     129      174         94
                   Capac ity (DWT million)              7.8      8.9       10.7       14.2      14.7        10.4       6.8       5.7    5.6     7.5     8.8     10.8        1.7

Sc rapping         LR2 (80-110k dwt)                    -          1        -          -          3               5      4       15       5       4       4       4          4
                   LR1 (60-80k dwt)                     -          2             1      5         2               6      1        4       4       3       3       3          3
                   MR2 (45-60k dwt)                       6        5             7      4         8              13      5        8       4       4       4       4          3
                   MR1 (25-45k dwt)                      12       11            15      8        16              27     27       21      29      24      20      17         26
                   Total MR (25-60k dwt)                 17       17            23     12        23              40     32       29      33      28      24      21         29
                   Small (10-25k dwt)                       6         5          7         4         8           13     10        9       8       7       6       5           7
                   Total # of ships                      23        25        31         21        36          64         47       57      50      42      37      33         43
                   Capac ity (DWT million)              0.8       1.0       1.1        0.9       1.5         2.7        1.8      3.0     2.2     1.8     1.6     1.5        1.8

Orderbook          LR2 (80-110k dwt)                     51      104       124         98        59              43     27       14      80     106     101      91         64
                   LR1 (60-80k dwt)                     101      123       130        109        86              75     36       28      21      17      17      11         19
                   MR2 (45-60k dwt)                     -         -         -          -         -           -         210      162     238     246     246     216        214
                   MR1 (25-45k dwt)                     -         -         -          -         -           -          49       39      59      57      71      68         30
                   Total MR (25-60k dwt)                -         -         -          -         -           -         258      201     297     303     317     284        244
                   Small (10-25k dwt)                    11           6          5         5         5            5      9        9      26      38      49      49           9
                   Total # of ships                  163          233       259        212       150         123        330      252     424     464     484     435        336
                   Capac ity (DWT million)          20.6         28.8      30.2       26.6      19.0        14.4       13.4     10.5    15.3    15.3    16.3    14.2       20.7

Y ear-end Fleet LR2 (80-110k dwt)                       127      140       150        179       184          206       231      240     245     256     291     327        248
(in # of ships) LR1 (60-80k dwt)                        141      166       205        238       216          261       295      308     316     322     323     329        322
                   MR2 (45-60k dwt)                      22       24            25     26        27              27     27       26      25      25      25      25         25
                   MR1 (25-45k dwt)                      37       41            46     53        60              63     65       67      70      73      76      81         72
                   Total MR (25-60k dwt)                 59       65            71     80        87              90     92       93      95      99     101     106         97

                   Small (10-25k dwt)                    50       54            58     64        69              71     72       74      74      78      81      85         76

                   Total # of ships                     377      424       484        560       556          628       690      715     730     754     796     847        742

Y ear-end          LR2 (80-110k dwt)                12.7         14.2      15.3       18.5      22.2        24.6       25.6     26.2    26.6    27.9    31.9    35.9       26.8
c apac ity         LR1 (60-80k dwt)                     9.9      11.7      14.7       17.1      19.3        20.9       22.6     23.1    23.5    23.9    24.0    24.5       23.5
(in DWT million) MR (25-60k dwt)                    36.8         41.2      46.2       53.5      59.8        63.3       65.4     66.8    69.5    73.3    76.3    80.8       72.2
                 Small (10-25k dwt)                 54.7         57.2      61.0       62.6      65.7        68.7       71.0     71.5    69.6    69.4    69.9    69.9       70.2
                   Total Capac ity                 101.4        124.2     137.2      151.6     167.1       177.4      184.6    187.5   189.2   194.5   202.0   211.1      192.6

Capac ity          LR2 (80-110k dwt)               11.5%        11.6%      8.1%      20.9%     20.2%        10.5%      4.4%     2.0%    1.6%    4.9%   14.4%   12.8%       2.3%
grow th            LR1 (60-80k dwt)                23.9%        18.6%     24.8%      16.9%     12.9%         8.2%      7.9%     2.2%    1.7%    2.0%    0.4%    1.9%       2.0%
                   MR (25-60k dwt)                 11.2%        11.8%     12.3%      15.6%     11.9%         5.7%      3.3%     2.2%    4.1%    5.4%    4.1%    5.9%       8.0%
                   Small (10-25k dwt)               7.9%         4.6%      6.8%       2.5%      4.9%         4.6%      3.4%     0.6%   -2.7%   -0.2%    0.6%    0.1%      -1.8%
                   Total Capac ity grow th         -1.7%        22.5%     10.4%      10.5%     10.2%         6.2%      4.1%     1.6%    0.9%    2.8%    3.9%    4.5%       2.7%

Source: Clarkson’s, Morgan Stanley Research estimates




                                                                                                                                                                              9
                                                                                            MORGAN                        STANLEY               RESEARCH

                                                                                            December 13, 2013
                                                                                            Maritime Industries




LNG Carriers                                                                                Exhibit 22

Short-term LNG shipping rates are expected to normalize                                     Spot/Short-Term LNG Shipping Rates
                                                                                             180          $kpd
in 2014-15 moving closer to levels of long -term contracts,
                                                                                             160                                                                     160k Cbm (Poten)
but market fundamentals are attractive. Short-term LNG
                                                                                             140
shipping rates have declined to $90-100kpd in 2013 vs ~$130kpd
                                                                                             120          145k Cbm (Poten)
in 2012 as market rebalances with newbuilding deliveries arriving
                                                                                             100
ahead the liquefaction projects. We expect that during the next
                                                                                                 80
couple of years short-term rates to converse in line with long-term                                                                                                       125k Cbm (Poten)
                                                                                                 60
contracts at $80-85kpd. The illiquid nature of the LNG chartering
                                                                                                 40
market, coupled with the large number of newbuilds that are being
                                                                                                 20
delivered may result in lower utilization for uncommitted vessels.
                                                                                                 0
We estimate that ~88 LNG carriers will be delivered though 2015.
                                                                                                 Dec-10             Jun-11         Dec-11            Jun-12          Dec-12              Jun-13       Dec-13
During the same period, liquefaction capacity is only expected to
                                                                                            Source: Poten & Partners, Morgan Stanley Research
grow moderately at ~44mtpa, which will add estimated demand
for 65-70 vessels, creating a possible surplus of 15 ships after                            LNG Supply and Demand Balance
accounting for retired vessels. However, after 2015 demand                                   Cbm million per mtpa                                                                          Ships per mtpa
                                                                                             0.26                                                                                                         1.90
growth is expected to accelerate again, as global LNG supply is
                                                                                             0.24
expected to double through 2020 from ~250mtpa in 2012. We                                                                                                                                                 1.70

expect 70-80mtpa to come online in 2016-17 adding demand                                     0.22
                                                                                                                                                                                                          1.50
for another 100 vessels, which should improve LNG chartering                                 0.20

activity and strengthen rates.                                                               0.18                                                                                                         1.30

                                                                                             0.16
                                                                                                                                                                                                          1.10
                                                                                             0.14                                                                Cbm million per mtpa
                                                                                                                                                                                                          0.90
                                                                                             0.12                                                                Ships per mtpa

                                                                                             0.10                                                                                                         0.70
                                                                                                           2008    2009    2010    2011      2012     2013    2014     2015     2016       2017    2018

                                                                                            Source: Clarksons, Morgan Stanley Research estimates
Exhibit 21
LNG Carrier Deliveries                                                                      Exhibit 23
  60     # of ships                                                                         Additions in Liquefaction Capacity
                                                                                                     60    mtpa
  50
                                                                                                                                                    47.8                                            48.1
                                                                                                     50
  40
                                                                                                     40                                                                                   36.9
                                                                                                                                                                          34.3
  30
                                                                                                                                                              29.6
                                                                                                     30
  20                                                                                                                       22.1
                                                                                                     20
  10                                                                                                                                 12.3
                                                                                                                 10.0
                                                                                                     10
  -
         03   04    05   06   07   08   09   10     11   12     13E 14E 15E 16E 17E              -
                                                                                                              2013         2014      2015           2016      2017        2018            2019      2020

Source: Clarksons                                                                           Source: Morgan Stanley Research estimates
Exhibit 24
LNG Carrier Fleet
                                                 Current Fleet             Age Profile           Orderbook                             YTD Deliveries                              YTD Contracts
                                              # of   Cbm     % of          Avg. % over    # of      Cbm    % of                    # of    Cbm      % of                       # of    Cbm      % of
Fleet                                        ships million fleet           Age 20 yrs    ships    million fleet                   ships million fleet                         ships million fleet
              Over 200,000                     45        10.3      19%      4.5    0%      -               -          0%            -               -          0%               -            -             0%
              150,000 - 200,000 Cbm            84        13.3      24%      3.2    0%     104             16.6      125%                11          1.7       13%                   28       4.8          36%
              120,000 - 150,000 Cbm           215        29.7      54%     13.6   18%        1             0.1        0%            -               -          0%               -            -             0%
              Under 120,000 Cbm                36         1.2       2%     21.9   54%        8             0.2       15%              1             0.0        1%                 7          0.2          15%
                       Total                  380        54.5     100%      9.5   11%     113             16.9      31%              12             1.7        3%                35          5.0           9%
Source: Clarksons, Morgan Stanley Research




                                                                                                                                                                                                          10
                                                                    MORGAN                  STANLEY                RESEARCH

                                                                    December 13, 2013
                                                                    Maritime Industries




                                                                    Exhibit 25
LPG Carriers
                                                                    Historical LPG Carrier Rates and MS Forecasts
LPG carriers are set to have a tight market through 2015             1,200 $k/month                                                                                  $kpd40
                                                                                                                                                  Forecast (base case)
after which growing supply may weigh on rates. LPG is a                                                                                                                     35
                                                                     1,000
supply driven commodity and is used in retail applications                                                                                                                  30
throughout Latin America and South East Asia as energy and             800
                                                                                                                                                                            25
in Western Europe and the Far East as feedstocks in
                                                                       600                                                                                                  20
petrochemical production and various other industrial
                                                                                                                                                                            15
applications. According to Poten & Partners, the seaborne LPG          400
                                                                                                                                                                            10
trade was ~69 Mt in 2012, of which over 45% was Middle
                                                                       200
Eastern Supply. By 2015/16, the global trade is expected to                                                                                                                 5

grow by ~30% to 88 Mt. US supply will be the main driver as a             -                                                                                                 0
result of US shale exploration that has created an abundant                        1Q 09 4Q 09 3Q 10 2Q 11 1Q 12 4Q 12 3Q 13 2Q 14 1Q 15 4Q 15
                                                                                               VLGC (78-82k CBM)          22-24k CBM          20.5K Cbm semi-ref
supply of natural gas liquids. US exports are expected to triple
from ~5 Mt in 2012 to 14-15 Mt by 2015/16 as two large export       Source: Clarksons, Morgan Stanley Research c
facilities come online from Targa and Enterprise. The large
                                                                    Exhibit 26
majority of this 8-9 Mt of incremental volume is expected to
                                                                    Global LPG trade volume is expected to grow by
move primarily towards Asia with a smaller part of it to Latin
                                                                    ~25% during 2013-15
America and perhaps some marginal exports to Europe. Each                     Mt
                                                                    100
Mt of incremental exports from the US to Asia is expected to                                                                        CAGR 2012-15
                                                                     90
generate demand for ~5 Very Large Gas Carriers (VLGC),                                                                                   8.3%
                                                                     80
tightening significantly the LPG market. Middle East and Africa                             CAGR 2005-12

production should also foster LPG exports, but the ton-mile          70
                                                                                                  3.8%                                                                   Latin America
effect is significantly smaller. We estimate that exports out of     60                                                                                                  North America

                                                                     50                                                                                                  Africa Total
the Middle East will increase by ~7 Mt, while an additional 5 Mt
                                                                                                                                                                         Europe
should come from Algeria and West African exporters. We              40
                                                                                                                                                                         Asia-Pacific

therefore expect the market to remain tight in 2014-15 with          30                                                                                                  Middle East

rates for VLGC at $1,000-1,100k/month ($33-36kpd) and                20

handy semi-refrigerated gas carriers at $900k/month (~$30kpd).       10

                                                                      0

Fleet orderbook is growing rapidly, but unlikely to ease                       2007     2008      2009   2010      2011      2012      2013      2014    2015

the current tight market during the next two years. The
                                                                    Source: Morgan Stanley Research
current orderbook of fully- and semi-refrigerated vessels
stands at 28% of the existing fleet capacity. We estimate that      Exhibit 27

~5% are vessels that will not be delivered until 2016-17,           LPG orderbook for 2013-15 stands at 23% of the fleet,
leaving the next two year’s orderbook at ~23% of the existing       but ~5% of the existing capacity is over 25 years
fleet, which equals to the anticipated volume growth of the LPG      % Change
trade. As nearly 5% of the existing fleet is over 25 year-old and
therefore candidate for scrapping, the market is expected to                          23%                             5%
stay very tight for at least another two years.
                                                                                                                                                         18%




                                                                                    2013-15                Fleet >25 years                     Net Fleet Growth
                                                                                   Orderbook

                                                                    Source: Morgan Stanley Research




                                                                                                                                                                            11
                                                                                             MORGAN            STANLEY        RESEARCH

                                                                                             December 13, 2013
                                                                                             Maritime Industries




The Panama Canal expansion in mid-2015 to moderate the
positive impact of growing US LPG exports. A significant
development will be the opening of the Panama Canal in 2015,
as VLGCs are going to be able use the channel, shortening the
journey time for exports from the US to Asia from ~36 day to 23
days (at 16.5 knots). As a result the tonnage demand from
each Mt of US exports towards Asia is expected to decline from
~5 VLGCs to ~3 VLGCs. That could create a hiccup for the
Very Large Gas Carrier market in 2016 as the Panama Canal
expansion coincides with the deliveries of large number of
vessels, resulting in lower charter rates. We therefore expect
VLGC rates to average ~$800/month from 2016 and onwards.
Handysize semi-refrigerated vessels should continue to enjoy
a relatively tight market, as they start to benefit from rising US
and Asian petrochemical exports and the Panama Canal
expansion has limited impact on smaller vessels.




Exhibit 28
LPG Carrier Fleet
Fully-ref & semi-ref Gas Carriers                             Current Fleet                              Over 25 year-old                          Orderbook
                                             # of ships     Cbm '000 % of fleet   Avg. Age       # of ships Cbm '000 % of fleet     # of ships     Cbm '000 % of fleet
   VLGC (60-90k Cbm)            Fully Ref          156        12,508       65%        10.1                 6         470       4%             46       3,848       31%
   LGC (40-60k Cbm)             Fully Ref           19         1,107        6%        11.5                 1             44    4%              2        120        11%
   MGC (25-40k Cbm)             Fully Ref           60         2,130       11%         9.5             -             -         0%             17        645        30%
                                Semi Ref            -            -          0%         -               -             -         0%              5        141         0%
                                    Total           60         2,130       11%         9.5             -             -        0%              22        785        37%
   Handy (15-25k Cbm)           Fully Ref           33           748        4%        13.8                 8         192      26%         -              -          0%
                                Semi Ref            55         1,062        5%         9.4                 1             15    1%             23        602        57%
                                    Total           88         1,810        9%        11.2                 9         207      11%             23        602        33%
   Small (<15k Cbm)             Fully Ref               6            9      0%        30.7                 5             6    68%              1              6    66%
                                Semi Ref           273         1,755        9%        15.4              54           314      18%             23        244        14%
                                    Total          279         1,765        9%        15.5              59           321      18%             24        250        14%
Total Fully-ref & semi-ref                         602        19,319      100%        10.7              75         1,042      5%         112          5,464       28%

Pressurized Gas Carriers                                      Current Fleet                              Over 25 year-old                          Orderbook
                                             # of ships     Cbm '000 % of fleet   Avg. Age       # of ships Cbm '000 % of fleet     # of ships     Cbm '000 % of fleet
   Large (6-11k Cbm)                                52           423       28%         8.5             -             -         0%             14             53    12%
   Medium (4-6k Cbm)                                76           369       24%         7.1             -             -         0%             15              8     2%
   Small (2-4k Cbm)                                131           442       29%         7.5                 3             9     2%             19              3     1%
   Very Small (<2k Cbm)                            235           294       19%        24.6             125           137      47%              1         -          0%
Total pressurized                                  494         1,527      100%         4.1             128          146       10%          49            64        4%


Source: Clarksons, Morgan Stanley Research




                                                                                                                                                                   12
                                                                        MORGAN                STANLEY                RESEARCH

                                                                        December 13, 2013
                                                                        Maritime Industries




Containerships
Rate pressures means that focus will remain on carrier                  rates and second hand value of ships between 4,000 – 6,000
financial health and alliances. The overall financial health of         TEUs, as they will be pushed from the big EW trade lanes, but
the container shipping industry remains challenging, although           cannot be used on the smaller EM region trade lanes due to
players like Maersk Line and CMA-CGM have been able to                  infrastructure deficits.
generate significant EBIT margins over the last few quarters,
thanks to an intense focus on cost control. With most of those          Exhibit 29
benefits due to taper in 2014, the focus shifts to the cost             Historical Containership Timecharter Rates
savings that can be achieved from the P3 Alliance. If these                  30    $kpd
savings are significant, and if the alliance is approved by the                                                                         4,250 TEU
regulators in the US, EU and China, this could widen the                     25                                                         3,500 TEU
profitability gap between the industry leaders and the rest. For                                                                        2,500 TEU
now, though, we remain cautious around the success of P3,                                                                               1,100 TEU
                                                                             20
especially given the recently announced “price signaling”
investigation now being conducted by the European Union.
                                                                             15
Other alliances are starting to react, with the G6 alliance
announcing its intention to cooperate on all EW trades (no
                                                                             10
longer just Asia-Europe).

With demand growth continuing to lag supply growth, the                       5

focus remains on active capacity management. Although
demand growth in Europe is set to rebound from the lows of               -
                                                                                  Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep-
2012-2013, growth will remain weak. While this should help                         10   10 10 10 11         11 11 11 12         12 12 12 13         13 13
support an improvement in global volume growth, we believe
                                                                        Source: Peter Doehle Schiffahrts KG, Morgan Stanley Research
demand growth will continue to lag supply growth. This is
mainly due to the size of the current order book, which can             Exhibit 30
should support between 7-8% capacity growth in 2014. One of             Idle Capacity
                                                                                          TEU million                                               % of Cellular Fleet
the potential solutions to bridge this gap is the idling of ships.      1.6                                                                                               14%

However, with the container shipping companies hesitant to                                                                            5,000+ TEU
                                                                        1.4                                                                                               12%
lay-up ships (the idle fleet is currently only ~4% of the total fleet                                                                 3,000-4,999 TEU
                                                                        1.2
                                                                                                                                                                          10%
according to Alphaliner), we believe that the oversupply                                                                             <3,000 TEU
                                                                        1.0
situation will remain as we head into 2014. Although scrapping                                                                                                            8%

remains an option, especially given China’s recently                    0.8
                                                                                                                                                                          6%
announced scrappage incentive scheme, the relatively young              0.6
age of the fleet (~7.5 yrs based on TEU) limits the upside from         0.4
                                                                                                                                                                          4%

further scrapping.
                                                                                                                                                                          2%
                                                                        0.2

Larger ships means that cascading will continue, placing                0.0                                                                                               0%
                                                                              Sep- Dec- Mar- May- Aug- Nov- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Mar- Jun- Sep-
pressure on rates. With almost 50% of the current order book                   09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13

>10,000 TEUs and almost 50% of new deliveries in 2014, we
                                                                        Source: Alphaliner, Morgan Stanley Research
believe that the cascading of larger ships (8,000 – 10,000
TEUs) from Asia-Europe to other trades lanes will continue.
This has already been seen on the Transpacific trade lane.
With demand growth limited on most trades, this additional
capacity growth will lead to downward rate pressure on most
trade lanes. YTD, the average CCFI China - Europe is down
-11% YoY, while China - South America is down -17%. The US
is faring slightly better, with average CCFI rates largely flat YoY,
thanks to better demand. Baring further capacity cuts, this will
continue into 2014. This will also place pressure on the charter



                                                                                                                                                                          13
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                                                                                                          December 13, 2013
                                                                                                          Maritime Industries




Container Freight Indices
Exhibit 31                                                                                                Exhibit 34
China to Europe/Mediterranean Freight Index (CCFI)                                                        China to Europe/Mediterranean Spot Freight Rates (SCFI)
2,300     $/TEU                       China-Europe                                                        2,500      $/TEU                             China-Europe
                                      China-Mediterranean                                                                                              China-Mediterranean
2,100

                                                                                                          2,000
1,900


1,700
                                                                                                          1,500
1,500


1,300
                                                                                                          1,000

1,100


  900
                                                                                                            500

  700


  500                                                                                                           0
    Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct-         Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct-
     09   09   09   09   10   10   10   10   11   11   11   11   12   12   12   12   13   13   13   13           09   09   09   09   10   10   10   10   11   11   11   11   12   12   12   12   13   13   13   13


Source: Shanghai Shipping Exchange, CCFI, Morgan Stanley Research                                         Source: Shanghai Shipping Exchange, CCFI, Morgan Stanley Research
                                                                                                          Exhibit 35
Exhibit 32                                                                                                China to US Spot Freight Rates (SCFI)
China to US Freight Index (CCFI)                                                                          4,700      $/FEU             China-US East Coast
                                                                                                                                       China-US West Coast
1,500     $/FEU                                   China-US East Coast                                     4,200
                                                  China-US West Coast
1,400
                                                                                                          3,700

1,300
                                                                                                          3,200

1,200
                                                                                                          2,700

1,100
                                                                                                          2,200

1,000
                                                                                                          1,700

  900
                                                                                                          1,200

  800
                                                                                                            700
                                                                                                                Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct-
  700                                                                                                            09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13
    Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct-
     09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13
                                                                                                          Source: Shanghai Shipping Exchange, CCFI, Morgan Stanley Research
Source: Shanghai Shipping Exchange, CCFI, Morgan Stanley Research
                                                                                                          Exhibit 36
Exhibit 33                                                                                                Intra-Asia Spot Freight Rates (SCFI)
Intra-Asia Freight Index                                                                                  500       $/TEU                                              China-Japan
1,100 $/TEU                                     China-Japan                                               450                                                          China-Hong Kong
                                                China-Hong Kong                                           400                                                          China-Southeast Asia
1,000                                           China-Southeast Asia
                                                                                                          350

                                                                                                          300
  900
                                                                                                          250

  800                                                                                                     200

                                                                                                          150
  700
                                                                                                          100

                                                                                                           50
  600
                                                                                                            0
                                                                                                             Jan- May-       Sep-   Jan- May-   Sep-   Jan- May-    Sep-   Jan-   May-   Sep-   Jan- May-   Sep-
  500                                                                                                         09   09         09     10   10     10     11   11      11     12     12     12     13   13     13
        Jan- May- Sep-   Jan- May- Sep-     Jan- May- Sep-     Jan- May- Sep-      Jan- May- Sep-
         09   09   09     10   10   10       11   11   11       12   12   12        13   13   13
                                                                                                          Note: China to US rates are quoted in US$ per Forty-foot Equivalent Unit (FEU), China to
                                                                                                          Europe/Mediterranean and Intra-Asia rates are quoted in US$ per Twenty-foot Equivalent Unit (FEU)
Source: Shanghai Shipping Exchange, CCFI, Morgan Stanley Research                                         Source: Shanghai Shipping Exchange, SCFI, Morgan Stanley Research




                                                                                                                                                                                                                   14
                                                                                MORGAN         STANLEY         RESEARCH

                                                                                December 13, 2013
                                                                                Maritime Industries




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Tanker Shipping Ltd., Paragon Shipping Inc., Safe Bulkers, Scorpio Tankers Inc., Ship Finance International Ltd, Star Bulk Carriers Corp, Teekay
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                                                                                                                                                     15
                                                                                             MORGAN            STANLEY            RESEARCH

                                                                                             December 13, 2013
                                                                                             Maritime Industries




                              Coverage Universe    Investment Banking Clients (IBC)
                                             % of                   % of % of Rating
Stock Rating Category            Count       Total     Count Total IBC Category
Overweight/Buy                    995           34%           313          38%           31%
Equal-weight/Hold                1283           44%           388          47%           30%
Not-Rated/Hold                    109            4%            26           3%           24%
Underweight/Sell                  537           18%            99          12%           18%
Total                           2,924                         826
Data include common stock and ADRs currently assigned ratings. An investor's decision to buy or sell a stock should depend on individual
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                                                                                            MORGAN            STANLEY            RESEARCH

                                                                                            December 13, 2013
                                                                                            Maritime Industries




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                                                                                                                                                                           17
                                                                                       MORGAN    STANLEY            RESEARCH




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Industry Coverage:Maritime Industries

Company (Ticker)                              Rating (as of) Price* (12/12/2013)


Fotis Giannakoulis
Ardmore Shipping Corporation                 O (08/26/2013)                   $13.00
(ASC.N)
Baltic Trading Limited (BALT.N)              E (02/26/2012)                    $5.46
Box Ships Inc (TEU.N)                        E (09/28/2012)                    $2.89
Costamare Inc (CMRE.N)                       O (02/26/2012)                   $16.29
Diana Shipping Inc. (DSX.N)                  O (12/13/2013)                   $11.14
Dry Ships Inc. (DRYS.O)                      U (02/26/2012)                    $3.49
Dynagas LNG Partners (DLNG.O)                E (12/09/2013)                   $19.33
Frontline Ltd (FRO.N)                        U (10/29/2012)                    $3.33
Golar LNG Limited (GLNG.O)                   O (02/26/2012)                   $34.29
Golar LNG Partners LP (GMLP.O)               O (05/18/2011)                   $28.65
Gulfmark Offshore Inc. (GLF.N)               E (03/22/2012)                   $46.74
Hornbeck Offshore Services                   E (03/22/2012)                   $48.69
(HOS.N)
Knightsbridge Tankers Ltd.                   O (12/13/2013)                    $8.00
(VLCCF.O)
Navios Maritime Partners LP                   E (12/13/2013)                  $17.67
(NMM.N)
Nordic American Tanker Shipping               E (10/29/2012)                   $8.09
Ltd. (NAT.N)
Paragon Shipping Inc. (PRGN.O)               E (02/26/2012)                    $5.81
Safe Bulkers (SB.N)                          O (12/13/2013)                    $7.98
Scorpio Tankers Inc. (STNG.N)                E (08/26/2013)                   $10.99
Ship Finance International Ltd               E (12/03/2013)                   $15.69
(SFL.N)
Star Bulk Carriers Corp (SBLK.O)             O (12/13/2013)                    $9.27
Teekay Corporation (TK.N)                    E (02/26/2012)                   $42.20
Teekay LNG Partners LP (TGP.N)               E (12/06/2010)                   $39.01
Teekay Tankers Ltd. (TNK.N)                  U (10/29/2012)                    $3.12
Tidewater Inc. (TDW.N)                       O (03/22/2012)                   $56.46
Tsakos Energy Navigation LTD                 E (02/26/2012)                    $5.42
(TNP.N)

Stock Ratings are subject to change. Please see latest research for each company.
* Historical prices are not split adjusted.




© 2013 Morgan Stanley

				
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