Eimskip Global News 2017

EIMSKIP’S GLOBAL NEWS 2017 EDITION

GLOBAL NEWS

Lagarfoss

TABLE OF CONTENTS GROWING STRONGER EVERY YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 GROWING EIMSKIP’S INTERNATIONAL OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 EIMSKIP EXPANDS ITS OPERATIONS IN NORWAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 EIMSKIP INCREASES FREQUENCY & CAPACITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 EIMSKIP‘S NORTH ATLANTIC NETWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 FAROE SHIP EYES NEW OPPORTUNITIES IN SEAFOOD EXPORT BOOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 EIMSKIP‘S NORTH ATLANTIC CONNECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 FAST AND THE FURIOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SAFETY IN TRAFFIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 OUR GLOBAL NETWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-13 EIMSKIP STARTS CALLING HELSINGBORG IN SWEDEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 EIMSKIP STARTED CALLING BREMERHAVEN IN GERMANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 CONNECTING GREENLAND WITH THE WORLD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 EIMSKIP AND THE COMMUNITY – AN INSEPERABLE WHOLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-17 EIMSKIP ACQUIRES 90% SHARE IN EXTRACO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 EIMSKIP ACQUIRES 80% SHARE IN MARECO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 KEY FIGURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 MISSION AND VISION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-21 PICTURES FROM EIMSKIP‘S OPERATIONS, ALL CAPTURED BY EIMSKIP‘S EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . 22 EIMSKIP IS A PART OF RESPONSIBLE TOURISM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

PUBLISHER Eimskip Korngardar 2 104 Reykjavik Iceland +354 525 7000 eimskip@eimskip.com eimskip.com

2 GLOBAL NEWS

EDITORS Ólafur William Hand Dagný Jónsdóttir LAYOUT Eimskip Marketing

PRINTING Litróf printing, Iceland PAPER Magnostar-Sappi

The printing of this magazine has Nordic Swan Ecolabel accreditation.

The paper used for the magazine has Nordic Swan Ecolabel accreditation an carries the FSC label.

Gylfi Sigfússon, President and CEO

GROWING STRONGER EVERY YEAR

Eimskip has just celebrated its 103rd anniversary and has never been stronger.

Eimskip currently operates 21 vessels, 14 chilled and cold-storage facilities in five countries, 26 warehouses in eight countries and terminal operations in 13 locations in four countries. The company runs a network of 60 own offices, works with 69 associates in a total of 48 countries and employs about 1,700 people in 20 countries.

Eimskip has defined its home market as the North Atlantic, stretching from the east coast of North America to the west and north coasts of Norway and embracing Newfoundland and Labrador, Iceland, the Faroe Islands and Norway.

These four countries are all rich in natural resources, which is significant for the design of Eimskip’s sailing system.

At the end of February, Eimskip made changes to its sailing system to strengthen the system and its services still further. With the changes and an additional 700 TEU vessel, the company has increased its capacity by 7-11% on both its European and North American routes. The task ahead is, as before, to maintain and improve the strength of our liner services in the North Atlantic, expand our range of services on the company’s home market and continuously fine-tune our customer services and international forwarding services.

Eimskip is operationally strong and financially stable and is focused on its mission to be a leading transportation company in the North Atlantic, with connections to international markets and to be specialized in worldwide freight forwarding services. The company is motivated by its vision to achieve and maintain excellence in transportation solutions and services.

The company’s forwarding services consist of transportation solutions that lie outside the company’s own liner system, the two complementing each other.

The international forwarding market is complex and highly competitive. We have managed to follow our customers in their globalization by creating a service network in cooperation with various deep-sea lines and other transportation companies all over the world. This service network is constantly evolving and attracting new customers, and the forwarding services have been growing steadily every year.

Eimskip’s strategy is to grow both organically and also through strategic acquisitions. Late last year, we strengthened our freight-forwarding network by

acquiring a majority share in the specialized forwarding company Extraco in the Netherlands. This will strengthen our service network through the Netherlands and consolidate the company’s niche in the international freight-forwarding market.

In January this year, Eimskip and Royal Arctic Line, the national carrier of Greenland, reached an agreement to build together three vessels to serve Greenland and the Scandinavian market, so connecting Greenland better with the rest of the world. This will expand business opportunities between the countries in our home market in the North Atlantic and allow importers in Greenland to source from a wider range of markets than from Denmark alone; it will also allow exporters in Greenland to sell and ship directly to other markets.

Also in January, Eimskip acquired a majority share in Mareco, a Belgian freightforwarding company, which will open the door for Eimskip to new commodities and new markets in Africa and South America. With this acquisition, Eimskip will acquire its first own office in South America in Sao Paulo, Brazil.

In November Eimskip signed an agreement to acquire the Norwegian shipping and logistics company Nor Lines, which serves Northern Norway with five vessels, trucking services and terminals. Eimskip is waiting for the Norwegian Competition Authority’s final ruling; in February the authority issued a notice of objection regarding the acquisition.

One of Eimskip’s duties is to make sure that environmental issues are taken seriously. We are actively participating in discussions regarding potential environmental risks and finding ways to minimize the costs of our operations in the North. Iceland’s sovereignty and its strategic geopolitical location make it an ideal platform for such discussions. We are working on reducing Eimskip’s ecological footprint and on monitoring and publishing the results.

I am very optimistic about the future of Eimskip. Operations in our home market will continue to grow, through a stronger sailing system and by constantly looking for ways to improve our customer services. Growth will also be realized with synergies in our international freight-forwarding services and adding strategic acquisitions. We are optimistic, energetic and ambitious, and convinced that we will, with our clear focus on the tasks ahead and the great opportunities at hand, have many more good years to come.

St. John’s, Newfoundland

GROWING EIMSKIP’S INTERNATIONAL OPERATIONS

Eimskip’s International operations cover 19 countries outside Iceland, with 42 own offices in Europe, North America, Asia and South America. The company has also an agency network in 28 other countries though which it offers its customers worldwide services for the carriage of frozen, chilled and dry cargo.

It is Eimskip’s objective to enhance its international activities. To secure growth, it was decided that one of the company’s key strategic priorities is to develop international activities further, in line with the company’s mission and vision, with the focus on the North Atlantic area and worldwide forwarding services. Currently, international operations generate 48% of the company’s revenue, but the goal is to increase diversification in the coming years and increase this ratio, thereby reducing the importance of Iceland-related revenue for the Group.

Acquisitions are an important part of this strategy and a few new companies have been brought into the Group in the past two years. In North America, Eimskip has acquired the reefer logistics company Cargocan and a cold storage and terminal company in St. Anthony, Newfoundland. These were important steps towards being better able to serve the seafood industry in Canada.

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In the Netherlands, Eimskip has acquired two reefer logistics companies. The first of these was Jac. Meisner, a forwarder specialized in refrigerated cargo and veterinary and agriculture controls. The second one is Extraco, which is specialized in juice logistics, including storing, blending and European distribution. These acquisitions were important to diversify the reefer logistics services with new commodities and customers and to generate synergies with the existing operations.

Eimskip acquired the reefer logistics company Mareco in Belgium in January 2017. This was also an important step in reefer logistics development, since with Mareco, Eimskip is able to strengthen further its services to seafood and meat customers and expand its geographical area into South America and Africa.

Focus on the North Atlantic area with Eimskip‘s own sailing system and on worldwide logistics services are the core activities of the company’s operations.

It is Eimskip’s objective to grow further in these segments and offer its customers even better services and more global coverage. Eimskip is a cool choice in logistics.

Bragi Thor Marinosson, Executive Vice President

Tromsø , Norway

EIMSKIP EXPANDS ITS OPERATIONS IN NORWAY The last few years have been very good for Eimskip in Norway. The company’s staff is now up to 48 employees, working in seven offices spread along the Norwegian coast and up to the Russian port city of Murmansk. The company has four ships on scheduled routes extending along the Norwegian coast, down to Great Britain and onwards to the Netherlands.

“The company’s goal is to be the supplier of choice for internationally competitive, high-quality transportation and logistics services, with a focus on the company’s home markets where viable,” says Lára Konráðsdóttir, Managing Director of the Norway operation. Eimskip is a leading transportation company in the North Atlantic, with connections to international markets, and is specialized in worldwide freight-forwarding services, with the vision of providing excellence in transportation solutions and services. “We have been focusing on the forwarding services, especially reefer forwarding, and recently we have been adding highly experienced staff to Eimskip’s team dealing with forwarding,” says Lára.

Eimskip in Norway operates two own cold stores, in Kirkenes and Sortland, and offers cold-store facilities in Tromsø and Aalesund. This fits the operation perfectly as most of the goods transported from Norway to other ports in Europe, Asia or Africa consist of frozen fish. The company is a partner in a worldwide cold-store network in which discharging, online inventory, tallying, agency, etc., are all part of the day’s work, as well as making connections to worldwide transport systems.

“In addition to our transportation services, we are agents for many foreign trawlers trollers that discharge land in Norway and we handle all the paperwork and ensure that the discharging landing permits are in order,” says Lára. “We operate seven reefer vessels and during periods of heavy booking we add another five or six vessels,” says Lára, optimistic about the company’s future in Norway, especially in the light of the country’s strong fishing industry and the increasing demand for marine transportation services.

Reykjavík, Iceland

EIMSKIP INCREASES FREQUENCY & CAPACITY In the first quarter of 2017, Eimskip introduced an addition to its fleet, adding one vessel to the liner service and at the same time changing the sailing system. The main purpose was to customize the system to changes in the market, allow for ongoing growth which has taken place in both import to and export from Iceland. These changes increase both capacity and frequency between Iceland and Europe and Iceland and the United States, Canada and Newfoundland.

Eimskip provides a ‘one-stop shop’ in transportation services where the needs of our customers are the main focus in all our actions. Our role is to provide excellent service by fulfilling our customers’ transportation needs at all levels of the supply chain and we believe that our dynamic sailing system is the key factor in allowing us to do so.

“By adding a vessel to our already extensive sailing schedule, Eimskip is reacting to the continuous growth in import to Iceland,” says Matthias Matthiasson, Vice President, North Atlantic Container Liner Services at Eimskip. “With the tourism industry growing at a such a fast pace it is now generating more foreign revenue than any other industry in Iceland. The sector is having to provide more and better accommodation, transportation services, whether in the form of rental cars or public transport, as well as entertainment, food and drink, the majority of which has to be imported. This puts pressure on the existing infrastructure, which needs to be continuously improved, again leading to more import of heavy machinery, building material and so forth.

In addition to this, export related to heavy industry (aluminium, silicon) and fish farming, is growing significantly year on year. All of this is on top of our economy’s natural growth.”

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These developments have led to our customers’ demands changing and a need for connecting new markets. New trading relationships were formed when Eimskip started calling at Portland, Maine, which gave new access to fish resources for both processors and distributors in Maine. Eimskip now calls at Bremerhaven, Europe’s fourth largest container port, a major transhipment hub with connections to Asia, Africa and South and North America. The modern terminal also has warehouse facilities for chilled and frozen cargo.

Calling at Swinoujscie has furthermore connected our customers to Eastern Europe and the Baltics.

“In all these changes, it is important that we don’t lose focus and forget our core export business, export of fish products. The new schedule includes weekly coastal sailings in Iceland which our customers have been calling for,” says Matthias. Eimskip’s increased business in the North Atlantic through connections in the USA, Newfoundland, the Faroe Islands and Norway, have enabled us to restart weekly services with direct connections to the Faroe Islands, the UK and Mainland Europe as well as offering shorter transit times to and from USA. This also allows us to strengthen our service and capacity for the Icelandic market.

“Being in such close proximity to developments in our marketplace gives us the advantage of preparing our systems for what is to come, but it also puts added pressure on us from our customers who now expect a dynamic but flexible sailing system that meets their ever-changing requirements. We do our best to provide this, revisiting the drawing board regularly to make sure our sailing system is the best it can be at any given time,” says Matthias.

EIMSKIP’S NORTH ATLANTIC NETWORK Nuuk Greenland

Portland United States

St. Anthony Canada

Halifax

Ísafjörður

Canada

Iceland

Grundartangi

Akureyri

Iceland

Iceland

Helguvík

Húsavík

Iceland

Argentia

Iceland

Reykjavík

Canada

Reyðarfjörður

Iceland

Iceland

Vestmannaeyjar Iceland

blue line

Runavík Faroe Islands

yellow line

Hammerfest Norway

Båtsfjord Norway

Måloy

Scrabster

Kirkenes

Norway

Scotland

green line

Norway

Norway

Faroe Islands

gray line

Tromsø

Norway

Sandnessjoen

Tórshavn

red line

Sortland

Norway

Ålesund

Bergen

Aberdeen

Norway

Norway

Murmansk

Scotland

Russia

orange line partner route

Grimsby

freight forwarding

Immingham

Stavanger Norway

England

Århus Denmark

possible arctic sailing route

Velsen

Rotterdam

seasonal route

Helsingborg

Helsinki

Sweden

The Netherlands

The Netherlands

transit hub port

Fredrikstad Norway

England

Finland

Vlissingen The Netherlands

Vigo Spain

Porto Portugal

Lisbon Portugal

Bremerhaven

St. Petersburg

Germany

Russia

Swinoujscie Poland

Szczecin Poland

Gdynia Poland

Klaipeda Lithuania

Riga Latvia

Tórshavn, Faroe Islands

FAROE SHIP EYES NEW OPPORTUNITIES IN SEAFOOD EXPORT BOOM As production of farmed Atlantic salmon and wild-caught pelagic species hits record-breaking levels in the Faroe Islands, leading transport and logistics services provider Faroe Ship is bracing for further increase in demand from domestic seafood exporters as well as foreign entities that make use of the islands’ storage and freight-forwarding services.

“We’ve seen quite a surge in demand for seafood-related transport and logistics services,” said Bogi P. Nielsen, Faroe Ship CEO. “This is primarily due to rapid growth in the aquaculture business as well as increased quotas in pelagic fisheries. All of this has presented our industry with new opportunities and challenges. Because of this growing demand we’re looking to further advance the scope and quality of our offerings.”

With the Russian Federation becoming by far the largest market for Faroese seafood exports in recent years, Russian vessels calling at Faroese ports have likewise emerged as a sizable segment looking for domestic cold-storage and international shipping services.

“We’ve become quick at adapting our services to the specific needs of our clients, as changes are fast in both the export and the import trade,” Mr. Nielsen added. “Clearly, the recent rise in seafood exports has benefited the shipping business and you may say the overall supply of services has increased to match the demand. Meanwhile, one of our focuses has been to encourage 8 GLOBAL NEWS

Russian vessels to use Faroese cold-storage facilities for their catches, whether these are made in our waters or in international waters. Furthermore, in cooperation with leading international operators, we offer shipping to destinations beyond our and Eimskip’s scheduled routes.”

Another factor that may further consolidate and expand Faroe Ship’s business is the Port of Tórshavn’s planned extension of the East Harbour, the company’s home port. Here, a major development will see facilities extended by 95,000 square meters within the next year or so, significantly increasing storage areas and dock space while dramatically enhancing vessel maneuverability.

With offices and warehouses in Tórshavn, Klaksvík, Runavík and Tvøroyri, Faroe Ship holds shares in cold-storage facilities in Klaksvík and Fuglafjørður, as well as owning a cold store in Tórshavn. In addition, the company has the Faroe Islands’ largest and most modern truck fleet.

Established in 1919 and part of Eimskip since 2004, Faroe Ship operates 6 weekly port calls from the Faroe Islands to ports in Iceland, Scandinavia, the United Kingdom and continental Europe. On the return voyages, imports are brought to the Faroes from ports in the UK, Denmark, Norway/Poland, and Sweden. In collaboration with Maersk, Faroe Ship offers further links to Asia, the Middle East, Africa and the Americas. Under the Faroe Express brand, the company also offers a worldwide courier service.

EIMSKIP’S NORTH ATLANTIC CONNECTIONS

SAFETY IN TRAFFIC 10 GLOBAL NEWS

In order to raise awareness and teach children about safety in traffic, E.T.S. parked one of its trucks in front of the “Dr. H. Bavinckschool� in the Netherlands, so the children could experience the view from inside the truck and learn about safety and dangerous situations in traffic.

FAMILY NO MORE

COMING SOON #F8

FASTANDFURIOUS.COM

FAST 8 Last year was certainly an eventful one in transportation at TVG-Zimsen. By far the largest individual project was handling the Fast 8 filming team which arrived from the US with all its equipment to shoot scenes in the latest Fast & Furious production with the title “The Fate of the Furious.” This went ahead in March and April in the Mývatn region and in the old cement works in Akranes.

From the outset it was clear that this would involve a huge volume of transport to and from the country. This started in February 2016, nearly the entire quantity passing through Eimskip’s regular port of call in Portland, Maine, on the eastern seaboard of the US. Four crossings were needed to bring it all across to Iceland. In addition, nine vehicles had to be flown in from New York and Boston. Altogether, about 820 units were carried to Iceland for the Fast 8 project.

The most conspicuous part of all this was the number of trucks and trailers involved. These were not only heavy but also extremely cumbersome; about half of the entire transported volume consisted of outsize vehicles which called for accuracy, care and detailed planning for loading and unloading.

A lot of 40-foot flatracks were therefore needed, all of them in outsizes.

And in addition to all the cars, tanks, trucks, snowmobiles, motorcycles and equipment waggons, there were mobile workshops: trailers fitted out as sophisticated garage and tire shops. But it was the Lamborghinis and army tanks that attracted most of the attention.

After the shooting, twenty vehicles were left with the recycling company Hringrás for disposal. They had either been smashed up or blown up in the course of the filming. So there was plenty to do, and when all was over, most of what was left had to be sent as fast as possible back to Portland for use in the next shoots, which were scheduled in Cleveland, Ohio and

Havana in Cuba. The film is due to open in mid-April 2017, and everyone is understandably excited at the prospect of seeing how it comes out on the big screen.

All collaboration between TVG-Zimsen and Truenorth and Packair in Los Angeles over the Fast 8 project went extremely smoothly. The same can be said regarding all contact with the customs authorities and Hringrás too.

Thanks are also due to Eimskip for its part in the venture; this applies to all the staff in Portland and Iceland and also the crews of the Eimskip vessels involved.

Obviously, direct scheduled sailings between the US and Iceland secured the best, quickest and safest transportation to and from Iceland for the Fast 8 project.

Anchorage Nuuk

Ísafjörður Grundartangi Helguvík Vestmannaeyjar

Dutch Harbor

Húsavík Akureyri Reykjavík

Reyðarfjörður

Runavík Tórshavn

Ålesu

Måloy Bergen

Prince Rupert

Fre

Stavanger

Scrabster Aberdeen

Århus

Killybegs

Bremer

Immingham Grimsby

St. Anthony

Seattle

Velsen Rotterdam

Vlissingen

Portland

Argentia Bayside Halifax Portland

New York

Bilbao

Everett

Vigo Porto

Oakland

Barcelona

Lisbon Valencia

Norfolk Los Angeles Long Beach Charleston Houston

Casablanca

New Orleans Agadir Miami

Veracruz

Kingston

Puerto Limon & Moin Puerto Caldera, Punta Morales

Panama

Caracas Lagos Abidjan

Guayaquil

blue line

Lima Callao

green line yellow line

Rio de Janeiro Santos

red line gray line Rio Grande

orange line

Valparaiso

Buenos Aires

partner route reefer tradeline network

Mar del Plata

Puerto Madryn

possible arctic sailing route optional / seasonal route

Puerto Deseado

transit hub port partner port

Ushuaia

Montevideo

Hammerfest Tromsø

OUR GLOBAL NETWORK

BĂĽtsfjord Kirkenes

Murmansk

Sortland

Sandnessjoen

und Helsinki

edrikstad

s

Helsingborg

St. Petersburg

Riga

Klaipeda Gdynia rhaven Swinoujscie Szczecin m

Moscow

Vladivostok

Odessa

Genova

Novorossiysk

Constanta

Dalian

Sendai

Tianjin

Istanbul

Tokyo Gioia Tauro

Piraeus

Qingdao

Izmir

Busan

Osaka

Limassol Haifa Port Said

Bahrain Shenzhen

Jebel Ali

Xiamen

Taipei

Hong Kong Hanoi

Jeddah Nhaa Sheva

Manila

Bangkok Ho Chi Minh City

Port Harcourt Port Kelang Singapore

Jakarta Surabaya

Brisbane

Cape Town

Fremantle

Adelaide

Melbourne

Sydney

EIMSKIP STARTS CALLING HELSINGBORG IN SWEDEN Eimskip starts to call Helsingborg in Sweden as of 4 May this year. The company will at the same time stop calling Halmstad which has been its port of call in recent years. This step is a part of developing the company’s sailing system, but the change gives the company’s customers better connections to other markets and other shipping companies. There has been substantial growth in transport between Iceland and Sweden, to and from the Faroe Islands and in Trans-Atlantic services.

close to the terminal where loading and unloading of containers take place.

The move to Helsingborg in Sweden represents a significant step in increasing services to Eimskip’s customers. The port has invested a great deal in recent years and offers now a modern terminal which will increase service reliability.

This development has, among other things, lead to increased storage capacity of reefer containers and all related services have been strengthened. The container port of Helsingborg is the fourth largest in Scandinavia.

The company’s office in Sweden will also move to the harbor area to be closer to the container terminal and the vessel arrivals. A warehouse will be opened

EIMSKIP STARTED CALLING BREMERHAVEN IN GERMANY Eimskip started to call Bremerhaven in Germany as of 6 December last year.

The company stopped at the same time calling Hamburg, which has since the year 1926 been one of the company’s ports of call. This step is a part of developing the company’s sailing system, but the change gives the company’s customers better connections to other markets and the transit time gets shorter, besides having the heart of the German fish industry located around Bremerhaven.

For the past several years, the company’s vessels Dettifoss and Godafoss have been calling Hamburg on the Blue Line. The terminal that Eimskip has been using will be closed due to structural changes in the port of Hamburg. It is therefore the right moment now to move the vessel calls and it will strengthen the company’s sailing system. The last service call in Hamburg is planned with the vessel Godafoss on 29 November.

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The move to EUROGATE Container Terminal Bremerhaven represents a significant step in increasing services to Eimskip’s customers. The port offers a modern terminal, providing a full array of services at a high degree of efficiency. The container port of Bremerhaven is the fourth largest in Europe and is a major transshipment hub. Connections via Bremerhaven to Asia, Africa and South and North America are also excellent and a warehouse for chilled and cold cargo is located directly at the container terminal, which further improves services for the fish industry.

Eimskip’s main office in Germany will remain in Hamburg.

CONNECTING GREENLAND WITH THE WORLD

Eimskip and Royal Arctic Line A/S, the Greenland’s national carrier, have a long-lasting relationship, Eimskip having been an agent for Royal Arctic Line since 1993. In May 2016, Eimskip and Royal Arctic Line signed a letter of intent to form and evaluate a potential cooperation regarding the building of three container vessels and capacity sharing.

In January 2017, Eimskip and Royal Arctic Line signed an agreement to connect Greenland into Eimskip’s international sailing system, so connecting Greenland to the rest of the world. The two companies intend to work together through capacity sharing on larger vessels which will increase efficiency and service reliability. Agreement on this cooperation is seen as a very important step in connecting Greenland to the global market. It will create opportunities for export customers in Greenland by allowing goods to be further refined in Greenland before they are transported directly to destinations all over the world in a more efficient way. Furthermore, customers in Greenland will be able to select transportation directly from new market areas instead of having to go through Denmark.

Eimskip finalized a contract at the end of January with China Shipbuilding Trading Company Limited and Guangzhou Wenchong Shipyard Co. Ltd. This is for two 2,150 TEU container vessels, which are expected to be delivered in 2019.

Royal Arctic Line has also signed a contract with the same shipyard for the building of one vessel of the same type.

The new vessels will have Ice Class and will be designed in accordance with the Polar Code. The vessels will have an overall length of 180 meters and a breadth of 31 meters and will be fitted with TIER III engines which are specially built to reduce nitrogen oxide (NOx) emissions. They will increase efficiency and service reliability as they are larger than current vessels in the trade and will be well equipped to sail in the North Atlantic. They will consume less fuel per container unit compared to older vessels, with lower emissions due to a builtin scrubber system which minimizes sulphur oxide (SOx) emissions. Larger and more economical vessels will result in lower operational costs per container unit.

The port developments in Nuuk, Reykjavík and Thorshavn will enable larger vessels to serve in Eimskip’s market area. Eimskip foresees that this cooperation will increase business activity between the Arctic nations, especially between Iceland and Greenland, where it been limited due to lack of frequency and direct services.

EIMSKIP & THE COMMUNITY Ever since it was founded in 1914, Eimskip has honored its corporate social responsibilities. Its focus in this area has changed over the years, taking account of the circumstances and knowledge at any given time. For example, around the time of the Company’s foundation, the independence issue was prominent in Iceland. It was obvious to the founders of Eimskip, and to the whole population too, that an island nation like Iceland without reliable transport and communications with the outside world could never maintain an independent existence and would always be subject to decisions taken abroad.

With the foundation of Eimskip, Iceland was at last able to make its own decisions regarding foreign trade and travel, which resulted in a new freedom and a stimulus towards social development.

Eimskip defines the community as one of its stakeholders. Corporate social responsibility looms large in its operations, and environmental matters play a large part in this. The Company’s corporate social responsibility is reflected both in an ethical approach to commercial dealings and to general responsibilities towards the community in each of the countries in which it operates.

In recent years Eimskip has been playing a larger role in community and environmental issues, as studies have shown that it is essential for society and the economy to combine in making a massive effort to repair the environmental damage that has occurred over the past decades.

Eimskip was one of the first companies in Iceland to set itself an environmental policy Adopted in 1991, this involves respect for the environment and an attempt to minimize the environmental impact of the Company’s operations. Awareness and environmental protection are reflected in all the Company’s activities.

Eimskip makes a priority of compliance with the regulatory framework in force at any given time, devoting special efforts towards keeping up to date with the rules applying in each and every one of the 19 countries in which it operates and also observing the international conventions under which its operations fall, both at sea and on land. For example, international rules restrict the use 16 GLOBAL NEWS

of fuel oil in designated emission control areas in coastal waters; instead, marine gas oil or other environmentally-friendly low-sulphur fuels must be used. For many years, Eimskip has been working with the Icelandic company Marorka on ways of reducing its oil consumption, including the installation of measuring devices from Marorka in its vessels. This, together with an emphasis on the most fuel-efficient approach to sailing at any given time, has led to a significant reduction in oil consumption. Eimskip has made a priority of being a leader in the adoption of new technology in this field rather than waiting until being compelled to do so by regulations.

Like most Icelandic companies, Eimskip sorts its refuse and makes a point of having this done in all its operational units and branches. Efforts are being made to raise still further the proportion of recyclable wastes and to have employees shoulder greater responsibility regarding waste generation.

Eimskip signed a declaration of its aims regarding measures to tackle climate change in November 2015, since when it has made a point of specifying aims and measured values regarding the environment. As from 2017 it will publish figures on the environmental impact of its operations in accordance with this declaration, with a carbon-footprint calculator to help its customers meet the needs of the market.

At the beginning of this year, Eimskip was one of many companies that signed a joint declaration on responsible tourism. It might seem strange to read that Eimskip was involved in this, together with tourist agencies and the like, but the fact is that Eimskip currently operates the ferries Herjólfur and Baldur and also the excursion craft Særún, which sails in Breiðafjörður.

Through its subsidiaries, the Company also handles the reception of most of the large number of international pleasure cruisers which call in Iceland each year. This responsible tourism project is aimed at making Iceland an attractive destination in future and creating a sustainable occupation for coming generations. Under the campaign, the companies involved seek to shoulder their responsibility for the impact that their operations have on the environment and the community. Support and guidance on ways of achieving the goals of responsible tourism are offered as part of the campaign.

- AN INSEPARABLE WHOLE Eimskip has always kept a close eye on the development of new sources of energy to power its vessel fleet and vehicles It has already acquired a considerable number of electric cars which it uses in the metropolitan area. Late last year, Eimskip signed a contract for the purchase of a Norwegian shipping company whose vessels are powered by liquid natural gas (LNG), which makes them far more environmentally friendly than oil-powered vessels. If this purchase goes ahead with the approval of the Norwegian competition authorities, they will become the most environmentally friendly ships in fleet of any Icelandic company.

Road traffic causes a lot of pollution and takes its toll on the road system. In 2014, Eimskip began services to more ports in Iceland as a way of raising the level of services to its customers, reducing road use and switching the freighting of heavy goods from road carriage to shipping cargo. The change has proved successful.

When the economic dimension of environmental challenges is considered, the conclusion is more often than not that the ‘greenest’ approach brings gains for everyone, both business enterprises and the community at large.

Measures to prevent accidents and substance abuse are among the most important contributions that enterprises can make to their communities, and they have been among the priorities in Eimskip’s corporate social responsibility activities over the years. Since 2004 it has collaborated with the Kiwanis movement in Iceland in giving all six-year-old children in Iceland bicycle helmets to enhance their safety in traffic. This initiative has proved its value many times over and made people generally aware of the need to use helmets not only when cycling but also in dangerous working areas. Children have been saved from serious injury every single year; Eimskip and its employees are justifiably proud of being involved in a project that has produced such evident good results Eimskip and the Kiwanis have given about 60,000 children helmets over the years, and the Company received recognition of this from the international Kiwanis movement, earning the title ‘Corporate Social Responsibility Company of the Year’ in 2013. Accident prevention is also an important part of Eimskip’s

own internal operations: large and complex workplaces often pose hazards of many types, which makes awareness-raising and training in response techniques a vital part of the Company’s culture, including training in the use of safety equipment.

Sports play a vital role in preventing substance abuse and anti-social behavior in Iceland, and Eimskip is one of the largest single sponsors of sports in the country. It has always made a point of supporting the children’s and youth divisions of the sports clubs; early introduction to an activity that gives a purpose and social focus is valuable in preventing young people from experimenting with intoxicants and drugs, which are possibly the greatest hazard for the younger age group. It is Eimskip’s hope that through this support for the sports clubs and by working closely with the customs authorities and the police to stop drugs reaching the country by sea, it will make a significant contribution to the fight against substance abuse.

Mention may also be made of Eimskip’s support for the work of the Icelandic Red Cross since 2009 under a cooperative contract on the collection of used clothing and the subsequent transport of the clothing to countries where it is needed.

This combines the aims of high utilisation and support of charitable work The Company has also for many years supported the National Forestry Service in its efforts to establish greater forest cover and the Seamen’s Accident Prevention Training unit in its efforts to combat accidents and promote safety at sea.

The years ahead will bring many more challenges to be faced in the fields of community work and the environment, and companies everywhere will have to play their part in meeting them. Community support and environmental protection are long-term tasks that will receive the Company’s attention far into the future.

EIMSKIP ACQUIRES 90% SHARE IN EXTRACO Eimskip has strengthened its position in worldwide reefer logistics services by acquiring 90% of the forwarding company Extraco Internationale Expeditie B.V. in the Netherlands.

Extraco was founded in 1991 and is located close to the port of Rotterdam, the largest port of Europe. It services importers of chilled and frozen commodities in the Netherlands, as well as providing import handling, warehousing, custom brokerage and distribution of bulk, chilled and frozen commodities in Europe.

The company’s annual turnover amounts to approximately EUR 19 million.

Extraco employs 19 people and the majority of the company’s current management team will stay on board the company and own 10% share. The company will move into Eimskip’s office in Rotterdam to achieve synergies and will form a reefer logistics center with the other Eimskip identities there: European Transport Services (E.T.S.), Eimskip Reefer Logistics and Jac. Meisner.

This is the first of several accretive acquisitions that Eimskip will be making in its core markets in the coming months. This acquisition will strengthen and diversify the company’s freight forwarding services in the Netherlands.

EIMSKIP ACQUIRES 80% SHARE IN MARECO Eimskip has strengthened its position in worldwide reefer logistics services by acquiring 80% of the forwarding company Mareco N.V. The company was founded in 2002 and its headquarters are located in Antwerp, Belgium. The current management team will continue to own a 20% share in the company and will manage its operations. Mareco employs 26 people in two locations, 22 in Antwerp and four in Sao Paulo, Brazil.

Mareco focuses on reefer logistics services, especially export to West, Central and South Africa from all over the world. Main commodities are seafood, chicken, pork and beef. The company’s annual revenue amounts to approximately EUR 60 million, with EBITDA ratio of 5-6% and it transports about 32,000 TEU per year.

18 GLOBAL NEWS

The acquisition is estimated EUR 16.6 million, subject to the company’s financial results for the year 2016, and is financed with cash and debt. Mareco will become a part of the Eimskip group as from the beginning of this year.

In relation to Eimskip’s investment and acquisition projects, the company has made an agreement with Íslandsbanki for a revolving credit facility with an agreed term of 18 months in the amount of EUR 47 million. Due to the acquisition of Mareco, Eimskip has drawn EUR 7 million on the credit facility.

The acquisition of Mareco expands Eimskip’s geographical reefer logistics network, especially in areas in Africa and South America, and increases the variety of frozen commodities. Mareco’s network will support the group to capitalize on new opportunities in new regions and supports further development in Eimskip’s reefer logistics services.

KEY FIGURES The year 2016 was a record year for Eimskip. The company is financially strong, with strong equity ratio and low leverage. About half of Eimskip’s revenue comes from operations outside of Iceland. The company’s liner services generated 74% of revenue in 2016 and 26% came from forwarding services.

geographical split of revenue

revenue EUR million

600 5%

8%

500 400 15%

300

2016

200

52%

9%

100 433.8

451.6

499.6

513.9

2013

2014

2015

2016

0

11%

ebitda EUR million

60

Iceland

Faroe Islands

Norway

Europe

Asia

Other

50 40

revenue by business segment

30 20 10 37.1

38.5

45.2

53.5

2013

2014

2015

2016

26%

0

2016

net debt and equity ratio EUR million

50 40 30 20 10 33.0

24.9

35.4

41.6

2013

2014

2015

2016

0

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

74%

Liner services Forwarding services

MISSION EIMSKIP IS A LEADING TRANSPORTATION COMPANY IN THE NORTH ATLANTIC WITH CONNECTIONS TO INTERNATIONAL MARKETS AND IS SPECIALIZED IN WORLDWIDE FREIGHT FORWARDING SERVICES

SECURE A GOOD RETURN FOR …

SHAREHOLDERS … WITH PROFITABLE GROWTH

BE AN OUTSTANDING WORKPLACE FOR …

EMPLOYEES

… WITH GREAT TEAM SPIRIT AND AMBITION

20 GLOBAL NEWS

VISION EXCELLENCE IN TRANSPORTATION SOLUTIONS AND SERVICES

CREATE VALUE FOR …

CUSTOMERS

… WITH OUTSTANDING SOLUTIONS AND SERVICES

SHOW CONCERN FOR THE …

SOCIETY

… WITH SOCIAL RESPONSIBILITY AND REDUCED ECOLOGICAL FOOTPRINT

PICTURES FROM EIMSKIP‘S OPERATIONS, ALL CAPTURED

BY EIMSKIP‘S EMPLOYEES

EIMSKIP IS A PART OF RESPONSIBLE TOURISM Eimskip signed a declaration on responsible tourism in cooperation with Festa, the Center for Corporate Social Responsibility and the Iceland Tourism Cluster.

Responsible tourism is an incentive project where companies connected with tourism agree on a limited number of clear and simple measures of responsible tourism, but over 250 companies in Iceland signed the declaration. The purpose of the project is to maintain Iceland’s status as an optimal future destination for tourists by supporting sustainability for the nation’s future generations.

The President of Iceland, Gudni Th. Jóhannesson, is patron of the project.

Eimskip operates the ferries Herjólfur and Baldur, as well as operating the cruise vessel Særún, sailing at Breidafjördur on Iceland’s west coast. In addition, Eimskip offers port agency services to most of the cruise vessels 22 GLOBAL NEWS

sailing to Iceland through the company’s subsidiaries. Eimskip’s role in the travel industry is therefore constantly growing. In addition to participating in the project, Eimskip is also one of the main sponsors.

Gylfi Sigfússon, President and CEO of Eimskip: “It is very important for us at Eimskip to be a responsible and leading company in the travel industry and that is why we welcome this initiative by Festa and the Iceland Tourism Cluster. Our goals tie perfectly in with the objectives of the project, which are to demonstrate exemplary behavior and respect for nature, ensure the safety of our guests and treat them courteously, respect the rights of our employees and have a positive impact on the local community.“

I‘M PROUD OF MY JOB Edda works as an operator of a 45 metric ton forklift at Eimskip. When choosing a career she never thought about the job as a gender issue. This is her job.

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