Q.1  Since Containership freight rate market has been unstable, we will appreciate if you
     would explain the process in which it has drastically dropped, especially in recent
     months. Were there any particular shipping companies triggering a harsh price war?

A.1  Whether particular companies instigated discount price war or not, many comparably new
     large vessels coming into market could be the factor whereby it takes some period of
     time for containership freight market to stabilize.

     Talking about such actions as setting profitability aside in order to primarily secure
     cargo volume, every player has come to well realize the pain caused from price wars,
     because recently the amount of loss become as big as size of business growth itself.
    In that sense, any such move to increase cargo volume even with no profit within a short
     time without any special reason has become less than before. However, we can say that
     the attitude still remains to fill vacanct space when it exists.

Q2.  For Containership Business, 1st Half results were in black figure, but 2nd Half estimation
     is in the red. On the other hand, looking at your cost saving plan in Containership Business,
     you have increased your full year saving amount plan by 10.0 billion ven, including 3.0
     billion yen achieved during 1st Half compared to estimations set as of this July.  Please
     advise your view about whether you still expect 2nd Half will turn to red ink, even including
     those cost savings.

A2. The balance between 1st Half and 2nd Half in Containership Business is caused by original
     Seasonality whereby cargo volume in 2nd Half is less than 1st Half. For this reason, the
     fact that earnings in 2nd Half are less than 1st Half is one of the basic framework in this
     business. On that basis, as you have pointed out, how we estimated freight rate for 2nd Half
     is significantly related to your question so I will answer our freight rate assumptions first.
     In Slide B-1, we quote our own freight rate indices. At the right edge of the table is shown
     1st and 2nd Quarters for Fiscal 2013; for example, for Asia-North America route it is 98 and
     96 respectively, and so 1st Half average is around 97. For Asia-Europe, 1st Quarter is 62 
     and 2nd Quarter is 76, with average for 1st Half being 69.

     These figures are average for the term and those for right now are, to be quite frank, much
     less than the average. In response, as our president touched on before, we are planning to
     restore freight rates from 1st November in Asia-Europe routes, and from 15th November in
     Asia-North America, on which our 2nd Half earning heavily depend, and we expect they can be
     restored with certain probability.     

     To put it in index, freight rate in Asia-North America trade is expected to increase by several
     points, and that in Asia-Europe by a few dozen points. However, we see the rate once increased
     could be somewhat down in the future due to various conditions. It is again going up slightly
     just before Lunar New Year holidays, and then again going down. For example, in our view, if it
     is raised by a few dozen points for a moment, it could then keep moving up and down repeatedly. 

     So, as an average point throughout 2nd Half, it is estimated as almost unchanged from that for
     1st Half.

     Consequently, in year-on-year comparison, profit level is estimated as considerably declined.
     We have been trying to recover that portion including sell off of additional chassis, containers,
     etc., but we see it might be difficult to reach the same level as last year.

Q3.   Moving up and down repeatedly, freight rates for containers seem to somehow keep going down
      structurally. Each containership company looks like it is pouring out the fruits from the
      advantage of scale with newly-built larger-type containerships by freight rate discounts. 
      Under such situation as a number of larger-type containerships being newly delivered into
      market for at least around these two years, if freight rates continue to decline for a couple
      of years structurally, let us know whether or not you can still firmly maintain your profitability
      with such cost cutting, etc.

A3.   I understand that your question is what we could do if present freight rates keep declining
      forever. For example, I doubt that present rate levels in October will last for very long as
      they do not appear to earn each containership carrier a reasonable profit. Recent precedents
      have already told us about that. Containership business performance during recent years has
      moved with such a stream, being the worst for Fiscal 2009 (the term ended in March 2010), and
      then next Fiscal 2010 recovered to fairly good, but again for Fiscal 2011 drastically worsened,
      and that is the background of what we faced last Fiscal 2012.  

      As you may be more clearly aware when you look at financial figures of overseas containership
      Companies, not only those in Japan, the companies concentrating in containership business seem
      to have been seriously damaged financially. So, sooner or later, while economy in U.S. and Europe
      is recovering to some extent, there will be gradual balance of supply and demand, so we consider
      freight rates are basically in recovery trend.

      On the other hand, as our own Containership Business policy, we have recently used words like
      selection and concentration, and input our management resources to our trunk lines between east
      and west, aiming to secure profit. And as to North-South trades and Intra-Asia trades where
      severe market situation seems to continue in the short and medium run, we are applying the
      brakes, which is what we have done continuously during these two recent years. 

      Regarding North-South trades and Intra-Asia trades, more to the point, their structure is such that
      when new giant containerships come into Asia-Europe routes, existing vessels in the routes move into
      Asia-North America, and in turn existing ones in Asia-North America flow into North-South trades or
      Intra-Asia trades one after another. So we foresee severer competition being prolonged there than
      in trunk likes from Asia to Europe and North America where competition is caused by just supply-demand
      gaps within the route and we have no choice but firmly going with a policy that aims for diminishing
      equilibrium in our earnings, and how we can save daily operating costs such as feeder costs, so-called
      ‘leaf picking’, or how far we can proceed with more efficient vessel deployment. Furthermore, we can
      even count on selling off more chassis, which has not yet completed in this 1st Half, and potentially
      can still be realized as in some areas where we are still negotiating with our customers. I suppose
      this might be such a way for compensating our earnings for those profit-improving items to support
      bottom line of our profit and loss.

Q.4   In containership industry, the P3 network, a powerful alliance to be formed by Maersk, MSC, and CMA-CGM
      starts from next spring, together with considerable cost-competitiveness and enormously potential efficiency
      in capacity allocation. Would you advise us of your present view about whether the other alliances, including
      CKYH to which you belong, consider it is better to stay with what you now have even in the future, or whether
      you are considering other ideas, including another realignment, etc.?    

A.4   As I suppose I might have answered almost in the same way in the previous meeting with you, we first generally
      view the movement positively because P3 will eventually be contributing to stabilizing the containership market
      situation. Talking about counter-measures for CKYH Green Alliance toward the P3, in terms of current share of
      space in each service route, CKYH has about 18% share in Asia-Europe trades and 26% in Asia-North America trades.

      Simply piling up present shares of Maersk, MSC, and CMA-CGM, which are forming P3, they will have approximately
      46% in Asia-Europe and 24% in Asia-North America. I believe CKYH, as an alliance, can sufficiently deal with P3
      power even in the way we have been doing up to now, but we will continue talking about how we can achieve further
      rationalization of service routes, more cost savings, including mixture of fleet, etc. among alliance members.   

      Regarding recent P3 movements, although you are already aware I will briefly touch on them just in case. On 24
      October they made application to FMC (Federal Maritime Commission) in the U.S.  On the other hand NITL (National
      Industrial Transportation League), a U.S. shippers’ association, has requested FMC to make strict investigation.

【Dry Bulk】

Q.1   As we understand that market exposure in your Cape-size fleet has been below 10% as a general policy,
      should we have the image that it will remain unchanged for next fiscal year?

A.1   While cargo volume has been increasing mainly for China, it does not seem that vessel surplus situation will change
      for a while so I will manage the business in a very prudent manner. Our free portion will not increase much.

Q.2   In terms of dry bulk market, please suggest to us your present circumstances and future outlook.

A.2   Background of recent hike in Cape-size market was basically that at the beginning of July, Chinese
      government took measures aimed at stopping its economic downturn such as construction of infrastructure,
      including subways in urban areas and building railroads in inland districts, in order to achieve pick
      up in crude steel production, and also price of steel increased after August.
       Another factor is that iron ore exports from Brazil, which are usually at a slower pace in first half
       of each year from impact of rough weather and flooding, have been increasing gradually up to now
       toward the end of the year. Depending on those backgrounds, the market for Cape-size has been raised.

       Then, as Panamax or smaller size vessel markets have been improving, they are still kept in positive tone
       because a new crop season in North America starts from October. Although Cape-size freight level has
       declined to around 16,000 dollars per day now, but considering present circumstances overall, I wonder
       if it might somewhat pick up again toward December.

Q.3   Is your Dry Bulker fleet cost increasing by recent new deliveries which were ordered at high prices before
      The Lehman Shock?

A.3   Whether higher priced new ships were delivered or not, yes it is as you say. We postponed deliveries of
      higher priced ships ordered before the Lehman Shock and those ships are entering our fleet nowadays.
      Business competitiveness of our Dry Bulk fleet is decreasing somewhat compared with before, however we
      view our fleet average cost as still being competitive compared with other carriers, so we think we can
      stand some market volatility. 

【Bulk Shipping Business】

Q     About outlook of Bulk Shipping Business sector in 2nd half, your estimate of 2nd half is 15.6 billion
      yen against 21.9 billion in 1st half. I think 2nd half should be better than 1st half considering your
      Dry Bulk market assumptions, so what is the reason you see 2nd half so prudently?
A     For Dry Bulk ships, we regrettably do not have so much market exposure for Cape-size. Especially for 2nd half
      we seldom have any market exposure whereas for small size vessels we now have market exposure to some extent.

      Another reason for difference between 1st half and 2nd half is valuation gain from exchange rate. We posted
      a gain of total 2 billion yen in 1st half. Although we posted gain of 3 billion yen in Bulk Shipping business
      in 1st half, it is not included in 2nd half so that is one reason for the difference.

      In addition, looking at Bulk Shipping business in 1st half, we think there was much more "Efficient Tonnage
      Allocation" than we expected. We have not factored in all of the "Efficient Tonnage Allocation" in our
      estimate for 2nd half so that may be one of the factors for the difference.


Q.1   As it seems the target from Cost Saving is increasing compared with estimate last time, what is concrete
      in your Cost Saving Plan?

A.1   We summed up factors for Cost Saving in the  material in A-5 under "Progress of Cost Saving Plan" which
      is divided into 2 sectors, "Containership Business" and "Bulk Shipping Business and Others."

     In Containership Business, target in fiscal year is 17.5 billion yen. Roughly speaking, one third is from
     Business restructuring which includes effect of large-size vessels due to five 8000-TEU type ships delivered,
     down-sizing scale of unprofitable trade and slow steaming by review of calling ports.

     Another one-third is from small operational cost saving which we are doing all over the world. For example
     there are re-negotiations of terminal charges and renegotiation of inland haulage by trucks and trains, so
     one-third is from building up those small cost savings.

     Final one-third is, roughly speaking, equipment related to Containership business. We sold container boxes
     themselves and chassis for container trailers, etc, as recent trend is that shipping companies no longer
     offer their own chassis in North America, so final one-third is gain from sale of those types of equipment.

     In "Bulk Shipping Business and Others" our target is 6.7 billion yen which is almost same amount as original
     Target of 7.0 billion yen. This is mainly from building up operational cost savings, like fuel cost saving
     by slow steaming and decreasing cargo charge of Car Carriers, etc.

Q.2  Please explain details of "Efficient Tonnage Allocation" in 3rd column of A-4 of financial material as
     there is positive factor of 5.8 billion yen in 1st half and 1.6 billion yen in 2nd half. Why will it
     decrease in 2nd half.

A.2 "Efficient Tonnage Allocation" is mainly from Bulk Shipping business where the details include factors
     such as further slow steaming, minimizing waiting time before cargo loading into Car Carriers and others,
     also decreasing ballast navigation which is navigation without loading cargo in Dry Bulk, etc. The reason
     for improvement in Bulk Shipping Business in 1st half is mainly from those factors.

     We do not factor all "Efficient Tonnage Allocation" into our estimate of 2nd half because of it being
     difficult determining how to predict them in an estimate. If we could succeed with the same efficient
     operation as in 1st half, there will be a positive factor in 2nd half.

Q.3  About valuation gain from exchange rate mainly due to overseas subsidiaries' debt, which business segment
     is it from mainly? As premise of exchange rate in 2nd half is 100 yen, do you factor valuation profit in
     your plan?

A.3  As valuation for 1st half, we posted gain of total 2 billion yen. There is gain of 3 billion yen in Bulk
     Shipping business and loss of a billion in Offshore Energy E&P Support & Heavy Lifter Segment. Net is
     gain of 2 billion yen.

    Loss of a billion is from our Offshore Energy Support business as the company is in Norway with
    exchange rate of Norwegian Krone being weak since April, so there is a billion yen evaluation loss
    of debt which the company financed in Japanese Yen, Dollars and Euros.

    For second half our premise of exchange rate is 100 yen against 97.75 yen as of end of September.
    If exchange rate as of the end of March 2014 will be 100 yen, there will be valuation gain in theory.
    However, we have not factored any gain in our plan this time.

Q.4 What is your plan for using cash of CB's issued in Sept 2013? Will you replace with other interest-
    bearing debt as zero coupon debt? If you will use this for new ship orders, please explain what you
    are thinking.

A.4 We would like use to cash from CB for new ships, Car Carriers and LNG Carriers. As mentioned, Car
    Carrier is making steady profit now, because actually cargo volume is very strong and we are also
    trying to increase high and heavy cargo like construction machinery.
    By adding new fuel efficient ships, we will be more competitive and improve service quality.
    In LNG carriers, including shale gas business, there are additional projects in view. At the same time
    we may use part of our cash for redemption of bonds. Please understand roughly as detailed above.