Company Overview

Presentation of Michael G. Roberts

Marine Salvage Update

Maritime Law Association /Instituto Iberoamericano de

Derecho Maritimo

Fajardo, Puerto RicoOctober 31, 2013

Company Overview

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Crowley was founded in 1892, when Thomas Crowley — grandfather of current chairman, president and CEO Thomas B. Crowley, Jr. — purchased an 18-foot Whitehall boat to provide transportation of personnel and supplies to ships anchored in San Francisco Bay.

Crowley has since grown into a strong, diversified, service-oriented company with primary interests in marine solutions, transportation and logistics.

Today, the company has more than $2 billion in annual revenues; more than 5,000 employees; and owns / operates a fleet of more than 250 vessels. Other assets include terminals, warehouses, tank farms, office buildings, trucks, trailers, containers, chassis, cranes and other specialized vehicles.

Three Generations At

The Helm

Marine Solutions,

Transportation & Logistics

121 Years Of Success

Principal Businesses

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Container Shipping & Logistics About 20 vessels in U.S. – C. America / Carib regional service Warehouse, trucking, Customs brokerage, etc.

Technical Services Diversified menu of domestic & international services

Petroleum Transportation 19 large tank vessels (17 ATBs) in domestic blue water trades; 4

MRs on order, plus options for 4 more. 5.5M bbls static capacity; average hull age less than 5 years.

Petroleum Sales & Distribution Tank farms, fuel supply network in Alaska

Crowley Solutions

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World-class ocean towing and barge transportation Vessel design and construction management Resource development project management Ship management (40+ vessels; MARAD, MSP, others) Marine salvage, wreck removal, emergency response

Titan Maritime

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Founded in 1980 by David Parrot

Acquired by Crowley Maritime in 2005

One of the very few organizations in the world doing marine salvage, emergency response and wreck removal as its core business

Member of the Int’l Salvage Union (ISU) and the American Salvage Association (ASA)

Depots in the US, UK, Singapore & Australia

Track Record

Now…Marine Salvage

1989 Salvage Convention – Codified traditional English and common law principles

Peril to marine property Service not pursuant to pre-existing duty Applies in absence of contract General maritime duty to render assistance Master / owner has contracting authority Must cooperate with salvor to prevent / minimize

environmental damage, and accept redelivery of vessel Salvor has a duty of care, including to protect the

environment; must seek / accept aid when needed

Marine Salvage – Legal Foundation

Salvage Contracts and Statistics

Lloyd’s Open Form (LOF) No cure – No Pay Full set of rules, including London arbitration First LOF Contract 1892 11 Revisions culminating in LOF 2011 100-120 LOFs per Year Since 1978 About $31 Billion Saved Salvage Business = $400-$600 Million per Year LOF with SCOPIC (Special Compensation Protection

and Indemnity Clause)

Other contract forms may be used

Criteria for the Award

Classic / Common Law Factors Nature & degree of risk or danger to vessel Salved value Risks assumed by salvors Salvor’s skill, energy & promptitude Salvor’s time & expense State of readiness & efficiency of equipment

More Recent Additions Skill / effort / cost in preventing environmental damage Degree of success

COSTA CONCORDIAVolume & Complexity of Cargo - APL Panama Capacity 4,000 TEU

1,805 Containers Aboard

Largest Award in History

ISU: RECOVERY OF POLLUTANTS

Salvage operations: 244 (256 in 2008)

Pollutants recovered: 1,022,730 tonnes (667,497 tonnes in 2008)

15,976,297 tonnes of potential pollutants recovered 1994 - 2009

Exxon Valdez Spill: 37,000 tonnes (1989)

• Torrey Canyon 1967

• Largest wreck of its time

• 120,000t crude oil spilled

• Outside UK waters

• $7.2M 3rd Party Settlement

• $14.8M H&M Claim

• Limitation Liability 1851

Wreck Removal

Wreck Removal

Key features of Wreck Removal Wreck has no commercial value (CTL) Risk Covered by P&I not H&M Bid / award process vs. emergency response

Nairobi Int’l Conv. Removal of Wrecks (2007) Authorizes coastal states to act where danger to navigation,

environment BIMCO contract forms commonly used (WRECKHIRE (day rates);

WRECKSTAGE (milestone payments); & WRECKFIX (single payment at completion)

Other contract forms – sometimes not suited to wreck removal projects – may also be used

Salvage – Wreck Removal Continuum

IG LCWG Found 3 Stages in Contracting Common

SCOPIC Often Presages Wreck Removal

Interim Contracts Usually for Fuel Removal While Tendering

Wreck Removal Typically Fixed or Staged

Delays in Switching or State Interference Forcing SCOPIC to Run

Resulted in Cost Increases

Sharing of Risk – More Global View

Twenty largest projects included significant day rate

components

Many other projects beyond the top 20 primarily lump sum

Year Vessel name Type Club GTContainers On

Board ROW/SCOPIC (US$)

2002 TRICOLOR Ro Ro Gard 49792 54,742,4932003 CP VALOR Container WoE 15145 900 44,553,1422004 HYUNDAI 105 Car carrier UK 40772 57,664,127

2004 SELENDANG AYU Bulk carrier Swedish 39775 148,118,1872005 TWIN STAR Bulk carrier Japan 14437 33,751,367

2006 OCEAN VICTORY Bulk carrier WoE 88853 52,155,9132006 ROKIA DELMAS Container Swedish 33047 391 73,284,4572006 GIANT STEP Ore carrier Japan 98587 38,887,6132006 CALIFORNIA Bulk carrier American 40182 44,066,4732006 MSC NAPOLI Container London 53409 2,318 135,301,3072007 NEW FLAME Bulk Carrier Swedish 26824 177,372,3212007 SEA DIAMOND Passenger WoE 22412 57,983,161

2007 EASTERN BRIGHT Chemical tanker Japan 1715 58,513,4422008 FEDRA Bulk carrier American 35886 60,700,000

2010 JOLLY AMARANTO Ro Ro UK 22945 43,517,5452010 MSC CHITRA Container Standard 33113 1,219 102,474,8862011 B OCEANIA Bulk Carrier Swedish 38337 55,080,5272011 RENA Container Swedish 37209 1,366 243,972,652

2011 COSTA CONCORDIA Cruise ship Standard 114147 561,636,615

2012 BARELI Container Gard 35881 1,397 54,327,008

TOTAL 2,098,103,236

COSTA CONCORDIA RENA

Capacity 3,350 TEU

1,366 Containers Aboard

US$244M & Counting – 2nd Most Expensive Removal

COSTA CONCORDIA JOLLY AMARANTO – RoRo Breakbulk

10,500 mt Cargo

Including >100 mt Steel Wire

COSTA CONCORDIA OCEAN BREEZE - Bulk

36,000 mt Grain

Removed via Telepherique

Wreck Removal

Wreck Removal Cost Drivers

Technical & operational characteristics of the

wreck & the site

Coastal state & stakeholders intervention

Media can drive unwarranted concerns / actions

Characteristics of fuel removal

Contractual arrangements

Effectiveness of contactors, salvage consultants

& claims manager

Wreck Removal Cost Drivers

Issues Facing the Industry

Responder Immunity P&I or Salvors policy will cover loss; therefore, liability

rules should drive best behaviors Owners/public need responsive, professional responders Responders need immunity from liability for ordinary

negligence, not gross negligence or recklessness Mechanisms to deter frivolous claims

Performance Guaranty Salvor agrees to cover cost of completion Not suitable given uncertainties in bidding No such clauses in standard BIMCO forms

COSTA CONCORDIA

COSTA CONCORDIA – A Perfect Storm

Characteristics of Wreck

45,000 mt lightship, Salvage weight 55,000 – 75,000 mt

Complex Heavily Damaged Structure

Capsized Upslope

Characteristics of Site

Environmentally & Cultural Sensitivity – Removal Intact

Complex Topography – Bridged Between Rock Ridges

Complex Geology

Casualty Occurred Winter 13 January

COSTA CONCORDIA – A Perfect Storm (Cont)

Fuel Removal – 71 Days Dead of Winter

Heavy State Oversight

Crime Scene – Prosecutorial Permissions for All Operations

Extraordinary Media Spotlight

Heavy Environmental Requirements

Meet of All Industrial Regulations

Salvage or Offshore Construction??

Platform PF-1

Sponson Installation

Blister Tanks

Ready

Commence Parbuckle

www.parbucklingproject.com

Upright – 1.5 Degrees Port

Starboard Side Damage

Crowley / Titan

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Thank You!