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TWST: Can we start off with an introduction to CP Ships (Toronto: TEU.TO; NYSE: TEU)?

Mr. Lee: What we found since we spun off as a public listed company from CP Limited in October 2001 is that few investors really understood what our industry was about and knew even less about CP Ships. Let me start by outlining what we do as a company, which is to offer door-to-door container transport services. So, to give you an example, we position a container in Detroit, let’s say on a Friday afternoon, bring it to a rail terminal – in this case it would be CP Rail -- load it on a scheduled train service to Montreal, load it onto a ship Saturday night, the ship sails Sunday morning -- a fixed time every week. The ship arrives in the UK, eight days later, the container is unloaded, put on a truck and delivered into a plant, say in the Northwest of England. We do this for thousands of container movements every year. So we are different from say a tanker company as we offer transport systems, where we try to manage the whole movement from a shipper’s plant to importers warehouse. We offer a few value added services, but we’re not a logistics company. We specialize in door to door container transport. The container shipping industry itself is a high growth industry. It’s grown at about 8.5% per annum over the last 20 years and in actual fact, since 2001 when there was the US and indeed global recession with very low container trade growth, we’ve seen a remarkable rebound in container demand during the course of 2002, probably with demand globally around 9% for the whole year. That is encouraging as the industry has ordered a number of new ships with 2002 marking the third year in a row where the supply of new capacity was more than 10% of the standing ship fleet in the world. So we found ourselves going into 2003 with ship systems being pretty well full on their lead legs. And so far this year industry volume, has been strong and capacity utilization relatively tight.

TWST: What were the underlying dynamics behind that rebound in 2002?

Mr. Lee: There are a few things. First of all, it would’ve been inventory restocking after 9/11 and the US recession in 2001. There was also pre-shipping prior to the West Coast lockout last September. But interestingly volume stayed strong throughout the year, driven we think by strong manufacturing growth in Asia, particularly China. So currently we find ourselves in a fairly balanced supply and demand situation with supply of new capacity set to decline in 2003 to 8% from over 10 percent last year, and next year down to about 6%. Hopefully if there is global economic recovery, which is really going to be driven by US economic recovery, then we should see container demand grow at the historic multiple of 2 – 3 times GDP. So we could be talking 6 to 8% container trade growth in 2003 and perhaps higher next year. Therefore, we think the industry fundamentals are slowly improving.

TWST: Can you give us a sense of your main objectives over the next 12 to 18 months and the milestones you would hope to pass along the way?

Mr. Lee: It is very much more of the same. We are looking to develop our regional strategy. Acquisitions remain a core part of our strategy in order to increase economies of scale and improve our service product in our existing markets and expand where appropriate into new markets. However cost savings will probably more difficult in 2003. Fuel prices are presently adverse for the transport industry due to the Iraq conflict, Venezuela, and unrest in Nigeria. Currency, particularly the euro has also negatively impacted us.. We have some net exposures because our revenues are mostly in US dollars, but only about 60% of our cost is US dollars. So pressure on operating costs will probably partly offset the benefits of improving freight rates as industry fundamentals improve.

TWST: You mentioned at the time of the 2001 listing there was some work to be done communicating the story to investors. How well do you think you have done with that?

Mr. Lee: I think it is a lot better. As I said, back in October 2001 we really had a big job to do but over time major institutions in Canada have certainly developed a better understanding of our industry and indeed CP Ships. It’s been more difficult in the United States where we saw some churn in shareholders following the spin off from our former parent, CP Limited which was a diversified large cap business and quite a different type of investment. So one of our key challenges is to focus our marketing in the US with investors whose investment criteria would permit them to invest in CP Ships which is considered a small cap investment.