THE PORT REPORT. 4 IN THIS ISSUE. CUMMINS CONTINUES KNOWLEDGE PROVIDER INITIATIVE AT THE 2008 INTERNATIONAL WORKBOAT SHOW.

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1 THE PORT REPORT. 4 TH QUARTER 2008 CUMMINS CONTINUES KNOWLEDGE PROVIDER INITIATIVE AT THE 2008 INTERNATIONAL WORKBOAT SHOW. Each year thousands from the commercial marine industry everyone from large fleet owners to independent owner operators, marine engineers and naval architects to shipyards and boat builders are drawn to New Orleans for the International Workboat Show. The Marine Business partnered in this year s show with Cummins MerCruiser Diesel and Cummins Generator Technologies, marking the first time these entities have exhibited together. The show was supported by distributors from throughout North America including Bridgeway, Crosspoint, Mid-South, Northeast, Northwest, Power Systems, Southern Plains and the Latin America RDO office. A big thanks to all the distributors who attended and helped make Workboat a great success! A wide range of marine products, including the QSK19, K38-M, QSK38 and, making its debut, QSK60 Tier 2 engines, as well as C Command panels, were on display. Workboat provided the perfect opportunity to start educating customers on next level emissions announced by the U.S. Environmental Protection Agency in early Due to the complexity of the The K38-M (left) and QSK19 (right), along with the QSK38 and QSK60 Tier 2 engines and C Command panels, were on display at this year s Workboat Show new regulations, Cummins and our distributors felt it was important to continue the Knowledge Provider initiative started with IMO in 1999 and continuing with Tier 2 in continued on page 2 IN THIS ISSUE. GECS Group Offering Integrated Solutions DCDN & INACE S 20+ Year Partnership Westar Chooses Cummins Tier 2 Distributors Support Top European Show

2 TECHNICAL EXPERTISE. CUMMINS CONTINUES KNOWLEDGE PROVIDER INITIATIVE AT THE 2008 INTERNATIONAL WORKBOAT SHOW....continued from page 1 In preparation for Tier 2, we found that customers were confused by the regulation and its many provisions. By creating clear communications, we positioned ourselves as the Knowledge Provider on marine emissions and made the Tier 2 regulation accessible. Building on this success, Cummins is undertaking an even larger effort to become the Knowledge Provider on Tier 3 and Tier 4 emission standards. Prior to the show, the Marine team introduced a package of materials designed to prepare distributors for the impending regulations, including the Meeting the Next Challenge brochure. Of the major engine manufacturers in attendance at Workboat, Cummins was the only one ready with customer-focused materials to address Tier 3 and 4. Cummins also coordinated a presentation during the show s conference program entitled EPA s Tier 4 Marine Rule: the Regulation and its Impact (click on link to access video of presentation). This session provided an informative review of the Tier 4 standards and an overview of technologies that may be used to achieve these drastically reduced emission levels. Eddie Brown, Marine Certification Specialist, along with speakers from the EPA, MTU and CAT, discussed stakeholder involvement in the rulemaking, implementation and timing, and the rebuild/remanufacture program. There was not an open seat in the house, highlighting the need for understanding and education on these regulations. With significant contribution from the channel, Cummins has created a thoughtful body of work focused on educating our customers on emission regulations and compliance. An informed channel puts Cummins in a better position to meet the next emissions challenge. Contributor: Eddie Brown (Marine Certification Specialist - Cummins Inc.) TABLE OF CONTENTS. GECS Group: Working Together to Provide Integrated Diesel Electric Solutions...3 DCDN and INACE: A Successful Partnership Spanning Two Decades...4 Success at Every Port...5 Cummins Exhibits at SMM, the Major European Commercial Marine Show of the Year!

3 TECHNICAL EXPERTISE. GECS GROUP: WORKING TOGETHER TO PROVIDE INTEGRATED DIESEL ELECTRIC SOLUTIONS. After the recent discovery of pre-salt oil fields more than 100 miles off the coast of Brazil, the Brazilian state oil company Petrobrás announced plans to bid 146 offshore support vessels by 2014 to support exploration and drilling of these new fields. The project consists of anchor handling tugs (AHT), platform supply vessels (PSV) and oil spill recovery vessels (OSRV). Cummins will bid QSK38, 50 and 60 gensets for the OSRV and PSV designs. There is potential for as many as 80 Cummins-powered vessels! Currently, only two Cummins diesel electric-powered vessels are operating in Brazil neither of which was built in the region. Because of the region s lack of experience with this application, it was necessary to present something different to the market. Following a boat christening in Lockport, LA, Marine General Manager Geoff Conrad, Cummins Mid-South VP of Marine Sales Calvin Klotz, naval architect Guido Perla and Electronic Power Design (EPD) president John Janik, came up with a novel idea. The four organizations would form an alliance, affectionately called the GEC (G Guido Perla; E EPD; C Cummins) Group, to pursue this opportunity in Brazil. Many operators were inquiring about propulsion options, so it made sense to bring in a fourth entity, and Guido Perla approached Z-drive supplier Schottell with the opportunity. Schottell became a key member of the new GECS Group, as they agreed to shorten their lead times to be a part of the projects. Because of their experience with diesel electric applications, Cummins Mid-South will assist the local distributor with the installation process and provide the gensets. The local Brazilian distributors, including CDME-RJ, DCDN, Motormac and PowerTech, will present the Cummins proposal to operators in their area. Waldemar Marchetti - Marine Business Manager in Latin America (left) and Calvin Klotz (right) shown with other members of the GECS Group during Rio Oil and Gas Offering an integrated diesel electric solution consisting of the vessel design, genset package and propulsion system, the GECS Group began meeting with vessel operators and shipyards prior to the Rio Oil and Gas show in September. In addition, GECS hosted an open house during the show, providing the group with the perfect opportunity to discuss the project with the operators and shipyards involved and to present their proposals. Petrobrás opened the technical build process to operators on December 2. Once the operator proposals have been accepted, Petrobrás will open the commercial bid process for equipment. At this time, we are pleased to report that three out of 14 operators have presented the GECS design proposal to Petrobrás! This is an excellent example of how the Cummins channel, working as a team, can achieve great success. Contributors: Waldemar Marchetti (Marine Business Manager - Latin America) and Geoff Conrad (General Manager - Cummins Inc., Marine Business) - 3 -

4 TOP-LEVEL RELATIONSHIPS. DCDN AND INACE: A SUCCESSFUL PARTNERSHIP SPANNING TWO DECADES. The relationship between DCDN (the Cummins distributor covering the Fortaleza and Ceará regions in northern Brazil) and INACE shipyard dates back over 25 years when the shipyard placed an order for 40 engines to be installed on commercial fishing boats the first order the distributor ever received! From that day on, the relationship between the two companies has continued to strengthen both professionally and personally. Cummins engines have become INACE s first choice when they undertake a new vessel project, with the two often negotiating deals together. And when the commercial fishing industry in Brazil began to soften, both companies diversified their business in order to sustain growth. The offshore oil industry in Brazil is growing rapidly, presenting DCDN and INACE with many new opportunities. Currently, offshore platform vessels are drilling two million barrels per day this amount is expected to increase to five million barrels per day DCDN owner José Luiz Miranda shown here with INACE owner D. Elisa within the next six years. Petrobrás, the Brazilian state oil company, is investing a lot of resources to support this growing offshore market, and all shipyards with capacity to build crewboats and other types of support vessels are working. INACE is no exception and began constructing their first crewboat in late When INACE recently earned an order to build six crewboats, they called on their old friends at DCDN. The two companies were able to successfully negotiate a contract, and each vessel will have at least four KTA50 propulsion engines and two 6C-CP gensets! Leveraging Cummins Mid-South s long-standing relationship with U.S.-based customer Tidewater, DCDN and INACE successfully influenced the customer s decision to choose Cummins and negotiated a deal for two crewboats currently being built at the yard. The success and profitability of the DCDN and INACE partnership highlights the importance of strong top-level relationships. Together these two companies successfully navigated the shipbuilding industry for 25 years, seen the ups and down of the market, and together explored and penetrated new markets. Contributor: Jose Luiz Miranda Jr. (DCDN) - 4 -

5 SUCCESS AT EVERY PORT. NORTH AMERICA. Westar Chooses Cummins Tier 2 With a diverse fleet of 18 tugs, eight water taxis and 20 barges, San Francisco s Westar Marine Services is one of San Francisco Bay s premier construction support companies. Their tug fleet will be 50% Cummins-powered when the Taurus, their 75 x 24- foot model bow tug, goes back in service. While the fleet includes a range of Cummins engines from 14- to 38-liter models, the Taurus will be repowered with a pair of QSK19-M Tier 2 engines (1320 HP at 1800 RPM). The Taurus is kept busy on a variety of jobs around the San Francisco Bay and offshore the west coast. Not only will the repower extend the service life of the vessel, it will also significantly reduce emissions. Westar s Rich Smith reports that they were able to keep the boat s Twin Disc MG527 gears with 5.17:1 ratios for the 660 HP per side engines. Once the Taurus is back in service, Westar plans to drydock the tug to tweak the props to maximize performance with the new engines. EAST ASIA. New Offshore Utility Support Vessel Completes Sea Trials Joining a long list of successful crafts from Guangzhou Panyu Lingshan, a well-established shipyard in south China, the 40-meter Putrajaya Singosari completed sea trials in mid-november. With an 11.8-meter beam and 4.6-meter molded depth, the offshore utility support vessel was built to a design by Khiam Chuan Marine P.L. of Singapore. Classed by BV and meeting IMO/SOLAS for life saving and firefighting, the vessel will be registered in Kota Kinabalu in Sabah Malaysia. Several other projects are currently underway at Westar Marine Services including the installation of a number of Tier 2 compliant generators in four tugs and two water taxis under the Carl Moyer grants program. Contributor: Alan Haig-Brown Main propulsion comes from a pair of 1200 HP Cummins KTA38-M2 main engines turning nozzled propellers through Reintjes WAF460 gears. This power gives the vessel a 12-knot speed and a 28-ton bollard pull. Steering is an electric over hydraulic. A 200 kw three-speed bow thruster provides additional maneuverability. A pair of water and foam monitors provide external fire fighting capabilities, while the deck house is fitted with water curtain nozzles. A pair of boomless dispersant spray nozzles is mounted in the bow. The vessel is also fitted with two 215 kw generator sets Contributor: Alan Haig-Brown your success stories to elizabeth.lynch@cummins.com. If your story is selected to appear in The Port Report, you will receive a $100 gift certificate from CPI Graphics.

6 SHOWS & EVENTS. CUMMINS EXHIBITS AT SMM, THE MAJOR EUROPEAN COMMERCIAL MARINE SHOW OF THE YEAR! Cummins recently participated in what has been described as the major European commercial marine show of the year, Shipbuilding, Machinery and Marine Technology (SMM). Now in its 23rd year, SMM is held every two years at the International Trade Fair in Hamburg, Germany. The show broke numerous attendance records in 2008, welcoming more than 52,000 visitors from across the globe and 1,965 exhibitors from 56 nations! The Marine Business, along with Cummins Germany, exhibited a range of products including the QSK38 Tier 2 engine and the K19-CP marine generator set. The booth emphasized the importance of the Marine Four Pillars CSE strategy (Local Expertise, Global Teamwork, Proven Technology and Customer Support Excellence) and Cummins experience with key applications in the market, including large ship and diesel electric applications. Although this trade show typically targets the shipbuilding industry, the Marine team saw increased interest in smaller diesel electric engines for use on larger vessels. This change has been driven by the need to save fuel and increase efficiency, as well as continued long lead times for medium speed products (up to three years). The show was supported by a large group of distributors from the EMEA region including Denmark, Germany, Holland, Norway, Romania, Russia, Serbia, Spain, Turkey and the Middle East RDO office. A big thanks to everyone who helped make SMM a great success! The K19 C Power genset (shown above) and the QSK38 Tier 2 engine were on display during SMM 2008 UPCOMING EVENTS. January 9-12 June 9-12 June August MariTrends PVA Convention San Francisco, CA NorShipping Oslo, Norway Brazil Offshore Rio de Jenairo, Brazil Navalshore Rio de Jenairo, Brazil For a complete list of upcoming shows, visit the Newsroom on marine.cummins.com Cummins Inc Leeds Avenue - Suite 301 Charleston, SC U.S.A. wave.master@cummins.com Internet: marine.cummins.com 2008 Cummins Inc.