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2011 2011 Current Issues & Trends Current Issues & Trends Affecting Intermodal Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

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Page 1: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

2011 2011 Current Issues & TrendsCurrent Issues & Trends

Affecting IntermodalAffecting Intermodal

Ron Sucik RSE Consulting

CCIBIntermodal Seminar

October 5, 2011

Page 2: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Current Situation and Key Current Situation and Key Facts to Keep in MindFacts to Keep in Mind

Intmdl Intmdl LdLds Up +5.8% over 2010. Down 3.7% to 2006.s Up +5.8% over 2010. Down 3.7% to 2006.

Int’l traffic still more than half of Intermodal loads.Int’l traffic still more than half of Intermodal loads.

40% of Asian imports come through LA/LB.40% of Asian imports come through LA/LB.

31% of Asian imports related to housing industry.31% of Asian imports related to housing industry.

Container trade imports increased 2% in first seven months Container trade imports increased 2% in first seven months of 2011. Exports increased 9%. of 2011. Exports increased 9%.

Containerized imports to rise about 3.6% during 2011.Containerized imports to rise about 3.6% during 2011.

Ron Sucik RSE Consulting

Page 3: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Ron SucikRon Sucik

Selected States Population Change Compared to United Selected States Population Change Compared to United States Population Change 1990 to 2000States Population Change 1990 to 2000

13% 14%

23% 21%

15%

26%

24%

0%

5%

10%

15%

20%

25%

30%

UnitedStates

California Texas NorthCarolina

SouthCarolina

Georgia Florida

RSE Consulting

Page 4: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Geography & DemographicsGeography & Demographics

Page 5: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

  

1997 Import TEUs

West Coast 83.25%LA/LB, Oakland, Seattle, Tacoma, Vancouver

East Coast 16.75%Gulf Coast .25%

NY/NJ/N. East 7.97%

South East 8.53%

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2008 Import TEUs

West Coast 75%LA/LB, Oakland, Seattle, Tacoma, Vancouver

East Coast 25%Gulf Coast

NY, NJ, N. East

South East

Ron Sucik

Page 6: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Which Route to the Midwest

Ron Sucik RSE Consulting

Page 7: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

What What MakesMakes A Location More Favorable A Location More Favorable

Large population or consumption centersLarge population or consumption centers• (LALB, NYC, Florida and the Southeast)(LALB, NYC, Florida and the Southeast)

Deep water for portsDeep water for ports• (Prince Rupert, LALB, Norfolk and Lazaro Cardenas)(Prince Rupert, LALB, Norfolk and Lazaro Cardenas)

Port infrastructurePort infrastructure• (LALB, Norfolk and PANYNJ)(LALB, Norfolk and PANYNJ)

Nearby Rail or Highway infrastructureNearby Rail or Highway infrastructure• (LALB, PANYNJ, Norfolk and the PNW-Vancouver, Seattle & Tacoma)(LALB, PANYNJ, Norfolk and the PNW-Vancouver, Seattle & Tacoma)

Space and/or Central Location for Dist. ComplexesSpace and/or Central Location for Dist. Complexes• (Chicago, St. Louis, Columbus, SEUS including Charleston, Savannah & Jacksonville)(Chicago, St. Louis, Columbus, SEUS including Charleston, Savannah & Jacksonville)

RSE ConsultingRon Sucik

Page 8: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Total Intermodal Loadings

Source: IANA Intermodal Market Trends & Statistics

10.3 10.2

11.2

11.9

12.9

13.6

14.2 14.113.7

11.7

13.413.7

10.0

11.0

12.0

13.0

14.0

15.0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 10 11

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Page 9: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Intermodal Loads by Type

1999 - 2010

Source: IANA ACT Research Co., LLC: Copyright 2011

2.2 2.4 2.5 2.7 3.0 3.1 3.1 3.3 3.6 3.8 4.0 4.5

2.9 2.6 2.4 2.32.4 2.6 2.6 2.4 2.1 2.1 1.6

1.7

4.8 5.3 5.45.9

6.57.1

7.9 8.5 8.3 7.7

6.1

7.2

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0Intermodal Loads (millions)

Dom Cont Dom Trlrs Internatl Cont

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Page 10: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

TOFC VS COFC

Ron Sucik RSE Consulting

Page 11: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Domestic Intermodal demand continues to show growth versus prior year Domestic Intermodal demand continues to show growth versus prior year comparisonscomparisons..

Domestic Intermodal VolumeDomestic Intermodal Volume

1111 SOURCE: INTERMODAL ASSOCIATION OF NORTH AMERICASOURCE: INTERMODAL ASSOCIATION OF NORTH AMERICA

Page 12: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

International Intermodal showed slower inbound US freight volumes in July. International Intermodal showed slower inbound US freight volumes in July. Signs of seasonal pickup are emerging.Signs of seasonal pickup are emerging.

International Intermodal VolumeInternational Intermodal Volume

1212 SOURCE: INTERMODAL ASSOCIATION OF NORTH AMERICASOURCE: INTERMODAL ASSOCIATION OF NORTH AMERICA

Page 13: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

US Import Container Volume GrowthUS Import Container Volume Growth2011 vs. 2010 (January – June)2011 vs. 2010 (January – June)

-10%

0%

10%

20%

Jan Feb Mar Apr May June

Total Imports US WC Imports US EC Imports

Source: Port Websites

WC: LAX, LGB, OAK, PDX, SEA, TAC EC: NYC, BAL, ORF, CHS, SAV

YTD Growth: West Coast = 4.5%, East Coast = 5.3%

Page 14: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Import/Export TEU Projections are StrongImport/Export TEU Projections are Strong

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000 Imports (U.S. TEUs) Exports (U.S. TEUs)

Source: TTX, 06/01/2011

Imports 2014 vs. 2011: +3.2 M TEUs (+18.4%)Imports 2014 vs. 2011: +3.2 M TEUs (+18.4%)

Page 15: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Hub Group’s rail partners have invested nearly $30 billion over the past five Hub Group’s rail partners have invested nearly $30 billion over the past five years improving their overall product and service offerings.years improving their overall product and service offerings.

Railroads Continue to InvestRailroads Continue to Invest

1515

NUMBERS REPRESENTED ARE IN MILLIONSNUMBERS REPRESENTED ARE IN MILLIONS

$2,242 $3,100 $3,100 $2,500 $2,488

$3,300

$2,014

$2,248 $2,167 $1,991 $2,600

$3,500 $1,178

$1,341 $1,558

$1,299 $1,743

$2,200

$1,639

$1,773 $1,740

$1,447

$1,800

$2,000

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2006 2007 2008 2009 2010 2011 EST

RAILROAD CAPITAL EXPENDITURES

UP BNSF NS CSX

Page 16: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Road vs RailRoad vs Rail

PUBLIC INFRASTRUCTURE PRIVATE INFRASTRUCTURE

• Publicly Funded/Maintained• Road Beds Built Beginning 1950’s

• Cost to Improve or Replace?• Minneapolis Bridge ($234M vs

$5M)• Cost to Expand?

• Who Pays (Autos, Commercial Trucks)?

• Private Property of Corporations• No Return = No Investment

• 5-10-20 Year Commercial Plans• Adapting To Economic Changes

• Expanding Capacity• Partnering With Municipal

Authorities

Page 17: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Fast, Reliable SolutionsFast, Reliable SolutionsThe West The West Coast Coast provides the provides the industry’s industry’s fastest fastest transit times.transit times.

Shanghai, China

Atlanta

Columbus Croxton, NJ

DEPARTS DESTINATION IPI (Rail Intact) TRANSLOAD ALL WATER

Shanghai Atlanta 20.5 Days 21.5 Days 26 Days

Shanghai Columbus 18.5 Days 19.5 Days 31.75 Days

Shanghai Croxton, NJ 18.5 Days 19.5 Days 29 Days

Page 18: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Chicago

Cincinnati

Columbus

Pritchard Roanoke

Norfolk

Detroit

Harrisburg

Philadelphia

NY/NJ

MechanicvilleAyer

Titusville

Jacksonville

Atlanta

Charlotte

Lynchburg

Shreveport

Meridian

Birmingham

New Orleans

Memphis

Bethlehem

Corridor Projects

Page 19: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

                                                                           

Page 20: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Truck/Rail Intermodal Market ShareTruck/Rail Intermodal Market Share

Mileage Blocks

Truck Rail Intermodal

Total Market Truck Share Rail Share

500 to 749 17.8 1.2 19.0 94% 6%

750 to 999 10.1 2.3 12.4 82% 18%

1000 to 1499 7.7 2.0 9.7 79% 21%

1500 to 2000 3.7 2.1 5.8 63% 37%

>2000 2.8 4.9 7.7 36% 64%

Total 42.1 12.5 54.6 77% 23%

Millions of units

Source: Assessment of 2007 Commodity Flow Survey and 2007 Rail Carload Waybill Sample

Truck and Rail Intermodal in Markets 500 Miles and Greater

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Page 21: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Truck/Rail Intermodal Market ShareTruck/Rail Intermodal Market Share 2035 Status Quo 2035 Status Quo

Mileage Blocks

Truck Rail Intermodal

Total Market Truck Share Rail Share

500 to 749 22.0 1.5 23.5 94% 6%

750 to 999 12.4 2.8 15.2 82% 18%

1000 to 1499 9.4 2.5 11.9 79% 21%

1500 to 2000 4.6 2.7 7.3 63% 37%

>2000 3.4 6.0 9.4 36% 64%

Total 51.8 15.5 67.3 77% 23%

Millions of units

Source: Assessment of 2007 Commodity Flow Survey and 2007 Rail Carload Waybill Sample

Truck and Rail Intermodal in Markets 500 Miles and Greater

Ron Sucik RSE Consulting

Page 22: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Truck/Rail Intermodal Market ShareTruck/Rail Intermodal Market Share 2035 50% Market Share 2035 50% Market Share

Mileage Blocks

Truck Rail Intermodal

Total Market Truck Share Rail Share

500 to 749 14.3 9.2 23.5 61% 39%

750 to 999 8.1 7.1 15.2 53% 47%

1000 to 1499 6.1 5.8 11.9 52% 48%

1500 to 2000 3.0 4.3 7.3 41% 59%

>2000 2.2 7.2 9.4 23% 77%

Total 33.6 33.6 67.3 50% 50%

Millions of units

Source: Assessment of 2007 Commodity Flow Survey and 2007 Rail Carload Waybill Sample

Truck and Rail Intermodal in Markets 500 Miles and Greater

One example of the dramatic benefits of shifting to rail intermodal is illustrated by the fact that just one long-distance, double-stack train between Chicago and Los Angeles can save 75,000 gallons of fuel by replacing 300 trucks, each traveling 1,983 miles.Source: Comparative Evaluation of Rail and Truck Fuel Efficiency on Competitive Corridors, ICF International, published by the Federal Railroad Administration (2009)

Ron Sucik RSE Consulting

Page 23: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

CS: Future Corridor Volumes Compared to Current CS: Future Corridor Volumes Compared to Current Corridor Capacity (Cambridge/AAR) - Corridor Capacity (Cambridge/AAR) - 20072007

2035 without improvements

Below capacity

Near capacity

At capacity

Above capacity

Ron Sucik RSE Consulting

Page 24: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Truck Transportation EmploymentJanuary 1996 - May 2011 (Seasonally Adjusted)

Sourc e: BLS, ACT Res earc h: Copy r ight 2011

96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 10 111000

1050

1100

1150

1200

1250

1300

1350

1400

1450

1500Employment (000's)

0

10

20

30

40

50

60

70

-10

-20

-30

M-M jobs Chg (000s)

Over 200,000 Drivers Eliminated

During Downturn of

Economy

Ron Sucik RSE Consulting

Page 25: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

The Sun Is Setting On The Old The Sun Is Setting On The Old Trucking ModelTrucking Model

PAST (low energy costs)

PRESENT (modest energy costs)

FUTURE (expect higher energy costs)

• Large Company-Driver Fleets with National

Scope and Scale• Company Operated Driving Schools

• Vast Quantity of Independent Truckers for Hire • Less Burdensome Regulatory Environment

(Hours of Service, CSA, Etc)

• Smaller & Regionalized Fleets• Owner-Operator Mix

• Fewer ‘Mom & Pop’ Carriers• Early Intermodal Operations

• Increased difficulty accessing capital. • Fewer Trucks/Drivers on Highway

• Regional Fleets w/Owner Operators• Non-Asset (Brokerage) Clearinghouse

• Requisite Intermodal Operation• Disciplined ‘Surviving’ Carriers

Page 26: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

2626

Does Opportunity Still Exist?Does Opportunity Still Exist?

MillionsUNITS

6

4

2

7-11 M

BNSFUnion Pacific

OTR that fitswestern intermodal

networks

4.1 M

International

Domestic

1.5 M

3.3 M

1.8 M

1.9 M

2.2 M

Opportunity

Page 27: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

• Demand continues to increaseDemand continues to increase

• Highway capacity continues to decreaseHighway capacity continues to decrease

• Government regulationsGovernment regulations Comprehensive Safety Analysis (CSA)Comprehensive Safety Analysis (CSA) Hours of ServiceHours of Service

• Trucking bankruptciesTrucking bankruptcies Higher fuel costsHigher fuel costs Limited access to creditLimited access to credit Higher equipment costs and lower resale values Higher equipment costs and lower resale values

Marketplace UpdateMarketplace Update

2727

Year-over-year July 2011 Full Year 2010

Domestic Intermodal 2.9% 10.6%

International Intermodal -4.6% 18.5%

For-Hire Truck Tonnage

3.9% 5.7%

SOURCES: IANA, ATA AND BAIRDSOURCES: IANA, ATA AND BAIRD

Page 28: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

More People – More FreightMore People – More Freight

2828 SOURCE: U.S. CENSUS BUREAU; FRA’S NATIONAL RAIL PLANSOURCE: U.S. CENSUS BUREAU; FRA’S NATIONAL RAIL PLAN

Americans require a freight system that moves 40 tons of freight per person annually. With current population growth projections, we are looking at moving 4 Billion more

tons of freight in the next 40 years.

Page 29: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

With improvements in service and facilities, Intermodal is becoming more With improvements in service and facilities, Intermodal is becoming more competitive in shorter distances, absorbing more of the projected growth in competitive in shorter distances, absorbing more of the projected growth in freight. freight.

Modal Shift OpportunityModal Shift Opportunity

2929 SOURCE: FRA’S NATIONAL RAIL PLANSOURCE: FRA’S NATIONAL RAIL PLAN

Page 30: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Temp-Controlled Intermodal - Phase 1

• C.R. England now operates 300 reefer containers (introduced in late 2010)

• Entire fleet of lightweight daycabs has been purchased

Container On Flat Car (COFC)

Page 31: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Customer ValueCustomer Value

Intermodal is now viable for shippers moving Intermodal is now viable for shippers moving temperature-controlled freighttemperature-controlled freight

Cost savings are a critical factor, but due to the Cost savings are a critical factor, but due to the improved services the rate gap between OTR and improved services the rate gap between OTR and Intermodal is narrowingIntermodal is narrowing

Dependence on “loading trucks” for the driver’s Dependence on “loading trucks” for the driver’s benefit is removed with Intermodalbenefit is removed with Intermodal

We expect the trend in temp-controlled freight We expect the trend in temp-controlled freight toward Intermodal to follow the dry markettoward Intermodal to follow the dry market

Temp-Controlled Temp-Controlled Intermodal ViabilityIntermodal Viability

Page 32: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

WHAT TO TAKE HOME FROM CCIBWHAT TO TAKE HOME FROM CCIB Intermodal loadings still below peak of 2006.

Railroads CapEx $40 Billion last 5 years.

Nearly 500,000 truckers left the business.

Western carriers OTR market 7-9 million.

Eastern carriers OTR market 9 million.

Refrigerated and Flatbed Containers enter mkt.

Ron Sucik RSE Consulting

Page 33: 2011 Current Issues & Trends Affecting Intermodal Ron Sucik RSE Consulting CCIB Intermodal Seminar October 5, 2011

Thank You For Your Time

Ron Sucik

RSE Consulting