Steve Haynes Director – Commodity Marketing and Sales North Carolina State Ports

1. National Waterways Conference 2006 Annual Meeting Portland, Oregon September 7, 2006 The Horizons of Transportation Understanding the Needs of Shippers (To Attract New Customers to the Waterways) Steve Haynes Director – Commodity Marketing and Sales North Carolina State Ports Chairman – Domestic Waterways Committee National Industrial Transportation League

2. Waterways Commerce – Assuring a Vibrant Future Will the barge industry attract the new customers it needs to sustain positive growth? Our opening premise: Today, barge services are utilized by a small group of shippers that have long understood the benefits of low cost and reliable water transportation for volume shipments Few new users are attracted to the use of barge transportation, even though many have the volumes to utilize this mode New users may lack the understanding of how to add the barge mode to their inventory of transportation options

3. Supply Chain Water Terminals Barge Transportation Inland Freight Inland Freight Knitting Together the Barge Transport Puzzle It’s the arrangement and these multi-modal steps that frustrate and turn-off prospective users of barge transportation

4. Surveying NIT League Members about Barge To get a better understanding of shipper attitudes about waterways transportation, NITL surveyed its membership, asking a variety of questions. • NIT League members represent • almost all commodity groups • We surveyed members • belonging to the following • committees: • - Rail Transportation • - Domestic Waterways • - Ocean Transportation • We surveyed both users and • non - users of barge, seeking: • - Drivers for users • - Barriers for non-users

5. Primary Mfd. Goods Chemicals Petroleum & Petroleum Products Food & Farm Products Crude Materials Coal 40 30 20 10 0 0 10 20 30 40 Waste & Scrap Mfd. Equipment NIT League Survey Participants Barge volume profile vs. League responders commodity profile 2004 Barge Volume Profile Survey Responders’ Commodity Profile Percent of total Percent of total Source: U.S. Army Corps of Engineers, “Waterborne Commerce of the U.S. 2004 Edition.”

6. 39% NO YES 61% Does your firm currently ship via barge ? • Our NIT League survey received 59 responses to our • questionnaire • 61 percent – YES, we use barge transportation • 39 percent – NO, we do not use barge • transportation

7. Of those responders that utilize barge, we asked: What are the greatest benefits from utilizing barge transportation? • Reduced freight costs • Ability to accommodate large volumes • Ease of handling cargos • Reliable conformance to transit time expectations

8. Of those responders that utilize barge, we also asked: What are the greatest disadvantages to utilizing barge transportation? • Slow transit times • Equipment availability • Location and access (proximity of waterways) • Cost (multi-modal)

9. Of those that utilize barge transportation, we then asked: What are the barriers that keep your company from shipping even greater volumes via barge? • Distance from waterways • Availability of barge equipment • Aggregate cost • Transit Times

10. Why would their customers refuse to accept barge? • Transit times for shipments are too long • (This may be a planning horizon problem that can be corrected) • Cargo cannot be handled effectively by the customer • (Perhaps this is due to a lack of proper receiving terminals) • Shipment volumes do not meet minimums and produce higher • freight costs • Customers frequently do not have sufficient storage to • accommodate volumes

11. 14% YES 86% Do rail shippers have volumes needed to ship barge? A key requirement to economical use of barge transportation is the ability to accumulate sufficient quantities to meet barge minimums. Of the volume rail shippers that did not use barge, 86 percent believed they had the volumes to use this mode.

12. 22% 35% YES YES 65% 78% Are non - barge shippers and receivers near water? • It was significant that almost 80 percent of • volume rail shippers who do not take advantage • of barge transportation were close to a navigable • waterway • 65 percent of their receivers were near water, too Receivers Shippers

13. 26% NO 74% Did rail shippers have access to more then one railroad? Almost 75 percent of volume rail shippers that did not use barge had no reasonable routing alternative. They were captive to a single railroad. As the railroad industry continues to consolidate, volume shippers need to develop routing alternatives – water transportation is the natural alternative for many.

14. 36% YES 64% Do companies have the expertise to understand barge? Almost 65% of responders that currently do not use rail, believed that they had the necessary expertise to understand how to identify favorable barge opportunities and initiate their use. So why don’t they?

15. 44% NO 56% Are barge lines making enough sales calls? More than half of prospective barge shippers report they never receive sales call from barge lines. Could increased sales coverage produce more business? Do you receive sales calls from barge lines?

16. In Conclusion – Interpreting the data Our survey suggests that there may be many additional prospective shippers that could be introduced to water transportation. There may be a tendency, however, to focus on growing existing relationships, rather than to also identify new prospects. NC Ports now seeks out potential importers or exporters who, for one reason or another, are not participating in global trade between the U.S. and the world. Our theory is that sooner or later, to survive in business, all commodity and manufacturing concerns will eventually become global. We want prospective customers to understand what services NC Ports can provide before they decide to go global.

17. Back to our opening question Will the barge industry attract the new customers it needs to sustain positive growth? • What is the solution? • - Identify new prospective barge shippers • - Educate prospective shippers how to use barge • - Offer multi-modal supply chain solutions • - Show them the “SAVINGS”

18. Ship A A by T Barge C O All American Towing Company Thank you for listening