Pilot Target Compensation Review

1. Pilot Target Compensation Review

2. Establishment • Authority • Louisiana Revised Statute 34:1122(B)(1) • “Pilotage fees and rates shall for all ordinary and necessary operating and administrative costs and expenses, ...and fair average annual compensation for a state ship pilot, in comparison to regulated state ship pilotage in other United States ports.” • Established 2008 • Prior per LPSC • Fee Commission Order P 08-001 • COLA adjustments annually thereafter • 5-year rolling average of change in southern urban CPI • Filed 11/01 per commission order P 08-001

3. Establishment • Baseline Assumptions • $358,700 • 47 Pilots • 10,500 ship turns • Is a target, not a salary • Factors • Number of turns • Vessel drafts • Vessel deadweight tonnages • Pilots in rotation Varies by pilot • Off-time • Extra days

4. 2008 Baseline $358,700 2009 3.688% $372,000 2010 2.764% $382,282 2011 2.409% $391,489 2012 2.269% $400,372 2013 2.057% $408,610 Target Commission Accepted ABP Targets From 2008-2012

5. 2011 Target vs. Actual $45,995 • Target: $391,489 • Actual: +$45,995* • * Based on Captain Lorino, 2011 $391,489

6. Value Of Cargo • Oil Tanker (loaded) • Carries roughly 600,000 barrels of oil • Value of $51,000,000* * Based on Nov. 5 price of $85/barrel

7. 1. Overall Revenue Is Up Revenue is roughly 6.5% above target estimates, due to: Increased Turns 10,720 actual vs. 10,500 estimated. Increased Tonnage Increased Draft 2010 True-Up Why Is Income Above Target?

8. Why Is Income Above Target? • 2. Fewer Pilots • Target is based on 47 Pilots • Bar Pilots Had Average of 44.4 Pilots in 2011

9. Why Is Income Above Target? • Does It Work Both Ways? • Yes, in 2009 turns were down. • Revenue fell below target estimates.

10. 2011 Range Of Earnings $558,035 • Highest = $558,035 • Lowest = $283,000 • Lorino = $437,484 $283,000 $0

11. Why Such A Wide Range? • Number of days worked varies amongst pilots due to injury, illness or other obligations. • Each pilot’s share of the “pie” is determined by the number of days he has worked. • Only if Pilot “A” cannot work, may Pilot “B” substitute for him. • There are no “extra” shifts. Only substitutions are permitted.

12. Why Such A Wide Range? • Pilot with lowest income missed 108 days due to injury. • Pilots are not paid for work days missed • Pilot with highest income averaged 6.5 more days per month. • Worked for other pilots who were off due to injury, illness or other obligations.

13. Bottom Line • Our revenue increases, and decreases, with ship traffic, tonnage and draft. • Today, we are doing more turns than estimated and on larger ships with more tonnage. • Pilot compensation is a direct reflection of the amount and degree of difficulty of work. • Trend benefits not just pilots, but the entire maritime industry and Louisiana economy.

14. Business On The River Is Good! Up 7.11% since 2007

15. Business On The River Is Good! Up 1.6% since 2007

16. Business On The River Is Good!

17. Benefits & Challenges • Benefits to Maritime Industry • More ships than projected coming in each year. • Ships, on average, are larger • Carrying more cargo • Less cost per unit (TPC) • Challenges • Deeper drafts push limits on channel • Larger ships in channel

18. Pilot Target Compensation Review