US / Canada Border Issues

1. US / Canada Border Issues William Cook Senior Manager, Corporate Customs DaimlerChrysler Corporation April 30, 2004

2. Agenda • Automotive Industry Overview • Automotive Trade Overview • Automotive Border Expectations • Recommendations

3. US In 2002 Built73% of NAFTA vehicles Built12 million vehicles Sold 16.8 million vehicles Employs 770,000 directly 1,001,000 indirectly Spends annually $500 Billion in US on parts $21 billion on R&D 7.5 billion on health care Canada In 2002 Built16% of NAFTA vehicles Built 2.6 million vehicles Sold1.7 million vehicles Employs 50,000 directly 550,000 indirectly Accounts for 16% of manufacturing 20% of all exports $27 billion in trade Automotive Industry Overview

4. Automotive Trade Overview • $46.8 B cars & trucks • $16.6 B parts & engines • $18.1 B cars & trucks • $26.5 B parts & engines Source: Statistics Canada, DesRosiers 2003 Figures are in $US

5. Major Automotive Border Crossings Queenston-Lewiston Bridge Bluewater Bridge Peace Bridge Ambassador Bridge & Detroit/Windsor Tunnel

6. Automotive Trade Overview International Highway Traffic Volumes between US & Canada • 43% of total volume between S.W. Ontario and S.E Michigan • 26% of total volume at Ambassador Bridge in Windsor/Detroit • DCX is 14% of volume with approx 1000 truckloads daily Automotive Sector Traffic Volumes • 34% of total volume • 68% of shipments occur at Detroit or Port Huron Automotive Cost Implications • Plant shutdowns costs $1.5 million/hour in lost revenue

7. Just-In-Time Delivery Process Daily Ship Windows MON 04:00 MON 07:00 MON 10:00 MON 13:00 MON 16:00 MON 19:00 Michigan Ontario Ambassador Bridge Delivery Windows MON 06:00 MON 09:00 MON 12:00 MON 15:00 MON 18:00 MON 21:00 Jefferson North Assembly Plant 15 Minutes 90 Minutes 15 Minutes Kautex Textron • Supplier located in Windsor, Ontario • 6 daily shipping windows • 2 hours total transit time • Supplier submits ASN upon shipment • JNAP located in Detroit, Michigan • 3 hours total inventory on hand Broker sends pre-shipment and entry information to US Customs Broker accesses USIPS to retrieve shipment data for entry information CHAMPS data populates CNACS and UPIPS with import shipments CHAMPS monitors, analyzes and updates supplier shipment / delivery performance Supplier issues 856 Advanced Shipping Notice (ASN)

8. Automotive Border Expectations JIT (just in time) inventory requires: • Seamless border crossings (i.e. minimal paperwork and crossing delays) • Consistent treatment of shipments at every port • Predictable border crossings necessary to meet JIT delivery • Expedited low risk shipments for qualified importers • Improved infrastructure to manage traffic efficiently and allow clear access for authorized traffic • Modern technology to enhance and simplify processes

9. Border Delays Do Not Support JIT!

10. Automotive Border Expectations DCX has been a leader in developing and promoting the use of optimalborder management systems • Examples: • CSA/FAST • NEXUS • Partners in Protection/CTPAT DCX needs recognition that: • We are low risk • Our shipments, drivers and carriers are secure and compliant Efficient Borders are critical to our business

11. Recommendations Border Management • Improve efficiency of driver registration process • Clarify benefits for CBP/CBSA programs to promote participation • Increase focus on unknown or high risk freight • Simplify requirements with common US/Canada processes Technology • Optimize technology to improve operations and integrated solutions • Implement intelligent transportation systems

12. Recommendations Infrastructure • Improve facilities to optimize capacity • Improve border access for low risk importers • New border crossing to meet increasing demands Funding • US • Establish separate border program as part of the reauthorization of the Surface Transportation Bill • Allocate funding to border states based on relative volume of trade • Canada • Proceed with prioritizing and spending of $300M allocated