Mid-south challenges & opportunities for change

1. Mid-south challenges & opportunities for change Memphis World trade club – 16 APRIL 2019

2. When we are no longer able to change a situation, we are challenged to change ourselves. -Victor Frankl

3. Agenda Strategic Perspective Mid-South Chassis Street Turn Fees Rail Appointments A Call to Action

4. Strategic perspective Living in the long shadow of Malcolm mclean

5. Clear and present challenges • We are in a period of volatility and change: • Ocean carrier industry consolidation • ELD’s • Trade agreements • Conditions show the fragility of our local container networks and flows: • Acute • Structural • Systemic • Structural and systemic forces directly impact long term Mid-South competitiveness.

6. Unifying focus • Supply chain velocity • “how to optimize the dispersion of goods and services to the marketplace”

7. Universal formula + + = Export or Import Load

8. Mid-south chassis www.joc.com

9. Mid-south Chassis Challenges Chassis models have not kept up with demands Chassis pools are not interoperable restricting freight Chassis costs are rising impacting shippers/truckers Chassis quality is poor and equipment is aged Chasing chassis wastes time and money Chassis repositioning increases system burdens Billing and reconciliation is complicated and time-consuming

10. Where are the chassis? Rail Ramp? Container Yard?

11. Problem with “Box Rules” Ocean Carrier C Ocean Carrier A Ocean Carrier B Ocean Carrier D Mandates Orange Chassis Mandates Yellow Chassis Mandates Blue Chassis Mandates Blue Chassis WHICH CHASSIS WILL TRUCKER USE? ? ? ? ? M&R POOL Memphis Supply Chain Innovation Team

12. SNAPSHOT of MCCP chassis location variability DO NOT REMOVE BARE MCCP CHASSIS FROM THE BNSF UNLESS YOU CAN RESERVE ON LINE. ***Any MCCP chassis you leave at the CN will remain on your usage until returned to a start/stop location*** 1.All logistics issues should be emailed to mccp@ccmpool.com. 2.All M&R issues should be emailed to mccpmnr@ccmpool.com. MEMPHIS BNSF is not accepting bare MCCP chassis. UPRR is accepting bare MCCP 20’s and 45’s. TRANSONE is accepting bare MCCP 40’S. CMC CLARKE is accepting all bare MCCP chassis. CMC PIDGEON will accept bare MCCP chassis from 5p until midnight.

13. SNAPSHOT of chassis TRAC location variability

14. What is chassis split? Ocean Carrier A Ocean Carrier B Source: IHS Markit 559303

15. Street turn Fees www.joc.com

16. What is a Street turn ? Ocean Carrier A Ocean Carrier B Trucker takes empty container from the importer’s facility after unloading directly to an exporter’s facility for loading and return to rail ramp or marine terminal.

17. Street turn Advantages Ocean Carrier A Ocean Carrier B • Compress two distinct truck moves into a more efficient routing: • Terminal / rail -> importer ->container yard • Container yard -> exporter -> terminal / rail • More complicated with chassis splits • Reduces congestion at terminals, container yards and on highways leading to and from facilities. • Reduces driver facility wait times • Eliminates empty container gate and handling charges; possible chassis splits. • Supports clean air - reduced miles and emissions. • Note: Despite systemic advantages, a JOC survey indicated street turns represent 10-25 percent of total moves per week. (Feb 12, 2019)

18. Street turn fees Ocean Carrier A Ocean Carrier B Five ocean carriers have announced some form of street turn fee: CMA CGM, Maersk, Hyundai and ZIM ranging from $30-$50 per export container. The fee is cited to cover administrative costs and some ocean carriers have moved to third party provider Avantida to manage street turns. The fee will not be absorbed by the trucking community. Ultimately, the fee will passed directly on to exporters. The fee does not guarantee improved Matchback opportunities. The fee could disincentive exporters and truckers, and reduce potential systemic improvements. The fee represents a higher cost of doing business and export “efficiency” tax.

19. Rail appointments www.joc.com

20. rail appointments Ocean Carrier A Ocean Carrier B Under Precision Scheduled Railroading (PSR), CSX is implementing a network-wide reservation system with the intent to match the number of containers allowed into terminals with the number of slots on outbound trains and available terminal storage space. With an Early Return Date (ERD) and rail cutoff that changes with changes in vessel coastal schedules, a reservation adds incremental complexity for shipper and truckers. For a reservation, rail billing must be completed, yet is not guaranteed for the same day. Containers can be turned away resulting in incremental costs. What is unclear is whether there is an alignment between daily CSX train capacity with specific ocean carriers/bookings; and between loads and empties?

21. A call to action

22. We want you to: • Express full support for Mid-South single gray chassis pool with an accountable pool manager to your ocean carriers, truckers, rail carriers, chassis providers and industry associations. • Exercise your right to choose your chassis provider on merchant haulage (CY) moves. • Confidentially report any demurrage and detention impacts from chassis availability to the Federal Maritime Commission Fact Finding Investigation 28: FF28@FMC.govCommissioner Rebecca Dye will testify at Surface Transportation Board hearing May 22nd on her interim D&D findings and the work of Memphis Supply Chain Innovation Team. • Voice your concerns on street turn fees to the announced ocean carriers. • Monitor your truckers’ CSX reservation system experiences to assess further action.

23. questions