Mark Tarzwell VP Supply Chain Ahold USA

Source: YouTube, Star Trek

Today Amazon is to logistics what Walmart was to retail in the 1980’s and 1990’s Amazon Prime Air is committed to making a delivery within 30 minutes of order US online retail sales are expected to grow 57% by 2018 to $414B UAS- Unmanned Aircraft Systems weighing less than 50 lbs. can travel greater than 10 miles

Source: NY Times, LA Times

Source: Huffington Post.com

Phil Misener the VP Global Public Safety at Amazon said this in the NY Times, :US regulators are moving way too slowly in the rapidly evolving development of commercial drones. Amazon Prime Air has envisioned buzzing fleets of miniature helicopters soaring far beyond the view of Amazon warehouses. According to Certify Expense Management Systems 47% of expenses in March for inner city travel was for Uber, up from just 14% YAG and in it’s home town, San Francisco 71%

Source: NY times, Associated Press

Source:Freedom Lab

1956 Bell Laboratories

Push button phone, fax, cell phone, ATM

Internet 1990’s……www.

Digital cameras

Smart technology

Instant gratification…..

OTR- Over the road Team drivers, lonely nighters,

locals

Railroad Intermodal, Supercars,

freight carriers

Shipping lines

Air freight

UPS, FedEx, USPS, DHL,

Uber, Sidecar

Industry employs 8.9M, 3.5M drivers 15.5M trucks operate in US, 2M tractor trailers 1.2M trucking companies, 90% > 6 units 70% of all freight rides on trucks $671B worth of manufactured and retail goods Drivers logged over 440B miles OTR loads down 16% since 2006 TL market >700 mile distance= $40B

Source: ATH Track, Truck info.net

Large fixed costs

High capital need

Driver shortage, very high people turnover

100% turnover last 10 years, 35,000 needed

Pay not keeping up with cost of living

Lost 160,000 drivers to construction since 2011

Today most entry level drivers want local work

Source: USDOT, Truck Data.com

State by state regulations

Insurance minimums

have increased

Lower speed restrictions

ELD electronic log devices

Stringent temperature

requirements

National drug scan

clearinghouse

Excessive delivery

penalties and fines

Increased safety

enforcement

Hours of service changes

Source: USDOT, joc.com

[VALUE] [VALUE]

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[VALUE]

14 Hours of Service, 840 minutes

Pre trip

Personal

Dwell

Void

Dead time

Drive time

Source: Truck Stop

Tractor Paradigm shift – how many years can I run a truck… now how many years should I? LCO- achieve lowest cost of operation Performance metrics modeling and monitoring Data driven decisions Components:

Maintenance/Repairs 9% Depreciation 21% Fuel cost 70%

Source: Fleet Advantage

2014 Federal mandate for oil savings standards that Heavy Duty Trucks must achieve 20% reduction in fuel consumption and GHG (Greenhouse gas) emissions by 2018 Saves 4 gallons per 100 miles driven Reduce consumption by 530M barrels of oil GHG reduction of 270M metric tons Savings of $50B/year 2014 vs 2018 $75,000 in operating savings over life of tractor

Source: Fleet Advantage

Much of today’s rail is Intermodal or piggyback vs off loading cars or supercars through spurs at manufacturing or distribution sites Railroad industry is usually a good indicator of the underlying North American economy Agriculture commodities like wheat and corn are using more rail Growth of railroad

sector expected to outpace the economy

Refer loads up 20.3% since 2006

Source: Intermodal.com, BB&TMC

Intermodal has experienced 12 straight years of load growth….+6% 2014 2014 saw commodity carloads up 5.5% Intermodal $14B 2014 expected $20B 2019 Reduces carbon foot by 60% vs. OTR Price competitive Use lightweight day cabs to complete delivery Easier to find dray drivers- for intermediate transport…..local runs Growing networks allow more flexibility, top 10 companies from 65% in 08’ to 73% in 13’

Source: Intermodal.com, BB&TMC, joc.com

Railroad consolidation seems to always affect service Dwell time up 20% in 2014 Longer timeline than OTR Shipment inflexibility Dray costs and driver

availability 5772 miles

Source: wilipedia.com

Shipping industry that drives the world economy has been flat or declining for years Average cargo vessel is 14,000 TEU but today’s new fleets up to 20,000 TEU

Source: United cargo

15 largest carriers saw revenue down 3% in 2014 but EBITDA increase 7% by reducing operating costs 4% and load optimization

Debt declined in 2013 from $107B to $91B

Carriers approaching limits of cost optimization

Expansion of Panama and Suez Canals will be instrumental in East Coast receiving

Container ships travel ¾ of the way to the moon and back annually

Source: NY times, Bloomberg, containerstatistics.com

A T Kearney reports the Global e-commerce Index for 2014 shows US growth at 15% leading the world’s previous leaders China and Japan Annual average growth for e-commence 15.6% since 2006 On-line food was $6B in 2012 and expected to be $10B by 2017, almost doubled in 5 years Retail customer traffic down significantly

Source: Statistica.com

UPS USPS DHL Fedex Peapod Amazon Amazon Fresh Fresh Direct

Grub Hub Uber Ship Station Instacart Kale Cart Blue Apron Domino’s Amazon Air

Source: Robot Center

Thank you