2011 Current Issues & Trends
Affecting Intermodal
Ron Sucik RSE Consulting
CCIBIntermodal Seminar
October 5, 2011
Current Situation and Key Facts to Keep in Mind
Intmdl Lds Up +5.8% over 2010. Down 3.7% to 2006.
Int’l traffic still more than half of Intermodal loads.
40% of Asian imports come through LA/LB.
31% of Asian imports related to housing industry.
Container trade imports increased 2% in first seven months of 2011. Exports increased 9%.
Containerized imports to rise about 3.6% during 2011.
Ron Sucik RSE Consulting
Ron Sucik
Selected States Population Change Compared to United States Population Change 1990 to 2000
13 % 14 %
2 3 % 2 1%
15%
2 6 %
2 4 %
0%
5%
10%
15%
20%
25%
30%
UnitedStates
California Texas NorthCarolina
SouthCarolina
Georgia Florida
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Geography & Demographics
1997 Import TEUsWest Coast 83.25%LA/LB, Oakland, Seattle, Tacoma, Vancouver
East Coast 16.75%Gulf Coast .25%
NY/NJ/N. East 7.97%
South East 8.53%
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2008 Import TEUsWest Coast 75%LA/LB, Oakland, Seattle, Tacoma, Vancouver
East Coast 25%Gulf Coast
NY, NJ, N. East
South East
Ron Sucik
Which Route to the Midwest
Ron Sucik RSE Consulting
What Makes A Location More Favorable
Large population or consumption centers• (LALB, NYC, Florida and the Southeast)
Deep water for ports• (Prince Rupert, LALB, Norfolk and Lazaro Cardenas)
Port infrastructure• (LALB, Norfolk and PANYNJ)
Nearby Rail or Highway infrastructure• (LALB, PANYNJ, Norfolk and the PNW-Vancouver, Seattle & Tacoma)
Space and/or Central Location for Dist. Complexes• (Chicago, St. Louis, Columbus, SEUS including Charleston, Savannah &
Jacksonville)
RSE ConsultingRon Sucik
Total Intermodal LoadingsM
illio
ns
Source: IANA Intermodal Market Trends & Statistics
10.3 10.2
11.2
11.9
12.9
13.6
14.2 14.113.7
11.7
13.413.7
10.0
11.0
12.0
13.0
14.0
15.0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 10 11
Ron Sucik RSE Consulting
Intermodal Loads by Type
1999 - 2010
Source: IANA ACT Research Co., LLC: Copyright 2011
2.2 2.4 2.5 2.7 3.0 3.1 3.1 3.3 3.6 3.8 4.0 4.5
2.9 2.6 2.4 2.3 2.4 2.6 2.6 2.4 2.1 2.1 1.61.7
4.8 5.3 5.4 5.96.5
7.1 7.9 8.5 8.3 7.7
6.1
7.2
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0Intermodal Loads (millions)
Dom Cont Dom Trlrs Internatl Cont
Ron Sucik RSE Consulting
US Rail: Containers on Flat Car (COFC) 4-week moving average
August '06 - September '11 (9/24/2011)
Source: AAR ACT Research Co., LLC: Copyright 2011
06 07 08 09 10 11
0
50
100
150
200
250
300
-50
-100
Loads/week (000)
0
10
20
30
40
50
60
-10
-20
Y/Y % Chg
US Rail: Trailers on Flat Car (TOFC) 4-week moving average
August '06 - September '11 (9/24/2011)
Source: AAR ACT Research Co., LLC: Copyright 2011
06 07 08 09 10 11
0
10
20
30
40
50
60
-10
-20
-30
-40
-50
Loads/week (000)
0
10
20
30
40
50
60
-10
-20
-30
-40
-50
Y/Y % Chg
TOFC VS COFC
Ron Sucik RSE Consulting
omestic Intermodal demand continues to show growth versus prior year omparisons.
Domestic Intermodal Volume
ternational Intermodal showed slower inbound US freight volumes in July. gns of seasonal pickup are emerging.
nternational Intermodal Volume
US Import Container Volume Growth2011 vs. 2010 (January – June)
%
%
%
%
Jan Feb Mar Apr May June
Total Imports US WC Imports US EC Imports
Source: Port WebsitesYTD Growth: West Coast = 4.5%, East Coast = 5.3%
Import/Export TEU Projections are Strong
0
5,000,000
0,000,000
5,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000 Imports (U.S. TEUs) Exports (U.S. TEUs)
Imports 2014 vs. 2011: +3.2 M TEUs (+18.4%)
ub Group’s rail partners have invested nearly $30 billion over the past five ars improving their overall product and service offerings.
Railroads Continue to Invest
$2,242 $3,100 $3,100 $2,500 $2,488
$3,300
$2,014
$2,248 $2,167 $1,991 $2,600
$3,500 $1,178
$1,341 $1,558
$1,299 $1,743
$2,200
$1,639
$1,773 $1,740
$1,447
$1,800
$2,000
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2006 2007 2008 2009 2010 2011 EST
RAILROAD CAPITAL EXPENDITURES
UP BNSF NS CSX
Road vs RailPUBLIC INFRASTRUCTURE PRIVATE INFRASTRUCTURE
Publicly Funded/Maintainedad Beds Built Beginning 1950’sCost to Improve or Replace?• Minneapolis Bridge ($234M vs
$5M)• Cost to Expand?
• Private Property of Corporations• No Return = No Investment
• 5-10-20 Year Commercial Plans• Adapting To Economic Changes
• Expanding Capacity• Partnering With Municipal
Fast, Reliable Solutionshe West
oast ovides e dustry’s stest ansit mes.
Shanghai, China
Atlanta
Columbus Croxton, NJ
DEPARTS DESTINATION IPI (Rail Intact) TRANSLOAD ALL WATER
Shanghai Atlanta 20.5 Days 21.5 Days 26 Days
Shanghai Columbus 18.5 Days 19.5 Days 31.75 Days
Shanghai Croxton, NJ 18.5 Days 19.5 Days 29 Days
Chicago
Cincinnati
Columbus
Pritchard Roanoke
Norfolk
Detroit
Harrisburg
Philadelphia
NY/NJ
MechanicvilleAyer
Titusville
Jacksonville
Atlanta
Charlotte
Lynchburg
Shreveport
Meridian
Birmingham
New Orleans
Memphis
Bethlehem
orridor Projects
Truck/Rail Intermodal Market Share
Mileage Blocks
Truck Rail Intermodal
Total Market Truck Share Rail Share
500 to 749 17.8 1.2 19.0 94% 6%
750 to 999 10.1 2.3 12.4 82% 18%
1000 to 1499 7.7 2.0 9.7 79% 21%
1500 to 2000 3.7 2.1 5.8 63% 37%
>2000 2.8 4.9 7.7 36% 64%
Total 42.1 12.5 54.6 77% 23%
Millions of units
Source: Assessment of 2007 Commodity Flow Survey and 2007 Rail Carload Waybill Sample
Truck and Rail Intermodal in Markets 500 Miles and Greater
Truck/Rail Intermodal Market Share2035 Status Quo
Mileage Blocks
Truck Rail Intermodal
Total Market Truck Share Rail Share
500 to 749 22.0 1.5 23.5 94% 6%
750 to 999 12.4 2.8 15.2 82% 18%
1000 to 1499 9.4 2.5 11.9 79% 21%
1500 to 2000 4.6 2.7 7.3 63% 37%
>2000 3.4 6.0 9.4 36% 64%
Total 51.8 15.5 67.3 77% 23%
Millions of units
Source: Assessment of 2007 Commodity Flow Survey and 2007 Rail Carload Waybill Sample
Truck and Rail Intermodal in Markets 500 Miles and Greater
Truck/Rail Intermodal Market Share2035 50% Market Share
Mileage Blocks
Truck Rail Intermodal
Total Market Truck Share Rail Share
500 to 749 14.3 9.2 23.5 61% 39%
750 to 999 8.1 7.1 15.2 53% 47%
1000 to 1499 6.1 5.8 11.9 52% 48%
1500 to 2000 3.0 4.3 7.3 41% 59%
>2000 2.2 7.2 9.4 23% 77%
Total 33.6 33.6 67.3 50% 50%
Millions of units
Source: Assessment of 2007 Commodity Flow Survey and 2007 Rail Carload Waybill Sample
Truck and Rail Intermodal in Markets 500 Miles and Greater
One example of the dramatic benefits of shifting to rail intermodal is illustrated by the fact that just one long-distance, double-stack train between Chicago and Los Angeles can save 75,000 gallons of fuel by replacing 300 trucks, each traveling 1,983 miles.Source: Comparative Evaluation of Rail and Truck Fuel Efficiency on Competitive Corridors, ICF International,
: Future Corridor Volumes Compared to Current Corridor Capacity (Cambridge/AAR) - 2007
2035 without improvements
Below capacity
Near capacity
At capacity
Above capacity
Truck Transportation EmploymentJanuary 1996 - May 2011 (Seasonally Adjusted)
BLS AC T R h C i h 2011
96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 10 1100
50
00
50
00
50
00
50
00
50
00Employment (000's)
0
10
20
30
40
50
60
70
-10
-20
-30
M-M jobs Chg (000s)
Over 200,000 Drivers Eliminated
During Downturn of
Economy
The Sun Is Setting On The Old Trucking Model
PAST (low energy costs)
ESENT (modest energy costs)
URE (expect higher energy costs)
arge Company-Driver Fleets with National Scope and Scale
• Company Operated Driving Schools Quantity of Independent Truckers for Hire
ess Burdensome Regulatory Environment (Hours of Service, CSA, Etc)
• Smaller & Regionalized Fleets• Owner-Operator Mix
• Fewer ‘Mom & Pop’ Carriers• Early Intermodal Operations
• Increased difficulty accessing capital. • Fewer Trucks/Drivers on Highway
• Regional Fleets w/Owner Operators• Non-Asset (Brokerage) Clearinghouse
R i it I t d l O ti
Does Opportunity Still Exist?
MillionsUNITS
6
4
2
7‐11 M
BNSFUnion Pacific
OTR that fitswestern intermodal
networks
4.1 M
International
Domestic
1.5 M
3.3 M
1.8 M
1.9 M
2.2 M
Opportunity
Demand continues to increase
Highway capacity continues to decrease
• Government regulations Comprehensive Safety Analysis (CSA) Hours of Service
• Trucking bankruptcies Higher fuel costs Limited access to credit Higher equipment costs and lower resale values
Marketplace Update
Year-over-year July 2011 Full Year 2010Domestic Intermodal 2.9% 10.6%International Intermodal -4.6% 18.5%For-Hire Truck Tonnage 3.9% 5.7%
More People – More FreightAmericans require a freight system that moves 40 tons of freight per person annually. With current population growth projections, we are looking at moving 4 Billion more
tons of freight in the next 40 years.
ith improvements in service and facilities, Intermodal is becoming more ompetitive in shorter distances, absorbing more of the projected growth in eight.
Modal Shift Opportunity
Temp-Controlled Intermodal - Phase 1
C.R. England now operates 300 reefer containers (introduced in late 2010)
• Entire fleet of lightweight daycabs has been purchased
Container On Flat Car (COFC)
ustomer Value
Intermodal is now viable for shippers moving temperature-controlled freight
Cost savings are a critical factor, but due to the improved services the rate gap between OTR and Intermodal is narrowing
Dependence on “loading trucks” for the driver’s benefit is removed with Intermodal
We expect the trend in temp-controlled freight toward Intermodal to follow the dry market
Temp-Controlled Intermodal Viability
WHAT TO TAKE HOME FROM CCIBtermodal loadings still below peak of 2006.
ailroads CapEx $40 Billion last 5 years.
early 500,000 truckers left the business.
estern carriers OTR market 7-9 million.
astern carriers OTR market 9 million.
efrigerated and Flatbed Containers enter mkt.
Thank You For Your Time
Ron Sucik
RSE Consulting
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