Why Getting Containers Through Major U.S. Gateways is About to get - PowerPoint PPT Presentation

Why Getting Containers Through Major U.S. Gateways is About to get more Problematic & What to do About It Ronald D. Widdows JOC TPM Conference Executive Chairman, American Intermodal Management, LLC Longbeach, California February 28, 2016

STRICTL TRICTLY CONFIDE IDENT NTIAL IAL The most st complex x operat ating ing envir ironme nment nt in the U. U.S … .Th The e LA/LB Basin in … .13 mari rine ne term rminal inals s The mergers currently underway or being initiated in the next 6 to 12 months will be the catalyst for a major reconfiguration of the carrier alliances. Many carriers have cargo flowing through 4-5-6 different terminals in So. California today. Service levels have been impacted by this complex environment. Alliance changes will result in additional challenges during transitions; a very real potential for disruption. Consolidating terminal interest to better consolidate alliance flows while possible will be exceedingly challenging due to ownership structures; that said there are efforts underway to work towards longer term solutions 10 10 3 2 9 4 11 11 1 12 12 5 13 13 6 8 7 1 American Intermodal Management - LLC February 28, 2017

STRICTL TRICTLY CONFIDE IDENT NTIAL IAL LA/ A/LB LB Opera rati tion onal al Challen lenges ges – Impact act on Shipper ppers s Sup upply y Chains ins The operating environment in the most important port complex in the U.S. has been ground zero for the most difficult challenges set up by the evolution of alliance relationships. In 2016 we have seen:  Terminal velocities deteriorating  Dwell times have increased over time  Chassis remains a challenge ; terminals “run out of chassis” routinely, assets are not consistently in the right place at the right time in the right quantities  Supply chain impacts persist as carriers have focused on cost reduction  Consolidation and Alliance reconfiguration will have significant impact on port/terminal performance at least in the near term A critical need exists for a new mindset , and the development of new strategies/operating methodologies as well as infrastructure development to avoid major disruptions in the future 2 American Intermodal Management - LLC February 28, 2017

STRICTL TRICTLY CONFIDE IDENT NTIAL IAL There are opportunities to positively impact the current operating environment While the operating environment is challenging, there are a number of areas where cooperation of stakeholders and greater sharing of data could bring about improvements, particularly on the landside:  Improving data integrity ; the industry is still wed to EDI for event data  Visibility needs to improve ; an enabler of better planning and execution … across the board  Asset availability ; not only chassis  Improve terminal velocity; this becomes even more critical as growth picks up  Better use of scarce trucking resources; current practices result in sub-optimization  Need for collaboration between carriers on landside operating issues  Need for longer time horizons to planning … . better upstream visibility crucial  These and other initiatives will … .. Reduce the effects of the more complex operating environment that the expanded alliance structures have precipitated Reduce congestion in the port area and contribute positively to reducing congestion to/from the Port Area Actions that will positively impact “flow”…the single most important factor to shippers, but with postiive implications to; terminal operators, carriers, motor carriers and the shipping community broadly 3 American Intermodal Management - LLC February 28, 2017

STRICTL TRICTLY CONFIDE IDENT NTIAL IAL Todays ys Discussio cussion — PANELISTS — Todd Zaninelli Director, International Transportation, Lowe's Thomas Lorenzo International Transportation Manager, Domtar Corp. Gene Seroka Executive Director, Port of Los Angeles Jonathan Rosenthal Managing Partner, Saybrook Capital 4 American Intermodal Management - LLC February 28, 2017

STRICTL TRICTLY CONFIDE IDENT NTIAL IAL What role will technology play in the continuing evolution of the container shipping sector? Technology has the potential to enable a dramatic change in how carriers manage information and use data to execute in a more efficient manner. New technology will unlock abilities to:  Enable greater use of data by the broad constituency of players who rely on information to manage the “flow” of commerce  Support the need for sharing of data between carriers, most significantly between alliance partners  Development of new visibility tools that provide better upstream/downstream visibility for; o Improved asset management o Enabling better planning of; stowage, terminal operations o Providing service partners improved visibility to better plan and execute connectivity and onward conveyance o Through improved visibility trigger the development of new tools for shippers to more efficiently manage their supply chains Support the more service oriented players in their efforts to create greater differentiation in their product/service offering and combat the complexities that currently negatively impact efficiency and flow of cargo through terminals 5 American Intermodal Management - LLC February 28, 2017

STRICTL TRICTLY CONFIDE IDENT NTIAL IAL The next phase of technology enabled development in the sector  A dramatic shift in how data/information is managed ; away from proprietary systems to more open architecture  Greater collaboration to enable better upstream visibility; better operational planning and execution  New operating methodologies with a greater degree of cooperation between service providers and those they serve to combat complexity, that target both reducing cost and improving service/impact on shippers supply chains  Deployment of new technologies ; like AI (Clearmetal) , , and Cloud technology like (Navis/Xvela) and other advances to bring network optimization and asset utilization to new levels of efficiency … . predictive versus reactionary  The ability for shippers to have much greater visibility of the flow of their cargo enabling a new way of interacting with carriers, terminals and motor carriers; utilizing new visibility tools, “intelligence” which unlocks the power of real time, highly accurate event data These changes will occur … at an individual carrier level initially but inevitably at an alliance and then sector level … only a matter of how long it takes 6 American Intermodal Management - LLC February 28, 2017

STRICTL TRICTLY CONFIDE IDENT NTIAL IAL Thank nk You 7 American Intermodal Management - LLC February 28, 2017