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Indiana Logistics Summit 2007. U.S. Barge Transportation – An Overview.

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Presentation on theme: "Indiana Logistics Summit 2007. U.S. Barge Transportation – An Overview."— Presentation transcript:

1 Indiana Logistics Summit 2007

2 U.S. Barge Transportation – An Overview

3 3 3.76 Trillion Domestic Ton Miles $739 Billion Transportation Market Source: American Trucking Association (2005 “Forecast” Report); U.S. Bureau of Transportation Statistics Water transportation moves one-sixth of the tonnage in the United States annually Railroad 39.8% Truck 28% Water 16.5% Pipelines 15.3% Air 0.4% Railroad 6.6% Truck 84.2% Water 1.3% Pipelines 4.7% Air 3.2%

4 4 With over 25,000 vessels navigating 12,000 miles of waterway, inland barging makes a significant contribution to the nation’s economy by: Contributing over $5 Billion to the U.S. economy annually Employing over 500,000 U.S. workers in industries supplied by barging Transporting 20% of the nation’s coal and 60% of all U.S. grain exports Playing a critical role in the transport of chemical, heating oil, and petroleum products Source: American Waterways Operators.

5 5 Inland barges move critical commodities and bulk freight to many U.S. markets, including ports for export 595 Million Tons Key Commodities Source: 2005, Informa Economics Barge Commodity Profile U.S. Inland Navigation System

6 6 Sources:Iowa Department of Transportation. Wilson, Transportation of America (19 th edition, 2002). U.S. Army Corps of Engineers. Carbon monoxide pollutants (in pounds) produced by moving one ton of cargo 1,000 miles. Injury rate per billion ton miles. With unmatched unit capacity, moving cargo by barge is the lowest cost, cleanest and most fuel efficient method of shipping freight Ton mile per gallon of fuel Safest - Injuries 15 Railcars 80 Truck Trailers BargeRail Truck Equivalent Units 1 Barge Lowest Cost Cost per ton mile (cents)0.72¢2.24¢26.61¢ 51420259 Cleanest - Carbon Monoxide 0.0921.77NA ==

7 7 Approximately 17,800 dry cargo barges in operation today; 24% were built between 1979 and 1981 Average barge life is approximately 25 - 30 years High steel prices have accelerated scrapping of old equipment and limited new builds Source: Informa Economics, Inc. and Criton ITC Dry Cargo Barges in Operation by Year of Construction

8 ACL – An Overview

9 9 Operating since 1915 Over 2,600 employees Over 3,000 barges and 120 towboats Leading transporter of dry and liquid commodities Leading manufacturer of marine equipment Approximately $1B in revenues One of the top 5 IPO’s in the U.S. during 2005* Fully integrated marine transportation company and industry leader in barge transportation and manufacturing American Commercial Lines (“ACL”) *Forbes March 13, 2006

10 10 ACL is THE industry leader in safety Personal Injury Incident Rate Incident Rate ACL Transportation Services’ Incident Rate for 2006 was 0.97 while the transportation industry* averaged 2.5 ACL’s Jeffboat shipyard had a 2006 Incident Rate of 4.07 while the shipyard manufacturing industry has averaged 12.1 0.97 4.07 *AWO reporting companies

11 11 We transport a diversified mix of both liquid and dry commodities 16.5% Manufacturing $155MM 83.5% Transportation $788MM 32% Grain 24% Liquids 8% Coal 25% Bulk & Other 2006 Revenues2006 Transportation Revenues $943 Million$788 Million 8% Steel 3% Fertilizer

12 12 Ingram 3,716 20.9% ACL 2,803 15.8% AEP MEMCO 2,318 13.0% ARTCO 2,076 11.7% Cargo Carriers 909 5.1% ACL is uniquely positioned to service both dry and liquid customers Dry CargoLiquid Cargo Source: Informa Economics, Inc. as of 12/31/05 & Barge Fleet Profile March 2006 Units % of Total Total Top 5 Dry 11,822 66.5% Units % of Total Kirby 897 32.3% ACL 371 13.3% Marathon 170 6.1% Canal 169 6.1% Ingram 165 5.9% Total Top 5 Liquid 1,772 63.7%

13 13 Located on the Ohio River, Jeffboat is the largest inland shipyard in the United States and is a leader in marine design and construction Lean manufacturing initiatives drive efficiency and productivity Jeffboat is one of two leading manufacturers of barges Industry leader in safety Manufacturing Services Division

14 14 Organic Growth Strategy 2006 Transportation Revenue2009 Transportation Revenue 2006 Manufacturing Revenue2009 Manufacturing Revenue EBITDA Potential 20 – 25% EBITDA Potential ≥ 30%

15 15 Inorganic Growth: Enhance Market Leadership Position –Consolidation in complementary barge operating and manufacturing markets Leverage Manufacturing Capacity –Expand manufacturing portfolio to include diversified sectors within and outside of transportation equipment Expand into Additional Modes –Leverage overlapping networks, supply chains, and customers currently served by barge through multi-modal expansion Diversify and Broaden Service Offerings –Move up and across the transportation supply chain to include “non-asset” and “asset-light” models. Additional opportunities exist to broaden offerings in ancillary services, environmental, engineering, finance, and commodities. Inorganic Growth Opportunities presented by mergers, acquisitions and new strategic partnerships are what we call inorganic growth.

16 16 We develop transportation solutions for industry-leading companies

17 Ethanol – A Transportation Opportunity

18 18 Geography of the Ethanol Industry in 2007

19 19 Overview of Ethanol Transportation Rail is the dominant mode –Rail = 70-75% of shipments –Truck = 15-20% of shipments –Barge = 5-15% of shipments Source: Informa Economics, Inc.

20 20 Ethanol Production and Domestic Barge Volumes Source: Informa Economics, Inc.

21 21 Waterborne: Inland Barge Waterborne Movement –Only 5 existing plants (622 mmgy) & 2 plants under construction (192 mmgy) are on the Mississippi/Illinois/Ohio River system (Source: Jaworski, ACL) –Original ethanol plants produced 20 to 30 million gallons annually –River located plants produce 100 to 200 million gallons annually Source: Informa Economics, Inc.

22 Indiana’s Waterways – A Growth Opportunity

23 23

24 24 Indiana Waterways – Strategic Advantage Three Ports –Port of Burns Harbor –Port of Jeffersonville –Port of Mount Vernon 358 Miles of Ohio River Shoreline Access to the Atlantic Ocean, Great Lakes and Gulf of Mexico Capacity for Growth in a Congested Freight Market

25 25

26 26 Almost 40 million tons of commodities moved by water to, from and within Indiana – and almost 120 million tons moved to from within and past Indiana on our waterways Source: 2004 U.S. Army Corps of Engineers Waterborne Commerce Statistics Shipments on Ohio River Basin waterways only

27 27 This presentation includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to risks, uncertainty and changes in circumstance. Important factors could cause actual results to differ materially from those expressed or implied by the forward-looking statements and should be considered in evaluating the outlook of American Commercial Lines Inc. Risks and uncertainties are detailed from time to time in American Commercial Lines Inc.’s filings with the SEC, including its most recently filed Form 10-K and Form 10-Q. American Commercial Lines Inc. is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of changes, new information, subsequent events or otherwise. Forward Looking Statements

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