Steve Haynes Director – Commodity Marketing and Sales North Carolina State Ports Chairman – Domestic Waterways Committee National Industrial Transportation League The Horizons of Transportation Understanding the Needs of Shippers (To Attract New Customers to the Waterways) National Waterways Conference 2006 Annual Meeting Portland, Oregon September 7, 2006

Waterways Commerce – Assuring a Vibrant Future Will the barge industry attract the new customers it needs to sustain positive growth? Our opening premise: Today, barge services are utilized by a small group of shippers that have long understood the benefits of low cost and reliable water transportation for volume shipments Few new users are attracted to the use of barge transportation, even though many have the volumes to utilize this mode New users may lack the understanding of how to add the barge mode to their inventory of transportation options

Knitting Together the Barge Transport Puzzle Inland Freight Supply Chain Water Terminals Inland Freight Barge Transportation It’s the arrangement and these multi-modal steps that frustrate and turn-off prospective users of barge transportation

Surveying NIT League Members about Barge To get a better understanding of shipper attitudes about waterways transportation, NITL surveyed its membership, asking a variety of questions. NIT League members represent almost all commodity groups We surveyed members belonging to the following committees: - Rail Transportation - Domestic Waterways - Ocean Transportation We surveyed both users and non - users of barge, seeking: - Drivers for users - Barriers for non-users

Waste & Scrap Mfd. Equipment Primary Mfd. Goods Chemicals Food & Farm Products Crude Materials Coal Petroleum & Petroleum Products Source: U.S. Army Corps of Engineers, “Waterborne Commerce of the U.S Edition.” 2004 Barge Volume Profile Survey Responders’ Commodity Profile NIT League Survey Participants Barge volume profile vs. League responders commodity profile Percent of total

Does your firm currently ship via barge ? Our NIT League survey received 59 responses to our questionnaire 61 percent – YES, we use barge transportation 39 percent – NO, we do not use barge transportation 61% 39% YES NO

Of those responders that utilize barge, we asked: What are the greatest benefits from utilizing barge transportation? Reduced freight costs Ability to accommodate large volumes Ease of handling cargos Reliable conformance to transit time expectations

What are the greatest disadvantages to utilizing barge transportation? Slow transit times Equipment availability Location and access (proximity of waterways) Cost (multi-modal) Of those responders that utilize barge, we also asked:

Of those that utilize barge transportation, we then asked: What are the barriers that keep your company from shipping even greater volumes via barge? Distance from waterways Availability of barge equipment Aggregate cost Transit Times

Why would their customers refuse to accept barge? Transit times for shipments are too long (This may be a planning horizon problem that can be corrected) Cargo cannot be handled effectively by the customer (Perhaps this is due to a lack of proper receiving terminals) Shipment volumes do not meet minimums and produce higher freight costs Customers frequently do not have sufficient storage to accommodate volumes

Do rail shippers have volumes needed to ship barge? 86% 14% YES A key requirement to economical use of barge transportation is the ability to accumulate sufficient quantities to meet barge minimums. Of the volume rail shippers that did not use barge, 86 percent believed they had the volumes to use this mode.

Are non - barge shippers and receivers near water? It was significant that almost 80 percent of volume rail shippers who do not take advantage of barge transportation were close to a navigable waterway 65 percent of their receivers were near water, too 78% 22% YES 65% 35% YES Shippers Receivers

26% 74% NO Did rail shippers have access to more then one railroad? Almost 75 percent of volume rail shippers that did not use barge had no reasonable routing alternative. They were captive to a single railroad. As the railroad industry continues to consolidate, volume shippers need to develop routing alternatives – water transportation is the natural alternative for many.

Do companies have the expertise to understand barge? 64% 36% YES Almost 65% of responders that currently do not use rail, believed that they had the necessary expertise to understand how to identify favorable barge opportunities and initiate their use. So why don’t they?

Are barge lines making enough sales calls? 44% 56% NO More than half of prospective barge shippers report they never receive sales call from barge lines. Could increased sales coverage produce more business? Do you receive sales calls from barge lines?

In Conclusion – Interpreting the data Our survey suggests that there may be many additional prospective shippers that could be introduced to water transportation. There may be a tendency, however, to focus on growing existing relationships, rather than to also identify new prospects. NC Ports now seeks out potential importers or exporters who, for one reason or another, are not participating in global trade between the U.S. and the world. Our theory is that sooner or later, to survive in business, all commodity and manufacturing concerns will eventually become global. We want prospective customers to understand what services NC Ports can provide before they decide to go global.

Back to our opening question Will the barge industry attract the new customers it needs to sustain positive growth? What is the solution? - Identify new prospective barge shippers - Educate prospective shippers how to use barge - Offer multi-modal supply chain solutions - Show them the “SAVINGS”

Thank you for listening All American Towing Company Ship Barge by AA T C O