1. Environmental Pragmatism: The Key to “Moving Forward” Bob Wade Corporate Manager Environmental, Hazmat & Safety

2. 1.Continuing regulatory, political and public pressures to reduce emissions and carbon footprint 2.Toyota’s environmental program – going beyond compliance 3.How to “Move Forward” and achieve results in today’s reality Presentation Overview

3. Public Opinion Context Continuing public concern and pressure to address global climate change... despite lack of major progress at Copenhagen.

4. Personal Stakes are High

5. Regulatory Context Continued focus at the Federal and state levels on addressing emissions and GHG reductions EPA decision to grant California waiver for GHG emission standards for motor vehicles... soon 2016 and beyond Possible Federal climate change legislation CARB diesel emission reduction programs, spanning: –On-road vehicles (trucks, buses, etc.) –Off-road vehicles and equipment (locomotives, tractors, cargo handling equipment, etc.) –Marine vessels (harbor craft, ocean vessels, shore power) –Stationary engines & portable equipment

6. Toyota’s Global 5 Year Environmental Action Plan TMS Environmental Action Plan North American Environmental Report Global Environmental Report TMS Environmental Policy Toyota’s Global Earth Charter Toyota Environmental Program

7. TMS Environmental Action Plan Environmental Action Plan 1.Energy & Climate Change 2.Recycling & Reduce Resources 3.Substances of Concern 4.Air Quality 5.Environmental Management 6.Cooperation with Society Set goals & targets Report annual results 2009 NA Report Results Exceeded CAFE 25% less energy use - TMS 90% recycling rate at TLS Logistics GHG reduction

8. Today’s Challenge How do we achieve further environmental gains in today’s regulatory and economic climate - and – at the same time, avoid undue burden and cost impacts on shipping? Answer “Environmental Pragmatism”

9. Recipe “Short-Term Small” + “Long-Term Large” + Common Sense

10. “Short-Term Small” Identify small investments and process changes that have short-term ROI and achieve environmental goals String them together to maximize return

11. Example #1 – Fuel Efficiency Initiative Toyota TransportTQPETEMA Post MPG 18 trailers w/skirts Governed Speed Driver Incentive (Post MPG) Governed Speed 2 trailers w/skirts 2 trailers w/Nose cone MPG target for fuel surcharge calculation (6.3 mpg  6.53 in FY10) $274,658$ 188,764$2.3M A cross-affiliate team from service parts, completed vehicle logistics and manufacturing parts logistics developed some 19 separate initiatives to reduce fuel costs Annualized Savings = $2.76M + GHG & Emissions Reductions

12. Toyota Transport - Governed Speed Speed reduction of 5mph 68mph to 63 mph Unit cost: $15 – labor Launch date: July 08 MPG gain: 2.97% ROI: < 1 week Savings/Yr.: $1,258/truck 44 trucks: $55,352/yr.

13. Service Parts - Driver Incentive Driver Incentive Program.5mpg Increase Unit cost: $7,000 max Launch date: April 09 MPG gain:.575mpg Q2 ROI: 2 weeks Savings/Yr.: $138K/yr.

14. Example #2 – Service Parts Truck Efficiency Kaizen Through route kaizen & increased cube efficiency, TMS reduced miles traveled to deliver service parts and accessories by 2.5M miles over the previous year.

15. “Long-Term Large” Patient investment – facilities, equipment and process changes Longer-term plans and expectations No instant ROI – but perhaps greater long- term return

16. Energy Use – U.S. Sales & Distribution 25% Energy Savings

17. “Long-Term Large” NAPCC Rooftop Solar

18. “Long-Term Large” Benefits NAPCC Rooftop Solar 2.3 megawatt solar roof array – second largest in North America No upfront capital costs Generates 58% of NAPCC electricity requirements Prevents 2.4 million pounds of CO2 annually Annual utility cost savings of $360K annually

19. Application to Port Operations Led by the Ports of LA and Long Beach – greater emphasis on environment Some requirements – like cold-ironing, stack sock, vessel retrofits – are very costly and sometimes impractical There may well be better, more practical and more cost-effective solutions!!

20. Conclusion These are challenging times on the economic and regulatory fronts The key to “Moving Forward” in achieving environmental goals without creating undue financial burdens on shipping will require... “Environmental Pragmatism” “Short-Term Small” + “Long-Term Large” + Common Sense