1. Port Financial Management Challenges Financing Freight Transportation Improvements St. Louis, Missouri April 29 to May 2, 2001 Financing Freight Transportation Improvements St. Louis, Missouri April 29 to May 2, 2001

2. Port Financial Management Challenges High Tech Terminals + Seamless Intermodal Transfer = No Local Jobs, No Taxes More Cargo = More Trucks = Pollution, Noise, Congestion Ugly Piles of Empties Warehouse/Distribution Jobs Adding Value Far From Waterfront Waterfront Land Demand High By Other Uses: Offices, Theme Parks Host Communities See Port As Part Of Past, Not Future High Tech Terminals + Seamless Intermodal Transfer = No Local Jobs, No Taxes More Cargo = More Trucks = Pollution, Noise, Congestion Ugly Piles of Empties Warehouse/Distribution Jobs Adding Value Far From Waterfront Waterfront Land Demand High By Other Uses: Offices, Theme Parks Host Communities See Port As Part Of Past, Not Future Perceived Public Benefits Declining

3. Port Financial Management Challenges Growth and Development Note: 1) Increased from current 1,500 Lifts per Acre 19952010202020302040 TEUs in Millions 2000 0 2 4 6 8 10 12 14 16 Forecasted Growth of Container Traffic with 50 ft Channel Deepening Forecasted Growth of Container Traffic with 50 ft Channel Deepening 14.4MM 4.2% CAGR Terminal Land Expansion Needs in 2040 Channel Depth Terminal Productivity Total Land Required New Land Required Reclaimed Land Required 50 feet 3,500 lifts/acre 2,400 acres 1,120 acres 600 acres 1

4. Port Financial Management Challenges Growth Issues 2000 2040 ROI MILLIONS OF TEUs 202020302010 Rail 13.9% Truck 86.1% PONYNJ West Coast Ports Other North Atlantic Ports Canada Modal Split Land Creation Environmental Impacts Return on Investment Regional Market Share

5. Port Financial Management Challenges Dredging / Disposal Landside Access Terminal Equipment Land Creation (Fill) Mitigation / Restoration Public Access Dredging / Disposal Landside Access Terminal Equipment Land Creation (Fill) Mitigation / Restoration Public Access Port Development Costs Going Up... Terminal Facilities Berth Construction Railroad and Road Access Channel Deepening (Local Share) Land Procurement & Reclamation Environmental Mitigation Average Cost/Acre ($ Millions) Terminal Facilities Berth Construction Railroad and Road Access Channel Deepening (Local Share) Land Procurement & Reclamation Environmental Mitigation Average Cost/Acre ($ Millions) 31% 28% 8% 5% 20% 8% 3.4 31% 28% 8% 5% 20% 8% 3.4 20% 18% 7% 15% 27% 13% 4.0 20% 18% 7% 15% 27% 13% 4.0 Container Terminal Construction Costs: 1990 2000...Prices Received For Services Going Down

6. Port Financial Management Challenges Return on Investment Going Down Inter-Port Competition is High Lease Rates Are Flat State Funding is Drying Up Competition For Federal Funding Inter-Port Competition is High Lease Rates Are Flat State Funding is Drying Up Competition For Federal Funding 2000 2040 ROI Millions of TEUs 202020302010

7. Port Financial Management Challenges Ports Change Business Model Maintain Market Share (Earn Market Share, Don’t Buy It) Strategic Plan To Meet ROI Objectives Competitive Bidding To Maximize Lease price Stress Capacity Expansion By Productivity Maintain Market Share (Earn Market Share, Don’t Buy It) Strategic Plan To Meet ROI Objectives Competitive Bidding To Maximize Lease price Stress Capacity Expansion By Productivity 2000 2040202020302010 FINANCIAL STRATEGY

8. Port Financial Management Challenges Mindset Change From Landlord to Logistics Provider Challenge Jurisdictions Entrepreneurial Risk Taking Regional Logistics Service Management Challenge Jurisdictions Entrepreneurial Risk Taking Regional Logistics Service Management Port Landlord

9. Port Financial Management Challenges Advance Competitive Advantage Decentralize Investment and Services Add Value By Integrating Cargo Handling With Distribution Build Leverage to Improve Pricing Advance Competitive Advantage Decentralize Investment and Services Add Value By Integrating Cargo Handling With Distribution Build Leverage to Improve Pricing Demand Management Strategic Mandate: Maximize Real Economic Impact of Demand Stream On Region

10. Port Financial Management Challenges Proposal to Improve Financial Performance Container Facilities Charge NAFTA-Wide Collected By Local Port Authority To Be Invested in Facilities By Collecting Authority (Not on Maintenance Dredging) Initiate Research to Determine Feasibility NAFTA-Wide Collected By Local Port Authority To Be Invested in Facilities By Collecting Authority (Not on Maintenance Dredging) Initiate Research to Determine Feasibility CFC