L.A. Transportation Club Marine Intermodal The Evolving Chassis - - PowerPoint PPT Presentation

1

L.A. Transportation Club

Marine Intermodal – The Evolving Chassis Model

Keith E. Lovetro

Chief Executive Officer TRAC Intermodal

Oct 11, 2016

2

Discussion Agenda

• An Introduction – Who Is TRAC Intermodal
• The Evolving State of Marine Intermodal
• Different Marine Chassis Pool Structures
• Our View – What Needs to Change
• Open Discussion – Q&A

3

Who is TRAC Intermodal TRAC is the nation’s leading Intermodal chassis pool manager and equipment provider for domestic and international Transportation Companies

4

• Largest provider of chassis in North America with over 310,000 units under management
• 195,000 in the Marine Segment
• 81,000 in the Domestic Segment
• 34,000 units in storage
• Broad distribution network which includes 630 Marine, 160 Domestic and 60 Depot locations
• Largest pool operator - 11 Neutral Marine Pools and only National Domestic Pool operator
• Investing in “Refurbs”, New Pools, Facilities and Infrastructure

TRAC Intermodal - Company Overview

Marine 64% Domestic 24%

Storage 12%

TRAC Fleet Size Geographic Footprint

Miami

• Ft. Lauderdale

Tampa

• Ft. Pierce

Orlando Jacksonville Monterrey Laredo San Antonio El Paso Denver Houston Salt Lake City Phoenix San Bernardino Los Angeles Oakland Stockton Portland Spokane Seattle Tacoma Omaha Kansan City Dallas

• St. Paul

Chippewa Falls Montreal Charleston Charlotte Portsmouth New Orleans Jackson Memphis Grand Rapids Detroit Mobile Cincinnati

• St. Louis

Chicago Evansville Boston Worcester Springfield Little Ferry Baltimore Syracuse Toronto Buffalo Cleveland Philadelphia Birmingham Huntsville Atlanta Savannah Nashville Indianapolis Marysville Columbus

• ChambersburgN. Bergen
• S. Kearny

Long Beach

5

TRAC Intermodal - Company Overview

• LA Service Center

6

TRAC Intermodal - Company Overview

• TRAC Mobile Service Units

7

TRAC Intermodal - Company Overview

8

North America Chassis Market

(1) Based on reported chassis fleets and TRAC estimates as of June 30, 2016 (2) Domestic excludes JB Hunt ‘s 68k proprietary nonstandard chassis

Marine Market: 578,000 Domestic Market: 181,000(2) Total Chassis Market: 759,000(1)

37% 20% 17% 8% 7% 7% 4% Truckers Other Lessors / Terminals Shipping Lines Flexi-Van Railroads DCLI 34% 24% 22% 10% 6%4% Shipping Lines DCLI Flexi-Van Other Lessors / Terminals Truckers 44% 36% 20% Railroad / Logistic Companies Others

• Total Estimated Market Size = 759,000 Active Chassis
• Marine - 578,000 (76%)
• Domestic - 181,000 (24%)
• TRAC has an estimated 37% of the total active chassis market share in North America
• 34% in the Marine market
• 44% in the Domestic market

9

North America Chassis Market

• 15 primary Steamship Lines have sold approximately 80% of their owned chassis since 2012
• 2 of these lines still own significantly large fleets (10,000+ each)
• The Steamship Line divestiture trend is expected to continue beyond 2016
• TRAC has acquired approximately 50% of the chassis that have traded

158,165 31,234

• 20,000

40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Beginning of 2012 Q3 2016

Steamship Line Divesture of Chassis 2012-2016 Top 15 SSLs

10

Evolving State of Marine Intermodal

• Excess capacity is undermining the economic viability of the Marine segment
• Steamship lines are posting significant financial losses
• WSJ estimated losses are $8-10 billion this year
• The Marine industry is prime for consolidation
• Bankruptcies
• Mergers / Acquisitions
• Steamship lines struggle to exit chassis provisioning – half-in / half-out
• Steamship line alliances continue to shift - creating additional complexity

11

Evolving State of Marine Intermodal

• Marine Intermodal operations are not well integrated
• MTO operating practices and schedules are different
• Information is fragmented with limited availability
• The independent chassis business model is not fully recognized
• PMA / ILWU negotiations included chassis
• Many Marine Terminal Operators don’t pay for their on-terminal use
• Chassis pool models are inconsistent and in certain markets, not interoperable
• The Pool of Pools created interoperability but there are still many challenges

12

Marine Chassis Pool Structures

• Neutral Pools (Private Pool)
• “Neutral” due to it not being associated with any

specific steamship line

• The company setting up the pool is the pool manager

and IEP for their respective customers in a geographic area.

• The pool manager establishes the hosting agreements,

M&R agreements and operating practices for the pool.

• Co-Op Pool – (Market Pool)
• Operates with one pool manager and one set of
• perating rules.
• Multiple IEPs may contribute to the fleet, and chassis

are “gray” across all locations in the pool.

• The pool manager establishes the hosting agreements,

M&R agreements and operating practices according the Operating Pool guidelines

Independent

• r IEP as Mgr

13

Marine Chassis Pool Structures

Pool of Pools

• Allows multiple neutral pools operating in the same geographic

area to use each-others fleets. This creates an “interoperable fleet” in multiple locations in a market

• Each contributing pool is responsible for and continues to

manage their own pool, their own M&R, their own fleeting and their respective pool operating rules

• Cross usage volumes are reconciled at the end of each month
• The Pool of Pool structure is only used in the Ports of Los

Angeles & Long Beach

14

Our View – What Needs To Change

• Steamship lines need to exit chassis provisioning – as they aspire to do

– Today over 60% of the Marine pool transactions are still steamship line controlled (CH)

• Create a consistent information source across the Port complex

– Vessel landing location and schedule – Size / quantity of boxes being imported

• Harmonize and Integrate Port Terminal Operations

– Align gate hours and days of operation – Facilitate live lift capabilities

15

Our View – What Needs To Change

• Chassis must be recognized as an independent part of the intermodal supply chain

– Data tracked at the chassis level – A service that is purchased – on-terminal or on-ramp use

• Chassis depots need to move off dock – but be in very close proximity (near dock)

– Allows better management of the chassis and the service quality – Frees up valuable working water front

• Pool of Pools model needs to evolve to a “Co-Op” pool structure

– One pool manager / one set of Operating rules – Consistent set of hosting and M&R agreements across the MTO’s – Evolve to “near-doc” chassis depots

16

Open Discussion – Q&A