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L.A. Transportation Club

Marine Intermodal –The Evolving Chassis Model

Keith E. LovetroChief Executive Officer

TRAC IntermodalOct 11, 2016

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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

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Who is TRAC Intermodal

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

Transportation Companies

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• 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

Marine64%

Domestic24%

Storage12%

TRAC Fleet SizeGeographic Footprint

MiamiFt. LauderdaleTampa

Ft. PierceOrlando

Jacksonville

MonterreyLaredo

San Antonio

El Paso

Denver

Houston

Salt Lake City

PhoenixSan Bernardino

Los Angeles

OaklandStockton

Portland

SpokaneSeattle

Tacoma

OmahaKansan City

Dallas

St. PaulChippewa Falls

Montreal

CharlestonCharlotte

Portsmouth

New Orleans

Jackson

Memphis

Grand RapidsDetroit

Mobile

CincinnatiSt. Louis

Chicago

Evansville

BostonWorcesterSpringfield

Little Ferry

Baltimore

SyracuseToronto

BuffaloCleveland

Philadelphia

Birmingham

Huntsville

Atlanta

Savannah

Nashville

Indianapolis MarysvilleColumbus

Chambersburg N. BergenS. Kearny

Long Beach

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TRAC Intermodal - Company Overview • LA Service Center

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TRAC Intermodal - Company Overview • TRAC Mobile Service Units

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TRAC Intermodal - Company Overview

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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

ShippingLines

Flexi-Van

Railroads

DCLI

34%

24%

22%

10%

6%4%ShippingLines

DCLI

Flexi-Van

Other Lessors / TerminalsTruckers

44%

36%

20%

Railroad /LogisticCompanies

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

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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 2012-2016Top 15 SSLs

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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

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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

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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

operating 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 or IEP as Mgr

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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

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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

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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

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Open Discussion – Q&A