2

Trucking, Autonomy and the Future of Rail

Doug Reese

Chief Strategy & Growth Officer

GE Transportation Digital Solutions

3

Freight transportation trends threaten rail

eCommerce changing the

way we acquire

goods…era of guaranteed

shipping

Emergence of disruptive

technologies…platooning,

autonomous trucking,

electric

Logistics startups

attracting new investments

Driving high service expectations

Last-mile delivery gaining in

prominence

Potential logistics value

chain disruption through

digitization

Likely to improve trucking competitive

position vis-à-vis railroads

4

Other potential disruptors

Democratization of

manufacturing

Additive manufacturing or

3-D printing has the

potential to disrupt supply

chains

Blockchain

technologies

Uberization of

freight

Commercial

drone deliveries

Blockchain likely to

become integral part of

supply chains

Potentially disruptive to

carrier/shipper business

models

Drone delivery likely

to impact on final mile

delivery.

5

Trucking has it’s own challenges

Capacity

crunch/high

demand

Driver

shortages

Spot rates

skyrocketing

How will this all impact the railroad industry?

Electronic

Logging

Device (ELD)

mandate

6

Rail isn’t going anywhere

40% Amount of freight moved by rail in ton-miles in the U.S.

4x Average fuel efficiency of rail as compares to trucks

75% Reduction in greenhouse gases

emissions moving freight by rail instead

of truck

67% NA Class 1 op ratio - compare to

~90% for trucking – rail is far more

profitable

2 November 2018Edit Presentation Title in [Insert Tab > Header & Footer]

|

7

Rail can (and should) take share from trucking

WHY?

1% shift in N.A. share from truck to rail = ~10% rev increase for N.A. rail

Share losses to trucking are self-inflicted & correctable

9 October 2018 9

How?

1. Sustain & enable intermodal growth

2. Integrated visibility & logistics to improve service

3. Unclog networks with optimization & op changes

4. Double down on cost savings with automation

10

Sustaining intermodal – port & terminal effectiveness

Outcomes:

Customer Challenge:

• Choke points @ ports &

terminals

• High fixed costs to expand

ports & intermodal terminals

• Fragmented, disconnected,

and often manual processes

• YOY Intermodal growth >6%

Visibility Optimization AutomationPort Optimizer

Solutions:

Smart Intermodal

TOS

Work Order

Assignment

Railcar

Blocking

Unit Location

Assignment <---------Real time optimization & visualization ---------

>

8-12%projected efficiency

@ Port of LA

10-15% gantry lift

productivity

15-20% hostler moves

Integrated visibility & logistics integration - Ports

11

Enabling visibility and execution across an integrated supply

chain

Port OptimizerCargoOwner

Ocean Carrier

Motor Carrier

TerminalOperator

Cargo Owner

• visibility for better

customer service

• Better planning for dray

partners cargo

velocity thru ports

• container dwell

• velocity of cargo thru

port

• rail volume thru

terminal

• velocity of cargo thru

port

• velocity of empty returns

Marine Terminal Op’r

Visibility +

Cargo VelocityCargo Dwell + Cargo

Velocity + Rail Volume

Ocean Carrier

Visibility +

Cargo Velocity

Motor Carrier

Turn Times +

Productive Turns

• Faster truck turn times

• number of productive

turns per day

Railroad

Rail Volume +

Visibility + Speed

Railroad

ChassisProvider

• rail volume through

ports

• visibility to empty railcar

inventory speed of

rail volume thru ports

Chassis Provider

• accuracy of chassis

inventory and forecast

chassis utilization

• Improved planning

chassis utilization

Accuracy +

Chassis Utilization

12

Integrated visibility & logistics – Bulk Shippers

“We want to ship (and

receive) more rail. We

don’t have information or

confidence as to when

we will get rail cars. So,

we truck more.”

• First railcar & inventory-in-

transit visibility solution

• Connects shipper, Class I and

short line rail data to enable

informed decision-making

Outcomes:

10%Rail Volume

14 days Advance Visibility

1 Information

Source“I used the visibility tool this morning and within seconds, I had all

the data at my fingertips. There have been days where it’s taken

me hours to get this information … the availability of the tool has

been especially meaningful due to the effects of the hurricane.”

Customer Challenge:

Pulp and Paper Producer

Solution:

13

Unclog networks with optimization

Outcomes:

Customer Challenges: Solutions: Network optimization + operational changes

Terminal& yard optimization

cloud capableservices/

containers

optimization /

automation

modern user

experience

open system /

integration

systems of systems

not just a TOS

10-15% lift productivity

10% Network

velocity

15-

20% hostler

moves

50% expired crews

• 2018 rail network velocity

is worse than 4 years ago

. . . rail systems need to

change operating models

and fix bottlenecks

• Terminal dwell has been

nearly static since 2015 @

>20 hours (!!!)

14

Double down on cost savings with automation

Outcomes:

Customer Challenges: Solutions:Train Automation

90% train

“break-in-twos”

3-17% fuel

efficiency

Up to 50%crew costs

possible near term

Safety & hauling

capacity

Crew costs and fuel

represent the

biggest

opportunities for

cost reduction in

rail

Movement authority &

optimization (MP)

Interface to control

system (DP)

Energy Management

(TO)

Interface to Signaling

(Safety Overlay)

ATO Authorization

Sensory Monitor

ATO Control Engine

Foundation

(Available today)

Level 2 automation

(1-3 years) Full automation

(3+ years)

Progression

15

More connected, more visible, more integrated, more flexible … the new freight rail landscape is happening now …

Port &

Supply

Chain

Visibility

Asset

Performance

Management

Network &

Yard

Optimization

Automation

Transportatio

n

Management

Edge

devices &

cloud

connectivity

16

GE Transportation . . . soon to be part of