Patty SenecalVice President

Transport Express, Inc19801 S. Santa Fe Ave.

Rancho Dominguez, CA 90221

Psenecal@transportmail.comwww.transportexpressusa.com

Transportation Research BoardSummer Conference La Jolla, California

July 10, 2006

TRANSPORTATION

Intermodal drayage Ports LA/LB

California Interstate LTL/FTL

Interstate FTL

WAREHOUSING

Cross docking & distribution

Value added (palletizing, sorting, labeling)

Storage (in-transit, monthly or contract)

SPECIALITY

U.S. Customs bonded warehouse

U.S. Customs Container Freight Station

U.S. Customs General Order Warehouse

Project / Plant Moves

Trade Shows / Expositions / Rock Bands

Over dimensional cargo

Pacific Rim Connection - Gateway to trade for the USSource: Containerisation International Year end 2005

1st: Hong Kong 22.427 Million TEU’s

2nd: Singapore 22.288

3rd: Shanghai 18.084

4th: Shenzhen 16.197

5th: LA/LB 14.194 (8th 7.484 TEU’s and 12th 6.709 TEU’s LB)

Containerization Revolution 50 years later…. Malcolm McLean founded the Sea-Land shipping line. His first container ship, the Ideal-X, left New Jersey for Houston on April 26, 1956, carrying 58 trailers.

March 23, 2006 The largest containership 9,500 TEU’s has been formally named “COSCO Ningbo”.

70% of total container traffic from Asia arrives at U.S. West Coast ports

Percent Market Share Breakdown

West Coast Port TEU’s Million 2004 2005

Los Angeles 7,484,624 69% 67.7%

Long Beach 6,709,818

Oakland 2,270,525 10.7% 11.1%

Seattle 2,087,929 8.8% 9.8%

Tacoma 2,066,447 9.2% 9.8%

Combined ports of LA / LB are the 5th largest

ports in the world

Pacific Rim Trade - LA/LB ports

2002 = 10.0 million TEU containers

2003 = 11.8 million TEU containers

2004 = 13.0 million TEU containers

2005 = 14.1 million TEU containers

2006 = 15.33 - est 8% growth

Destinat ion est imates? 50% Local distribution warehouse for local consumption and outbound distribution50% Intermodal train / 2005 = 21% / 1.5 M TEU’s direct on-dock rail from ship & 5% near dock trucked from port

On-dock rail – containers move from ship to train instead of being trucked to the rail ramps

23% In Los Angeles & 27% in Long Beach

On-dock 1.5 million containers in 2005! This reduces the dwell time on dock and the amount of gate and yard transactions for the marine terminal

LA/LB Ports / Rails Drivers - Estimate 10,000 OOD’s (Average port MC has 25 OOD’s)

Largest foot print of trucks in a small area!

710 FREEWAY:Current - 35,000 truck trips per day from ports

Future – 90,000 truck trips by 2030

Relationship of Motor Carrier & Owner Operator: Motor Carrier must register driver in Emodal or MTC Voyager April 2006 – Mandatory RFID Tags on each port truck April 2006 LA/LBMotor Carrier must sign an interchange agreement (terms/conditions of container & chassis) and have $1M insurance for equipment Signed Owner Operator Agreement between the MC & driverDriver paid by the trip, fuel surcharge + some waiting time. Driver paid weeklyMotor Carrier is asset based – not a truck broker

Motor Carrier requirement for Compliance state & federal–Operating authority (MC, CA, ICC)

–BIT (bi-enniel inspection terminal)

–Drug testing

–DMV pull notice

–Driver logs

–Background check

–Equipment inspections every 90 days

–Equipment M&R records

TWIC…..

ABC NEWS BY PIERRE THOMAS WASHINGTON, March 7, 2006 In Washington today, House Republicans vowed to defy President Bush's effort to have a Dubai company take over six major U.S. ports. But ABC News has learned about a port threat from within — a major security breach at the ports of New York and New Jersey.

ABC News has learned that the cards, given to thousands of truckers by the Port Authority of New York and New Jersey, were issued with virtuallyno background checks. The Department of Homeland Security recently investigated the New York and New Jersey ports, and found stunning gaps in security.

The new DHS report, obtained by ABC News, shows that of the 9,000 truckers checked, nearly half had evidence of criminal records. More than 500 held bogus driver's licenses, leaving officials unsure of their real identities.

The intelligence report found truck drivers had been convicted of homicide, assault, weapons charges, sex offenses, arson, drug dealing, identity theft and cargo theft.

Money laundering and counterfeiting pose other security problems, the report points out. Authorities once seized almost half a million dollars, which was concealed inside a truck's rocker panels.

The report concludes port "security gaps" expose "vulnerabilities that could be capitalized by terrorist organizations." It also found similar problems at other major U.S. ports.

Homeland Security – TWIC Background, terrorist list, immigration status, 7 years back criminal

ATA supports concept of a single background assessment and the issuance of a single security credential. One card acceptable across the United States!

CTA support states federally pre-empting statesOne national card - not additional cards or requirements from states

All States must be required to upload criminal history into central FBI national data baseStates need uniform standards of reporting

The HazMat Endorsement and TWIC should be harmonized - disqualifying criteria for TWIC is same as HME

Not 2 duplicate application/fees – only difference is photo

Other security programs have not been consolidated.Such as Secure Identification Display Area (SIDA) or DOD’S clearance to haul arms, ammunition

or explosives. Individual has to undergo a separate check for each program.

Need a ‘tiered level’ of clearance through TWIC

Homeland Security – TWIC What is the appeal process for denials?Burden of proof must lie with TSA.

Is a driver put out of work while an appeal is taking place?

Should their be a temporary card issued for as long as the appeal takes?

What about identity theft?

What about a recent immigrant less than 7 years?

Will TWIC exacerbate the driver shortage?

Motor Carriers already required to background check

Impact of RFID TAGS AND TWIC? RFID Tags used for security driver check in

CTA commissioned a Second Survey: “Port Driver Attitudes Toward the PierPASS OffPeak Program”John Rozsa, Ph.D. Stonebridge Associates, Inc. Results presented on March 8, 2006

PierPass is nonprofit company created by West Coast Marine Terminal Operators Discussion Agreement – granted limited antitrust by FMC to address multi-terminal issues such as congestion, security and air quality.

Traffic Mitigation Fee (TMF): $50 = 20’ $100 = 40’

Accessed between 8:00 a.m. 6:00 p.m. (both imports & exports)

LA/LB open M-Thru 6:00 p.m. – 2:00 a.m. & Saturday 8:00 – 5:00 p.m.

Prior to PierPass harbor was 7:00 a.m. – 4:30 p.m. with breaks gave drivers about 6 ½ hour of gate time. No coordinated gate schedule between the piers.

John Rozsa, Ph.D., Stonebridge Associates ‘Port Driver Attitudes toward PierPass Off Peak Program’

Results released on March 8, 2006 – Key findings:

• There are still no differences in turn times between day and night gates.

• Drivers who work two or more Saturday gates monthly average significantly more turns.

• Night and Saturday gates continue to be unpopular with drivers: Forty percent refuse to work nights; Forty one percent refuse to work Saturdays.

• $ Additional compensation for 21 percent of night drivers and for 17 percent of Saturday drivers has significantly improved drivers’ attitudes toward Off-Peak and their willingness to work nights or Saturdays.

• Most important reason for not working Off-Peak continues to be that the hours keep drivers away from home at the times their families’ normal activities are scheduled

• Although opinions about Off-Peak are more positive than in the first survey, if those who receive additional compensation are excluded, drivers are not much more willing to work nights or Saturdays than before.

• The majority of drivers do not see improvements in freeway congestion.

• 33% of drivers who work nights and 32% of those who work Saturday gates say they do so because that is when work is available.

• Many drivers noted that they didn’t want to work night gates but had no economic alternative.

Reasons Given for Not Wanting to Work Night or Saturday gates

Reason 1st Survey 2nd

Survey

Do not want to give up family time 41% 41%

No extra compensation Na 29%

Turn times too long 37% 27%

Do not like night driving-safety& security 28% 26%

Cannot make enough trips 24% 15%

Customers not open for delivery 18% 15%

Hours of service compliance 17% 11%

Not enough customers requesting nights 23% 11%

Company refuses to work at night 9% 6%

CTA plans another driver AND Motor Carrier survey is planned for September 06.

Off Peak – ?* Driver Shortage – 2nd shift drivers not likely (workers compensation issue)

* Economic injustice of expecting drivers to work longer to make more money? Does that attract drivers? Will market pay more to work off peak?

*Gate Hours: Free time starts at 6:00 p.m. -trucks wait through 5-6:00 p.m. shift change. ILWU break 10:00 p.m. – 11:00 p.m. (2/3 moves done by 10:00 pm 1/3 after 11:00 p.m.

* Ships heavy on weekend – drivers out of HOS by Saturday

* Willingness of warehouse (beyond mega XL retailers) to be open? Concerned with cargo theft, labor cost, operating cost, can’t get labor

* How much more cargo can or will shift into off-peak with fees being raised from $100? Bubble effect?

* How does community view PierPass? Growth strategy or environmental? Impacts of night/weekend delivery to community?

National Benefit vs. Local CostRegional Balance - Quality of life issues of congestion,

pollution, land use verses jobs and local, state, economy

The ports of LA/LB announced on June 28, 2006 “San Pedro Bay Ports Clean Air Action Plan” for ships, trains, trucks, yard handling equipment, harbor craft.

First time ever the ports have established uniform air standards. “Most comprehensive, far reaching strategy…ever developed by any US seaport”.

Implementation mechanisms – terminal lease agreements, tariffs, Calif Environmental Quality Act (CEQA), mitigation and incentives.

Involves hundreds of millions of dollars of investment by the ports, state, air regulatory agencies, port industry.

“San Pedro Bay Ports Clean Air Action Plan”

Port HDV frequent callers ( 7 or more calls per week) by the end of 2011 – will meet or be cleaner than the EPA 2007 on-road PM emission standards and be the cleanest available NOx at the time of replacement or retrofit.– Infrequent callers 3.5 – 7 calls with MY 93-2003 will

be equipped with emission reduction technology

• Plan calls for $1.7 Billion on HDV replacements or upgrades (installation of emission controls) over the 5 year plan.

• Assistance to owner operator or private fleets is being proposed– Ports & SCAQMD will commit $200 million– $800 Million from 19.9 BILLION infrastructure bond

that California has on November 2006 ballot.

• Ports envision using the marine terminal operators lease requirements “to use clean trucks” a green lane to expedite clean trucks, medallion program to limit “dirty trucks”, tariff changes, or a sliding fee that favors “clean trucks”

• Ps: What about an industry standard for turn times of trucks????

Truck driver / capacity shortage

Nationwide driver shortage American Trucking Assoc. - May 2005 Report done by Global Insight “US Truck Driver Shortage Analysis and Forecast”

Current national shortage 20,000 drivers May jump to 111,000 by 2014Average of 54,000 new drivers per year for the next decade Pay shortage = driver shortage - weekly earnings in long-distance trucking are

1.5% below the average in construction Life on the road not easyLack of new infrastructure to deal with highway/road congestionCompanies leave business due to higher insurance, fuel, etc.?? TSA Worker ID Cards ???

• Intermodal hard hit – owner operators & companies– Too much unpaid waiting time: inside marine terminals, customer docks

and freeways– The yield per truck is reduced by unproductive ports, shipper docks and

freeways– Market rate level keep truckers in old trucks – market does not recognize

the value (YET) of cleaner trucks

• On-dock rail combined with PierPass helped capacity issues.

Influences every aspect of our lives

Improves our standard of living

Shapes our cities

Underpins our economy

Determines our trade patterns

TRUCKS DELIVER THE AMERICAN ECONOMYWITHOUT TRUCKS AMERICA STOPS

FREIGHT TRANSPORTATION