US / Canada Border Issues William Cook Senior Manager, Corporate Customs DaimlerChrysler Corporation April 30, 2004

2 Agenda 1.Automotive Industry Overview 2.Automotive Trade Overview 3.Automotive Border Expectations 4.Recommendations

3 Automotive Industry Overview US In 2002 Built 73% of NAFTA vehicles Built 12 million vehicles Sold 16.8 million vehicles Employs 770,000 directly 1,001,000 indirectly Spends annually $500 Billion in US on parts $21 billion on R&D 7.5 billion on health care Canada In 2002 Built 16% of NAFTA vehicles Built 2.6 million vehicles Sold 1.7 million vehicles Employs 50,000 directly 550,000 indirectly Accounts for 16% of manufacturing 20% of all exports $27 billion in trade

4 Automotive Trade Overview $18.1 B cars & trucks $26.5 B parts & engines $46.8 B cars & trucks $16.6 B parts & engines Source: Statistics Canada, DesRosiers 2003 Figures are in $US

5 Major Automotive Border Crossings Bluewater Bridge Ambassador Bridge & Detroit/Windsor Tunnel Peace Bridge Queenston-Lewiston Bridge

6 International Highway Traffic Volumes between US & Canada 43% of total volume between S.W. Ontario and S.E Michigan 26% of total volume at Ambassador Bridge in Windsor/Detroit DCX is 14% of volume with approx 1000 truckloads daily Automotive Sector Traffic Volumes 34% of total volume 68% of shipments occur at Detroit or Port Huron Automotive Cost Implications Plant shutdowns costs $1.5 million/hour in lost revenue Automotive Trade Overview

7 Just-In-Time Delivery Process Kautex Textron Jefferson North Assembly Plant OntarioMichigan Daily Ship Windows MON04:00 MON07:00 MON10:00 MON13:00 MON16:00 MON19:00 Delivery Windows MON06:00 MON09:00 MON12:00 MON15:00 MON18:00 MON21:00 15 Minutes 90 Minutes Ambassador Bridge Supplier located in Windsor, Ontario 6 daily shipping windows 2 hours total transit time Supplier submits ASN upon shipment JNAP located in Detroit, Michigan 3 hours total inventory on hand Supplier issues 856 Advanced Shipping Notice (ASN) CHAMPS monitors, analyzes and updates supplier shipment / delivery performance CHAMPS data populates CNACS and UPIPS with import shipments Broker accesses USIPS to retrieve shipment data for entry information Broker sends pre- shipment and entry information to US Customs

8 Automotive Border Expectations JIT (just in time) inventory requires: Seamless border crossingsSeamless border crossings (i.e. minimal paperwork and crossing delays) Consistent treatmentConsistent treatment of shipments at every port Predictable border crossingsPredictable border crossings necessary to meet JIT delivery Expedited low risk shipmentsExpedited low risk shipments for qualified importers Improved infrastructureImproved infrastructure to manage traffic efficiently and allow clear access for authorized traffic Modern technologyModern technology to enhance and simplify processes

9 Border Delays Do Not Support JIT!

10 Automotive Border Expectations DCX has been a leader in developing and promoting the use of optimal border management systems :Examples: CSA/FASTCSA/FAST NEXUSNEXUS Partners in Protection/CTPATPartners in Protection/CTPAT DCX needs recognition that: low riskWe are low risk securecompliantOur shipments, drivers and carriers are secure and compliant critical Efficient Borders are critical to our business

11 Recommendations Border Management Improve efficiency of driver registration process Clarify benefits for CBP/CBSA programs to promote participation Increase focus on unknown or high risk freight Simplify requirements with common US/Canada processesTechnology Optimize technology to improve operations and integrated solutions Implement intelligent transportation systems

12 Recommendations Infrastructure Improve facilities to optimize capacity Improve border access for low risk importers New border crossing to meet increasing demandsFunding US Establish separate border program as part of the reauthorization of the Surface Transportation Bill Allocate funding to border states based on relative volume of trade Canada Proceed with prioritizing and spending of $300M allocated