Car Hire Fallback Rates Craig Bicknell – Mgr. Fleet Performance & Compensation Norfolk Southern ACACSO Fall Meeting November 2010

Fallback Rates Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration. Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration.

Fallback Rates Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration. Negotiated agreement types: Market Rate Spot Market Rate Special Market Rate Bilateral and Spot Bilateral Rate Special Bilateral Rate

Fallback Rates Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration. Market Rate –These negotiated rates do not actually expire. If a Market Rate offer is sent and concurred to that contains an expiration date, upon expiration, the rates remain in effect and a new expiration date of 12/31/9998 is established with the existing offer number.

Fallback Rates Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration. Spot Market Rate –Upon expiration, rates revert back to a fallback rate. The fallback rate is the last negotiated market rate between the two parties to the expiring agreement. –If there was no prior market rate, the fallback rate is the default rate for each car in the agreement

Fallback Rates Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration. Spot Market Rate - Example Owners of car ABC negotiate a Spot Market Rate with Road XYZ that expires 6/30/2010. On 7/1/2010, the rate for the car “falls back” to the previous market rate negotiated on car ABC with Road XYZ if one exists. If not, the car’s default rate is in force.

Fallback Rates Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration. Special Market Rate –For negotiations originating after May 31, 2004, upon expiration, rates revert back to a fallback rate. The fallback rate is the last unexpired negotiated market rate between the two parties to the expiring agreement. –If there is no prior unexpiring market rate, the fallback rate is the default rate for each car in the agreement

Fallback Rates Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration. Special Market Rate – cont’d –For negotiations originating on or prior to May 31, 2004, upon expiration, rates remain in place until superseded by another agreement or arbitration.

Fallback Rates Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration. Bilateral or Spot Bilateral Rate –Upon expiration, rates revert back to a fallback rate. The fallback rate for non-market rate equipment is the base rate that all users pay when they do not have a bilateral or spot bilateral rate in place with the owner.

Fallback Rates Car Hire agreements with Expiration Dates are often revert, or “Fallback” upon expiration of the agreement. This presentation will discuss each type of Agreement and what happens to rates at expiration. Special Bilateral Rate –Upon expiration, rates revert back to fallback rates. The fallback rate for a car subject to a Special Bilateral agreement is the last unexpired negotiated rate between the two parties. –If there is no prior unexpiring negotiated rate, the fallback rate is the base rate for each car in the agreement

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