1 FedEx Freight Presented by: Dennis Beal Vice President – Physical Assets - FXFS

2 First Units Delivered Jan, 2003 Our Goal – Test Everything as quickly as possible.

3 Current Population TOTAL TRACTOR FLEET 9,130 TOTAL MILES RUN PER DAY2,300,000 TOTAL POST OCTOBER 2002 ENGINES 758 TOTAL TRACTOR FLEET 9,130 TOTAL MILES RUN PER DAY2,300,000 TOTAL POST OCTOBER 2002 ENGINES 758

4 Mileage Ranges  TOTAL MILES RUN ON COMPLIANT ENGINES 29,020,849  LOWEST MILEAGES 35,000  HIGHEST MILEAGES 175,000  TOTAL MILES RUN ON COMPLIANT ENGINES 29,020,849  LOWEST MILEAGES 35,000  HIGHEST MILEAGES 175,000

5 Fuel MPG Experience  INITIAL DECLINE 15%  IMPROVED 4% AT 50,000 MILES  DECLINED AGAIN AT 70,000 MILES (3% TO 4%)  INITIAL DECLINE 15%  IMPROVED 4% AT 50,000 MILES  DECLINED AGAIN AT 70,000 MILES (3% TO 4%)

6 TO IMPROVE, MANUFACTURERS HAVE TRIED: COMPUTER MAPPING CHANGES DIFFERENT INJECTORS VARIOUS DIFFERENTIAL RATIOS VARIOUS HORSEPOWER SETTINGS COMPUTER MAPPING CHANGES DIFFERENT INJECTORS VARIOUS DIFFERENTIAL RATIOS VARIOUS HORSEPOWER SETTINGS

7 History of Mechanical Issues  CAMSHAFT FAILURES  SENSOR FAILURES  EXHAUST COOLER FAILURES  EGR VALVE FAILURES  INJECTOR FAILURES  CAMSHAFT FAILURES  SENSOR FAILURES  EXHAUST COOLER FAILURES  EGR VALVE FAILURES  INJECTOR FAILURES

8 CHANGES TO PREVENTATIVE MAINTENANCE  OIL DRAIN INTERVALS- OUR STANDARD IS 36,000 MILES. HAD TO REDUCE FOR A FEW ENGINES, BUT NOT ALL  100% OIL ANALYSIS- SOME ENGINES SHOW NO ISSUES  RANDOM COOLANT ANALYSIS-NO ISSUES  OIL DRAIN INTERVALS- OUR STANDARD IS 36,000 MILES. HAD TO REDUCE FOR A FEW ENGINES, BUT NOT ALL  100% OIL ANALYSIS- SOME ENGINES SHOW NO ISSUES  RANDOM COOLANT ANALYSIS-NO ISSUES

9 Results  NO REAL HORROR STORIES  JUST A LOT OF PAIN AND HIGH COSTS  NO REAL HORROR STORIES  JUST A LOT OF PAIN AND HIGH COSTS

NEEDS  SUFFICIENT TEST ENGINES AS EARLY IN 2005 AS POSSIBLE  SUFFICIENT ACCESS TO ULTRA LOW SULFUR DIESEL FUEL FOR THESE TEST ENGINES ACROSS THE COUNTRY  SOME FORM OF RELIEF FROM THE EXTREME COST INCREASES (I.E. TAX CREDITS)  SUFFICIENT TEST ENGINES AS EARLY IN 2005 AS POSSIBLE  SUFFICIENT ACCESS TO ULTRA LOW SULFUR DIESEL FUEL FOR THESE TEST ENGINES ACROSS THE COUNTRY  SOME FORM OF RELIEF FROM THE EXTREME COST INCREASES (I.E. TAX CREDITS)

11 Thank You, Dennis Beal Vice President – Physical Assets FedEx Freight System Thank You, Dennis Beal Vice President – Physical Assets FedEx Freight System