1. To Outsource or Not to Outsource Scott McWilliams Executive Chairman, OHL

2. Agenda  3 rd Party Logistics (3PL) Providers  3PL Market Overview  Disadvantages to Outsourced Logistics  Advantages to Outsourced Logistics  Suggestions When Outsourcing With a 3PL  Final Thoughts

3. 3PL Providers 3PL (Third Party Logistics) Providers can perform all or part of the following logistics functions:  Transportation  Warehouse/Distribution  Information/Financial  Value Added Source

4. Transportation 3PLs  Both asset and non-asset based  Services include: –Carrier procurement and management –Network optimization –Transportation optimization –Performance management/reporting –Freight audit and payment –Forwarding

5. Warehouse/Distribution 3PLs  Regional, domestic and global 3PLs  Services include: –Warehousing –Inventory management –Information systems (WMS, OMS) –Fulfillment –Value-added services such as embroidery, engraving, gift wrap, software installation, etc. –Returns management

6. Information Based 3PLs  Information based 3PLs core offering is management and technology within the supply chain versus physical execution  Services include: –Process management –Information technology (TMS, BI) –Consultation on industry trends, solutions, and benchmarks

7. 3PL Providers Strategic Resource Business Resource Problem Solver Vendor  Transactional  Basic services  Focused on cost  Broader service offerings  Enhanced expertise  Contractual  Greater expertise  Technology integration  Enhanced capabilities  Information based knowledge  Shared gains/risk  Flexible and collaborative  Advanced technology

8. 3PL Market Overview 3PL Activity for 2011 Gross Revenue ($Billions) % Change YOY Net Revenue ($Billions) % Change YOY Profit Margin % Change YOY Domestic Transportation Management (non-asset) $41.312.2%$6.312.2%17.4%11.5% Domestic Transportation Management (asset) $11.14.7%$10.94.7%4.5%12.5% Warehouse / Distribution $34.08.2%$26.68.4%3.0%7.1% Source: Armstrong & Associates, 2012  CAGR of 3PL market 10.3% for past 15 years  Asset based carriers increased performance continues supported by efforts to keep supply tight

9. 3PL Market Overview 3PL Customer Composition 2011 % Retail24% Technology22% Automotive11% Utilities/Metals10% Food/Grocery9% Industrials7% Healthcare7% Other6% Consumer Goods5% Source: Monte Sol Capital, Radiant Logistics July 2012; Armstrong & Associates, 2012  The “30 Club” – GM, P&G, Wal*Mart, Pepsi and Ford  Who are 3PL customers?

10. 3PL Market Overview  Majority of companies plan to increase outsourcing in 2013  Continuing trend to consolidate number 3PLs used  Latest 3PL Study reports 86% of outsourcers report success Source: Stifel, Nicholaus & Company Inc. 2013 Third-Party Logistics Study, 2012

11. ReasonMost Frequent Answers 20132009 Logistics is a Core Competency15%27% Cost Reductions Would Not be Experienced15%32% Logistics Too Important to Consider Outsourcing12%25% Service Level Commitments would Not be Realized9%23% Against Corporate Philosophy8%16% Have More Logistics Expertise Than Most 3PLs8%17% Control Over the Outsourced Function(s) Would Diminish7%25% Too Difficult to Integrate I.T. Systems7%8% Issues Related to Security of Shipments6%7% Inability of 3PLs to Form Meaningful and Trusting Relationships6%7% Global Capabilities of 3PLs Needs Improvement5%10% Previously Outsourced and Chose Not to Continue3%14% Source: Stifel, Nicholaus & Company Inc. 2013 Third-Party Logistics Study, 2012  Latest 3PL study shows fewer reasons why firms don’t outsource  Non-users realizing 3PLs getting better over time Disadvantages to Outsourced Logistics

12. Other areas…….  Integration/Coordination costs  3PL biased choice of service providers  Sensitive data/information leaks  Reduced contact with their customer  Competitor and 3PL collaboration Disadvantages to Outsourced Logistics

13. Advantages to Outsourced Logistics  Risk sharing  Supply-chain contingency  Flexibility –Real Estate –Operations –Labor –Strategy  Variable costs  Speed  Focus on core competency  Access to additional resources  Software

14. Advantages to Outsourced Logistics  Latest 3PL study shows quantified results ResultsGlobally Logistics Cost Reduction18% Inventory Cost Reduction8% Logistics Fixed Asset Reduction26% Order Fill Rate Changed From 58% Changed To65% Order Accuracy Changed From 67% Changed To72% Source: Stifel, Nicholaus & Company Inc. 2013 Third-Party Logistics Study, 2012

15. Suggestions when outsourcing to a 3PL Both sides should learn from past failures: Source: Inbound Logistics 3PL Market Report, 2012

16. Suggestions when outsourcing to a 3PL For the Shipper… 1.Have strategy for outsourcing 2.Develop rigorous selection process 3.Clearly define your expectations 4.Develop a good contract 5.Establish solid policies and procedures 6.Identify and avoid potential friction points 7.Communicate – effectively! 8.Measure performance and communicate results 9.Motivate and reward providers 10.Be a good partner For the 3PL… 1.Offer strategic thinking and planning 2.Understand competitive market 3.Insist on clearly defined expectations 4.Develop a good contract 5.Establish sound policies and procedures 6.Identify and avoid potential friction points 7.Communicate – effectively! 8.Request performance measurement program 9.Motivate and reward your personnel 10.Be a good partner Source: C.F. Lynch & Associates, Logistics Outsourcing

17. Final Thoughts  Understand your situation – everyone is unique