1. Supply Chains and Private Sector Dynamics

2. 3- 2 Major trends in freight logistics Supply chains basics Implications for planning Agenda

3. 3- 3 Productivity Congestion Input cost factors Trends in Trucking

4. 3- 4 Trends in Trucking - and More

5. 3- 5 Trends in Rail Freight Intermodal growth Capacity constraint Capacity allocation

6. 3- 6 Trends in Waterborne Freight Mega-ships All-water routes Transloading Short-sea prospects

7. 3- 7 Trends in Pipelines Weather risks Ethanol conversion

8. 3- 8 Trends in Air Cargo Ground substitution Global carriers

9. 3- 9 Trends in Logistics Visibility Globalization Fast Cycle Logistics Radio Frequency Identification Tag Applications

10. 3- 10 Globalization: Trade Percent of US GDP

11. Supply Chain Basics

12. 3- 12 Traditional Logistics METHOD OF CONTROL SUPPLY CHAIN MATERIAL OWNERSHIP TRANSPORT SYSTEM INFO SYSTEM MATERIAL FLOW WHOLESALE RETAIL INTEGRATED MANUFACTURER PUSH TO CUSTOMER

13. 3- 13 Fast Cycle Logistics KEY: MATERIAL FLOW INFORMATION FLOW MATERIAL OWNERSHIP TRANSPORT SYSTEM INFO SYSTEM METHOD OF CONTROL SUPPLY CHAIN GLOBAL LOCATION KNOWLEDGE SPECIALISTS INTEGRATOR PULL FROM CUSTOMER STAGING POINT

14. 3- 14 Supply Chain Management Transforms non-valued added activities into strategic management functions “Just-in-time” transit replaces inventory Reliability surpasses cost as most important transportation consideration

15. 3- 15 Advanced Manufacturing Reliable and timely Higher value shipments Just-in-time manufacturing Multi-modal, truck dominant

16. 3- 16 Natural Resource Manufacturing Bulky goods Low damage, low cost Less emphasis on speed Rail and barge dependent

17. 3- 17 Non-Durable Manufacturing Heavy or high cube Moderate to high value Moderate to high speed Local ends of long supply chains Truck dominant

18. 3- 18 Service Industries Accessibility Reliability Smaller, more frequent trips Truck and express package dependent

19. 3- 19 Global Supply Chain: High Tech SPECIAL PRODUCT & DC SPECIAL PRODUCT & DC ASSEMBLY & DC ASSEMBLY & DC PARTS DC PARTS DC URGENT DC URGENT DC BUSINESS CONSUMER BUSINESS IMPORT AIR HUB IMPORT AIR HUB IMPORT SEAPORT IMPORT SEAPORT Modal Key Truckload Intermodal Less Than Load (LTL) Air Package COMPANY CONTROL COMPANY OWNERSHIP

20. 3- 20 Global Supply Chain: Retail Office RETAIL OUTLETS RETAIL OUTLETS LOCAL MARKET DIRECT WAREHOUSE RETAIL OUTLETS RETAIL OUTLETS WAREHOUSE RETAIL OUTLETS RETAIL OUTLETS REVERSE LOGISTICS ( Multi-stop Loop ) PORT EXTRA- REGIONAL VENDOR EXTRA- REGIONAL VENDOR REGIONAL VENDOR REGIONAL VENDOR Truck – Dray Truck – LTL/Pkg. Modal Key STAGING WHOLESALE REGIONAL DC WHOLESALE REGIONAL DC EXTRA- REGIONAL DC EXTRA- REGIONAL DC Truckload Intermodal rail

21. 3- 21 Regional Chain: Consumer Beverages CLUB MULTIPLE TRIPS  BULK ORDER DELIVERY 1 – 3 Stops per Trip To Clubs & Grocery Stores SMALL ORDER DELIVERY 10 – 30 Stops per Trip To Convenience Stores, Hotels Restaurants, Bars, Offices GROCERY MULTIPLE STOPS  MULTISTOP POCKET (3 Mile Radius) STEM ( 5 – 15 Miles) EXTERNAL MARKETS EXTERNAL MARKETS LOCAL PLANT & DC LOCAL PLANT & DC EXTERNAL PLANT & DC EXTERNAL PLANT & DC Production Flow Local Receivers Modal Key Production & Wholesale Flow

22. 3- 22 High Service Chain: Health Care REGIONAL DC REGIONAL DC 1 – 2 HOUR SERVICE OVERNIGHT SERVICE 4 – 6 HOUR SERVICE HOSPITAL CENTRAL DC CENTRAL DC VENDOR

23. Implications for Planning

24. 3- 24 Planning Considerations The Supply Chain = the Business Enterprise Business competitiveness depends on transportation performance Chains are sensitive to time and disruption Chains cross jurisdictions Needs vary by chain

25. 3- 25 Freight Planning and Economic Competitiveness Travel and vehicle operating costs LOS Inventory carrying costs Reliability Asset utilization costs Land use Access to markets Multi-jurisdictional planning

26. 3- 26 Fuse information with technology Demand high performance transportation system Impacts supply chains and business models Businesses Compete on Logistics Costs