1. LCS Report Card Mike Partica May 2008 Chicago, Il

2. Liability Continuity System (LCS) Background History –Industry process implemented in January 1999 –LCS was implemented as one of the building blocks of a Centralized Car Hire Process –Goal was to eliminate all time claims –Roads were not using the same interchange times to pay Car Hire Rules Today –Car Hire Rule 9 states Roads must use LCS to pay Car Hire. –As per Car Hire Rule 11, LCS records must be referenced to disprove Liability. –A third party agreement (ex: Haulage) does not authorize non-payment to an owner. Bottom line, roads must pay according to LCS.

3. How it all ties Together TRAINII Reporting LCS Records LCS Process Car Hire Liability Analyse LCS and address reporting issues Improve your car hire position by dealing with reporting issues

4. Opportunities in TRAINII Reporting Roads must look at what they are reporting to TRAINII, and what errors are returned!

5. What can you Measure? LCS by Message types –By system – Provides and overall health of reporting. –By location – Provides insight into problem areas. –Hours difference between both roads reporting. On Hand equipment (based on LCS) with no movement. –30 days no movement count. LCS must be used to settle car hire AND Should help identify and deal with reporting issues. Areas of opportunity

6. Common LCS Message Types V – Verified Interchange – Both roads reported, difference within 1 hour. W- Both roads reported, Difference within 4 hours. O – One road reporting, Delivering road’s report. P - One road reporting, Receiving road’s report. B – Both roads reported, difference 4 – 120 hours D – Only delivering carrier reported. R – Only receiving carrier reported. G – LCS gapped, not based on an interchange reporting I – Illogical interchange reporting (or too old) When it comes down to dealing with your issues, all “D”’s and “R”’s may not be equal.

7. It is Important to Distinguish within LCS message Types. For a “D” type interchange (Only delivery road reported) –Were YOU the delivering road? For a “R” type interchange (Only receiving reported) –Were YOU the receiving road? For a “G” type interchange (Gap interchange) –Is it gapped out of your account… Start by focussing on what your company can do to fix reporting issues. If Yes, not that much of a problem, LCS is using your reporting.

8. Problems are not always Straight forward. If Road A never gave car to Road B, The type “R” is not a real concern, you’re paying less car hire that you think you should. ReporterEvent Road ATrain Departure Road ATrain Arrival Road BReceipt Road ATrain Departure Road ATrain Arrival LCS interchange LCS Type A to B“R” B to A“G” LCS EventsEvent Reporting

9. Problems are not always Straight forward. Road B is ok with the Type “R”, Road A may not be. ReporterEvent Road ATrain Departure Road ATrain Arrival Road ADelivery Road BReceipt Road BTrain Departure Road BTrain Arrival Road BDelivery Road AReceipt LCS interchange LCS Type A to B“R” B to A“V” LCS EventsEvent Reporting

10. Sample LCS Report Card LCS TypePercentage V – Verified10% W – Within 4 hrs40% B – 5 to 120 hrs10% D – Delivering Road only14% R – Receiving Road Only14% G – Gap record10% I - Illogical2% Overall 50% is within 4 hours.. Hopefully not all your problem.

11. CN LCS Report Card CN System (All Regions) Week ending May 5 th, 2008 Bottom line, 78% of the LCS interchanges seem acceptable. 10% are more of a concern. (some may be a CN issue, some not)

12. Key points when investigating Reporting issues Ask yourself some questions… –What was in your Railroad’s reporting system? –What did you actually send out to TRAINII? –Did you get any TRAINII errors? –Bottom line, does your reporting match what Railinc has in their Database? Try to establish a dollar value for the issue. –Ex: Your missed reporting caused you to pay an additional 24 hours due to the other road’s reporting. ($16.80 per car, or $168 for a 100 car train) –Does the reporting issue impact other areas (ex: demurrage)? Focus on the most current data possible. –Audit logs are typically not kept very long. Expect Layers of Problems. Work one layer at a time. Track your progress regularly!

13. Conclusion Using LCS information can help you resolve reporting issues. It is important to track and measure where you are. Benefits: –Reduced Car Hire expense –Better information for customers –Potentially improved operations (if addressing operational issues, reducing dwell). –A Car Accounting process with less exceptions (less work). Liability assigned by LCS is a reflection of what is reported.

14. Questions?