2. Agenda
2
I. Overview of Disruptor Organization
II. 3D Printing
III. 3rd Party Logistics Providers
IV.Visibility
V. Driverless Trucks
VI.Collapsible Containers
3. • Visibility
• Autonomous Vehicles
• Collapsible Containers
• 3D Printing
• 3rd Party Logistics Providers
Disruptors are Organized into Watch and Do
3
Watch Do
The Internet of Things & Industry 4.0
5. 5
Enterprise 3D Printing Grows and Refines
3D Printing software reads a digital file and uses additive
manufacturing to make a 3-dimensional solid
67% of Manufacturers already own
Tool for prototyping, product development, innovation
Accounts for 95% of printed objects by volume
0
200
400
600
800
1000
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Revenue(inmillion$)
3D Printing Industry Expected
Revenue
6. 6
3D Printing Increases Time and Cost Expectations
Time and
Efficiency
Time to market
Demand response
Lead time
Materials
Business and
Manufacturing PlansCost
Inventory
Labor
Materials
Flexibility
Digital Business
Component Assembly
Consumers
11%
Manufacturing
Companies
39%
Construction and
architecture
companies
27%
Medical
companies
23%
3-D Printing Industry Market Segmentation
Total Industry:
$492.4 million
7. 7
Prepare through Monitoring, Visibility, and Network Adjustments
Cost Sensitivity
Monitor the adaption of 3D printing, especially in industries
like footwear, toys, ceramics, and major partners of CSX
Raw Materials for
Component Printing
Rebalance customer portfolio to make it easy for smaller
manufacturers to partner
Re-shoring and
Fragmented
Manufacturing Market
Adjust network to respond to localized production and
transportation
More Customer
Acquisition
Opportunities
Introduce new services such as logistics consulting
Time and Efficiency
Introduce new infrastructure to communicate costs and time.
Clearly defined lead times are paramount
8. 3PLs offer more service through their value chain
8
Raw material control, quality control,
planning, and scheduling Inbound Logistics
Operations
Outbound Logistics
Marketing and sales
After-sales services
Department Responsibilities
Value Added
Service
provided by
contract
logistics
provider
Manufacturing, packaging, quality
check, production control,
maintenance
Finishing of goods, material handling,
dispatch, deliver, invoicing
Customer support management,
order taking, market research, sales
optimization
Maintenance, warranty, training,
installation, upgrades of products
9. 3PL Consolidations are on the Rise
9
0
5
10
15
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
3PL Acquisitions over $100M
from 1999 - 2015
Number of Acquisitions
Key Takeaways
• M&A increasing
• Consolidation turns firms into logistics one-stop shops that
service all its clients’ supply chain functions
• Highly concentrated
Success Stories
• XPO Logistics acquired Conway and Norbert Dentressangle
Result
• 157.2% revenue growth in 2015 of $606.3 million up from
$235.7 million in 2014
Success Stories
• FedEx acquired French parcel delivery company TNT
Result
• Increased market share from 10% to 22% in Europe’s
express delivery market
Impact on CSX
• Logistics one stop-shops attract businesses outsourcing
more than one of their logistics functions (ex: intermodal and
transportation management)
• Provide visibility from pre-rail to the end user
• Likely increase customer’s willingness to pay higher prices
for premium services
• Potentially take clientele from CSX
FedEx
10%
TNT
12%
UPS
25%
DHL
41%
Others
12%
Estimated 2014 Market Share for
International Shipments in Europe
10. 10
3PLs affect Service Expectations and Business Volume
Value added services
Provide real-time visibility
to customers
Shift perception of
ShipCSX app from
optional to necessary tool
Provide end-to-
end supply chain
visibility
Extends customer
base
Diversifies service
offerings
Expands
geographic
footprint and
access to
networks
Horizontal alliances
Extends customer base
Diversifies product and
service offerings
Greater access to
transportation networks
Provide end-to-end supply
chain visibility
Acquire a 3PL Partner with 3PL
Improve ShipCSX
App
11. Visibility is an Essential Business Component
11
In a survey conducted by the Aberdeen Group of companies with predominately global
supply chains 63% of companies indicated visibility as a high priority for improvement
In CSX’s survey, 94% responded to the question of “over the next 5 years what is the
likelihood of supply chain visibility playing a role in your supply chain” with either
extremely likely, very likely or moderately likely
13. Recommendation: More Visibility and ‘Freemium’ Pricing Model
13
Offer more visibility information through the
ShipCSX App
Use a ‘freemium’ price versioning strategy
Maintain relationships with customers and
outstanding service
Offering the option to have access to visibility
information at a higher price point allows CSX
to determine
Demand
Scalability
14. Driverless trucks hinder economic growth
14
8.7 Million truck drivers exist, and also create network effects such as motels
businesses
Truck driver: the most common occupation by state
15. Driver Shortage Still on the Rise
15
Source : American Trucking Association. Driver Shortage Analysis 2015
Driverless Trucks will significantly affect the landscape of the trucking industry
Driver Shortages will be addressed with more companies going autonomous
CSX now has the potential for improved first mile and last mile delivery
20,000
31,000
38,000
0
5000
10000
15000
20000
25000
30000
35000
40000
2008 2011 2014
Truck Driver Shortage Growth
16. Driverless Truck timeline is closer than expected
16
http://www.huffingtonpost.com/scott-santens/self-driving-trucks-are-going-to-hit-us_b_7308874.html
17. 17
Opportunities for CSX to sophisticate operations
Driver Shortage
Eliminates the ever lasting problem logistics companies face.
CSX now needn’t worry about pre and post freight
transportation
Environmental Impact
Lesser Carbon gas emissions through driverless trucks by factor
of 20%
Line Haul
Transportation
Helps to transport goods from offshore warehouses to
intermodal terminal
Last Mile Delivery
Autonomous ‘drones’ to help delivery to doorstep, as CSX looks
to enhance last mile delivery
Safety
A founding pillar for CSX. No requirement for drivers to stop
after 11 hours, and not prone to human error.
18. Implement Immediately to Respond to Autonomous Vehicles
18
Pros Cons
First movers in the industry
Improved last miles delivery
Eliminates driver shortage
problem
Availability of outsourcing
Fairly new technology
Not fully tested
Government regulations
High switching costs
19. Collapsible Containers Reduce Space Requirements for
Empty Containers
Folds along hinges
Only requires forklift
Fits 5 containers in
space of 1 non-
collapsed
Takes 30 seconds
19
20. 20
Empty Containers are Stacking Up
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
LA NY/NJ
Number of Containers Shipped From Ports
(Expressed as ratio vs. previous year)
2014 2015
Source: WSJ Logistics Report – “At U.S. Ports, Exports Are
Coming Up Empty”
Growing number of
empty containers due
to international trade
imbalance
Easier to ship
containers back to
refill quickly for max
revenue
Costing shipping lines
billions per year
22. 22
Less Space
— Smaller facilities
— Shorter trains
— Lower fees
Image – ”greener”
Reduce LTV cost by 80%
Reduced rates possible for
customers with collapsible
Initial Investment poses
risk
— Who buys first
— Benefits others more than CSX
— Retrofit or buy new?
Training/learning time
Benefits truckers and
international shippers more
Exact time to deploy
uncertain
Recommend CSX Invests with customers and competitors
Share risk and cost by investing with other container shippers
Pros Cons
23. 23
Acting earlier saves money
Technology is available
now
Could be seen as more
innovative and
progressive railroad
Competition will benefit
from tech more – don’t
let them get head start
24. • Visibility
• Autonomous Vehicles
• Collapsible Containers
• 3D Printing
• 3rd Party Logistics Providers
Conclusion
24
Watch Do
