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Current News

LTL and TL

FMCSA changes SMS; CSA 2010 safety standings available Aug. 16........................................................ 1
FMCSA to eliminate DOT number registrant-only classification................................................................... 1
Diesel Price Gains 0.9¢ to $2.928 a Gallon .................................................................................................. 2
LaHood Seeks Truckers’ Help to Combat Distracted Driving ....................................................................... 3
NAFTA Trade with Canada and Mexico Jumps Nearly 40 Percent.............................................................. 4
Senate Bill Would Allow Heavier Trucks....................................................................................................... 5
Opinion: Safety Doesn’t Excuse Prejudice ................................................................................................... 5
Focus federal funds on interstates................................................................................................................ 7
Fleets Say Drive-Time Cut Would Boost Freight Costs................................................................................ 8
Fuel-Efficiency Focus Should Be on Tractors, Engines, Rather Than Trailers, ATA Says .......................... 9

Logistics

Putting Freight in Federal Policy ................................................................................................................. 10
Slow but Steady Growth in the Supply Chain Execution Market ................................................................ 11
RFID Market Climbs by $600 Million in 2010.............................................................................................. 12
Panama Canal Authority Signs First-Ever Partnership Agreement with the Mississippi State Port Authority
at Gulfport.................................................................................................................................................... 13
Georgia Adopts Proposal to Modernize Warehouse Law........................................................................... 14
The Plight Before Christmas ....................................................................................................................... 15

Rail

AAR reports weekly freight rail traffic sets 2010 record.............................................................................. 17
Freight-rail capacity expansion bill enters Senate ...................................................................................... 17
Short-line tax credit extension still stuck in Senate, ASLRRA says............................................................ 18
Rail’s Split Personality................................................................................................................................. 19
KCS Net Jumps Five-Fold to $37.4 Million ................................................................................................. 20

Air

Air freight volumes on the up, but some fear a slowdown .......................................................................... 21
USPS Delivers $3.5 Billion Loss, Cash Crunch Looms .............................................................................. 22
International Freight Traffic Shows Marked Improvement .......................................................................... 22
Los Angeles Air Freight Recovery Levels Off ............................................................................................. 23
Demand continues to rise in June............................................................................................................... 24

Maritime

Port Tracker report calls for 15 percent annual volume increase and a new peak month ......................... 24
US import growth to weaken as year progresses ....................................................................................... 25
Charleston containers up 19% in first half, harbor deepening reaches milestone...................................... 26
Container volumes back to pre-recession levels this year.......................................................................... 27

US Economy

New claims for jobless benefits rise to 479K .............................................................................................. 28
Spending, Income Flat in June ................................................................................................................... 29
Trucking adds 5,900 jobs in July as overall hiring slows ............................................................................ 30
Tax Breaks on the Sidelines ....................................................................................................................... 32
Fed to Keep Balance Sheet From Shrinking............................................................................................... 33
Some Firms Struggle to Hire Despite High Unemployment........................................................................ 34
Energy Information Administration Diesel Fuel Prices................................................................................ 37
Energy Information Administration Regional Fuel Prices ........................................................................... 38
Transportation Stocks by Mode .................................................................................................................. 39

LTL and TL
FMCSA changes SMS; CSA 2010 safety standings available
Aug. 16

Addressing concerns raised by the American Trucking Associations and other industry groups earlier this
summer about the design of Comprehensive Safety Analysis 2010 (CSA 2010), the Federal Motor Carrier
Safety Administration announced updates to the Safety Management System methodology to better
identify carriers deemed “high risk” or otherwise have safety compliance problems.

Most notably, the measure of exposure will be changed from Power Units only to a combination of Power
Units and Vehicle Miles Travelled (VMT) in the Unsafe Driving BASIC and Crash Indicator. In addition,
these two BASICs will change from using Power Units as a safety event grouping (formerly referred to as
peer grouping) to using the number of crashes for the Crash Indicator and the number of inspections with
a violation for the Unsafe Driving BASIC.

According to FMCSA’s CSA 2010 website, other updates to the SMS include:

• The measure of exposure will change from Power Units to the number of relevant inspections in the
Controlled Substances/Alcohol BASIC;

• Severity weights for some roadside inspection violations will be updated; and

• The Agency will employ a more strategic approach to addressing motor carriers with a history of size
and weight violations rather than counting these violations in the Cargo-Related BASIC; the new
approach will include alerts to roadside inspectors when carriers have a history of size and weight
violations.

FMCSA also announced that beginning August 16, the CSA 2010 Data Preview Website will soon provide
carriers with an assessment of where they stand in each of the SMS’s seven Behavior Analysis and
Safety Improvement Categories (BASICs) so they can understand and address their safety compliance
issues right away. The seven BASICs—which replace SafeStat’s Safety Evaluation Areas (SEAs) in
December 2010—are Unsafe Driving, Fatigued Driving (Hours-of-Service), Driver Fitness, Controlled
Substances/Alcohol, Vehicle Maintenance, Cargo-Related and Crash Indicator. For additional details
about the Data Preview and the improvements to the SMS, visit:
http://csa2010.fmcsa.dot.gov/Documents/SMSImprovementsFAQs.pdf

Commercial Carrier Journal, 8/6/2010

FMCSA to eliminate DOT number registrant-only
classification

The Federal Motor Carrier Safety Administration has announced its plans to eliminate the “registrant-only”
U.S. Department of Transportation number as part of the Performance and Registration Information
Systems Management (PRISM) program. FMCSA originally developed the concept of a “registrant-only”
USDOT number to identify registered owners of commercial motor vehicles (CMVs) that are not motor
carriers, but lease their CMVs to entities that are motor carriers.

FMCSA today, Aug. 9, announced through a Federal Register notice that it has concluded that registrant-
only USDOT numbers are being used differently from what the agency intended and thus the practice of

1

issuing registrant-only numbers to entities that are not motor carriers is having an adverse affect on
FMCSA’s ability to track motor carriers’ safety violations.

A registrant-only USDOT number did not authorize a non-motor carrier to operate in interstate commerce,
and no safety events were to be assigned to it. However, FMCSA found that in numerous cases, law
enforcement personnel were presented a registrant-only number during inspections and crash
investigations; as a result, data that should have been assigned to the record of the motor carrier
operating the CMV were assigned erroneously to the registrant-only DOT number. An FMCSA analysis in
2009 found that more than 35,500 (18 percent) of the more than 200,000 registrant-only records in
MCMIS contained crash and inspection activity that should have been recorded on the lessee’s motor
carrier record.

FMCSA determined that placement of this information on a registrant-only record adversely affects the
accuracy of its safety monitoring system, and that motor carriers that use registrant-only numbers
improperly can evade FMCSA oversight, including compliance reviews and new entrant program audits.
In addition, if safety events are not attributed properly to the motor carriers operating CMVs, FMCSA
found it couldn’t factor those events into the motor carriers’ safety ratings.

FMCSA says it will maintain all existing numbers of non-motor carrier registrants as dormant registrant-
only USDOT numbers. The effective date of the change is Sept 1.

Commercial Carrier Journal, 8/9/2010

Diesel Price Gains 0.9¢ to $2.928 a Gallon

2nd Straight Weekly Rise; Oil Hits 3-Month High

The U.S. diesel average price rose 0.9 cent to $2.928 a gallon last week, the second straight gain, but
just the third increase in the past 12 weeks, the Department of Energy reported Aug. 2.

The retail gasoline average price fell 1.4 cents to $2.735, marking its first decline in three weeks but the
third in seven weeks, DOE’s Energy Information Administration reported after its Aug. 2 survey of fueling
stations.

On the New York Mercantile Exchange, oil prices jumped to a three-month high on Aug. 3, closing at
$82.55 a barrel, after trading around $78 during the previous week. Oil closed at $82.01 on Aug. 5.

Andrew Reed, an analyst for Energy Security Analysis Inc., said he does not anticipate pump prices will
increase much in the near term.

“With sluggish demand and plenty of inventories, there isn’t really much in the fiscal markets to push
crude higher than it is,” Reed said.

“After some signs of demand strength in May, we’ve had a couple of bearish signals lately,” Reed said. “I
really don’t expect diesel demand in itself to be driving up prices too much. It’s really about the underlying
crude price.”

Prior to the two most recent gains, diesel had fallen 6.2 cents over the previous four weeks. The price is
now 19.9 cents below the year’s high of $3.127 in May, but 37.8 cents higher than the same week last
year, EIA said.

The gas price decline left gas 17.8 cents higher than the same week a year ago.

Although the diesel price has been fairly stable this summer, fleets said it is never a factor they can
ignore.

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Richard Strobel, senior vice president of G&P Trucking, Gaston, S.C., said his company buys fuel in bulk,
which it stores at five company yards, sometimes as much as 10,000 gallons of diesel a month.

“Nothing to get us in trouble, but sometimes based on what the market’s doing it will give us a little bit of
an advantage,” Strobel said.

The truckload carrier governs its 550 tractors at 65 miles per hour and instructs drivers where to purchase
fuel. It also equips some of its vehicles with fuel-efficient tires and other aerodynamic technologies,
providing small increases in fuel economy.

At Hager City (Wis.) Express Co., owner Bill Schroeder said he started experimenting with auxiliary power
units after receiving a federally funded anti-idling grant run by Wisconsin that pays half the cost of an
APU.

After two years of waiting, Schroeder said, in June he received enough funding to put APUs on two of his
25 trucks.

Although Schroeder said he does not yet have data on fuel savings, his trucks are forced to idle because
drivers can be on the road for eight days straight and sleep in their cabs.

“We were up to 40% idling time on some [trucks], so, hopefully, [adding APUs] cuts them down
dramatically,” he said.

John Yandell, president of truckload carrier Yandell Truckaway, Oakland, Calif., said that his company
continually strives to further minimize empty miles.

“We’re trying to work within a 250- to 300-mile range out of the San Francisco Bay area, filling all those
lanes of traffic. I would say that probably 50% to 60% of the time we’re able to get round-trip miles.”

Yandell Truckaway operates 125 tractors and hauls mostly food-related products and wine. Although the
carrier is close to refineries in the Bay area, Yandell said diesel is more expensive close to home. For that
reason, he encourages his drivers to refuel farther from the company’s home base.

“If I get 50 or 75 miles down into the Central Valley—Sacramento, Stockton and Modesto—the price is
lower,” Yandell said. “Don’t ask me why.”

He also encourages his drivers whenever possible to pay for diesel in cash because prices can be 5
cents to 7 cents lower per gallon than when using credit cards.

Meanwhile, EIA economist Neil Gamson said he expects diesel to rise slightly in upcoming weeks.

“We see diesel prices hitting over $3 by the end of the year, and continuing a slight increase in 2011,
reaching as high as $3.19 average by the fourth quarter of 2011,” Gamson said.

Transport Topics, 8/9/2010

LaHood Seeks Truckers’ Help to Combat Distracted Driving

COLUMBUS, Ohio—Transportation Secretary Ray LaHood encouraged the nation’s safest truck drivers
to play an active role in combating distracted driving.

“Distracted driving is an epidemic in America,” LaHood said in a speech Aug. 5 during the National Truck
Driving Championships here. “We are trying to persuade Americans that if they put down their cell phones
and their BlackBerrys while they’re driving, a lot of lives will be saved.”

LaHood suggested that truck drivers who see motorists talking on cell phones should “give them a honk
or two. Or three.”

3

“You all are ahead of the curve on this; you all have set a standard. We appreciate that,” he said.

During his remarks at NTDC’s “Breakfast of Champions,” LaHood also praised the truckers for their
commitment to highway safety.

“Thank you for making safety your No. 1 priority,” he said, addressing more than 400 drivers and their
families and co-workers.

“I want you to know that at DOT, we appreciate what you all do and the fact that safety is your No. 1
priority,” LaHood said.

Following his speech, LaHood walked through the driving course on the convention center floor during a
tour led by Mark Courter, NTDC chairman and manager of safety compliance for FedEx Freight.

NTDC, also known as the “Super Bowl of Safety,” tests the nation’s safest drivers on a wide range of
skills and knowledge.

Competitors in all nine truck classes took written exams on Aug. 4 that tested drivers on safety rules,
security, first aid and general trucking industry information.

Renée Evans, a Con-way Freight driver in the step van class, said she was pretty confident about her
performance on the written test.

“I thought I did really well,” said Evans, who works out of Henderson, Colo.

Other questions on the exam covered such topics as fire safety and specifics about the Federal Motor
Carrier Safety Administration’s upcoming CSA safety ratings system.

On Aug. 5, competitors in the 3-axle, 4-axle, tank-truck and flatbed classes completed their pre-trip
inspections and driving skills tests. The step van, straight truck, 5-axle, twins and sleeper berth classes
were set to take their tests on Aug. 6.


NAFTA Trade with Canada and Mexico Jumps Nearly 40
Percent

Trade using surface transportation between the United States and its North American Free Trade
Agreement (NAFTA) partners Canada and Mexico was 39.5% higher in May 2010 than in May 2009,
reaching $66.8 billion, according to the Bureau of Transportation Statistics (BTS) of the U.S. Department
of Transportation. The increase was the largest percentage year over year increase in total U.S.-NAFTA
trade by surface modes on record back to April 1994. May was the third month in the last four with a
record percentage year-over-year increase.

According to BTS, a part of the Research and Innovative Technology Administration, the value of U.S.
surface transportation trade with Canada and Mexico in May 2010 remained 9.9% below the May 2008
level despite the 2009-2010 increase. North American surface freight value rose 1.5% in May 2010 from
April 2010. Month-to-month changes can be affected by seasonal variations and other factors.

Surface transportation consists largely of freight movements by truck, rail and pipeline. In May, 86.2% of
U.S. trade by value with Canada and Mexico moved on land.

The value of U.S. surface transportation trade with Canada and Mexico in May was up 15.4% compared
to May 2005, and up 36.2% compared to May 2000, a period of 10 years. Imports in May were up 31.8%
compared to May 2000, while exports were up 41.8%.

4

U.S.–Canada surface transportation trade totaled $40.2 billion in May, up 37.5% compared to May 2009.
The value of imports carried by truck was 32.0% higher in May 2010 compared to May 2009, while the
value of exports carried by truck was 34.5% higher during this period. Michigan led all states in surface
trade with Canada in May with $5.5 billion.

U.S.–Mexico surface transportation trade totaled $26.6 billion in May, up 42.7% compared to May 2009.
The value of imports carried by truck was 36.1% higher in May 2010 than May 2009 while the value of
exports carried by truck was 43.2% higher. Texas led all states in surface trade with Mexico in May with
$9.4 billion.

The TransBorder Freight Data are a unique subset of official U.S. foreign trade statistics released by the
U.S. Census Bureau. New data are tabulated monthly and historical data are not adjusted for inflation.
May TransBorder numbers include data received by BTS as of July 12.

LogisticsToday.com, 8/5/2010

Senate Bill Would Allow Heavier Trucks

Measure Backed by ATA, Shippers’ Group.

A trio of senators introduced a bill that would allow states to increase the maximum weight for trucks
operating on their interstates beyond the federal limit of 80,000 pounds.

Sens. Mike Crapo (R-Idaho), Susan Collins (R-Maine) and Herb Kohl (D-Wis.) said in introducing the Safe
Efficient Transportation Act that states would be allowed to “opt in” and increase their weight limits to
97,000 pounds.

The legislation is identical to a bill introduced in the House last March by Reps. Michael Michaud (D-
Maine) and Jean Schmidt (R-Ohio) and would require the new, heavier trucks to have six axles in order to
diffuse the added weight.

“This bipartisan legislation strikes the right balance between productivity and safety,” Kohl said in a
statement.

The bill is backed by American Trucking Associations and the Coalition for Transportation Productivity, a
shippers’ group, the two said in statements Thursday.

“ATA supports a number of reforms to federal truck size and weight regulations as part of our
Sustainability Initiative,” said ATA President Bill Graves.

“More efficient trucks, like those allowed under this legislation, will significantly reduce the trucking
industry’s carbon output,” he said in a statement.


Opinion: Safety Doesn’t Excuse Prejudice

This Opinion piece appears in the Aug. 9 print edition of Transport Topics. Click here to subscribe today.

“Alto! Habla usted español” Imagine this scenario: You and your rig cross the border into Mexico. Along
the highway, the police stop you. You haven’t broken any laws, but you’re nervous. Your Spanish is
enough to get by, but not all Mexican police officers speak fluent English. The officer checks your papers.

5

His Spanish is fast, with an accent you can’t quite decipher. You do the best you can, communicating the
details of your business trip. Satisfied, he lets you go.

Three hours later, you’re stopped again. This time, the officer’s language is too quick, with many words
you don’t understand. Once again, you tell him your business purpose, but this time the officer orders you
to park, writes a violation for insufficient communication and tells you to stay put until someone bilingual
shows up.

Sound crazy? Not really. Similar scenarios occur frequently with interstate truck drivers on many
American highways. Police stop drivers and discover they are not native English speakers. Sometimes
the driver is allowed to continue; other times the driver is put out of service (OOS) for failure to
communicate sufficiently.

The zealotry with which this roadside enforcement is applied varies. During the 2002-2007 period, Volpe
National Transportation Systems Center determined that California had completed 2.3 million driver
inspections with six English-speaking violations and no OOS violations for language difficulties—this in a
state where 20% of the population speaks English less than “very well.”

Compare that with North Carolina, which completed only 268,821 driver inspections but racked up 511
English-speaking violations, with 175 resulting in OOS—in a state where only 4% of the population
speaks English less than “very well.”

So, what rule are these drivers breaking and why the arbitrary enforcement?

According to Section 391.11(b)(2) of 49 Code of Federal Regulations, an interstate driver must be able to
“read and speak the English language sufficiently to converse with the general public, to understand
highway traffic signs and signals in the English language, to respond to official inquiries and to make
entries on reports and records.”

The operative word—“sufficient”—is purposely not clarified in the regulations, giving investigating officers
discretion at roadside.

The Federal Motor Carrier Safety Administration and the Commercial Vehicle Safety Alliance both say
that if the investigator completes the vehicle/driver inspection, communication has been sufficient.

During its roadside inspections, CVSA enforces the OOS language component sporadically. (State
inspectors receiving Motor Carrier Safety Assistance Program grants to enforce interstate trucking
regulations during roadside checks under the auspices of CVSA essentially are working as agents for
FMCSA.)

FMCSA itself still leaves the regulation’s wording unchanged despite issuing stricter enforcement criteria
to field personnel in 2007—a policy that doesn’t comply with rulemaking or fair-notice procedures.

For almost 75 years, the U.S. Department of Transportation has interpreted the English fluency rule as a
motor carrier’s responsibility to evaluate a driver’s English proficiency in the context of duties, type of
cargo, route and public contact.

Since 1936, FMCSA and its predecessors have interpreted the rule to require only a minimal level of
English fluency to drive a commercial vehicle in interstate commerce. That’s why states may administer
the CDL examination in foreign languages without fear of compromising safety. No studies or statistics
have shown a connection between greater language fluency and fewer accidents. That’s why it’s unfair
for inspectors to enforce subjective standards in the name of safety.

It’s also wrong for states to accept more than $10 billion of MCSAP money from the government when it
enforces a higher standard than the federal regulation it purports to enforce—particularly when a stricter
standard discriminatorily jeopardizes certain companies from prospering in interstate trucking.

Some states, namely California, Florida and, most recently, North Carolina, have elected not to enforce a
language fluency requirement. Internal government reports in 2007 and 2008 offered recommendations to
lessen the adverse effects of inconsistent enforcement without success.

6

Now, however, several discrimination complaints have been filed under the Civil Rights Act of 1964. DOT
investigations are under way to determine if states and officers using federal enforcement dollars are
violating the act’s Title VI requirements and/or individual rights.

Rooting out the problem is a start, but without coordination and top leadership involvement, it will do little
to create a consistent objective standard.

If America is indeed a melting pot of diverse cultures, tolerance should carry the day. Until it’s shown
convincingly that a certain level of English fluency reduces accidents on U.S. highways, investigators
should cite drivers for “insufficient” communication only if such deficiency honestly prevents completion of
the roadside inspection.

Motor carriers should be left to determine fluency during the hiring process, and states should continue to
govern language requirements on their commercial driver license exams.

Unnecessary and inconsistent OOS orders must stop, and false OOS “jumping” charges—i.e., accusing a
driver of leaving his/her OOS location before the time has expired—should cease immediately until an
objective standard is promulgated.

In the interim, the government should provide officers with language-assist technologies to facilitate
communication during roadside inspections.

Otherwise, we will continue the inexplicable use of safety as an excuse to wallow in this self-made
quagmire of inconsistency, arbitrariness and discrimination.


Focus federal funds on interstates

Without raising the federal gas tax at all, the federal government could increase spending on interstate
highways by $10 billion a year, according to a study by the Reason Foundation, a Los Angeles-based
public policy organization, “think tank.” That’s how much money is diverted to projects with no national
benefits, such as ferryboats, trails and mass transit programs, Reason found.

The funding for such programs, which are unable to generate significant user revenues and require large
subsidies, should come from state and local governments, the think tank argues.

“Sooner or later Congress is going to have to deal with the highway bill and the major shortfall in highway
investment,” said Robert Poole, principal author of the report and the Reason Foundation’s director of
transportation policy. “It is time to rethink and refocus the federal transportation role more on core federal
purposes and less on peripheral concerns.”

Although the trucking industry would agree with Reason’s key premise that the highway trust fund should
be focused on projects of national significance, the industry might take issue with some of alternatives the
alternatives the think tank offers for financing non-Interstate projects. For example, Reason favors giving
states incentives to pursue public-private partnerships that shift financing and risk away from taxpayers
and onto private investors. And the foundation favors tolling and congestion pricing.

The summary and full report is available here.

eTrucker.com, 8/9/2010

7

Fleets Say Drive-Time Cut Would Boost Freight Costs

While the trucking industry waits for the Obama administration to complete its review of a new hours-of-
service proposal, executives with some of the nation’s largest fleets warned that a cut in driving time
would result in higher consumer costs, reduced efficiency and increased pollution.

If DOT or Congress “reduces the hours of service from 11 hours a day of driving, to say, nine . . . they are
actually reducing capacity by the equivalent of 250,000 trucks,” said Stephen Russell, chairman and chief
executive officer of truckload carrier Celadon Group Inc. “That’s going to cause pricing to go through the
roof.”

Late last month, in compliance with a federal court settlement with Public Citizen and the Teamsters
union, the Federal Motor Carrier Safety Administration sent its new HOS proposal to the White House for
review. The rule is expected to be made public later this year.

The current rule allows for 11 hours of driving within a 14-hour period, followed by a 10-hour rest period.
In June, Public Citizen put forth a suggestion that driving time be cut back to eight hours within a 12-hour
period.

Jack Holmes, president of UPS Freight, the less-than-truckload division of UPS Inc., said he is concerned
fleets would have to hire more drivers, and put more trucks on the road, if driving time is reduced.

“If you have a proposal that results in more trucks on the road, it would certainly seem to be flawed,”
Holmes said.

Randy Mullett, director of government relations for Con-way Inc., said “the less hours when people are
out on the road equals less productivity and less use of your assets.”

A reduction in hours will be costly for trucking, he said, but it was not yet entirely clear how costly.

“What is difficult to figure is how much extra capacity does it require for additional equipment,” Mullett
said. “Does it change the ratio of tractors to trailers? I don’t think we have a good handle on that yet.”

Celadon’s Russell said higher costs ultimately would get passed through to the consumer because
“nobody’s going to eat it.”

“It is going to drive pricing through the roof, and whatever every Tom, Dick and Harry buys, whether
they’re buying American cheese or buying products from anywhere . . . it’s going to cost more,” he said.

Holmes said when a new rule is published, fleets will have to review not only routes but entire
transportation networks to see if changes need to be made to minimize the effects on customers.

Mullett agreed, saying that it is possible that “some things that are next-day [delivery] now may become
two-day.”

However, he was able to find a small upside for Con-way if there is a change.

“From the Menlo point of view . . . it might be a whole bunch of work for us, so every cloud might have a
silver lining,” Mullett said referring to Menlo Logistics Worldwide, the company’s logistics division.

David Abney, UPS’ chief operating officer, said the company believes no change in the rule is needed.

“The safety numbers since the change was made in ’04 back that up,” Abney said. “If we felt that was an
issue, it wouldn’t take the government saying that they needed to reduce the hours; we would the
appropriate steps ourselves.”

Despite the uncertainty, Mullett said it was too early for Con-way to spend time worrying too much about
what might happen.

8

“We feel like that we’ve got the right people and systems that we can respond to a change,” he said.
“We’re hoping that it is not one that’s really costly or disruptive to the industry.”


Fuel-Efficiency Focus Should Be on Tractors, Engines,
Rather Than Trailers, ATA Says

Federal transportation officials considering fuel-efficiency standards for heavy trucks should concentrate
their early regulatory efforts on engines and tractors, not trailers, American Trucking Associations said.

In written comments to the National Highway Traffic Safety Administration, ATA said that of five heavy-
truck fuel-efficiency alternatives proposed by the agency, initial mandates should not be focused on costly
and complex modifications to trailers.

ATA said that requiring trailer standards is not a “viable short-term solution” to address fuel-efficiency
gains, given the large number of trailers and trailer manufacturers and the high initial capital costs for
fleets.

“We’re not opposed to trailer regs,” Glen Kedzie, ATA vice president and environmental affairs counsel,
told Transport Topics. “We recognize that trailers won’t be taken off the table entirely. But from everything
that we’re hearing and based on the ratios of tractors to trailers, it probably isn’t prudent addressing
trailers in the first of many rounds of these regulations.”

NHTSA is considering several options in proposing fuel-efficiency standards for heavy trucks that
probably would be voluntary for model year 2014 and mandatory for 2016 trucks. The U.S. Environmental
Protection Agency also plans to propose fuel-efficiency standards by 2014, but President Obama has
asked the two agencies to work together to “harmonize” their requirements.

The five NHTSA alternatives under consideration range from taking no action to setting a performance
standard that addresses engines, tractors and trailers. The alternatives were outlined in a June Federal
Register posting for the agency to complete an environmental impact statement.

ATA said NHTSA also should consider requirements to govern truck speeds to 65 miles per hour, make
highway infrastructure improvements to mitigate congestion and allow heavier, high-productivity vehicles.

The Truck Trailer Manufacturers Association agreed with ATA, calling trailer requirements “impractical.”

“While on the surface it may seem that there are only a few types of trailers, the reality is that for each
type of trailer (van, reefer, flatbed, low-boy, tank, etc.), there are a myriad of possible configurations,” Jeff
Sims, TTMA’s president, said in written comments.

The Owner-Operator Independent Drivers Association disagreed with some of ATA’s suggestions.

“Speed limiters on [medium-duty/heavy-duty] vehicles may certainly increase the efficiency of that one
particular vehicle but have the opposite effect on traffic operating around that one vehicle by causing
them to consume more fuel as a result of needing to slow down below posted limits, the desire to pass
and the creation of ‘micro-congestion,’ ” OOIDA’s president, James Johnston, wrote in comments.

Johnston said that constructing a uniform fuel-efficiency standard for any particular medium- or heavy-
duty vehicle poses challenges that must contemplate myriad multiple-uses, operating environments and
nearly innumerable other factors that could render “any fuel-efficiency standard set by the government
impossible to attain outside a perfect laboratory setting.”

Johnston also opposed allowing heavier trucks as a way to increase fuel efficiency.

9

“It is widely recognized that our nation’s highways and bridges are already in dire need of significant
maintenance and rebuilding,” Johnston wrote. “Increasing vehicle weights will lead to accelerated
deterioration of highways and bridges, thus reducing their life cycle and requiring significant maintenance
and rebuilding.”

“Increasing the size and weight of MD/HD vehicles does pose significant safety risks to the motoring
public besides the hidden environmental costs,” Johnston wrote.


Logistics
Putting Freight in Federal Policy

Senate bill calls for a multimodal national freight strategy and development grants.

Sen. Frank Lautenberg knows congestion, and he wants to do something about it. Hailing from one of the
nation’s most congested states, the New Jersey Democrat in late July joined two other lawmakers to
introduce a bill directing the federal government to establish a national freight policy.

The FREIGHT Act of 2010—“Focusing Resources, Economic Investment, and Guidance to Help
Transportation”—calls for an Office of Freight Planning and Development in the Department of
Transportation, a strategic plan for a multimodal, national freight system and a dedicated freight grant
program.

The bill, sponsored by Lautenberg and fellow Democrats Maria Cantwell and Patty Murray of Washington,
also ties infrastructure funding to improvements in easing congestion, carbon emissions, in energy use
and public safety. It also comes as maneuvering over the next multiyear surface transportation spending
bill gathers momentum.

“We’ve been preaching the issue of freight and its importance for several years, and this is the most
broad-based response we have received,” said Mortimer Downey, chairman of the Coalition for America’s
Gateways and Trade Corridors and a former deputy transportation secretary. “There should be a national
freight policy, but beyond that (there should be) a means by which the government can invest” in multi-
modal projects. “We’re going to work to have this bill enacted either free-standing or as part of a broader
transportation authorization bill.”

Downey’s coalition is one of several industry groups supporting the FREIGHT Act, including the
Intermodal Association of North America, the National Railroad Construction and Maintenance
Association, the Environmental Defense Fund, the American Association of Port Authorities, ITS America
and Transportation for America, a group calling for a 20 percent shift in freight from highway to rail and
intermodal services.

The Association of American Railroads later released a statement supporting the bill, while the
International Warehouse Logistics Association backed it with a caveat: “If properly designed and
implemented, such a program will not only help us preserve our competitive position in the world
marketplace, but it will stimulate jobs in logistics, which is one of the few sectors of the American
economy that has seen job growth and can prove a substantial jobs-multiplier effect that results from
increasing supply chain efficiencies,” IWLA President Joel Anderson said.

Trucking industry groups were notably absent from the roster of organizations supporting the legislation.
But the FREIGHT Act isn’t anti-truck, said Leslie Blakey, executive director of the Coalition for America’s

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Gateways and Trade Corridors. “The intent of the bill is to make the system work better across the board,”
Blakey said at a July 22 press conference.

“I don’t think the bill per se is encouraging modal shift,” said Joni Casey, president and CEO of lANA,
which has trucking and rail members. “You’re already seeing shifts based on fuel costs and pricing. It’s
the market that’s going to do the modal shifting if there is going to be such a thing. I don’t think any piece
of legislation will.”

The bill hit Capitol Hill shortly after the American Association of State Highway and Transportation
Officials called for greater federal investment in infrastructure—and not just highways—in a report called
“Unlocking Freight.”

“Congress must invest in all transportation modes, from waterways to roads and rails, to get us where we
need to be as a competitive nation,” said Larry L. Brown, president of AASHTO and executive director of
Mississippi’s transportation department

“We need to think nationally, regionally and on a multimodal level,” said Gerald Nicely, Tennessee’s
transportation commissioner. “Central to this effort should be the creation of a national multimodal freight
plan to ensure that transportation investments are coordinated and made where most needed.”

Brown and Nicely spoke at separate events July 8 marking the release of the report, which identified the
1,000 miles of highway most heavily traveled by truck.

Although AASHTO supports a multimodal approach to freight, it puts more emphasis on expanding
highway capacity than some of the FREIGHT Act’s backers. The report says traffic on interstate highways
expanded 150 percent between 1980 and 2006, but interstate capacity increased only 15 percent.

The legislation and report are both efforts to crack barriers to infrastructure spending and shape the next
surface transportation bill, which is stuck in pre-election gridlock in Congress and debate over how to fund
future spending.

The DOT is preparing a list of principles to serve as guidelines for reauthorizing multiyear transportation
programs. Those principles will be coming out soon along with a finalized strategic plan for all DOT
programs, Secretary of Transportation Ray LaHood told the American Road and Transportation Builders
Association on July 23.

That plan is likely to share many elements of the FREIGHT Act, including a permanent grant program
similar to the one-off TIGER grants approved by Congress that the DOT is using to fund multimodal
projects.

Journal of Commerce, 8/2/2010

Slow but Steady Growth in the Supply Chain Execution
Market

The market for supply chain execution (SCE) solutions slowed significantly thanks to the global recession,
but has still enjoyed an 8% growth rate since 2006, according to a recent study from analyst firm ARC
Advisory Group.

In its analysis of the SCE market, ARC focuses on warehouse management systems (WMS),
transportation management systems (TMS) as well as collaborative production management systems for
both process and discrete industries.

ARC's logistics and production management studies lowered their forecasts based on the recession, and
consequently the forecast for SCE is lower than it was just two years ago, explains Steve Banker, ARC's

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service director for supply chain management. "However, the good news is the recession is winding
down, many growth drivers remain, and ARC's forecast reflects those drivers."

Each application had specific growth factors affecting that market in particular, but certain factors applied
to all application areas. These common factors that cross all SCE applications include:

• Global sourcing

• Preferential trade agreements

• Manufacturing and logistics outsourcing

• Mergers and acquisitions

• Regulatory pressures.

These factors drove growth across all SCE applications and help explain why ARC sees a fairly robust
forecast for the SCE market.


RFID Market Climbs by $600 Million in 2010

By the end of 2010 the value of the entire RFID market will be $5.63 billion, up from $5.03 billion in 2009,
according to estimates from analyst firm IDTechEx. This includes tags, readers and software/services for
RFID cards, labels, fobs and all other form factors. It does not, however, include the value of any RFID
tags that retail giant Wal-Mart Stores plans to insert into jeans and underwear.

In total, 2.31 billion tags will be sold this year, up from 1.98 billion in 2009, predicts report author Raghu
Das. Most of the growth in this period is due to an increase in use of passive UHF tags. For passive UHF
tags, the biggest category of use is asset tracking in many closed loop systems. Such applications
typically use tens of thousands of tags and more; and, rarely, a million tags or more. The paybacks of
these applications are very strong but the numbers of tags is relatively small per case study.

UK retailer Marks & Spencer will use almost 200 million UHF tags alone this year for apparel tagging, but
their success in this sector has not gone unnoticed and many others, notably Wal-Mart, are on their way
to large deployments. In total, IDTechEx found that in 2009 550 million passive UHF tags were sold, and
that number will rise to at least 800 million in 2010. IDTechEx is aware that two passive UHF tag suppliers
have increased their prices for the first time in many years this year and they are installing extra capacity.

However, the biggest spenders are still governments, who are able to implement large RFID schemes
such as animal tagging, transit ticketing, people identification etc where the paybacks are typically greater
efficiency and improved safety. Rapid ROI is less of a concern for them. Well managed suppliers to these
sectors operate profitably. For example, in 2010 178 million tags will be used for animal and pet
identification, at an average tag cost of 97 cents each.

The market for all RFID interrogators will grow from $0.92 billion in 2010 to $4.99 billion in 2021.

According to the IDTechEx research data, the biggest sectors by numbers of tags are contactless cards
(HF, for transit, secure access, purchasing, etc) using 450 million tags, followed by RFID tickets (HF, for
transit ticketing) 380 million tags, and then apparel (UHF) 300 million tags. By value, just over $1 billion
will be spent on RFID cards in 2010 and $240 million on tags for passports. $36 million will be spent on
tags for apparel in total.

In 2010 43% of RFID tags will be sold and used in North America. In the future, IDTechEx believes that
RFID will be huge in China. Indicators of this include the fact that Chinas has been adding new RFID
manufacturing capacity while the U.S. and Europe saw a shakeout in tag providers, the Chinese

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Government is a strong advocate for RFID, and has the power to mandate companies to use it. China
has already executed the largest RFID order by value (over one billion national identification cards for
adults, six billion dollars including systems) and has a policy of making its own requirements throughout
the RFID value chain. In 2009/2010, RFID events in China are five times bigger by attendance than the
biggest RFID events in the U.S. and Europe. Most products will be source tagged, and because China is
one of the largest exporters the tags will be supplied there.

Traditionally, active RFID has been tags with a battery to boost read range or add extra functionality to
the tag such as sensors. Then came real time locating systems (RTLS). In 2010, these two sectors will be
a total of $610 million in value, where $225 million will be spent on tags and the rest on infrastructure,
software and services. Now there are wireless sensor networks (WSN) which may or may not be used to
form mesh (self forming and self healing) networks. Those in active RFID and RTLS have added extra
functionality to create WSN but we also have new standards emerging, such as ZigBee, which are part of
the scene.

Over 20 million ZigBee tags have been sold and are used to form mesh networks for "smart" electricity
meters, preventing the need for manual reading of the meters and allowing rapid response to high use.
This is increasingly becoming mandated as new houses move towards having "greener" credentials.


Panama Canal Authority Signs First-Ever Partnership
Agreement with the Mississippi State Port Authority at
Gulfport

(PANAMA CITY, Panama)—Panama Canal Authority (ACP) Administrator/CEO Alberto Alemán Zubieta
and Mississippi State Port Authority at Gulfport (MSPA) Executive Director/CEO Donald R. Allee
launched a strategic partnership in Panama by signing a Memorandum of Understanding (MOU) to
increase economic growth, spur international trade and promote the "All-Water Route" (the route from
Asia to the U.S. East and Gulf Coasts via the Panama Canal).

During an official ceremony, both parties, joined by Mississippi Governor Haley Barbour, affirmed their
commitment to mutual growth and cooperation. Renewable after five years, the first-ever ACP-MSPA
agreement will allow for joint marketing ventures, information sharing and technological exchange.

"Today's MOU signing represents a great opportunity for Panama and Mississippi to build upon our
existing offerings and trade relationship through a mutually beneficial alliance," said Mr. Alemán Zubieta.
"One of the primary tenets of the ACP is to continually look for creative approaches to boost trade flows
and provide safe, reliable and efficient service to the international maritime community. This agreement is
one way that we can help achieve this goal."

Both the ACP and the Port are dedicated to further increasing capacity and fostering business
development. In 2009, Panama was Mississippi's third largest trading partner, in terms of exports, after
Canada and Mexico.

"For four decades, the Mississippi State Port Authority has focused on growth prospects in the Western
Hemisphere, but the expanded Panama Canal will afford the Port of Gulfport new opportunities to be
more competitive in shipping between North America and both Asia and the West Coast of South
America," said Mr. Allee. "This agreement between the MSPA and the ACP will provide a framework for
our two entities to work together to pursue new business opportunities that will result from an expanded
Panama Canal."

The Panama Canal is currently undergoing its historic $5.25 billion expansion project which will double
the waterway's capacity and build a new lane of traffic through the construction of a new set of locks.

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Scheduled for completion in 2014, the project will allow more ships and the passage of longer and wider
vessels through the Canal.

Receiving $570 million in federal Community Development Block grants for restoration projects, the
MSPA continues to refurbish the Port from Hurricane Katrina damage. Development plans include
elevating the Port's West Pier to 25 feet above sea level, returning to pre-Katrina storage capacities and
preparing for increased operations once the Panama Canal expansion project is completed.

"Maritime commerce is vital to Mississippi's economy, and the expansion of the Panama Canal provides
the state with considerable opportunities for increased trade and worldwide shipping," said Governor
Barbour. "Through the partnership with the Panama Canal Authority, the Port of Gulfport will be able to
offer even more businesses quick, affordable access to nearly three-quarters of American consumers.
Our nation's ports are overcapacity, and the current restoration of the Port of Gulfport will accommodate
increased container traffic that will be entering the U.S. as a result of the Panama Canal expansion."

Seaports Press Review, 8/2/2010

Georgia Adopts Proposal to Modernize Warehouse Law

The state of Georgia has become the latest state to adopt changes to the warehousing provisions in the
Uniform Commercial Code (UCC). The Georgia state legislature passed legislation adopting the changes,
which was signed into law by Governor Sonny Perdue on May 27 and went onto effect on July 1.

The UCC was established in 1952 and is one of a number of uniform acts that have been created to
harmonize the law of sales and other commercial transactions in all 50 states. Article 7 of the code
pertains to warehouse receipts, bills of lading and other documents of title. In 2003, the International
Warehouse Logistics Association began an effort to get the states to adopt a revised Article 7 that allows
for many of these documents to be in electronic form.

The new Georgia law also deletes obsolete references to tariffs, classifications and regulations that no
longer track modern commercial practices. In addition, it deals with permissible contractual limitations of
liability; negotiation and transfer; lien of the carrier or warehousemen on the goods and right to enforce
lien in a commercially reasonable manner; altered, lost and stolen instruments; and the effects on holders
resulting from insolvency of the warehouse customer.

To date, IWLA and its members have succeeded in persuading 39 states to adopt the revision. The
association currently is pressing its efforts in Massachusetts, Ohio, Washington and Michigan.

"Article 7 is the lifeblood of the warehouse industry, and widespread adoption of the revision allows more
efficient operation in commerce across state lines," says Joel Anderson, president and CEO of IWLA.
"What happened in Georgia is a perfect example of what our commercial warehouse members, working
together and with the assistance of the IWLA staff, can accomplish politically for the benefit of the entire
industry."

"This was truly a team effort," says William Stankiewicz, vice president and general manager of Shippers
Warehouse of Georgia, with facilities in Jonesboro, Ga. "Article 7 helps to solve many of the emerging
issues in the new age of electronic rights and title transfer by incorporating consistent provisions for
electronic documents of title. It allows a warehousemen or common carrier on one side of the country to
know what his expectation will be on the other side of the country."

Robert Doyle, president of Amware Logistics Services Inc., which operates warehouse facilities in the
Atlanta area, says, "Getting involved in the political process is critical to our industry. There is no
substitute for direct constituent involvement in these types of matters and we must be willing to get
involved and represent the supply chain industry as strong and educated advocates and ambassadors."

Logistics Today, 8/9/2010

14

The Plight Before Christmas

Companies have learned some useful lessons about demand planning, but will improved forecasting
techniques guarantee happy holidays?

For the first few months of this year, the U.S. economy was moving steadily toward recovery. The Credit
Managers' Index (CMI), a key indicator of corporate economic trends, registered a rise each month from
August 2009 until April 2010, and other benchmarks gave cause for optimism.

Then came May, with the BP oil leak, worries about European sovereign debt, disappointing employment
data, and a sudden drop in the CMI index. Talk of a double-dip recession resumed, and CFOs were torn:
Should they ramp up for growth or once again batten down the hatches?

The dilemma as to whether to reduce inventory if another downturn is coming or gear up for a resumption
of growth is particularly acute now, as companies debate how to prepare for the holiday shopping season.

"No one is confident that they should buy up into this fourth quarter in a significant way, but, by the same
token, they don't want to miss opportunities," says Bryan Eshelman, a retail and consumer products
specialist with business advisory firm AlixPartners. "So it's really investing in the capability to react quickly
that will help those that are most successful this fourth quarter."

Fortunately, the Great Recession prompted many companies to reevaluate their methods of demand
forecasting and planning. Companies now test the market more frequently, assessing customer intentions
via such means as dipping into markets tentatively before plunging into huge inventory orders.
Merchandising methods, dubbed "hold-and-flow" and "delayed-distribution," are increasingly helping
managers to look before they leap.

At the same time, corporate forecasters have grown more cognizant of the role companies themselves
play in sparking or dampening demand. Rather than rely solely on such venerable prediction metrics as
same-store sales, they are attempting to gauge how their own pricing, advertising, and sales practices
affect customer behavior and how they can refine those practices to boost sales.

For these practices to succeed, some experts say, CFOs will need to begin linking sales predictions to
production planning, instead of allowing the two functions to operate separately. At Coach, a maker of
luxury handbags and other wardrobe accessories, CFO Mike Devine says that his role is "to make sure
the organization maintains discipline in having our production forecasts line up with our sales forecasts."
Rather than enforcing preexisting production, inventory, and sales plans, finance chiefs must be able to
make quick adjustments as conditions change.

Before the recession, CFOs typically approached forecasting and planning "on a strategic basis," says
Charlie Chase, business enablement manager for software company SAS Institute. "Now they need to do
it on a tactical basis," he says. Think of it as an early Christmas present the company can give itself.

Going with the Flow

The recession schooled finance chiefs on the inherent risks of placing large inventories in a supply chain.
Previously, companies typically made or bought products and distributed them to stores in bulk because
that was the cheapest way to do it. Until, that is, demand dried up and companies had to take big write-
downs and unload the goods at deep discount, if at all.

Some companies now postpone the manufacturing of goods until they are reasonably sure there is a
market for them. More specifically, companies defer completion of a certain portion of a product line.
"Previously, we would convert all raw materials purchased into finished goods," says Coach CFO Devine.
"Now, we take a deeper position in continuing raw materials [but hold off on manufacturing]. This allows
us to respond more nimbly to consumer buying patterns."

Coach might, for example, load up on more leather or silk than it needs to manufacture products for a
given season, and use the remaining materials for later seasons. If demand suddenly does spike,
however, "we'll have raw materials available to quickly up production," Devine says.

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Similarly, some companies are stocking up at their warehouses but delaying the shipment of finished
goods to stores. In a May earnings call, Saks announced that it would install such a "hold-and-flow
system" in phases beginning this summer. The system "will drive allocation effectiveness by holding back
a portion of certain merchandise orders at our distribution center…employing the product through the
stores as demand dictates," says Ron Frasch, the luxury clothing chain's president and chief
merchandising officer.

Such techniques do add warehousing costs, but also have the potential to boost revenues and gross
margins. That's because improved precision in meeting demand makes it more likely that goods will be
sold at full price. If they're used successfully, "the benefit of full-price sell-through outweighs any
additional expense to warehouse the product," says Matthew Katz, a managing director at AlixPartners.
"If you warehouse product and then don't get the full-price sell-through, however, then you've got a
problem."

Shaping Demand

Companies are also adopting a more sophisticated approach to forecasting that includes probing the
effects of their own actions on customers. Previously, companies relied solely on past sales-trend data,
along with such well-worn gauges as seasonal effects on sales, as a basis for their forecasts, according
to SAS's Chase. "Then, whatever is left over is called 'unexplained' or attributed to randomness," he says.
"But, in fact, it can be attributed to sales promotion, marketing, price, and [the accuracy of your] economic
forecast."

In his recent book, Demand-Driven Forecasting, Chase argues that managers imperil their predictions
and their profits if they ignore such factors. "For example, a price change occurring simultaneously with a
product sales promotion could erode the profitability of the product or create an unexpected out-of-stock
situation on the shelf at the retailer," he writes.

Yet such internal factors must be balanced against broader economic and social factors. Two years ago,
OfficeMax, a retailer that does a big business in school supplies, ran a promotion in which crayons, glue,
and other specified items were sold for a penny apiece in an effort to lure buyers to shop for all their back-
to-school needs at the store.

Unfortunately, this coincided with the start of the recession. Instead of filling their baskets with a mix of
loss leaders and full-priced items, OfficeMax customers spread their spending across a variety of
competing stores on the basis of price, according to Reuben Slone, executive vice president of supply
chains at the company. "People had a lot more time than money," he says, "because unemployment was
really beginning to mushroom, and they were literally watching their pennies." Slone says the promotion
failed because of the most common kind of error in forecasting: an error in assumptions about human
behavior, rather than a numerical miscalculation.

Now, Slone says, OfficeMax layers a bevy of external factors into its sales forecasts, everything from
"competitive entry/exit" (what happens to demand when a Staples or Best Buy enters or exits a local
market) to weather patterns. The company even employs a "hurricane algorithm," which it uses to gauge
how many bottles of water, flashlights, or batteries people will buy in advance of, or after, a storm.

So what do such methods tell Slone about his company's prospects for Christmas, which is a key selling
season for office products? "Overall, we're cautiously pessimistic," he says, noting that the company's
business is highly correlated to the nation's employment numbers. "We're not planning for a huge
resurgence."

In that, he doesn't appear to be alone.

CFO.com, 8/6/2010

16

Rail
AAR reports weekly freight rail traffic sets 2010 record

WASHINGTON—The Association of American Railroads has reported that for the week ending July 31,
2010, U.S. railroads reported the highest traffic levels of 2010 for both carload and intermodal traffic. U.S.
railroads originated 300,292 carloads for the week, up 9.4 percent compared with the same week in 2009,
but down 10.6 percent from the same week in 2008.

In order to offer a complete picture of the progress in rail traffic, AAR reports 2010 weekly rail traffic with
comparison weeks in both 2009 and 2008. Note that U.S. rail traffic fell sharply in fall 2008, when the
financial crisis took hold.

Intermodal traffic totaled 232,895 trailers and containers, up 20.2 percent from the same week in 2009,
and up 0.9 percent compared with 2008. Compared with the same week in 2009, container volume
increased 21.9 percent and trailer volume rose 11.7 percent. Compared with the same week in 2008,
container volume increased 9 percent and trailer volume dropped 28.9 percent.

Eighteen of the 19 carload commodity groups increased from the comparable week in 2009 with only
waste and scrap, down 1.9 percent, posting a decline. Metallic ores, up 73 percent, and metals and
products, up 35.2 percent, were the commodities posting the most significant increases. In comparison to
2008, all nineteen commodity groups posted declines.

Carload volume on Eastern railroads was up 9.9 percent from last year, but down 13.7 percent from
2008. In the West, carload volume was up 9.1 percent from last year but down 8.5 percent from two years
ago.

For the first 30 weeks of 2010, U.S. railroads reported cumulative volume of 8,461,271 carloads, up 7.3
percent from 2009, but down 13.1 percent from 2008, and 6,318,845 trailers or containers, up 13.5
percent from 2009, but down 6 percent from 2008.

Canadian railroads reported volume of 73,858 cars for the week, up 17.3 percent from last year, and
50,967 trailers or containers, up 21.6 percent from 2009. For the first 30 weeks of 2010, Canadian
railroads reported cumulative volume of 2,167,829 carloads, up 21.1 percent from last year, and
1,380,845 trailers or containers, up 14.7 percent from last year.

Mexican railroads reported originated volume of 14,282 cars, up 23.4 percent from the same week last
year, and 6,848 trailers or containers, up 23.1 percent. Cumulative volume on Mexican railroads for the
first 30 weeks of 2010 was reported as 411,472 carloads, up 20.9 percent from last year; and 192,794
trailers or containers, up 32.8 percent.

Combined North American rail volume for the first 30 weeks of 2010 on 13 reporting U.S., Canadian and
Mexican railroads totaled 11,040,572 carloads, up 10.2 percent from last year, and 7,892,484 trailers and
containers, up 14.1 percent from last year.

TheTrucker.com, 8/6/2010

Freight-rail capacity expansion bill enters Senate

Last week, Sens. Kent Conrad (D-N.D.) and John Ensign (R-Nev.) introduced the Freight Rail
Infrastructure Capacity Expansion Act of 2010 (S. 3749), which aims to encourage private capital
investments in freight rail and help expand rail capacity.

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A companion bill to H.R. 1806—a measure introduced last year by Rep. Kendrick Meek (D-Fla.) that
currently has more than 100 House co-sponsors—S. 3749 would provide two tax incentives: a 25 percent
tax credit for capacity expansion expenditures on new freight-rail infrastructure and a vehicle for
expensing all qualifying rail infrastructure capital expenditures.

The incentives would apply to railroads, shippers, ports and trucking companies. Qualifying expenditures
would include track, tunnels, signals, train control devices, locomotives, bridges, yards, terminals, and
intermodal transfer and transload facilities.

On Friday, the Association of American Railroads (AAR) voiced support for S. 3749, which would spur
future freight-rail investments that are needed to “take full advantage of freight rail’s unparalleled potential
to promote economic recovery, provide much-needed jobs, take trucks off the highways, save fuel, and
reduce CO2 emissions,” according to the association.

“America has great expectations for our nation’s railroads—to provide not only the vital connection for
U.S. business to the global marketplace, but also the underlying network for expanded intercity
passenger and high-speed rail,” said AAR President and Chief Executive Officer Ed Hamberger. “This bill
offers incentives for our highly capital-intensive business, and will ensure freight rail can continue to meet
these expectations.”

Progressiverailroading.com, 8/9/2010

Short-line tax credit extension still stuck in Senate, ASLRRA
says

A vehicle for extending the short-line tax credit still had not been secured in the Senate before the August
recess, according to an item in the American Short Line and Regional Railroad Association’s (ASLRRA)
latest newsletter.

Since December 2009, Congress has tried numerous times to extend the Section 45G tax credit—which
expired at 2009’s end—via a tax extenders measure. The Senate tried four times in June and July to pass
the most recent House-passed bill, which would extend the short-line tax credit through 2010. But each
time, the Senate failed to get the 60 votes necessary to pass a measure, according to the ASLRRA.

The Senate likely won’t consider any new or pending legislation until after Labor Day. However, the last
four comparable tax bills that included language on Section 45G didn’t pass both chambers in identical
form before October, ASLRRA said. As of Aug. 1, measures including a short-line tax credit extension
had garnered 261 House co-sponsors and 53 Senate co-sponsors.

Initially enacted in January 2005, the tax credit enables regionals and short lines to claim a tax credit of
50 cents for every dollar spent on infrastructure improvements, up to a cap of $3,500 per mile of owned or
leased track.

Progressiverailroading.com, 8/6/2010

18

Rail’s Split Personality

Intermodal and some other cargoes are strong, but weakness still comes in carloads

The freight rail business is looking more like two markets than one, a fast-paced intermodal segment
marked by equipment tightness and other business segments marked by uncertainty about the economic
recovery.

That split personality is revealed in remarks by officials at several companies that play to differing parts of
the rail industry. “We do think that we’re going to continue to see a tremendous amount of demand in the
market,” said David P. Yeager, chairman and CEO of intermodal specialist Hub Group.

That company experienced a surge in second quarter demand that used up all its available capacity, and
it sees no sign of a letup. “The first few weeks in July we have seen just as strong as where June ended
up,” Yeager said in a July 21 earnings conference call. “That’s rather extraordinary ... that’s not normal for
July.”

Yet at GATX, one of the premier North American suppliers of leased railcars and locomotives, demand
across a much broader range of cargo markets is far less robust. “We continue to see some signs of
improvement, although they are inconsistent,” Chairman, President and CEO Brian Kenney told analysts
on July 22.

While pricing on railcar leases have recovered somewhat from their recession lows, Kenney said lease
renewal rates are still “well below expiring rates” in the second quarter.

Union Pacific Railroad, like other major carriers, is enjoying a surge in profit as it keeps equipment and
work force capacity tight enough to keep pushing productivity and freight rates higher.

Yet UP, North America’s largest rail freight hauler, also sees a slow economic recovery continuing to split
its cargo markets, with intermodal, automobiles and some other categories doing well, but other cargoes
weak from a long slump in construction of housing, commercial buildings and highways.

“And it doesn’t look like the slow improvement trajectory is going to change much over the last half” of this
year, said John Koraleski, UP’s executive vice president for marketing and sales.

James R. Young, UP chairman, president and CEO, told analysts, “We’re cautious in terms of our
outlook.” He said if one adds up the pluses and minuses of the volume outlook for different cargoes, “they
lean a little more on the positive side in volume than the negative.”

The companies turned in strong earnings for the quarter.

UP’s profit jumped 53 percent from a year earlier—which was the low point of the recession for freight
haulers. Its net income of $711 million was 17 percent of its $4.2 billion in sales.

Revenue carloads rose 18 percent, including a 24 percent surge for intermodal loadings. Its automotive
business, flattened at that point in 2009, soared 71 percent and in turn pulled up related shipments of
metals and ores. And, because pricing power and efficiency gains lifted average unit revenue by 8
percent, UP’s total revenue rose 27 percent.

UP, other railroads and rail shippers still have a vast fleet of idled railcars across the continent, so they
are ordering few specialty cars and are slow to activate new leases.

That sluggishness in the largest business line for GATX trimmed the lessor’s rail segment revenue by
about $10 million, and cut its rail profit 34 percent or nearly $15 million. Gains from its Great Lakes bulk
shipping line, American Steamship, and some specialty business pushed GATX’s overall profit up 69
percent to $21.5 million, but left it wondering when it can count on a revived rail sector.

“It still feels like a downturn to us,” Kenney said.

Hub was in the sweet spot of a sizzling intermodal market, where demand and pricing are up so much
that marketers are ordering new containers and still expecting tight capacity.

19

Hub also has a sizable truck brokerage business, and admits it was caught off guard when demand
revved up so much this past spring that truckers quickly hiked their rates to Hub or just opted not to carry
loads. The result was “serious compression” in the profit margin on brokerage, Yeager said, and “it’s
going to take some time to dig out of that hole.”

Outside of intermodal, one area of strength in rail loadings has been metals and ores, largely to supply a
revived auto manufacturing industry as well as steel supports for stimulus projects around the U.S.

But recent rail data suggests metals demand could be cooling. GATX is also cautious about ore loadings
for its Great Lakes ships, amid concerns some steelmaking furnaces may curtail production in coming
months. “We could see some softening in demand for ore in the second half;” Kenney said.

Journal of Commerce, 8/2/2010

KCS Net Jumps Five-Fold to $37.4 Million

Railroad firm’s second quarter freight volume matches 2008 pace

Kansas City Southern, the smallest of North America’s Class I railroads, powered back from tough
recession financials to post a $37.4 million profit for the second quarter that was up 527 percent from the
2009 period.

The company operates two railroads of about equal size in its network—KCS Railway in the central-
southern U.S. and KCS de Mexico that sprawls across that country. It was also the hardest hit of the
Class Is by the 2008-2009 recession, as its normally strong KCSM automotive traffic plunged after the
credit crisis shut down much U.S. auto production.

Another factor was that in the 2009 second-quarter, KCS was spending to finish a costly construction
project to open its own rail segment between the towns of Rosenberg and Victoria, Texas. That project
eliminated a need to pay Union Pacific Railroad to use its track in the area, gave KCS a more direct route
between Houston and Laredo at the border and allowed KCS to build an intermodal ramp near Houston.

With that segment running and the auto business up sharply with the recovery, KCS reported a 24
percent gain in freight traffic from last year and said volume now slightly exceeds the period in 2008
before the credit crisis triggered a sharp recession.

Revenue surged 35 percent to $462 million as KCS added price increases to the stronger volume, like
other railroads. Its per-shipment average revenue rose 11 percent to $952.

“Automotive and intermodal traffic trends have been encouraging, and we continued to deliver strong
increases in our cross border revenues,” Chairman and CEO Michael R. Haverty said.

The latest quarterly profit was 8.1 percent of receipts, and while up sharply from a 2 percent margin a
year earlier it compares with double-digit profits that the top railroads are delivering. KCS’ net income
available to common shareholders was $34.6 million.

Haverty steps down from the CEO post on Aug. 1, to make way for David L. Starling to move up from his
current role of president and chief operating officer.

Haverty will remain with KCS with a new title of executive chairman.

Journal of Commerce Online, 7/27/2010

20

Air
Air freight volumes on the up, but some fear a slowdown

IATA chief questions how long the industry can maintain momentum.

Air freight volumes in June continued to show growth on last year, but there are doubts whether volumes
can continue to grow at this level.

Scheduled freight traffic grew 26.5% year-on-year in June, according to the International Air Transport
Association (IATA), but lagged behind the 34% year-on-year growth reported in May.

However, May traffic was exceptionally high as it included some delayed traffic from April’s volcano ash
crisis, and volumes remain 6% above the pre-recession peak of early 2008.

IATA said cargo load factor remained “historically” high at 53.8% in June, but it was down from the 55.7%
reported in May, when capacity increased “slightly” ahead of volumes.

IATA Director General and CEO Giovanni Bisignani said: “The question is: how long can the industry
maintain the double-digit momentum?

“Business confidence remains high and there is no indication that the recovery will stall any time soon.

“But, with government stimulus packages tailing off and restocking largely completed, we expect some
slowing over the months ahead.”

Bisignani added: “A clear indication of the growing confidence was more than 400 aircraft orders
announced at the UK Farnborough Air Show.

“This is good news that will bring environmental benefits through improved fuel efficiency. But it will also
make the challenge of matching capacity to demand much more difficult.”

Freight demand continues to follow economic recovery and trade patterns, with airlines in Asia-Pacific up
29.8% year-on-year in June, 39.6% up in the Middle East, 44.9% up in Latin America and 54% up in
Africa.

Carriers in North America saw volumes grow by 24.2%, while Europe was at half the rate of the fastest-
growing economies, at 15.3%.

Europe remains the only region still 5-6% below the pre-recession peak.

“The low value of the euro will be a help to the region’s exporters and eventually drive-up freight
volumes,” IATA added.

African, Asian and Latin American carriers boosted capacity rapidly over the last quarter, according to
IATA.

Asia-Pacific airlines, including Korean Air, Singapore Airlines and Cathay Pacific, three of the world’s
largest air freight providers by size, boosted capacity measured in available freight ton kilometers (AFTK)
by 20.5%, year-on-year.

African and Latin American airlines increased AFTK by 23.3% and 25.3%, respectively, but their
European and North American counterparts were far more cautious, expanding AFTK by just 2.1% and
5.9% compared to a year earlier.

International Freighting Weekly, 7/29/2010

21

USPS Delivers $3.5 Billion Loss, Cash Crunch Looms

Agency seeks congressional relief, changes to contracts.

The U.S. Postal Service said its net loss for the April-June quarter rose 46 percent to $3.5 billion and the
agency warned it may run out of money next year unless Congress reduces its pension costs.

“Given current trends, we will not be able to pay all 2011 obligations,” said Joseph R. Corbett, USPS chief
financial officer.

Despite more than $10 billion in cost cuts in the last three years, “it is clear that a liquidity problem is
looming and must be addressed through fundamental changes requiring legislation and changes to
contracts,” Corbett said.

The postal service said its net loss for its fiscal third quarter rose to $3.5 billion from $2.4 billion a year
earlier as mail volume continued to decline and benefit costs increased.

Mail volume, which has fallen 20 percent since 2007 amid growing competition from e-mail and other
electronic communications, fell 1.7 percent in the quarter to 40.9 billion pieces.

Operating revenue declined $294 million to $16 billion while operating expenses rose $789 million, or 4.2
percent, to $19.5 billion.

The postal service blamed the increased operating costs mostly on an $870 million increase in workers’
compensation liability expense resulting from a non-cash fair value adjustment and higher retiree health
benefits expenses.

The agency is required to set aside $5.4 billion to $5.8 billion annually to pre-fund retiree health benefits
under the Postal Accountability and Enhancement Act of 2006.

Although cash flow appears to be sufficient for 2010 operations, it is uncertain whether cash flow,
together with maximum available borrowing of $3 billion, will be enough to fund the congressionally
mandated $5.5 billion payment to the Retiree Health Benefit Fund on Sept. 30 and retain sufficient
liquidity into 2011, Corbett said.

The Postal Service has incurred net losses in 14 of the last 16 fiscal quarters. The fiscal 2010 year-to-
date net loss is $5.4 billion, compared to a loss in the same period last year of $4.7 billion.


International Freight Traffic Shows Marked Improvement

International scheduled air traffic statistics for June showed continued strong demand growth as the
industry recovers from the impact of the global financial crisis, reports the International Air Transport
Association (IATA). Compared to June 2009, international passenger demand was up 11.9% while
international scheduled freight traffic showed a 26.5% improvement.

Capacity increased only slightly above demand improvements during the month, keeping load factors in
line with historical highs at 79.8% for passenger traffic and 53.8% for freight.

"The industry continues to recover faster than expected, but with sharp regional differences. Europe is
recovering at half the speed of Asia with passenger growth of 7.8% compared to the 15.5% growth in
Asia-Pacific," says Giovanni Bisignani, IATA's director general and CEO.

22

Outside of Europe, all regions reported double-digit growth in passenger traffic. "The question is how long
can the industry maintain the double-digit momentum? Business confidence remains high and there is no
indication that the recovery will stall any time soon. But, with government stimulus packages tailing off
and restocking largely completed, we do expect some slowing over the months ahead," Bisignani says.

International freight demand grew 26.5% in June 2010, down from the 34.0% recorded in May 2010. May
was exceptionally high as some interrupted traffic from April's volcanic ash crisis shifted to May. Volumes
remain 6% above the pre-recession peak in early 2008.

Freight demand continues to follow economic recovery and trade patterns with airlines in Asia-Pacific
(+29.8%), Middle East (+39.6%), Latin America (+44.9%) and Africa (+54.0%) growing the fastest.

Carriers in North America (+24.2%) occupy the middle ground.

Europe (15.3%) is growing at half the rate of the fastest growing regions based on slower economic
growth. This trend is particularly evident in Europe which is the only region still 5-6% below the pre-
recession peak. The low value of the Euro will be a help to the region’s exporters and eventually drive up
freight volumes.

"We remain cautiously optimistic," says Bisignani. "A clear indication of the growing confidence is the over
400 aircraft orders announced at the Farnborough Air Show. This is good news that will bring
environmental benefits through improved fuel efficiency. But it will also make the challenge of matching
capacity to demand much more difficult."

Logistics Today, 7/29/2010

Los Angeles Air Freight Recovery Levels Off

Tonnage grows 25 percent in first half of 2010, slips from May to June.

Freight traffic at Los Angeles International Airport grew 25.1 percent in the first half of the year, but the
tonnage growth slipped back in June in a sign that the air cargo recovery is leveling off.

The airport, the largest U.S. gateway for trans-Pacific air trade, said freight tonnage grew 18.5 percent in
June compared to the same month a year ago. That was slower than the 26.5 percent expansion LAX
reported in May, and freight tonnage also slipped 2.4 percent from May to June.

The recovery at Los Angeles, where freight traffic fell 7.1 percent in 2009, comes as airports in Asia are
reporting a sharp upturn in exports.

LAX’s tonnage for the first half of 2010 exceeded the airport’s total during the same January-June period
in 2008, before shipping demand hit the deepest part of the downturn.

But the 2010 half-year total still is more than 6 percent behind the tonnage Los Angeles handled in the
first half of 2007.


23

Demand continues to rise in June

International airfreight showed continued strong demand growth in June as the industry recovers from the
impact of the global financial crisis.

Global demand for air cargo grew 26.5 percent, down from the 34 percent recorded in May 2010.
However, May was exceptionally high due to the shifting of some interrupted traffic from April’s ash crisis.
Volumes remain six per cent above the pre-recession peak in early 2008. Capacity increased only slightly
above demand improvements during the month, keeping load factors in line with historical highs at 53.8
percent.

Freight demand continues to follow economic recovery and trade patterns with airlines in Asia-Pacific
(29.8 per cent), the Middle East (39.6 percent), Latin America (44.9 percent) and Africa (54 percent)
growing the fastest.

Carriers in North America (24.2 percent) occupy the middle ground.

Europe (15.3 percent) is growing at half the rate of the fastest growing regions based on slower economic
growth. It is the only region still five to six per cent below the pre-recession peak. The low value of the
Euro will be a help to the region’s exporters and eventually drive up freight volumes.

Air Cargo News, 7/30/2010

Maritime
Port Tracker report calls for 15 percent annual volume
increase and a new peak month

Following last month’s report which noted import cargo volumes at U.S.-based retail container ports would
begin to decline in the coming months, the most recent Port Tracker report by the National Retail
Federation and Hackett Associates notes that 2010 volume is pegged to hit 14.5 million containers for a
15 percent annual increase.

July volumes are expected to rise 1.38 million TEU, or 25 percent, and August volumes are expected to
rise 14 percent year-over-year at 1.32 million TEU, according to the report.

Port Tracker indicated that U.S. ports handled 1.32 million TEU (Twenty-foot Equivalent Units) in June,
which is the latest month for which data is available, for a 4 percent gain from May and a 30 percent year-
over-year gain. This marks the eighth straight month to show a year-over-year improvement after
December 2009 snapped a 28-month streak of declining volumes through November 2009.

This year began with sequential gains in December and January, followed by a decline in February.
March volumes—came in at 1.07 million TEU (Twenty-foot Equivalent Units), which was up 7 percent
from February’s 1.01 million TEU and 12 percent year-over-year. April volumes at 1.15 million TEU—were
up 7 percent from March and 16 percent year-over-year. And May hit 1.25 million TEU followed by June’s
1.32 million TEU.

The ports surveyed in the report include: Los Angeles/Long Beach, Oakland, Tacoma, Seattle, New
York/New Jersey, Hampton Roads, Charleston, and Savannah.

24

The report’s authors said that the large double-digit increases in June and July can be attributed to
backlogs that accumulated due to a lack of shipping capacity brought on by ship owners removing
capacity during the recession, followed by them taking their time bringing them back online when
economic activity picked up.

They added that many retailers may actually be transporting more merchandise earlier in the year to
avoid further bottlenecks, explaining that this could lead to July becoming the peak shipping month in
2010 as opposed to October, which is more common.

“Shippers and importers have sort of moved ahead of the market by buying early partly out of fear that
there was not going to be enough capacity later on, and it seems that they have gotten a head start,” said
Ben Hackett, president of Hackett Associates, in an interview. “This is what really drove the May-July
figures.”

Hackett added that he believes the container shortage is close to an end, with carriers putting vessels
back into service that are charged with bringing back empty containers from Europe and North America.
And the amount of empty containers moving out of U.S. ports is higher through the first six months of
2010 than it was for all of 2009, according to Port Tracker.

And with various economic indicators taking steps backwards in recent weeks, Hackett pointed out that
consumer confidence appears to be moving in lockstep with that trend, as current levels—since June—
are in line with August 2009.

Even though the Port Tracker report maintains that July may turn out to be the peak shipping month of
the year, Hackett noted that does not mean there will not be growth in the coming months.

In fact, year-over-year projected growth rates are still in double-digits, with July and August projected to
hit 1.38 million TEU (25 percent increase) and 1.32 million TEU (14 percent increase), respectively.
September is expected to hit 1.32 million TEU (16 percent increase), and October is slated for 1.31
million TEU (10 percent increase). November and December are projected to hit 1.19 million TEU (9
percent increase) and 1.12 million TEU (2 percent increase), respectively.

“We aren’t back to where we were two years ago and consumers aren’t convinced that the recession is
over quite yet, but 2010 is clearly going to finish better than last year,” NRF Vice President for Supply
Chain and Customs Policy Jonathan Gold said in a statement. “In the meantime, retailers are monitoring
demand very closely and hoping to see increases in employment and other areas that will boost
consumer confidence. Cargo numbers this summer are showing unusually high percentage increases,
but that appears to be an indication of shortages in shipping capacity earlier in the year rather than sales
expectations.”

Logistics Management, 8/6/2010

US import growth to weaken as year progresses

Double-digit growth in container imports into the US in June and July caused by vessel shortage earlier in
the year

US container imports are expected to surge by 15% this year, although growth is expected to weaken in
the second half as retailers imported goods earlier this year to avoid capacity shortages.

The latest Global Port Tracker report, which is carried out by Hackett Associates on behalf of the National
Retail Federation (NRF), estimated that import volumes would reach 14.5 million containers in 2010.

While this would put 2010 imports 15% ahead of 2009, they would still lag behind pre-recession levels.

Volume growth would also weaken as the year progressed, the NRF said.

25

The volume increase experienced over the last couple of months was an indication that the peak season,
which normally comes in the third quarter, had come earlier than normal, the report said.

It was also an indication that backlogs had built up due to the lack of shipping capacity earlier in the year
after ship owners took vessels out of service during the recession and were slow to return them as the
economy began to pick up.

NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said: “We aren’t back to where
we were two years ago and consumers are not convinced that the recession is over quite yet, but 2010 is
clearly going to finish better than last year.”

“In the meantime, retailers are monitoring demand very closely and hoping to see increases in
employment and other areas that will boost consumer confidence.”

“Cargo numbers this summer are showing unusually high percentage increases, but that appears to be
an indication of shortages in shipping capacity earlier in the year rather than sales expectations.”

Ben Hackett, founder of Hackett Associates, said: “There are indications that the shipping season may
have peaked earlier than normal as the rush to re-stock inventories earlier in the year intersects with a
combination of increased shipping capacity, consumer confidence levels not seen since August 2009 and
the slowing growth of consumer spending. The traditional peak season may be melting away.”

The report showed that US container imports in June were 4% up on May and 30% above June 2009.

It was the seventh month in a row to show a year-over-year improvement after December broke a 28-
month streak of year-over-year declines.

July was estimated at 1.38 million teu, which is a 25% increase over last year, while August is forecast at
1.32 million teu, up 14% percent on last year.

International Freighting Weekly, 8/10/2010

Charleston containers up 19% in first half, harbor deepening
reaches milestone

Deepening of Charleston Harbor, already the deepest in the Southeast, reached another milestone as
container volumes in the Port of Charleston increased 19 percent in the first half of 2010.

The U.S. Army Corps of Engineers’ Charleston District has favorably concluded the Reconnaissance
Study for the post-45-foot deepening project in Charleston Harbor. The study determined a federal
interest in proceeding to the next step in the process—the feasibility phase—to further define time and
costs associated with deepening Charleston’s channels.

At the same time, container volumes in the Port of Charleston have continued to climb. Buoyed by new
shipping services and major new investments in the area, container volume increased 19 percent during
the first six months of 2010.

In June, pier containers at the Port of Charleston increased almost 34 percent over the previous year—
the fourth straight month of year-over-year, double-digit increases.

Despite widespread declines in global trade in 2009, the SCSPA volumes rebounded during the past six
months and closed its most recent fiscal year exceeding its budgeted container volume. In the accounting
period that ended June 30, Charleston handled 741,208 pier containers, off 5.2 percent from FY2009.

“Despite a very challenging economic environment, the SCSPA posted an operating profit and enjoyed
strong volume increases over the past six months,” said Bill Stern, chairman of the SCSPA board. “While

26

we expect volume to moderate in the latter half of the year, we’re encouraged that business has returned
at such a fast pace and we’re headed in the right direction.”

Contributing to the recent volume gains, Charleston added three new shipping services in FY2010,
including Mediterranean Shipping Company’s Golden Gate Service (GGS). The GGS, which had its first
local call in February, is bringing ships of more than 8,000 20-foot equivalent units to the port on a regular
basis. This highlights Charleston’s deep-water capabilities in the Southeast region.

“The port is handling the biggest ships on the East Coast today while working toward even deeper
channels that will secure our state’s future in global trade,” said Jim Newsome, SCSPA president and
CEO.

On the cargo development side, major global corporations are locating or expanding in the port’s service
area while the SCSPA has launched new targeted sales efforts:

• TBC Corporation, parent company of Tire Kingdom, is the largest distribution center to announce in
the past year. TBC is locating a new 1.1 million square foot distribution facility in Berkeley County and
will import tires through the Port of Charleston.

• Several other importers and logistics firms located or expanded in the area, while private developers
are proceeding with plans to build more than 20 million square feet in new industrial space near
Charleston’s deepwater port facilities.

• Targeted marketing efforts, including a new rail-served warehouse initiative and an expanded
overweight permit for refrigerated containers are also boosting container volume.

During the current fiscal year, which began on July 1, the SCSPA is projecting a seven percent increase
in container volume and a more than 50 percent increase in breakbulk and non-container cargo.

At the same time, the SCSPA plans to invest nearly $77 million this fiscal year on terminal improvements,
including work on the SCSPA’s new container terminal on the former Navy Base as well as a new cruise
terminal in downtown Charleston.

American Journal of Transportation, 8/6/2010

Container volumes back to pre-recession levels this year

Container volumes handled at the world’s ports are expected to exceed the pre-crisis levels of 2008 this
year, but growth is expected to slow towards the end of the year.

Analyst AXS Alphaliner said it expected container port handling volumes to grow by 11.6% in 2010 to 545
million teu, just exceeding the 535 million teu recorded in 2008.

In 2009, port volumes fell by 8.6% to 489 million teu—the first decline recorded since containers were first
introduced to the market.

Year-on-year growth in the first half is estimated at 18%, but Alphaliner expects growth to slow during the
second half.

Alphaliner said: “The robust 2010 growth projections come on the back of a strong first half. Global
handling volumes in the first six months to June are estimated to have grown by 18%.”

“The full-year growth forecast takes into account a slowdown in the second half of the year, due to the
uncertainty over the sustainability of global demand.”

“Handling volumes are expected to grow by 6% in the second half, reflecting partly the higher base seen
in the second half of last year, as well as the anticipated slowdown in trade volume growth.”

27

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