Proprietary & Confidential TMC Engine Summit March 16, 2004 Steve Duley Vice President Purchasing

Proprietary & Confidential

TMC Engine SummitMarch 16, 2004

Steve Duley

Vice President Purchasing


Serving North America

DEDICATED

EXPEDITED - TEAMS

INTERMODAL

ONE-WAY VAN

BROKERAGE

BULK

SPECIALIZED

> > >


Schneider National

$2.9 billion in revenue in 2003

Operate 12,000 tractors, 15,200

drivers, and 45,000 trailers with

20,800 associates operating in

28 countries

Purchase $1.5 billion in 3rd party

transportation from 1,300 carriers

Pay 20 million invoices totaling

$7 billion to 8,500 carriers

Commitment to superior

information and communications

technology

Truckload

Intermodal

Financial Services

Financial Services

Spot Brokerage •Glass Brokerage •

Tariff Based •

OptiModal •TruckRail •

One-Way Van •Dedicated •Expedited •

Specialized •Bulk •

Operating Services •Application Services •

SFI •INS •

Payment Services •New Ventures •

Brokerage

Logistics


Engine Review

Post October 2002 –

January 2004


Engine Evaluation Table – Last Update 1/19/04

Model Qty. Description Mfr Date

Apprx. Miles

Detroit Diesel

12.7L Series 60 1 Preproduction Pilot – Repower 11/01 Repower 400,00012.7L Series 60 2 Preproduction – Manufactured Pilot 03/02 275,00012.7L Series 60 5 Preproduction 08/02 290,00012.7L Series 60 48 Production 2/2003 02/03 255,00012.7L Series 60 1,000 Production – 6-10/2003 06/03 –

10/0350,000 – 150,000

MBE4000 5 Production 05/03 120,000

CaterpillarC12 Bridge 5 07/02 271,000

C15 Bridge 5 07/02 378,000

C15 Acert 2 Pilot – Manufactured 04/03 160,000C15 Acert 10 Preproduction – Manufactured 04/03 138,000C13 Acert 2 Pilot – Manufactured 12/03 48,000C13 Acert 10 Preproduction 12/03 47,000

CumminsISX 10 Production @ Kenworth 12/02 220,000


Post October 2002 Engine – Evaluation Results

Purchase price over $5,000 per engine.

MPG loss 3-5%. (10 years of progress – lost!) Oil drain interval same as post 1998 engines.

One engine teardown @ 250,000 miles was normal.

Driver feedback – “acceptable – good performance.”

Reliability first 250,000 miles (30% life) is ok.

Some early failures of every significant EGR component i.e. VGT turbo,

EGR valve, VPOD, sensors, pipes, EGR coolers.

Concerned about operating costs/reliability as vehicle ages: Warranty ends.

More parts to maintain.

High cost parts.

More complex troubleshooting.

Significant improvements have occurred since 10/2002.


Engine Component Price ComparisonComponent Pre Oct 2002 >Oct 2002 Labor Hours Labor Cost @ $75/Hr

Turbo $537 $1,330 1.1 $83

Water Pump $114 $240 3.4 $255

Fuel Pump $101 $110 0.8 $60

Air Compressor $381 $405 1.9 $143

Camshaft $474 $400 4.2 $315

Injectors (6) $200 $210 4.1 $308

Exhaust Manifold $137 $186 0.9 $68

Sensors $80 0.5 $30

Relative Humidity --- $80 0.4 $30

Turbo Speed --- $180 0.4 $30

Barometer --- $15 0.4 $30

Turbo Boost $51 $30 0.4 $30

Intake Air Temp $49 $5 0.4 $30

EGR Components

Turbo Actuator $252 $190 1.1 $83

VPOD Assy. --- $200 0.5 $38

EGR Cooler --- $560 3.0 $225

EGR Valve --- $970 1.5 $113

Cold Pipe --- $460 0.5 $38

Hot Pipe --- $30 1.0 $75

Sub-Total $3,296 $6,731

Oxy Catalyst (CAT Bridge) --- $1,400 1.0 $75


Government Regulations Increasing Engine Costs

Post 2002 engine will increase operating costs by 2-3 cents/mile.

Oct 2002

Purchase price $4,500

Fuel MPG

Maintenance

Fuel Costs/Gallon

Total Operating

$5,500

$6,000

______

$11,500

Residual value reduction $4,000

Total Cost $20,000

NPV (6 years @ 8%) $15,000

Forecast Date 8/2001

Technology EGR

Total Cost of ’02 Engines


Engine Review

2007-2010 Engine


EGR with aParticulate Filter Approach

12

34

56

T

Intercooler

EGR Cooler

C

Catalyzed Particulate Filter

EGR Control Valve

Air to Air Cooler

Variable Geometry Turbocharger

Particulate Filter to be Integrated into the Vehicle Exhaust System

NOx Reduction with Increased EGR Rates


Diesel Particulate Filter Concerns

Catalyzed Particulate Filter

Particulate Filter to be Integrated into the Vehicle Exhaust System

Initial and replacement price

(precious metals?).

Active regeneration process.

Maintenance interval.

Maintenance process.

No heavy truck experience.

Requires low sulfated ash oil

(possible unique oil).

Reduced life with LSD fuel.

Overall operating cost.


Government Regulations Increasing Engine Costs

Oct 2002 1/2007 2007*

Purchase price $4,500 $16,000 $8,000

Fuel MPG

Maintenance

Fuel Costs/Gallon

Total Operating

$5,500

$6,000

______

$11,500

$7,200

$9,000

$5,100

$21,300

$7,200

$6,000

$5,100

$18,300

Residual value

reduction

$4,000 $5,000 $5,000

Total Cost $20,000 $42,300 $31,300

NPV (6 years @ 8%) $15,000 $35,000 $26,000

Forecast Date 8/2001 6/2002 1/2004

Technology EGR NOx Trap EGR/SCR

Total Cost of ’02 and ’07 Engines

* Revised 2/2004


SNI View of 2007 SCR should be approved.

Must receive adequate representative field test engines by mid-year

2005.

Cost estimates are much higher than EPA’s estimate. EPA should reforecast costs.

A government funded financial incentive is needed.

Without a successful field test AND incentive. Significant prebuy followed by a long interval no/slow buy.

Cost/recovery challenge. Cumulative cost impact – i.e. health care, litigation, insurance, hour of

service changes, driver wages.

Raise prices – lose freight.

Transition – compete with old technology.

Support Clean Air “Win-Win” solution needed.


How Long Can Fleets Slow/No Buy?Major Components

Service Life Without Rebuild Yr/1000 Miles

Rebuild Target Age Yr/1000 Miles

Rebuild Cost

Rebuild Extended Life Yr/1000 Miles

# Rebuilds Potential

Cab 8 / 1,000 6 / 750 $5,000 4 / 500 1-2

Major Elec Harnesses

10 / 1,200 6 / 750 $1,000 8 / 1,000 Unl.

Htr/AC System 6 / 750 5 / 600 $1,500 4 / 500 1-2

Engine 8 / 1,000 6 / 750 $7,000 4 / 500 1-2

Frame 8 / 1,000 6 / 750 $1,000 4 / 500 1-2

Transmission 10 / 1,200 None $3,200 8 / 1,000 1-2

Steer Axle 12 / 1,500 None $1,000 8 / 1,000 1-2

Rear Axles 10 / 1,200 None $3,500 8 / 1,000 Unl.

Total Cost of Rebuild

$15,000

Incremental Cost of 2007 Engine from pre-October 2002 $40,000

Incremental Cost of 2007 Engine from post-October 2002 $20,000 - $25,000

Documents

Proprietary & Confidential TMC Engine Summit March 16, 2004 Steve Duley Vice President Purchasing