TRB – SHRP2 SYMPOSIUMInnovations in Freight Demand Modeling and Data Improvement

October 21-22, 2013

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Hyster-Yale Snapshot Hyster-Yale Materials Handling, Inc. (NYSE:HY)

NACCO Materials Handling Group, Inc. is an operating unit of HY

Leading global designer, manufacturer and marketer of lift trucks and provider of aftermarket parts and support

Build to order OEM

Headquartered in Cleveland, Ohio

Over 5,300 employees in 13 countries

FY 2012 Revenue – $2.5 billion

FY 2012 Net Income - $98.0 million

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Hyster-Yale Overview

Leading global lift truck brands in terms of units sold– #3 globally in 2011 (2012 data not yet available)

Large installed base that drives parts sales– Over 798,000 units worldwide– Sales of more than 76,900 units in 2012– Sales of more than 3,800 units at SN JV in Japan in 2012

Diverse customer and application base Global independent dealer network Comprehensive, updated global product line Globally integrated operations with economies of scale Experienced management team

Key Highlights Global Footprint

Mission Statement: Be a leading globally integrated designer, manufacturer and marketer of a complete range of high quality, application-tailored lift trucks, offering the lowest cost of ownership, outstanding parts and service support and the best overall value.

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Class Capacity Range Description / Illustrative Application

Class I 1 ton – 5.5 tons

Electric counterbalanced trucks used in warehousing and manufacturing operations where noise or fuel emissions are undesirable

A distribution center customer uses a Class I truck to move pallets from one trailer to another

Class II 1.5 tons – 6 tons Electric narrow aisle trucks used indoors to handle high-density storage of materials in

narrow-aisled buildings Retail and warehouse customers rely on Class II trucks to pick orders off their shelves

Class III 1.5 tons – 8 tons Electric hand trucks used indoors and outdoors for applications requiring the user to

select and transport materials Retail customers use Class III trucks to move pallets of goods to their store aisles

Class IV 1 ton – 7 tons

Internal combustion engine counterbalanced trucks with cushion tires used indoors in warehousing and manufacturing operations and outdoors on smooth surfaces. Utility, standard and premium models for different customer applications.

A customer relies on Class IV trucks to move heavy parts on a pallet from the machining area in a factory to assembly

Class V 1 ton – 8 tons

Internal combustion engine counterbalanced trucks with pneumatic tires used indoors and outdoors in warehousing and manufacturing operations. Utility, standard and premium models to address different customer applications.

A warehouse or manufacturer relies on Class V trucks to move coils of steel from the mill to a storage area

Class V Big Trucks 8 ton – 52 tons

Internal combustion engine counterbalanced trucks with pneumatic tires used indoors and outdoors in ports and heavy manufacturing operations

A port relies on Class V Big Trucks to move containers from the port to a rail area

Comprehensive Product Line

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Challenges to Today’s Manufacturing Logistics Network

• Globalizationo Suppliers and Customerso Carriers and Service Providerso Planning for an Extended

Supply Chaino Security

• Regulationo Driver Hours of Service

Reductionso Importer Security Filing (ISF,

aka “10 + 2”)o Hazardous Material

• Inventory Reductiono Vendor Managed Inventoryo Forward Stockingo Replace Inventory with

Information!

• Customer Serviceo Increase in Competitive

Pressureso Right Product/Right Time/Right

Place/Right Condition/Right

Priceo Customers Demand More

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Inbound Transportation Modeling – Current State

• Utilize historical data setso Freight bill payment fileso Carrier shipment level detail reports

• Identify trends within a rolling 6-month period of timeo Origin & destination combinations o Shipment frequencyo Weights, volumes, piece counts

• Work with carriers & suppliers to validate feasibilityo Does the supplier have room to hold material?o Can the carrier meet the required service expectation?

• Primary goal is to move from small, expensive shipments that are unplanned to cost effective shipments that are scheduled for delivery.

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Inbound Transportation Modeling – Current State Benefits & Limitations

• Benefits:o Regular shipping schedule for suppliers. Same day of the week, same

carrier, in some cases… even the same driver.o Stability within planning system. Parts will arrive same time every week.o Leveling of workload at manufacturing receiving docks. We can adjust

delivery plans to fit slower activity times.o Transportation cost reduction.

• Limitations:o Slow to recognize changes. Working with historical data requires 3

months worth of transactions in order to determine trend vs. anomaly.o Decisions are not shipment specific, instead they are based on the overall

activity level during a period of time.o No consideration of future changes to SC network. In a sense, it is

looking in the review mirror to see where you are going.

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Inbound Transportation Modeling – Current State Example

Fm City Fm St Fm Zip To Loc ID To Name To City To St To Zip Carrier Mode Shp Wgt PCS Vol Shp Frt$ GREENVILLENC '27834 'NMHG-11699CARRARO NORTH AMERICACALHOUN GA '30701 RBTW TL 20898 21 0 501.95GREENVILLENC '27834 'NMHG-00038BLACK EQUIPMENT COMPANY, INC.EVANSVILLEIN '47715 MCET TL 1510 1 0 261.17BEREA KY '40403 'NMHG-103151GM POWERTRAIN GROUPROMULUS MI '48174 NDIN TL 44500 20 0 792.05BEREA KY '40403 'NMHG-103995CASCADE CORPORATIONFINDLAY OH '45840 NDIN DTL 22500 10 0 576.36FINDLAY OH '45840 'NMHG-10ANMHG-BEREA PLANTBEREA KY '40403 NDIN DTL 22000 10 0 563.55FINDLAY OH '45840 'NMHG-72ANACCO-PLANTGREENVILLENC '27834 BLAC TL 44500 20 0 1440.24FORT PAYNEAL '35967 'NMHG-10ANMHG-BEREA PLANTBEREA KY '40403 RCSC TL 44500 20 0 693.84BEREA KY '40403 'NMHG-CARGOQCARGOQUIN, INCLAREDO TX '78041 RCSC TL 44500 20 0 2727.45CHERRYVILLENC '28021 'NMHG-72ANACCO-PLANTGREENVILLENC '27834 MCET TL 44500 20 0 789.57CHERRYVILLENC '28021 'NMHG-72ANACCO-PLANTGREENVILLENC '27834 BTTE TL 44500 20 0 738.67DAVENPORTIA '52802 'NMHG-10NACCO MATERIALS HANDLINGRICHMONDKY '40475 MCET STL 44500 20 0 1563.77MIRROR LAKENH '03853 'NMHG-72ANACCO-PLANTGREENVILLENC '27834 GEIF TL 44500 20 0 1306.74LEWISBURGTN '37091 'NMHG-8 NACCO MATERIALS HANDLINGSULLIGENTAL '35586 NEWM STL 44500 20 0 831.6GREENVILLENC '27834 'NMHG-NACCFAPNACCO/FAPCO MATLS HANDLING GROUPBUCHANANMI '49107 GEIF TL 44500 20 0 1826.66HOMEWOODIL '60430 'NMHG-72ANACCO-PLANTGREENVILLENC '27834 GEIF TL 44500 20 0 2181.24RICHMONDKY '40475 'SHIPTO OOCL NORFOLK VA '23501 EXPT PPAY 7720 1 0 0RICHMONDKY '40475 'SHIPTO OOCL NORFOLK VA '23501 EXPT PPAY 7715 1 0 0

Historical Data Analysis Opportunity IdentificationShipment #1 = 5,000 lbs., 3 pallets, MondayShipment #2 = 7,000 lbs., 2 pallets, WednesdayShipment #3 = 4,000 lbs., 4 pallets, Thursday

Supplier & Carrier Collaboration1) Determine if carrier has capacity.2) Confirm supplier has space to hold freight.3) Select the optimal loading day and time.4) Set service expectations.

Shipment Consolidation1) Single shipment of 16,000 lbs.2) Picked up from supplier every Wednesday.3) Delivered to manufacturer every Thursday.

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Inbound Transportation Modeling – Future State

• Utilize open PO fileo Work with future requirements vs. historical performance.o Planning resources have ability to see the shipment detail prior to carrier

pick-up.• Identify optimization opportunities based on real-

time data feeds

• Primary goal is “optimization”o Shipment Method = Need o No longer saving transportation cost at the expense of inventory.o No longer reducing inventory at the expense of transportation cost.o Right parts delivered at the right time at the right cost.

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Inbound Transportation Modeling – Future State Benefits & Limitations

• Benefits:o Improved visibility throughout supply chaino Stability within planning systemo Leveling of workload at manufacturing receiving dockso Appropriate levels of inventoryo Transportation cost reductiono Avoidance of premium modes of transport (air, team drivers)

• Limitations:o IT investmento Communication channels must be efficiento Requires implementation of software solutions

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Outbound Transportation Modeling

• Multi-Stop Truckload

• Must Meet Customer Need

• Efficient Route Designo Minimize stops in order to reduce chance for delays.o Avoid congested metropolitan areas for first delivery.o Group deliveries by region.o Limit “out-of-route” miles. Design should be as close to Point A to Point B

as possible (even if there are Points C & D)

• Operationally Practicalo Total load weight should range between 38,000 and 44,000 lbs.o Majority of load weight should deliver to final destination.o Proper product mix in the trailer.

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Measuring Outbound Load Efficiency

• “Perfect” Load Score

(In-Route Mileage %) X (Total Weight %) X (Final Stop % of Total Weight) = Load Efficiency

X X =

Actual Miles: 2,609Direct Miles: 2,598Out of Route: 11 (.4%)

In-Route Mileage %99.6%

Total Weight: 40,238 lbs.Avail. Weight: 44,000 lbs.Under Utilization: 3,762 (8.5%)

Total Weight %91.5%

Final Stop Weight: 38,958 lbs.Total Weight: 40,238 lbs.Under Utilization: 1,280 (3.2%)

Final Stop Weight %96.8%

88.2%

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Transportation Modeling – Key Considerations

• Is it cost effective?• Does it meet desired service requirement?• How do we mitigate risk?• Are there implementation costs?• Can it be managed?• How will it be measured?• Are there intangible benefits?

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Transportation Modeling – Assumptions

• Road & Highway Infrastructureo Support 500 miles per dayo Minimize delays when operating outside of interstate system

• Port Facilities and Accesso Quick vessel turnaroundso Containers off port within 24 – 48 hourso Effective rail interfaces

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Transportation Modeling – Future

• What can be done to mitigate the impact of regulatory limitations on drivers’ hours of service?

• How do we make the use of intermodal services a more viable option?

• How will larger container vessels calling US east coast ports impact current infrastructure?

• Is it possible to offset energy costs with more efficient transportation networks?

• Continued move away from Point A to Point B shipments.

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Transportation Modeling – Questions?

Thank You!

Andy Street, MS, CSCPOrder Fulfillment & Logistics Manager

NACCO Materials Handling Group, Inc.andy.street@nmhg.com

(252) 412-3110