David Sellers, Assistant Vice President Automotive
April 19, 2018
Tying it all Together – Asset Utilization
Copyright © 2016 TTX Company. Confidential: Not for Distribution. 3
TTX Overview
TTX functions as the industry’s railcar cooperative, operating under
pooling authority granted by the Surface Transportation Board
»$1.5 billion company, serves/owned by North America’s leading railroads
»TTX owns/maintains a national pool of over 230,000 railcars/wells:
»Owners enjoy financial/operational benefits matched to business needs:
»Rail customers benefit from a consistent fleet of free-running cars
»TTX is not a leasing company – TTX is a pooling company
o Intermodal o Automotive o General Merchandise
o Capital outlay eliminationo Empty mile reduction o Risk mitigation
Copyright © 2016 TTX Company. Confidential: Not for Distribution. 4
Today’s Agenda
»Railcar Pooling
▪ National Pools
▪ Agency Pools
»Railcar Standardization
»Signs of Life
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Copyright © 2016 TTX Company. Confidential: Not for Distribution. 6
Copyright © TTX Company. Confidential: Not For Distribution
Common Characteristics and Benefits of National Pooling
Characteristics
» Fleet is sized and placed in a nationwide pool for use by a network of customers with a similar product
» Entails the shared use of similar equipment and management processes across a nationwide area
» Managed jointly under common set(s) of rules, typically by a single committee or operator
Benefits
» Cars are able move and interchange freely between multiple participants
» Facilitates cost reduction
▪ Fewer Empty Miles
▪ Less Switching Required
▪ More Capacity
▪ Reduced Capital / Car Hire
▪ Less Congestion
» Higher degree of car quality
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Copyright © 2016 TTX Company. Confidential: Not for Distribution. 7
Copyright © TTX Company. Confidential: Not For Distribution
Pooling Example: Multilevel Distribution Before Pooling
» Railroads maintained ‘X’ number of railcars, used exclusively by each of their originating shippers
» Railcars assigned individually, by railroad, to shipper-specific automotive production plants
» Once unloaded, railcars were reverse-routed back to origin
» Increased car mileage, longer transit times, and overall higher operating costs
» Required a larger fleet size and higher levels of investment / capital expenditure
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Copyright © 2016 TTX Company. Confidential: Not for Distribution. 8
Copyright © TTX Company. Confidential: Not For Distribution
Pooling Example: Current Multilevel Pooling
» Multi-level railcars combined into one common pool
» Shared for use among auto shippers
» Distributed by railroads’ fleet distribution and car management teams
» National multi-level pool, managed by TTX Reload
» Provides for centralized distribution of a shared fleet of 60,000+ multi-level railcars
» Requires smaller fleet size capable of handling more loadings, higher volumes
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Copyright © 2016 TTX Company. Confidential: Not for Distribution. 9
TTX Reload Network
Note: Hypothetical/ for Illustrative Purposes Only
Copyright © 2016 TTX Company. Confidential: Not for Distribution. 10
Copyright © TTX Company. Confidential: Not For Distribution
Pool Efficiency - Multilevels
Pooled assets perform 17.5% more efficiently than assets in non-pooled service on average
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Reload Pool Avg: 67.56%
Without Pooling: 50% Numbers based
on a June 1 –
December 31,
2017 study
Copyright © 2016 TTX Company. Confidential: Not for Distribution. 11
Empty Return Percentages by Car Type and Pool
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Pooled Boxcar
Private Car
Multilevel Pool
Intermodal Pool
Copyright © 2016 TTX Company. Confidential: Not for Distribution. 13
Copyright © TTX Company. Confidential: Not For Distribution
Agency/Commodity Pooling – Scrap Customers in Newark
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» Common Commodity - Scrap
» Common Car Type – 52’ Gondola
» Close Proximity – Newark
Characteristics Benefits
» Cars are able move between multiple customers
» Balanced Risks for Customers
» Facilitates cost reduction
Copyright © 2016 TTX Company. Confidential: Not for Distribution. 15
Copyright © TTX Company. Confidential: Not For Distribution
Boxcars – How Specialization Hurts Fleet Efficiency
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Lengths
▪ 40’
▪ 50’
▪ 52’
▪ 60’
▪ 86’
Dimensions
(Plate)
▪ B
▪ C
▪ E
▪ F
▪ G
Door(s)
▪ Single Plug
▪ Double Plug
▪ Slider
▪ Slider/Plug
Other Stuff
▪ Cushioned
▪ Rigid
▪ Grade
▪ Vented
▪ Insulated
▪ Bulkheads
40’ Cement 86’ Autoparts
Copyright © 2016 TTX Company. Confidential: Not for Distribution. 16
Copyright © TTX Company. Confidential: Not For Distribution
Boxcars – Standardization
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50’ Boxcar
• 70 ton capacity
• Plate C
• Rigid or Cushion
• Plug Door
50’ High Cube Boxcar
• 100 ton capacity
• Plate F
• Cushion
• Single Plug Door
60’ High Cube Boxcar
• 100 ton capacity
• Plate F
• Cushion
• Double Plug Door
Copyright © 2016 TTX Company. Confidential: Not for Distribution. 17
Signs of LifeIn a Dismal Market
» Car Types in Demand:
• Covered Hoppers
• Intermodal
» Coming Back:
• Boxcars
• Mill Gondolas
• Aggregate
» Not Yet or Maybe Never:
• Centerbeams
Copyright © 2016 TTX Company. Confidential: Not for Distribution. 18
Avg. Daily Rates: Rental Car* vs. Leased Railcars+
Compact Car:
$30.98/Day
Intermediate Car:
$32.98/Day
Standard Car:
$34.97/Day
Full Size Car:
$49.97/Day
Intermediate SUV:
$44.97/Day
Standard SUV:
$84.97/Day
Boxcar 70 Ton:
$12-$15/day
Gondola:
$15/day
Bulkhead Flat:
$18-$21/day
Centerbeam:
$10-$12/day
Covered Hopper:
$11-$18/day
Boxcar 100 Ton:
$27/day
*Avg. Rates: Enterprise Holdings-Chicago Loop Branch
+Avg. Industry Lease Rates