International Propeller Club

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1 International Propeller Club Merritt Lane Canal Barge Company President & CEO October 3, 2012

2 Agenda Brief description of Canal Barge Company Overview of industry issues Waterways story and advocacy for infrastructure improvements Discussion of dry cargo trends Impact of low water

3 Canal Barge Company Founded in 1933 Headquartered in New Orleans One of the largest and most diversified privately-owned marine transportation companies in the U.S.

4 Liquid Cargo Services Diversified, balanced operations Approximately 25% black oil/asphalt, 50% lube oil, & 25% chemical.

5 Dry Cargo Services Term contracts for public utilities and other domestic shippers.

6 Deck Cargo Services Marine Transportation Solutions Experienced Project Management Team Domestic & International Time Charter or Lump Sum Transport Bareboat charter

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8 Bulk Liquid Storage Services 60+ acre multimodal facility near Joliet, IL located at mile 281 on the Illinois Waterway System Less than 2 miles away from Interstates 55 and 80 3 rail sidings served by CSXT with rail car storage capacity 3rd-party bulk liquid storage and accessorial service

9 Illinois Marine Towing Fully owned Canal Barge Company subsidiary offering barge fleeting, towing, barge affreightment, and shipyard services on the Illinois River

10 Canal Barge Company Profile People 630 non-union Barges 814 Tank barges 226 Deck barges 141 Hopper barges 447 Inland Towboats 33 Data current as of September 25, 2012

11 Our Story Value of Barging Critical national economic infrastructure although largely out of public view Offers compelling economic value Boasts excellent safety & environmental record Affords tremendous fuel efficiency Provides positive impact on American quality of life

12 Inland Marine Highway Tulsa Minneapolis St. Paul St. Louis Chicago Pittsburgh Over 12,000 miles connecting 38 States 624 million tons of cargo transit the inland waterways 14% of all intercity freight, valued at nearly $70 billion, for only 3% of the total freight bill Houston Mobile New Orleans Corpus Christi

13 Dry Cargo Capacity One 15-Barge Tow 1,050 Large Semi Tractor-Trailers 216 Rail Cars + 6 Locomotives Source: Texas Transportation Institute Center for Ports and Waterways, February 2012

14 Advantages of Inland Waterways Transport: Units to Carry 1,750 Short Tons of Dry Cargo 1 barge 16 rail cars 70 trucks One loaded covered hopper barge carries 58,333 bushels of wheat, enough to make almost 2.5 million loaves of bread. Source: Texas Transportation Institute Center for Ports and Waterways, February 2012

15 Advantages of Inland Waterways Transport: Units to Carry 27,500 Barrels of Liquid Cargo A loaded tank barge carries 27,500 barrels of gasoline, enough to keep about 2,500 automobiles running for an entire year. 1 barge 46 rail cars 144 trucks Source: Texas Transportation Institute Center for Ports and Waterways, February 2012

16 Fuel Efficiency Ton-miles Traveled per Gallon of Fuel Source: Texas Transportation Institute Center for Ports and Waterways, February 2012

17 Safety Record Fatalities Inland waterways transport has a low fatality record compared to rail or truck For each barge transportation fatality, there are 18.1 fatalities related to rail and 132 truck-related fatalities. Source: Texas Transportation Institute Center for Ports and Waterways, February 2012

18 Advantages of Inland Waterways Transport: The Greener Way to Go Inland barges produce less carbon dioxide while moving America s cargoes In terms of CO 2 produced per ton of cargo moved, inland barges have a significant advantage over trains and trucks. Tons of CO 2 per Million Ton-miles Source: Texas Transportation Institute Center for Ports and Waterways, February 2012

19 Aging Infrastructure 57% of locks and dams are over 50 years old Concrete deterioration at Chickamauga Crumbling lock wall, Lower Mon 3, opened in 1907 Leaking miter gates, Upper Miss Lock 19

20 Lockport Lock Wall Collapse October 7, 2011 Approx. 280 of Chicago Sanitary and Ship Canal wall slid into the Canal.

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22 Olmsted Lock and Dam Original cost estimate in 1988 was $775MM and 7 years to complete. Current estimate is over $3B and completion in Essentially wipes out all funding of other projects until Olmsted is completed. Puts massive pressure for O & M funding for aging system. Results in only 4 completed priority navigation projects in next 40 years despite the fact that Congress has authorized 24 of them.

23 WAVE4/Capital Development Plan CDP developed by team from Inland Waterways User Board and USACE: Prioritizes navigation projects across the entire system Improves the USACE project delivery system on time and on budget Full efficient funding of projects through increased fuel tax coupled with the above reforms delivers 25 projects in 20 years. H.R WAVE4 (Waterways are Vital-Economy, Energy, Efficiency and Environment) legislation incorporates the CDP Lead sponsor is Congressman Whitfield (KY)

24 Senate Proposal Ports 5 Year Effort $ 2 B/year construction $ 3 B/year O&M 100% federal to 50 All channels and ports dredged to authorized depths and widths Inland Infrastructure Federalize Olmsted Adopt CDP Priority List and Corps Reform Increase fuel tax by 11 cents

25 Outlook Senate Hearings completed on WRDA Markup promised in lame duck session House No action planned until 2013 Will take Senate action in lame duck to create legislative momentum

26 000s Short Tons Total U.S. Coal Supply & Demand 1,250 1,225 1,200 1,175 1,150 1,125 1,100 1,075 1,050 1,025 1, Est. Total Supply Total Demand Source: Doyle Trading Consultants & EIA Historical Data

27 000s Short Tons Components of U.S. Coal Demand Total Tonnage Est. Other Total Exports Industrial Utilities Source: Doyle Trading Consultants & EIA Historical Data

28 Fuel switching: Coal Trends U.S. Energy Information Agency Through July 2012 coal-fired utility power generation is down 18% and natural gas is up 30% year over year. Older, less efficient coal-fired power plants are being shut down, mostly located in SE, Ohio Valley and Mid-Atlantic Drivers speeding up retirements: Slower economy Low natural gas Stringent environmental regulations 49 gigawatts to be retired by 2020 (Approx. 1/6 of current capacity)

29 Implications Coal industry will continue to increase efficiency to compete with natural gas domestically and foreign export markets. Political and economic environments increase the likelihood that there will be less coal barged for utilities and more for export through the lower Mississippi River. Many variables beyond an operator s control, very difficult to predict how long term and ratable these opportunities will be.

30 Lower Mississippi Coal Exports Total Tonnage Lower Miss. Coal Exports (000s Tons) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Source: Criton Corporation

31 U.S. Grain Trends Farmers planted largest corn crop since Yield is way off due to drought. Transportation is disrupted because of low water. Grain prices are high, but no bonanza for the barge business this year.

32 USDA September Export Forecast (Millions of Metric Tons) Product 2009/ / / /2013 Corn Soybeans Wheat Source: River Transport News/Criton Corporation

33 CNN & CBC CNN joined a CBC vessel to report on the impact of the historic high water in May of 2011

34 CNN & CBC CNN also joined a CBC vessel to report on the impact of the historic low water in August of 2012

35 Impact of Low Water Smaller, shallower channels impact barging by: Reduced tow size Reduced draft Slower transit times due to delays Silver lining versus 1988 Professionalism of mariners, industry leaders and government officials Technology and training Industry communications and self-regulation Positive working relations with the USACE and USCG

36 Thank You