Date

1
Title
Inland Waterways Conference State of the Towing
Industry Merritt Lane President and CEO Canal
Barge Company March 3, 2009

• Date

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Agenda

• Canal Barge Company Overview
• Economic Outlook
• The Waterways Story
• Major Industry Issues and Concerns

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• Celebrating 75 Years

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Canal Barge Company Profile
Data current as of March 2, 2009
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CBC Liquid Cargo Services

• One of the largest and fastest-growing tank barge
  companies with a very young fleet.
• Diversified, balanced operations
• Approximately 25 black oil/asphalt, 50 lube
  oil, 25 chemical

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Deck Cargo Services

• Inland oceangoing
• Domestic international
• Affreightment equipment-for-hire

• Oil gas
• Power generation
• Nuclear
• Construction / repair
• Govt / Military svcs

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Dry Cargo Services

• Term contracts for public utilities and other
  domestic shippers
• Focus on operational excellence and quality
  service, not economies of scale
• Maintain control of equipment
• Long-term contract opportunities

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Bulk Liquid Terminal 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 facilities
• 500,000 barrels of storage capacity for
  chemicals, asphalt, black oil and sulphur

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Illinois Marine Towing

• Barge fleeting, towing, barge affreightment, and
  shipyard services on the Illinois River
• Largest fleeting capacity in northern Illinois
• Strategic fleet locations in Chicago, Lemont,
  Joliet, and Channahon
• Specialized retractable pilothouse towboats
• Flexibility to turn line-haul tows out of
  Channahon for delivery throughout Chicagoland

Critical supplier to most barge lines serving the
Chicago market
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2008 a Highly Unusual Year!

• CBC had great success across all lines of
  business resulting in a record year
• Most barge lines had very good years as liquid
  and dry markets were strong
• Northbound dry cargos were hard to come by
• Supplier and labor costs continued to increase
  well ahead of inflation indices
• There was nothing normal about 2008.

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Tough Operating Year

• 2008 Interruptions to Navigation
• Ohio and lower Mississippi River spring flooding
  (March-April)
• Upper Mississippi River Re-Opened Late (May)
• Upper Mississippi River flooding, navigation
  stopped (June)
• New Orleans oil spill (July)
• Hurricanes Gustav and Ike (August and September)
• On-going shoaling, groundings, dredging
• Intermittent, unscheduled lock closures
• Brutal winter weather

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Looking Ahead

• Import/export markets were badly hurt by world
  financial and economic crisis
• Markets associated with automotive or housing
  negatively impacted
• Seasonal demand and special projects
• Flight to quality
• Supplier pricing and availability
• Labor costs and availability skill positions
  remain very valuable
• Credit risk

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Current Inland Barge Fleet
Source Informa Economics December, 2007
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Hopper Barge Industry Fleet Profile
Number of Barges
Age of Hopper Barges (years)
Source Informa Economics December, 2007
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2008 Hopper Barge Fleet

• 937 new hoppers delivered in 08
• Down 12 from 2007
• 2/3 of fleet built by 3 companies
• 575 hoppers sold to overseas markets
• 612 hoppers scrapped as prices soared
• Net loss of 250 barges to the fleet

Source River Transport News
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Tank Barge Industry Fleet Profile
Number of Barges
Age of Tank Barges (years)
Source Informa Economics December, 2007
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2008 Tank Barge Fleet

• 215 new construction tank barges in 08
• 10 bunker barges
• 46 30k bbl hot oil barges
• 81 30k bbl clean product barges
• 78 10k bbl barges
• Compares to 132 barges built in 07

Source River Transport News
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Shipyard Orders

• Bonus depreciation available for 2008 and 2009
  deliveries likely a factor in 2009 decisions
• Firm orders mostly confirmed, some cancellations,
  some requests to defer orders
• Many options will expire
• Very few 2010 orders on the books at present

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Waterways Industry Concerns

• Adequate funding for lock and dam modernization
  and operation and maintenance needs stimulus?
• Higher taxes or fees
• Onerous economic or environmental regulation
• Restrictive trade policies
• Labor-Management issues
• Increased activism by state governments

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Inland Marine Highway

• Strengthening the economy
• Each year, 624 million tons of waterborne cargo
  transit the inland waterways
• This equals 14 of all intercity freight, valued
  at nearly 70 billion, for only 3 of the total
  freight bill
• Barging can be a part of the solution to major
  issues that impact the quality of life for all US
  citizens such as traffic congestion, air
  pollution, fuel efficiency

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Dry Cargo Capacity
Source Texas Transportation Institute Center
for Ports and Waterways, November 2007
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Advantages of Inland Waterways Transport
Source Texas Transportation Institute Center
for Ports and Waterways, November 2007
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Advantages of Inland Waterways Transport
Source Texas Transportation Institute Center
for Ports and Waterways, November 2007
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Fuel Efficiency
Ton-miles Traveled per Gallon of Fuel
Source Texas Transportation Institute Center
for Ports and Waterways, November 2007
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Safeguarding Our Health the Environment
Inland waterways transport generates fewer
emissions than rail or truck per ton-mile. Barge
transportation generates the lowest emissions as
measured in grams per ton-miles in four standards
tracked by the EPA

• Particulate matter (PM)
• Hydrocarbons (HC)

• Carbon monoxide (CO)
• Nitrogen oxides (NOx)

PM 0.011164 HC 0.01737 CO
0.04621 NOx


0.46907
PM 0.01621 HC 0.02423 CO
0.06445 NOx




0.65423
PM 0.018 HC 0.020 CO
0.136
NOx



0.732
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Safety Record Injuries
For each injury involving barge transportation,
there are 125.2 injuries related to rail and
2,171.5 truck-related injuries.
Source Texas Transportation Institute Center
for Ports and Waterways, November 2007
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Safety Record Fatalities
Inland waterways transport has a low fatality
record compared to rail or truck.

• For each barge transportation fatality, there are
  22.7 fatalities related to rail and 155
  truck-related fatalities.

Source Texas Transportation Institute Center
for Ports and Waterways, November 2007
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Spill Rate
Inland waterways transport moves hazardous
materials safely.
Rate of Spills inGallons per Million Ton-miles
Spills of More Than1000 Gallons
Source Texas Transportation Institute Center
for Ports and Waterways, November 2007
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Aging Infrastructure

• Frequent closures for repairs
• Decreased performance
• Costly delays

Concrete deterioration at Chickamauga
Crumbling lock wall, Lower Mon 3, opened in 1907
Crumbling lock wall, Lower Mon 3, opened in 1907
Leaking miter gates, Upper Miss Lock 19
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Construction Major Rehabilitation Funding
210
190
Final Appropriation
170
150
Presidents Budget
Million
130
110
90
70
50
09
96
97
98
99
00
01
02
03
04
05
06
07
08
Fiscal Year
Monies from 20/gallon fuel tax gathering in
Inland Waterways Trust Fundand matched equally
with monies from Federal Treasury. Actual
funding is double this amount.
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Value to the Nation

• A key part of the U.S. marine transportation
  system with significant capacity to support
  growth.
• Essential to our nations economy, environment,
  and quality of life.
• Federal government must focus on full, efficient
  funding of priority projects to
• Modernize the waterways system
• Manage the inland waterways as a
  system
• Increase funding for operations
  and maintenance
• Improve delivery system to provide on
  time and on budget projects

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Towing Vessel Inspection

• AWO went to Congress in 2003 to ask for
  authorization to create a modern towing vessel
  inspection program to enhance safety.
• Legislation passed in 2004 and regulation has
  been in the development stage ever since.
• TSAC offered suggestions to facilitate
  publication of a notice of proposed rulemaking.
• USCG has committed to publish the proposed rule
  this Spring.
• USCG is moving forward with a bridging program
  and is working with industry to plan and
  implement.
• AWO has strengthened RCP to make it a more
  effective tool in making the transition to
  SubChapter M.

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Vessel Discharges

• Court order in 2006 forced U.S. EPA to regulate
  vessel discharges.
• EPA has struggled with this admittedly poor fit
  for vessels that transit multiple states in a
  single voyage.
• AWO worked with EPA and states to avoid
  disruptions in maritime commerce and developed a
  Best Management Practices Guide.
• AWO was forced to file suit in IL to stop onerous
  graywater discharge requirements from shutting
  down barge operations.
• AWOs 2009 major priority is to advocate for
  legislation to establish a consistent national
  approach to regulation of vessel discharges.

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Transportation Worker Identification Credential
(TWIC)

• Trained mariners aboard U.S. flag vessels are the
  eyes and ears of the nations waterways
  ensuring U.S. economic security.
• AWO partnered with the USCG to develop approved
  Alternative Security Plans for our members.
• Unfortunately, the TWIC program imposes
  unnecessary burdens on maritime employees and
  their employers without enhancing security.
• AWO 2009 goals include
• (1) Eliminating the requirement to make a 2nd
  trip to the TWIC enrollment center to activate
  your TWIC.
• (2) Ensuring that the forthcoming DHS regulations
  do not require TWIC readers on towing vessels.

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We have a huge number of issues on our plate

• They are complex and critically important that we
  get them right.
• We must collaborate with govt partners to
  conceive and implement plans that achieve
  solutions that meet our mutual objectives.

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DAMN!
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Conclusion

• The barge and towing industry is vital to our
  countrys economy, environment and quality of
  life.
• By working in partnership with government to
  ensure wise and forward-thinking public policy,
  we will become a greater part of the solution to
  many of our countrys most critical strategic
  questions
• Energy efficiency
• Traffic congestion
• Environmental stewardship
• Public safety
• Homeland security

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THANK YOU!