TMC Engine Summit March 16, 2004

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TMC Engine SummitMarch 16, 2004

• Steve Duley
• Vice President Purchasing

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DEDICATED
EXPEDITED - TEAMS
INTERMODAL
gt gt gt
Diversified Truckload Carrier and Logistics
Provider
ONE-WAY VAN
BROKERAGE
Serving North America
BULK
SPECIALIZED
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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

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Engine Review

• Post October 2002 January 2004

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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 400,000
12.7L Series 60 2 Preproduction Manufactured Pilot 03/02 275,000
12.7L Series 60 5 Preproduction 08/02 290,000
12.7L Series 60 48 Production 2/2003 02/03 255,000
12.7L Series 60 1,000 Production 6-10/2003 06/03 10/03 50,000 150,000
MBE4000 5 Production 05/03 120,000
Caterpillar
C12 Bridge 5 07/02 271,000
C15 Bridge 5 07/02 378,000
C15 Acert 2 Pilot Manufactured 04/03 160,000
C15 Acert 10 Preproduction Manufactured 04/03 138,000
C13 Acert 2 Pilot Manufactured 12/03 48,000
C13 Acert 10 Preproduction 12/03 47,000
Cummins
ISX 10 Production _at_ Kenworth 12/02 220,000
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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 _at_ 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.

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Engine Component Price Comparison
Component Pre Oct 2002 gtOct 2002 Labor Hours Labor Cost _at_ 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
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Government Regulations Increasing Engine Costs
Total Cost of 02 Engines
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 _at_ 8) 15,000
Forecast Date 8/2001
Technology EGR
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Engine Review

• 2007-2010 Engine

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EGR with aParticulate Filter Approach
Variable Geometry Turbocharger
Air to Air Cooler
Intercooler
NOx Reduction with Increased EGR Rates
C
Catalyzed Particulate Filter
T
EGR Control Valve
EGR Cooler
Particulate Filter to be Integrated into the
Vehicle Exhaust System
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Diesel Particulate Filter Concerns
Catalyzed Particulate Filter

• 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.

Particulate Filter to be Integrated into the
Vehicle Exhaust System
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Government Regulations Increasing Engine Costs
Total Cost of 02 and 07 Engines
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 _at_ 8) 15,000 35,000 26,000
Forecast Date 8/2001 6/2002 1/2004
Technology EGR NOx Trap EGR/SCR
Revised 2/2004
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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 EPAs
  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.

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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 pre-October 2002 40,000 Incremental Cost of 2007 Engine from pre-October 2002 40,000 Incremental Cost of 2007 Engine from pre-October 2002 40,000 Incremental Cost of 2007 Engine from pre-October 2002 40,000 Incremental Cost of 2007 Engine from pre-October 2002 40,000
Incremental Cost of 2007 Engine from post-October 2002 20,000 - 25,000 Incremental Cost of 2007 Engine from post-October 2002 20,000 - 25,000 Incremental Cost of 2007 Engine from post-October 2002 20,000 - 25,000 Incremental Cost of 2007 Engine from post-October 2002 20,000 - 25,000 Incremental Cost of 2007 Engine from post-October 2002 20,000 - 25,000 Incremental Cost of 2007 Engine from post-October 2002 20,000 - 25,000