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January 2010

Company Overview

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Benchmarking is part of the

Transportation Master Planning Cycle

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Data

Analyze

Procure

Execute

Review

Strategic & Tactical Optimization Based

Modeling; Operations Assessment

Sourcing & Capacity Management

Model-Based Benchmarking

TMS Assurance and Selection

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1. Benchmark your performance

2. Leverage your entire network

3. Leverage your network assets

4. Executive buy-in

5. Provide more information to carriers

6. Multiple Round Bidding

7. Optimize your responses

8. Standardize your charges (keep it simple for carriers)

9. Measure performance

10. Green – Improved efficiency reduces costs

No matter what your process is, Benchmarking needs to be included!

Typical Procurement Process, Top 10 Check List:

Benchmarking is a Critical Step

in the Procurement Process

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Truckload Consortium Membership

• Model Statistics Jan 2010 Release– Over $13.8 billion in transportation spend

– Nearly 14 million loads

– 75 model participants with TL spend ranging from $10M to over $500M

– Covers USA, Canada and in and out of Mexico

– 7 separate models (Dry, Temp, Intermodal, Flatbed, 3 short haul models)

– Equivalent to 5% of the total North American for-hire truckload market

26%

19%

15%

12%

8%

8%

7%5%

Primary Business SectorFood Producers

Retail

Beverages

Industrial Goods & ServicesPersonal & Household GoodsOther

Forestry and Paper

Construction & Materials

13%

32%

19%

25%

8%3%

Membership Freight Spend

$0-10M

$10-50M

$50-100M

$100-250M

$250-500M

$500M+

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“Am I Paying Fair Rates?”

In 2003 there was no way to answer that question

• Publicly available information was not sufficient

– Neither accurate nor timely

– Not robust enough to capture idiosyncrasies of the freight

• Traditional benchmarking does not capture cost drivers

– Database models do not isolate the individual characteristics of the lanes that determine the cost

of service

– Metrics based approaches such as Activity Based Costing do not capture the impact of external

market conditions

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Model-Based Benchmarking

• Chainalytics Created the Model-Based Benchmarking Consortium

– A collaborative membership based organization for confidentially sharing transportation rate information

for the purpose of benchmarking against market costs

• MBBC Goals

– Build a representative model of the market

– Understand carrier cost drivers

– Quantify impact of freight characteristics

– Provide a bellwether to validate procurement performance

– Identify need and plan procurement

– Quantify value for sourcing events

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How do companies benchmark?

• R e s u l t s f r o m C h a i n a l y t i c s p o l l s a t p u b l i c w e b i n a r s :

53%

14%

17%

8%

8%

13%

72%

9%

4%

2%

Measure against last year's rates

Compare with other shippers

Rely on carriers and service providers

Research public information

Don't benchmark, or don't know

How Does Your Company Benchmark Transportation Costs?

MBBC Members Non-Members

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Building the Models

• If only operational costs considered. . .

– A shipment from OH to FL will cost the same as a

shipment from FL to OH!

• Regional Values

– Capture impact of a truck entering / leaving an area

– Separates the regional effect from other factors

(miles, etc)

– Can be estimated by ALL loads in/out of a region

– Eliminates need for lane by lane comparisons

– Allows estimation of new lanes

But what about the regional effect?

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Building the Models

In Out

Ohio 47.10 153.71

Florida 385.41 39.91

• Regional Value Guidelines

– More regions are better

– But must have critical mass

– Only the relative value matters

• Calculating the impact:

– Move from OH to FL

• $539.11 = 153.17 + 385.41

– Move from FL to OH

• $87.01 = 39.91 + 47.10

• Moving South is approximately

~ $452 more per load!

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Building the Models

Regional values created for North America

• Regional Factors are

calculated as part of estimation

• US regions (see map)

Canadian Provinces and 4

regions in Mexico

• Value reflects the cost impact

of a shipment originating or

destining in a certain location

• Separate values calculated for

inbound and outbound

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Benchmarking Report Output

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NORMALIZED FUEL SURCHARGE PROGRAM

StatisticsAnnual Shipment Volume 46,046 loads 7,258 loads 11,082 loads

Estimated Market Cost 57,030,101$ 12,866,304$ 16,818,002$

Reported Annual Cost 59,804,416$ 11,945,199$ 15,668,498$

Percent Above / Below Market 4.86%ABOVE MARKET -7.16%BELOW MARKET -6.83%BELOW MARKET

Value Above / Below Market 2,774,315$ (921,105)$ (1,149,504)$

Number of LoadsPercent Number of LoadsPercent Number of LoadsPercent

Loads BELOW Market 11,174 24% 5,439 75% 6,273 57%

Loads AT Market 6,928 15% 775 11% 2,420 22%

Loads ABOVE Market 27,944 61% 1,044 14% 2,389 22%

Value Percent Value Percent Value Percent

Actual Value BELOW Market 11,228,207$ 19% 8,298,162$ 68% 8,297,309$ 47%

Actual Value AT Market 7,841,202$ 13% 1,613,485$ 13% 3,440,926$ 20%

Actual Value ABOVE Market 40,735,007$ 68% 2,033,553$ 17% 3,930,263$ 22%

FUEL SURCHARGE PROGRAM DATA

MBBC Reported MBBC Reported MBBC Reported

Base Price in $/Gallon 1.230$ 1.100$ 1.265$ 1.100$ 1.265$ 1.100$

Escalator 0.058$ 0.060$ 0.054$ 0.060$ 0.066$ 0.050$

Rate Per Mile Increase 0.010$ 0.010$ 0.010$ 0.010$ 0.010$ 0.005$

Weighted Average Cost of Fuel for

the Model 3.959$ 3.959$ 3.959$ 3.959$ 3.959$ 3.959$

Average Annual Fuel Surcharge

Paid Per Mile 0.471$ 0.477$ 0.499$ 0.477$ 0.408$ 0.286$

Fuel surcharge Differential Per Mile

Dry Van Refrigerated Intermodal

Dry Van Refrigerated Intermodal

0.006$ (0.022)$ (0.122)$

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Benchmarking Report Output

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Lane-by-Lane Analysis (long haul, dry van):

Origin City

Origin

State

Origin

ZIP

Origin

Country Destination City

Dest

State Dest ZIP

Dest

Country

Distance

(miles)

Annual

Volume

Annual

Corridor

Volume

Equipment

Type

Equipment

Size

Service

Type

Movement

Type

Contract

Type

AURORA IL 60502 US MC FARLAND CA 93250 US 2,027 1.00 1.00 D 53 S OB CC

SOUTHAVEN MS 38672 US CENTER CO 81125 US 1,111 1.00 3.00 D 53 S OB CC

MONCTON NB E1E 3X3CA CUDAHY WI 53110 US 1,548 1.00 1.00 D 53 S IP CC

ATLANTA GA 30354 US LAREDO TX 78041 US 1,171 1.00 1.00 D 53 S OB CC

IRVING TX 75061 US SALT LAKE CITY UT 84104 US 1,190 1.00 2.00 D 53 S OB CC

SOLON OH 44139 US GLOUCESTER MA 01930 US 670 1.00 1.00 D 53 S OB CC

LAKELAND FL 33815 US ONEILL NE 68763 US 1,643 1.00 2.00 D 53 S OB CC

MODESTO CA 95358 US KENNEWICK WA 99337 US 752 2.00 9.00 D 53 S OB CC

MODESTO CA 95358 US LOGAN UT 84321 US 802 2.00 8.00 D 53 S OB CBK

JACKSONVILLE FL 32218 US ALMENA WI 54805 US 1,458 2.00 4.00 D 53 S OB CBK

OMAHA NE 68112 US ATLANTA GA 30336 US 1,000 11.00 14.00 D 53 S IP CC

BELVIDERE IL 61008 US GULFPORT MS 39501 US 912 7.00 7.00 D 53 S OB CC

Minimum

Reported

CPM

Maximum

Reported

CPM

Average

Reported

CPL

Average

Reported

CPM

Reported

Annual

Linehaul Cost

Annualized

Fuel

Surcharge

paid by

Company

Annualized

Fuel

Surcharge

paid by

Market

Difference

Annualized

Fuel

Surcharge

Total CPL paid by

Company (Average

Reported CPL +

Annualized Fuel

Surcharge)

Reported

Annual Cost

(Includes Fuel

Surcharge)

0.90$ 0.90$ 1,829$ 0.90$ 1,829$ 426$ 466$ (41)$ 2,255$ 2,255$

1.58$ 1.58$ 1,753$ 1.58$ 1,753$ 233$ 256$ (22)$ 1,986$ 1,986$

1.72$ 1.72$ 2,658$ 1.72$ 2,658$ 325$ 356$ (31)$ 2,983$ 2,983$

1.24$ 1.24$ 1,450$ 1.24$ 1,450$ 246$ 269$ (23)$ 1,696$ 1,696$

1.48$ 1.48$ 1,761$ 1.48$ 1,761$ 250$ 274$ (24)$ 2,011$ 2,011$

2.38$ 2.38$ 1,598$ 2.38$ 1,598$ 141$ 154$ (13)$ 1,738$ 1,738$

0.65$ 0.65$ 1,069$ 0.65$ 1,069$ 345$ 378$ (33)$ 1,414$ 1,414$

2.46$ 2.50$ 1,864$ 2.48$ 3,728$ 158$ 173$ (15)$ 2,022$ 4,044$

1.52$ 1.55$ 1,231$ 1.54$ 2,463$ 168$ 184$ (16)$ 1,400$ 2,799$

0.73$ 0.74$ 1,065$ 0.73$ 2,129$ 306$ 335$ (29)$ 1,371$ 2,742$

1.17$ 1.17$ 1,172$ 1.17$ 12,891$ 210$ 230$ (20)$ 1,382$ 15,201$

1.53$ 1.54$ 1,401$ 1.54$ 9,810$ 192$ 210$ (18)$ 1,593$ 11,150$

Difference

Percent

(Includes Fuel

Surcharge)

Status

(Includes Fuel

Surcharge)

Estimated

Linehaul Cost

(Does not

include Fuel

Surcharge)

Estimated

Linehaul CPM

(Does not

include Fuel

Surcharge)

Estimated

Annual Linehaul

Cost (Does not

include Fuel

Surcharge)

Difference

Total CPL

(Does not

include Fuel

Surcharge)

Annual Cost

Difference

(Does not

include Fuel

Surcharge)

Difference

Percent

(Does not

include

Fuel

Surcharge)

Status

(Does not

include Fuel

Surcharge)

-26.58% BELOW 2,605$ $1.28 2,605$ (776)$ (776)$ -29.8% BELOW

-13.27% BELOW 2,035$ $1.83 2,035$ (282)$ (282)$ -13.8% BELOW

39.79% ABOVE 1,778$ $1.15 1,778$ 880$ 880$ 49.5% ABOVE

-16.35% BELOW 1,758$ $1.50 1,758$ (308)$ (308)$ -17.5% BELOW

2.78% ABOVE 1,683$ $1.41 1,683$ 78$ 78$ 4.6% ABOVE

-1.98% AT 1,620$ $2.42 1,620$ (22)$ (22)$ -1.3% AT

-28.67% BELOW 1,604$ $0.98 1,604$ (535)$ (535)$ -33.4% BELOW

20.24% ABOVE 1,509$ $2.01 3,017$ 355$ 711$ 23.6% ABOVE

-16.16% BELOW 1,485$ $1.85 2,970$ (254)$ (508)$ -17.1% BELOW

-21.65% BELOW 1,414$ $0.97 2,828$ (350)$ (699)$ -24.7% BELOW

-15.11% BELOW 1,398$ $1.40 15,377$ (226)$ (2,486)$ -16.2% BELOW

0.24% AT 1,379$ $1.51 9,655$ 22$ 155$ 1.6% AT

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Online Estimators for all Models

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Online “Batch” Estimator

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Benchmarking Report Output

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Market Report

-Includes rate trend analysis

-Surcharge analysis

-Specific studies on

relevant topics

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Customer Comments

“We realized what we thought were extremely competitive lanes… were actually well above market. We saved $65,000 annually on only 4 lanes!”

“This is vital information to help us determine the most effective procurement strategies for our company.”

“Not only do we use it for a sanity check among the transportation group, but we share with executive management, especially in these times.

“We got our first report. Addressed just two lanes - saved $150,000!”

“We achieved an annual rate reduction of $100,000 with just one carrier”

“There is no doubt that we have validated how well the business units are doing… we now have the ability to benchmark internally and externally.”

“MBBC has helped us compare our total landed cost to our competitors.”

“We are on target to save 8 Million Dollars in our first year of membership in the MBBC.

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Some of Chainalytics’ Clients

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FOOD AND

BEVERAGE

RETAIL

HOME/OFFICE

DURABLES

HEALTHCARE

HOME/OFFICE

NON-DURABLES

LSPChemical/ProcessAuto/IndustrialPackagingUtilities/

Telecomm/Media

OTHER

INDUSTRIES

SERVED

• 62 of the Fortune 500

• 9 of the Top 15 US Retailers

• 11 of AMR’s Top 25 Supply Chains

• 5 of the Top 20 Global Forest and Paper Companies

• 8 of the World’s 25 Largest Food & Beverage Mfgs

• 9 of the Top 10 Consumer Goods Supply Chains., SCDigest

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Chainalytics Contact:

John Schnorf

jschnorf@chainalytics.com

770-433-1566