Florida East Coast Railway. Academic Case Study. Prepared for the. Intermodal Association of North America

Transcription

1 Florida East Coast Railway Academic Case Study Prepared for the Intermodal Association of North America Logistics and Supply Chain Management Case Competition University of North Florida By: Lawrence Gross Gross Transportation Consulting 1

2 Introduction: Adam Bridges, Senior Vice President of Strategic Planning for the Florida East Coast Railway had recently joined the organization and was settling into his new position. Among his highest priority items was to provide his recommendation to senior management as to whether to proceed with a proposed new intermodal service linking southern and central Florida. He was due to present to the group the following week, so it was time to dig through the data and come to a decision. History: The Florida East Coast Railway (FEC) is a regional railroad operating 350 miles of mainline connecting the cities along the east coast of the State of Florida from Jacksonville on the north to Miami on the south. The FEC is what is known as a regional or Class II railroad, not as large as the giant Class I roads which are seven in number and include such well-known names as Union Pacific, Norfolk Southern, BNSF and CSX. Despite its relatively small footprint, the FEC has a long and rich history and has played a key role in the economic development of the State of Florida. The FEC was developed by Henry Flagler, a business tycoon, real estate promoter and railroad developer. A former partner in Standard Oil alongside the legendary John D. Rockefeller, Flagler moved to Florida in the late 1800 s and began building a hotel and railroad empire. The first piece of what became the FEC was a short line railroad near Jacksonville purchased in This was followed by additional purchases of small railroads in rapid succession, so that by 1889 the Flagler road reached as far south as Daytona. This was as far as tracks had been laid, so beginning in 1892, Flagler began laying track south from Daytona towards south Florida. Along the way he constructed a string of hotels on the assumption that the hotels would provide a ready source of passengers for the railroad, and the railroad would provide easy access to the seaside hotels for northerners who might crave a bit of Florida sunshine. The railroad was also aimed at transporting Florida citrus north. The railroad reached West Palm Beach in The next year, a severe freeze decimated the citrus crop in central Florida, and Flagler decided that he needed to keep pushing the rails south in order to reach warmer climes with a more reliable growing season. By 1886 the rails had reached a sleepy village on the shore of Biscayne Bay. In gratitude, when the town incorporated it offered to name itself Flagler, but he in turn suggested that they instead adopt the native American name for the area and the village became known as Miami. 1

3 But Flagler was not yet done. The U.S. had announced in 1905 that it would construct a canal linking the Pacific and Atlantic Oceans across Panama. Flagler envisioned the creation of a huge port on the island of Key West, the closest U.S. point to the Canal. He therefore pushed his tracks further south and eventually 128 miles of line were built down the Florida Keys, connecting the islands through the construction of long bridges across open water. The Railroad that Went to Sea to Key West was finished in 1912, just a few months before the death of Flagler, at great cost in both dollars and lives. But the Key West extension never lived up to Mr. Flagler s dream. It was very expensive to maintain and traffic was light. The end came in 1935 when a terrific hurricane badly damaged the line. Rather than rebuild, the FEC gave up on the Key West extension and sold the infrastructure to the State of Florida, which used the right of way and bridges to build Highway U.S. Route 1 to Key West. The great cost of the Key West extension and the servicing of that debt was a heavy burden on the FEC and when depression came in 1929, the line declared bankruptcy. This ushered in a long dark period in FEC history. The road continued to operate in bankruptcy for the next 30 years. Eventually financier Edwin Ball acquired a controlling interest in the bankrupt carrier and the FEC emerged from bankruptcy in But turbulence returned in 1963 when the FEC declined to go along with the national railroad labor agreement and sought to operate its trains with only two crewmembers instead of the four or five crewmembers that were then standard operating procedure in the U.S. The unions struck in 1963 but the railroad resumed operations using management and replacement workers. The labor situation lasted until 1975 when agreement was finally reached. Today, two-person crews are standard across the nation. In 1983 the railroad became part of Florida East Coast industries (FECI), under which the FEC railroad maintained an independent existence while the parent went on to further develop the extensive real estate holdings associated with the railroad. In 2007, FECI was purchased by Fortress Investment Group, a private equity group, and rolled into another prior acquisition, RailAmerica Corp, a diversified collection of short-line railroads. The larger FEC proved to be less than an ideal fit with the shortline operator and the FEC was also hurt badly when the Great Recession dealt a devastating economic blow to FEC s Florida markets. Saddled with a leveraged balance sheet with high-cost debt as the result of the Fortress purchase, the FEC began to lose money. In response, in 2010, Fortress split off the FEC from RailAmerica and brought in an experienced former CSX intermodal executive, Jim Hertwig as President with the mission of righting the ship and fully tapping FEC s potential. In 2012 Fortress sold off 2

4 RailAmerica to larger shortline operator Genesee and Wyoming Corp., but retained ownership of the FEC. Background: As railroads go, today the Florida East Coast Railway s operation is simplicity itself. It operates a main line running up the east coast of Florida from Miami to Jacksonville, where it connects with the major eastern Class I railroads, CSX and Norfolk Southern. The line is flat, straight and fast. It is highly maintained in excellent condition. FEC has about 600 employees and annual revenues of approximately $350 million. Compared to most railroads the FEC carries a limited variety of cargo. Florida, although populous, is mainly a consuming state particularly as one travels further south. There is little industry and therefore limited outbound shipments. Freight primarily flows into the state. FEC s fortunes depend in the main on just 5 commodities: Intermodal, Crushed Stone (otherwise known as Aggregate ), Autos, Ethanol and Food. The FEC is dependent on intermodal volume to a far greater extent than is typical of railroads. Of the roughly 525,000 revenue rail movements of railcars and intermodal container and trailers handled by FEC in 2014, approximately 400,000 or 76% were intermodal units. The mix was roughly 60% containers and 40% trailers. The high percentage of intermodal traffic is particularly notable in that the length of the FEC line, roughly 350 miles, lies well below the minimum threshold mileage at which conventional wisdom would say intermodal can compete. FEC has been growing intermodal, both in terms of volume and revenue per unit. In 2010, when Hertwig arrived on the property, the FEC handled 325,000 intermodal units (trailers and containers) with average revenue of $347 per unit. In 2014, volume rose to 400,000 units and average revenue had increased to $450 per unit. The improvement in intermodal was very important because of the collapse of crushed rock market during the recession. During the 1990s and thru to 2008, FEC s second most important commodity in terms of carload volume, Crushed Rock (or aggregate) shipments flowed north from quarries near Miami to construction areas further north. While crushed rock volume trailed that of intermodal, the revenue impact was significant because the revenue and contribution per carload of crushed rock was considerably greater than that per intermodal container or trailer. The Crushed Rock business boomed along with Florida s construction business prior to the Great Recession, but it was devastated by the 3

5 downturn. By 2010, the carload volume of rock handled had fallen by two-thirds from its peak in 2006 and it continued to decline for another couple of years. Finally, in 2012 it began to slowly recover as the construction industry in Florida regained a pulse. In 2014, this traffic accounted for over 50% of FEC s volume in terms of just rail carloads, but only 11% of total volume when Intermodal is included in the total. FEC has a well-deserved reputation as a maverick and innovator amongst railroads. In addition to its unconventional intermodal activities, FEC is taking a leadership position in the use of Liquefied Natural Gas (LNG) for fuel with an extensive program that will culminate in LNG-powered locomotives being utilized for all FEC main-line trains. This program will involve the purchase of 24 new-design GE LNGcapable locomotives, the design and construction of special railcars to carry the locomotive s fuel supply and the building of 2 LNG plants along its line. The FEC plans on loading ISO tanks at the LNG plants for export as well as transporting ISO tanks up its network for dray delivery to stations where class 8 tractors can fuel. In many ways, LNG is the new coal for the FEC. In another bold move, parent company Fortress has plans well underway to leverage the FEC right of way and operational capabilities to build a privately owned and funded high-speed passenger service linking the cities of South Florida with Orlando, to be called All Aboard Florida. FEC Intermodal: The FEC s intermodal business has a higher percentage of trailers than most railroads. Due to the heavily imbalanced nature of the Florida economy, most major truckers have many more truckloads moving into Southern Florida than out, and as many as three out of four trucks would be required to run many expensive empty miles to get the truck, its driver and trailer back up into northern Florida where outbound freight might be found. The FEC offers a convenient solution by taking the trailers in Jacksonville and running them south on the rail. The FEC has its own fleet of trucks which are used to deliver the trailer to the final destination. Once empty, the FEC picks the trailer back up, places it back on the flatcar and expedites it north to Jacksonville where the truck line resumes possession. This is referred to by the FEC as their Ramp to Door product. The FEC also carries domestic intermodal containers for all the major intermodal carriers. These are interchanged to FEC in Jacksonville from both Norfolk Southern and CSX. In addition to outside containers, the FEC also owns its own highway fleet, consisting of over 1,10053 domestic containers 4

6 and over and 48 dry van trailers. It also participates in specialty markets, owning and carrying via intermodal some 50 refrigerated trailers and (unusually) 78 flatbed trailers. In addition to the domestic intermodal business described above, the FEC conducts a lively business in the movement of ocean-going containers that traverse the ports of southern Florida. The FEC s ability to tap into this market has been recently enhanced through the opening of two new intermodal terminals: an on-dock facility at the Port of Miami and the near-dock Fort Lauderdale Intermodal Container Transfer Facility (ICTF) serving Port Everglades and Fort Lauderdale. The ICTF is located directly adjacent to the container facility at Port Everglades, and traffic can move between the facilities via a dedicated direct gate connection without even touching a public highway. The bulk of these containers are destined to and from South and Central America, Puerto Rico and the Caribbean Islands. But these ports also see a certain amount of cargo from Asia and Europe. Miami was one of the first ports on the East Coast to dredge to the 50-foot deep channel needed to permit passage of the newest, largest container ships and had also upgraded to the requisite Post-Panamax cranes with more height and reach. One option that the FEC was beginning to exploit was transloading of cargo from international containers to domestic containers and trailers. As previously noted, there is normally an ample supply of empty domestic containers and trailers coming available every day in Southern Florida as they are unloaded. These units need to be repositioned north whether loaded or empty and represent an excellent source of low-cost capacity. The FEC, working with its sister Fortress company FECI constructed a new transloading facility at its Hialeah intermodal terminal at which freight can be transloaded from one container to another. Under the plan, import containers landing at Miami would be loaded on shuttle trains at the on-dock intermodal terminal for movement to the nearby Hialeah ramp. The import cargo would be swung from the international container to a domestic 53 container or trailer, which would then be loaded onto the FEC for movement north under load. The international container would also be shuttled back via rail to the port of Miami. Given the nature of the market in which it operates, FEC is heavily dependent on the profitability of its intermodal business. FEC also regarded Intermodal as one of the best opportunities for growth. It was with this in mind that the Central-Florida opportunity was being explored. 5

7 The Central-Florida Opportunity: The Central-Florida area including Orlando is a major urban market. According to the 2010 census, The Greater Orlando area has a population of over 2.1 million, making it the third largest metro region in Florida. Expanding the area to include the East Coast (Daytona and environs) bumps the total up to 2.8 million people. The mainstay of the region s economy is tourism, with the area s well known attractions such as Disney World, Universal Studios and Sea World at the core. But efforts are underway to diversify the economy and reduce the dependence on the economically-sensitive tourist business, and other areas of growth include high-tech, military and health care. The freight flowing into the region reflects the needs of the population, with heavy emphasis on consumer goods, consumer staples and food products. In common with South Florida, the area is predominantly inbound in nature in terms of freight, generating a relatively small amount of outbound freight, including northbound parcel shipments and some movements of temperature controlled commodities generated by the remnants of the citrus groves. FEC theorized that substantial quantities of import freight from Europe and Asia was terminating in the Orlando metro area. This would include the various toys and tourist items being consumed by the vast number of visitors as well as all the other imported goods generally purchased by consumers, whether visiting or local. Additionally, imported food items from South America and the Caribbean were thought to be landing in South Florida destined for the Orlando area. It is these flows of goods that FEC sought to tap with the proposed service. A 2013 report commissioned by the Jacksonville Port Authority contained the following estimates: 1 million TEU s of warehoused cargo is trucked into Florida each year from Atlanta, Savannah and West Coast distribution centers (presumed by the report to be transloaded cargo) 160,000 TEU s of Asian imports per year flow from West Coast and South Atlantic ports into the state of Florida 107,300 TEU s of non-asian cargo move into Florida via Florida ports other than Jacksonville. 1 1 The Decision to Pursue a 47 Ft. Channel Depth, Report by Martin Associates for Jacksonville Port Authority, September

8 Existing Traffic Patterns: Imports were thought to be reaching Orlando via five principal routes: Intermodal via Southern California: The ports of Los Angeles and Long Beach in Southern California account for some 40% of all imported containerized cargo received in the U.S. Cargo from Asia would be landed there and then forwarded east via intermodal, either in the original international container or by being transloaded into larger domestic containers or trailers. From there the intermodal unit would travel via either BNSF or Union Pacific to a gateway city, either Atlanta or Memphis. There it would be interchanged to CSX or Norfolk Southern. CSX would move the traffic to its intermodal terminal located in Winter Haven, FL, at which point it would be grounded for delivery to final destination. NS, would rail its share of the intermodal units to the NS terminal in Jacksonville for highway movement beyond to the final destination in Central Florida. Intermodal or Truck via Houston, TX: Some volume from Asia is routed via the Panama Canal into Houston. From there the main two options were to truck the goods directly from Houston to the final destination in Orlando or to use intermodal. The typical intermodal routing would involve using Union Pacific from Houston to New Orleans and then CSX beyond to Winter Haven. Alternatively, the UP could interchange to NS for delivery to the NS Jacksonville ramp for truck movement beyond to final destination. Truck via Savannah, GA: Savannah, GA was also a big entry point for goods from Asia and Europe, given its proximity not only to Florida but also the major consuming area of Atlanta. Goods from Asia flow into Savannah both by heading east via the Panama Canal and by heading west through the Suez Canal and across the Atlantic. Goods from Europe and the Caribbean (to a certain extent) also flow into Savannah. From there the goods are typically trucked into Orlando. CSX does have direct on dock rail at Savannah with good I95 service to Florida; however the length of haul makes this a low priority on their network. Truck via Jacksonville, FL: Jacksonville also is a significant player for traffic destined for Central and North Florida and even portions of Georgia. At least three services from Asia call at Jacksonville, two operating through the Panama Canal and one through the Suez Canal. The port also plays a big role in the north/south trade to South America and is a major player in the Puerto Rico trade. 7

9 Truck via South Florida (Miami/Port Everglades): The ports of South Florida are not big players in the overall scheme of things, but nevertheless a significant amount of volume is handled at the two main facilities (Miami and Port Everglades). Together these ports accounted for some 660,000 TEU s (Twenty-Foot Container Equivalent Units) in 2013, about 3.6% of all U.S. import TEU s. Miami and Port Everglades are the 12 th and 14 th ranked U.S. ports in terms of import volume. Traffic bound for Orlando, including such items as food products from South America, the Caribbean and Puerto Rico are typically grounded at the port and then moved via truck to Orlando. The Proposed Service FEC s proposed Central-Florida service would require an intermodal ramp in the area. The railroad already had a small facility in Cocoa Beach. From there it would be a 50-mile drive to downtown Orlando. While the facility was very small, it might be adequate for the start of the service. However, with any degree of success, this little pocket ramp would soon be overwhelmed and expansion or a new facility would be required. On weekdays the FEC typically runs a minimum of six main line trains a day north originating from either the Hialeah terminal, which formed the effective southern end of the line for the FEC, or from the new Fort Lauderdale ICTF facility. Trains originating from Hialeah would also pick up traffic from the on-dock intermodal facility at the Port of Miami. These cars would be shuttled over from the port and placed on a siding adjacent to the main line where they could be conveniently picked up by the northbound main line train. FEC also runs six southbound main line trains per day originating in Jacksonville with local and interchange traffic heading south to Ft. Lauderdale and Miami. These trains carry traffic for local markets and for export. Option 1: Direct Movement. The plan called for containers bound for Central-Florida to be loaded at both the Port of Miami and Fort Lauderdale ICTF. These containers would be grouped together in what railroaders call a block. Trains originating out of Fort Lauderdale would carry the block for Cocoa Beach within the train. This block would be dropped off in Cocoa Beach on the way north. Stopping and switching the train in Cocoa would require adding at least 45 minutes to the schedule not impossible, but not a move to be made lightly, given the service-sensitive nature of the FEC s intermodal business. 8

10 Similarly, a Cocoa Beach block would be built in the Port of Miami and picked up by the northbound train out of Hialeah. This train would also stop in Cocoa Beach on the way north. Once the containers arrived in Cocoa Beach they would be unloaded off the train and placed onto FEC highway chassis (a wheeled skeletal trailer used for moving containers over the road) and made ready for highway transport. FEC Highway Services (FECH) would provide the truck and driver to pull the container and chassis over the highway to its destination in the Orlando area. Most distribution facilities in the Orlando area were located south of town and it is a straight shot west on Rte 528 from Cocoa Beach for about miles. Once the container had been unloaded and made available by the shipper or consignee, the process would be reversed, with a highway move back to Cocoa, and the container would eventually be returned to Fort Lauderdale or Port Miami by rail for loading back onto ships. Option 2: Transload. Another potential way to tap the market was via transload. As previously noted, some 75% of the intermodal units being handled northbound by FEC were empty. These empty units represented a ready source of capacity. If FEC could put freight in these units, the revenue would be considerably higher than that associated with empty movement. The plan would operate as follows: inbound containers into the Port of Miami would be shuttled over to the nearby terminal in Hialeah via rail. At Hialeah the freight inside the international container would be transferred from the international box into a waiting empty domestic 53 trailer or domestic container. Generally, because the domestic unit was larger than the 40 international container, two 53 s could handle the same product as was carried in 340 international boxes, provided the product was not too heavy. The now-empty international box would be shuttled right back to the port, or repositioned for export loading, while the loaded domestic unit would be moved via FEC intermodal train up to Cocoa Beach. There it would be unloaded from the railcar. If the unit was a domestic container it would be mounted on a 53 domestic chassis. Then the trailer or container/chassis combo would be moved to final destination by FEC Highway Services (FECH). Once unloaded it would be moved back to Cocoa by FECH and then picked up by a northbound train for empty movement up to Jacksonville. The net result was better utilization of the international container and conversion of 50% of the domestic unit s trip north from empty to loaded. In addition, since the Central Florida region did generate at least some northbound freight, a portion of the domestic units would be used for loaded bookings and thus move 9

11 back to Cocoa for movement north by rail but as loads, giving the FEC the opportunity for optimal load-to-load economics. Challenges: The proposed service would need to overcome significant challenges in order to succeed. First and foremost, the highway distance from the Port of Miami to the Orlando area distribution facilities was only around 225 miles. The FEC would have to haul a container 205 miles on the rail and then another miles on the highway. In order to compete, the proposed FEC service would have to offer attractive rates at or below that of direct truck movement. Of course, the rail would have to offer consistent and reliable service. Could the FEC perform the service at a cost low enough to make a profit? Were there service parameters that could create a competitive advantage for the rail? Assuming that the service (or services) could be operated profitably, how much volume could it attract? Certainly the volume that was already flowing from the Port of Miami and Port Everglades was fair game. But what about the volume of imports that was reaching mid-florida via other routes? Could it successfully be diverted? Success would require that one or more steamship lines add a Miami port of call to their schedule and they would only do so if it made sense for them financially. To bring a steamship line on board, the total supply chain costs of the routing via FEC would need to compare favorably with the alternative routings. Finally, once all the pieces were put in place, the service would need to be marketed to the shippers and also the logistics companies that controlled the routing of the freight. The investment required to support the service was considerable. Upgrading the Cocoa Beach intermodal facility would cost roughly $5 million. Additional investments of $100,000 would be required for a container yard (CY) if Adam thought that CY services at Cocoa would increase the FEC competitive advantage versus over-the-road truck. A CY might offer the ability to position empty equipment for export, perform pre-tripping and light maintenance to enhance reload opportunities. Highway tractors also would need to be acquired for the Cocoa Beach Orlando shuttle operation at a cost of roughly $120,000 each. Opportunities: Adam knew that railroading was a volume business. Once the FEC decided to operate a train, the incremental cost of adding cars to the train was low. Since he was not planning on adding any new trains, the Central Florida volume would add only incremental costs to FEC s operation. A 10% increase in volume would yield a 2% reduction in the average cost per unit handled. Adding profitable volume to FEC s intermodal operation would therefore reduce overall average cost per unit. 10

12 Because of the volatility of fuel costs, all land transport, rail, intermodal, or truck was typically quoted net of fuel surcharge. To this base rate a fuel surcharge was then added consisting of a percentage indexed to the price of diesel fuel in order to arrive at the total transportation rate. Because rail intermodal was more efficient than truck, FEC was able to implement fuel surcharge about 20% lower than truck for its intermodal ramp-to-ramp moves. Other considerations: As Adam prepared his presentation he was aware that the timing was in some respects very good for the proposed project. Ongoing wrangling between port labor and management on the U.S. west coast had snarled operations and resulted in big delays. Freight was being diverted in the near term from the west coast to alternative routings, and he knew that shippers would be undertaking sweeping reviews of their supply chain strategies in light of the continuing difficulties. In contrast, the ports on the east and Gulf coasts, while considerably smaller than the mega-ports of Los Angeles and Long Beach, enjoyed tranquil labor relations and generally operated efficiently with little congestion. Further adding to the mix was the imminent completion of a big enlargement project for the Panama Canal. The project would increase the maximum size of the container ships transiting the canal from the current capacity of around 5,000 TEU (Twenty Foot Equivalent Units) to roughly 13,000 TEU s. It was expected that the economies of scale associated with the operation of these larger ships would drive down the cost of all-water movement of cargo from Asia to the east coast. However, these ships also would sit lower in the water than the existing vessels, mandating depths of at least 50 feet in the harbors. The Port of Miami was ready with the capability to accommodate the maximum size ships able to traverse the canal. Port Everglades had funding approved for both cranes and deepening and was planning on being ready for these ships in The two S. Florida ports are less than 5 miles from the open sea so involved a minimal amount of added sea miles in order to call on the port. Houston was currently dredging to 45 foot depth, so would be able to handle the ships only with some restrictions. The Port of Savannah currently possesses a depth of just 42 feet and the Port of Jacksonville has 40 of water. The government agency charged with such matters, the Army Corps of Engineers had proposed a project to deepen the channels for both ports to 47 feet, which would permit the big ships to call with minimal restrictions such as when the tide was right and when they were not fully laden. But completion of the projects were years away. 11

13 Lastly if the FEC was successful in entering the Central Florida market out of the South Florida ports, then growth would eventually lead to incremental train starts, with the associated step function in costs. Conclusion: Adam realized that the rail was part of a community of stakeholders with shared interest in East Coast routing with rail solutions as part of the supply chain. These stakeholders included the S. Florida Ports and their associated government agencies and funding, Environmental groups looking for clean supply chains that leverage train fuel economy and LNG emissions, East coast labor groups, and shipper / consignee customers who would benefit from clean, competitive and diverse supply chains. The FEC was not alone. Adam knew that the project under consideration would generally be considered impossible by most experts in the intermodal field, but the FEC had an established track record of doing the impossible. But part of that success was careful consideration of all the facts and picking its opportunities carefully. The time for decision on this particular proposal was at hand. 12

14 Exhibit 1 13

15 Source: PIERS Excludes volume from Puerto Rico and other U.S. originations. 14

16 Approximate Costs and Service from Asia to Various Points Rates from China for single 40 ISO Container Destination Approx. Rate Approx. Service Time CSX Winter Haven Ramp via $5, Days L.A./Long Beach + intermodal NS Jacksonville Ramp via $5, Days L.A./Long Beach + intermodal CSX Winter Haven Ramp via $6, Days (via Panama Canal) Houston + intermodal NS Jacksonville Ramp via $6, Days (via Panama Canal) Houston + intermodal Port of Houston $4, Days (via Panama Canal) Port of Savannah $4, Days (via Panama Canal) Ports of Miami or Port Everglades $4, Days (via Panama Canal) Approximate Round Trip Drayage Rates and Service to Orlando from Various Points Origin Approx. Miles Approx. Rate excluding FSC CSX Winter Haven Ramp 48 $235 NS Jacksonville Ramp 158 $550 Port of Jacksonville 160 $557 Port of Houston 952 $2,900 Port of Savannah 277 $855 Port of Miami 232 $735 Port Everglades 211 $668 15

17 FEC Rail Rates Round Trip Unless Otherwise Noted Origin Destination Equipment Return Approx. Rate excluding FSC Port of Miami Cocoa Beach 40 /45 ISO Cont. Empty $300 Port of Miami Cocoa Beach 40 /45 ISO Cont. Loaded $340 ICTF Ft. Lauderdale Cocoa Beach 40 /45 ISO Cont. Empty $285 ICTF Ft. Lauderdale Cocoa Beach 40 /45 ISO Cont. Loaded $325 Port of Miami Hialeah Ramp (Shuttle) 40 /45 ISO Cont. Empty $70 Hialeah Ramp Cocoa Beach 53 Trailer/Container N/A $150 Cocoa Beach Jacksonville 53 Trailer/Container N/A $140 Hialeah Ramp Jacksonville 53 Trailer/Container N/A $230 Notes: 1. Rates are exclusive of Fuel Surcharge. FEC Fuel Surcharge applies. 2. Rates include chassis usage, day of placement plus two days; after which equipment detention charges apply. FECI Highway Rates One Way Origin Destination Equipment Return Approx. Rate excluding FSC Cocoa Beach Ramp Orlando Any N/A $100 Orlando Cocoa Beach Ramp Any (Loaded) N/A $100 Orlando Cocoa Beach Ramp Any (Empty) N/A $75 Notes: 1. Rate is exclusive of Fuel Surcharge. Highway Fuel Surcharge rate applies. FECI Transload Rates Origin Equipment from Equipment to Per Unit Unloaded Hialeah Ramp 40 ISO Container Any $200 16

18 Typical Highway Fuel Surcharge Matrix Fuel Surcharge is adjusted weekly based on DOE Index Regional Average, and billed using the Standard Fuel Surcharge Matrix below. If you have any questions regarding this Matrix please contact your Regional Pricing Manger Price Range Percentage Price range Percentage Price Range Percentage $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % 17