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Customer First – Safety Always!
Watco Perishable Express – North East
Association of Rail Shippers
April 19, 2018
1
• Quick (I promise) Watco Overview
• Existing perishable supply chain issues
• Perishable Express supply chain
• Questions/Discussion
Agenda
Customer First – Safety Always!
Customer First Foundation Principles
3
Value Our Customers
• Earn their business every day by providing Safe, Accurate, and
Timely Service
• Create solutions that deliver value for our Customers and Watco
over the long-term
Value Our People
• SAFE Service, ALWAYS
• Be Honest and Fair
Safely Improve Every Day
• Always do the right thing and always try to find a better way
• Build a tremendous future by making decisions that protect our
Customer, Team, Community, and Environment
Customer First - Safety Always!
Customer ♦ Commodity ♦ Geography ♦ Service
Watco Overview
4
Geographic Diversity
We operate 37 railroads, 34 mechanical shops, 78 terminal and port operations, and 34 switching locations in 38 States, 1 Canadian Province, Western Australia, and Mexico.
Watco Overview
5
Unique Services Offering
14% of 2017 Revenue
• Formed joint venture with The Greenbrier Companies effective July 18, 2014 (“GBW”)
• Provides repair and maintenance services
• 34 mechanical facilities• 11 Tank Shops
• 11 Freight Car Shops• 7 TTX Shops• 5 Mobile Repair
53% of 2017 Revenue
• Second largest short line operator (largest private
operator) in North America with 37 short line railroads in the U.S. and Australia
• +440 locomotives• +4,200 railcars• +5,100 track miles• +1MM car loads transported or switched • 34 switching and other operations• Operations in 29 states and Australia
25% of 2017 Revenue
• 78 Terminal and Port Operations• 43 Transload Terminals
• 33 Marine Terminals• 2 Specialty Terminals
• Service Offerings• 25 Dedicated Contract Facilities• 53 Merchant Terminals
8% of 2017 Revenue
• Opportunity to solve Customer supply chain needs
• 15 Supply Chain Service Centers
• End to End solutions
• +25,000 Licensed Motor Carriers Under Contract
Supply Chain ServicesMechanical Services
Transportation Services Terminal and Port Services
Customer ♦ Commodity ♦ Geography ♦ Service
Initially:
Protecting rail shipments of our shortline’s biggest commodity (fresh potatoes)
by innovating service, facilities, and equipment (the Supply Chain)
Now:
Building a new supply chain using the most efficient equipment and new
technology with the rail industry’s best service to build incremental perishable
rail traffic
Perishable Express Goals
Eastern Idaho Railroad
• Service: 20-30 day one-way cycle time
• Equipment: Retiring 50’ ARMN fleet - 2.5:1 truck conversion
• Damage: Consistent 5-20% damage per rail load due to existing slip sheet
pallet loading
• Dunnage: Customers paying $500-750 per load to secure slip sheet pallet
loading (particularly in fresh shipments)
• Loading/Unloading Time: Slip sheet pallet loading/unloading takes 5-6
people 4-5 hours per car to load/unload a car
Things To Fix
Learn About The Market: Current Truck Lanes
Customer First – Safety Always!
Burley, ID - Market
Customer First – Safety Always!
Idaho Falls, ID - Market
• Service: Use Class 1 premium service
• Equipment: Use the largest most efficient car
• Damage/Dunnage/Loading & Unloading: Use new technology
• Bundled Pricing and Tracking “Farm to Table”
What We Did
• Burley Warehouse
• New Car, New Equipment (Racks, Rollers)
– 72ft Car, 4:1 truck conversion
– Racks, eliminates dunnage, speeds loading, reduces damage, gets
down to “pallet level” customer)
• Service (UP “Food Train”, NS Intermodal)
• Bundled “farm to table” pricing and tracking using Watco Supply Chain
Services
• Not just fresh potatoes now (butter, onions, frozen potatoes) – flexible to ship
multiple commodities per load
Truck competitive product to the Northeast for Idaho Shippers
What is Perishable Express
• UP Food Train
– EIRR connects at Minidoka and Idaho Falls and hits the Food Train at Pocatello
– < 3 days Pocatello to Global 3/Rochelle; Train ZWACYP
– UP intermodal train (Rochelle – Chicago) connects to NS; Train IG3AH
• NS Intermodal
– Cars run on priority UPS intermodal trains Ashland Ave/Chicago – Harrisburg, then
Harrisburg – Bethlehem; Trains 24Z and 22V
Total transit time Burley – Bethlehem has ranged from 7-11 days (the 11 day trip was during
the blizzard of early 2017)
Train Service
A Sight For Sore Eyes – Getting Through Chicago
– Watco acquired the Burley, ID Warehouse to feed Food
Network.
– Developed a trucking strategy with a local Idaho trucker to
deliver product from customer sheds to the Warehouse.
– Joint marketing with customers to win business.
Origination Terminal
Customer First – Safety Always!
Destination- Bethlehem, PA
Equipment - Refrigerated Boxcar Specs
• Partnered with ARX (Fed Ex freight movement/rack system)
• GBRX and TILX Refrigerated Boxcar Specs
o ~179,000 lb. net weight
o 20 Racks / 80 pallets per railcar
o 4:1 Truck to boxcar conversion
The Rack and Rollers System
Loading
Inside the Car
Total Package
• Utilizes Patented Racking / Roller Systemo Eliminates damage
o No dunnage
o No blocking/bracing
o Faster and safer load / unload
• Premium Rail Serviceo 7-9 day normal service
o Truck competitive
o Added capacity
o Manifest to Intermodal
Customer First – Safety Always!7
• Fully integrated and flexible supply chain– Trucks
– Warehouses
– Rail
– “One Price”
• 3 Cars In Service / 21 In Service by 3Q
• 3 Tables In Service
• “Pallet Level” Shipping via the rack system – Mixed products
– Mixed customers
Where are we today?
• Eastbound Examples of shippers utilizing Perishable Express– Fresh potatoes from Burley, ID to NJ for cruise ships
– Fresh onions for restaurants in NY, NJ
– Mixed loads of fresh onions and potatoes for grocery stores.
– Frozen butter for croissants for LeCoq Cuisine in CT and for cookies for David’s Cookies in PA and NJ
– Frozen French fries from Caldwell, ID to PA.
– Frozen potatoes products from Caldwell to New England destinations.
Commodities
• 21 total cars in service by 3Q
• 5 tables in service by 2Q
• Setting up additional origins and destinations
• Turn Nampa (BVRR interchange) on to UP Food Train
• Continued fleet expansion
• Developing Backhauls– Shipped our first backhaul last week (Boston Beer Co. and other
NE micro brews to Seattle from Bethlehem)
– 3x 2000+ mile loaded hauls in a month
What’s Next
• Focused Origins and Destinations
• Must connect well with intermodal network
• Shortline or Class 1 delivery: Both work
• Extremely short turn time on equipment
The Secret Sauce
Thank You