D E C AT U R I N T E R M O D AL R AM P O P P O R T U N I T Y

F I N AL R E P O R T

AU G U S T 3 1 , 2 0 1 5

1

Agenda

Executive Summary

Terminal Overview

Shipper Opportunities and Requirements

Conclusions and Next Steps

2

Project objectives and approach

Purpose of Study Study Approach

• Soybeans and processed soybeans are major

export commodities in international containers

from central Illinois

• Railcars and empty containers are generally

brought into central Illinois to be loaded with

soybeans for export from locations such as

Chicago and the east coast

• Increasing the volume of imports coming

through the Decatur, Illinois intermodal terminal

would increase the local supply of containers

and railcars for outbound export soybean

shipments

• Having a larger supply of equipment locally

should result in lower costs and improved

equipment availability

• This study was performed in order to assess

importer interest in shipping through the

Decatur ramp and to better understand their

requirements

• Zubrod/Clair conducted an analysis of PIERS

data to assess overall import volumes to

central Illinois and to identify major importers

PIERS data is a product of IHS Company

PIERS data is based on import and export

shipping manifests

Analysis was conducted of the 4/1/2014 to

3/31/2015 period

Central Illinois considered to be zip codes

(at 3-digits) 615, 616, 617, 618, 619, 625,

626, 627, which includes Peoria, Normal,

Champaign, Danville, Decatur, Springfield,

and Mattoon

Analysis performed in May and June, 2015

• Zubrod/Clair conducted interviews of leading

containerized freight importers to central Illinois

to better understand their current supply

chains, interest level in shipping through the

Decatur ramp, and any requirements/inhibitors

Interviews were conducted by phone

between June and August, 2015

3

Key findings

The Decatur terminal is currently underutilized, and could provide a lower cost shipping

option for soybean exports

The Decatur terminal location could be a good option to ship to central Illinois locations

Based on PIERS data, there are an estimated 21,500 containers imported to central IL,

split across US port on both coasts

Most companies interviewed are very interested in having Decatur as a viable option for

container imports

Interviewees see the main advantage as being lower drayage cost versus Chicago

Many interviewees would be open to having longer transit times and less frequent

intermodal rail service

Caterpillar, the biggest container importer to central Illinois, has developed a transload

model in the Chicago-area, and is unlikely to shift to the Decatur terminal

ADM and the Midwest Inland Port team are trying to address barriers to Decatur ramp

usage and further educate potential customers

The ISA and Illinois soybean farmers should support efforts to increase import volumes

through the Decatur terminal

4

Agenda

Executive Summary

Terminal Overview

Shipper Opportunities and Requirements

Conclusions and Next Steps

5

The Decatur terminal is owned and operated by Archer Daniels Midland Company (ADM)

The intermodal terminal was developed by

ADM and opened in 2013

The terminal includes access to three Class

1 railroads – Canadian National Railway

(CN), CSX Railway (CSX), and Norfolk

Southern Railway (NS)

These three railroads connect to other

North American Class 1 railroads

Together, CN, CSX, and NS provide rail

access to Atlantic, Gulf, and Pacific coast

ports

Decatur has good access to major

roadways, including I-55, I-57, I-72, I-74,

and US Highway 51

Source: Google Maps

Arial View of Decatur Terminal

6

Soybeans and other agricultural products are key export commodities in intermodal containers

Soybeans are shipped in international

containers from central Illinois to Asia

Illinois accounts for 66% of containerized

soybean exports

Soybean exports take advantage of the low

cost “backhaul” move to Asia

The move from Asia to the US with consumer

goods is the high paying “headhaul” move

Containers from the US to Asia are inexpensive,

because a low paying load is better than

shipping the container back to Asia empty (with

no revenue)

Containers are attractive for some Asian

customers because of the lower shipment size

Intermodal containers hold about 20 tons

Containers are loaded and remain intact for

identity control

Intermodal transit times are typically faster than

via bulk transport

Top Central Illinois Export Commodities

Source: PIERS database of central Illinois exports, 4/1/2014 –

3/31/2015; Zubrod/Clair analysis

Commodity

Container

Volume

%

Total

DDG 14,465 26%

Seed Grains 12,899 24%

Soy Soybeans 3,616 7%

Corn 1,952 3.6%

Corn Gluten Meal 1,253 2.3%

Sugar Syrup 1,074 2.0%

Paper 1,018 1.9%

Better Yellow Corn 958 1.8%

Lysine Amino Acid 767 1.4%

Soybeans 742 1.4%

All Other 15,850 29%

TOTAL 54,592

7

The Decatur terminal is currently underutilized, and could provide a lower cost soybean shipping option

Most import containers today travel to

Chicago-area intermodal terminals and are

then trucked to central Illinois

Containers also trucked from St. Louis and

Indianapolis terminals in smaller numbers

When empty, containers are trucked back to

Chicago terminal

Currently trains of empty containers are

brought to Decatur then loaded and put back

on the train for the rail move to the port

Increased import volume into the Decatur

ramp would create a supply of local

containers for soybean exports

A local supply of containers should lower the

intermodal transport cost

Source: Midwest Inland Port

International Container Unloading

8

Agenda

Executive Summary

Terminal Overview

Shipper Opportunities and Requirements

Conclusions and Next Steps

9

The Decatur terminal location could be a good option to ship to central Illinois locations

Truck miles from the Decatur terminal to central Illinois receivers is much

lower than from Chicago-area intermodal terminals

Traffic congestion in and around Chicago can cause delays that magnifying

the mileage impact

Decatur

Terminal

Chicago-Area Intermodal Terminal Locations

LPC (BNSF) Landers (NS) 59th St. (CSX) Harvey (CN)

De

sti

na

tio

n

Cit

ies

Bloomington 47 90 131 136 121

Champaign 44 105 127 132 118

Peoria 87 121 162 167 153

Decatur <10 138 171 176 161

Springfield 49 157 198 203 189

Estimated Truck Drayage Miles (1-way)

Source: Railroad websites; Google Maps; Zubrod/Clair analysis

10

Based on PIERS data, there are an estimated 21,500 containers imported to central Illinois

An estimated 21,500 containers (36,500

twenty-foot equivalent units, or TEU’s) were

imported to central Illinois from 4/1/2014 to

3/31/2015 Average of less than 100 per day is less than

one double stack intermodal train per day

Volume is split across a range of ports Los Angles/Long Beach accounted for nearly

one-third of volume

Seattle/Tacoma was the second largest

inbound port, accounting for about 15%

Ports on the east coast account for more than

50% of import volume, but no single east coast

port accounts for more than 10% of import

volume

There may also be volume through

Canadian ports to central Illinois customers

Dispersion of volume could make intermodal

service to Decatur more challenging

Top Import Ports

For Central Illinois Imports

Source: PIERS database of central Illinois exports,

4/1/2014 – 3/31/2015; Zubrod/Clair analysis

Port

Container

Volume

%

Total

Los Angeles/Long Beach 6,982 32%

Seattle/Tacoma 2,934 14%

Norfolk 2,117 10%

Wilmington, NC 1,849 9%

New York 1,808 8%

Houston 1,477 7%

Chester, PA 1,328 6%

Charleston 1,125 5%

Baltimore 589 3%

Savannah 515 2%

All Other 785 4%

TOTAL 21,509

11

Zubrod/Clair interviewed 10 of the top container importers into central Illinois

Companies Interviewed Topics Discussed

• ADM

• Anonymous

• BRG Sports/Bell Helmets

• Bunnomatic

• Caterpillar

• Komatsu

• The Libman Company

• Mitsubishi

• Rural King

• ThyssenKrupp

• Midwest Inland Port was also

interviewed

• Current import volume and lanes

• Interest in Decatur ramp and

potential benefits

• Requirements to make Decatur

ramp a viable option

• Potential inhibitors

12

Most companies interviewed are interested in having Decatur as a viable option for container imports

Most interviewees were interested in the

potential for the Decatur terminal

One company ships intermodal inbound

today — as a part of manifest trains

Four companies have been in discussion

with ADM, brokers, or other stakeholders

about using the Decatur ramp

If Decatur terminal had competitive

offering, most interviewees would be

enthusiastic to use it

Interest Level in Decatur Ramp

Number of Interviewee Mentions

0

3

6

9

High Medium Low

Source: Interviews

13

Interviewees see the main advantage as being lower drayage cost versus Chicago

The primary Decatur terminal

advantage interviewees mention

was the lower drayage cost Shorter mileage

Less congestion

Less variability

Several other benefits were

mentioned by a single interviewee

Key Decatur Ramp Advantages

Number of Interviewee Mentions

0

3

6

9

Low CostDray

LowerCarbon

Footprint

Good forLocal

Economy

Better forDrayageProvider

LongerPickupTimes

Source: Interviews

14

The Decatur service has to be competitively priced on a total delivered cost basis

To be of interest to shippers, the Decatur service would have to be equal to

or less expensive than options through Chicago… …particularly if shippers have to give up some degree of service (transit time or

frequency)

There should be drayage savings due to shorter length of haul and less

traffic congestion

Rail rates to Decatur have been a sticking point. So far the railroads have

not offered rail rates that are competitive with their rates to Chicago Rail rates for interchange moves (involving more than 1 railroad) are likely to be

higher and add to the total transit time

Conversations continue between the railroads and ADM/Midwest Inland Port

Source: Interviews

15

Many interviewees would be open to having longer transit times and less frequent intermodal rail service

Decatur Terminal Service Requirements

Number of Interviewee Mentions

0

3

6

9

Requires EqualTransit Time

Requires HighFrequency

Yes No

Most of the companies interviewed

would support the Decatur service even

if it required a longer transit time than

Chicago

Typically one to two days longer was

acceptable

Interviewees were split as to whether

they needed high frequency of trains

Three require high frequency to support

container flow and consistent

shipments

Three are okay with service two to

three days/week

Source: Interviews

16

Interviewees also suggest that having ship lines on board and a supply of draymen are important

Other Potential Success Factors

Number of Interviewee Mentions

0

2

4

Having supply chain partners and

supporters in place will be important to the

Decatur terminal’s success Several interviewees suggested that a

drayage network will have to be

developed in Decatur as well as a chassis

pool (chassis are the frame and wheels

that the container is placed on for truck

transport)

Ship lines control the routing of many

international shipments (international

containers are controlled by the ship lines)

so will have to support shipping to Decatur

Shipper-friendly rules around storage and

free days was mentioned by one

interviewee

One interviewee suggested the facility

should have customs clearance

capabilitiesSource: Interviews

17

Caterpillar accounted for 40% of import container shipments to central Illinois

Caterpillar accounts for about 40% of

central Illinois imports

After Caterpillar the import volume is

relatively widely distributed among a

large number of companies

There were only four companies with

more than 1,000 container imports in

the 12-month period assessed

Based on interviews, several

companies have more containers/ year

than the PIERS data would suggest

Cumulative additional 2,700

container imports

Top Importers to Central Illinois

Note: Zubrod/Clair combined similar company names where

applicable

Source: Interviews; PIERS database of central Illinois exports,

4/1/2014 – 3/31/2015; Zubrod/Clair analysis

Company

Container

Volume

%

Total

Caterpillar 8,680 40%

Mitsubishi 2,739 13%

ThyssenKrupp 1,123 5%

BRG/Bell Helmets 1,078 5%

Komatsu 764 4%

Vesuvius USA 569 3%

Rural King 539 3%

Horizon Hobby 264 1%

ADM 210 1%

C Preme 10 186 1%

All Other 5,359 25%

TOTAL 21,509

18

Caterpillar has developed a transload model in the Chicago-area that it expect to continue to use

Caterpillar has developed a supply chain

model based on shipments to Chicago Transload freight from containers to

trucks near Chicago

Match import and export loads to

maximize truck utilization to and from

the transload facility

Keep containers near Chicago, rather

than at production facilities

They have assessed the Decatur option

in the past and found that it was not as

attractive as their current transload

model

Resulting import volume to central Illinois

excluding Caterpillar is about 13,000

containers/year, or about 50/day (based

on PIERS data)

Source: Interviews; PIERS database of central Illinois exports, 4/1/2014 –

3/31/2015; Zubrod/Clair analysis

19

The Midwest Inland Port and ADM team are trying to address barriers to Decatur ramp use

Working to get additional rail service Discussions for rail from the west coast

Obtaining ship line support Many of the large ship lines are supportive

ADM has program to guarantee a load outbound for a loaded inbound container

Improving drayage network ADM drayage company provides service and has a chassis fleet

ADM Logistics has relationships with many other drayage companies

Planning to obtain customs clearance capabilities Filing for customs port of entry status

Can provide service to support even flow of containers Capability to store containers at the terminal and send to customer over several days

Source: Interviews

20

Potential next steps

The ISA, its member farmers, and the agricultural community in the state of

Illinois should support efforts to increase import volumes through the Decatur

ramp to facilitate lower cost agricultural products container exports Educate and publicize the importance of export intermodal to the soybean and general

agricultural supply chain from Illinois

Provide support to Midwest Inland Port and ADM in their efforts to solicit involvement

from partners and stakeholders, including not only shippers, but also potentially

railroads

Provide support to Midwest Inland Port and ADM in their efforts to obtain customs

clearance status for the facility

Provide support to Midwest Inland Port and ADM at events involving stakeholders and

other influencers (e.g., tour of facilities for members of foreign consulates the week of

October 19, 2015)