1. Scott Grady Sr. Vice President Landstar Supply Chain Solutions Supply chain Overview North American Supply Chain Overview

2. North American Supply Chain Trends Early 2000’s • Globalized Focus • One Product fits all • Auto Industry • Clothing • Agricultural • Consumer Electronics • Inventory Floats could be as much as 60 days • Industry carried “Back up inventory” • Velocity was Slow • NAFTA • North American Focus • Limited Global Impact • Premature for Infrastructure

3. North American Supply Chain Trends Today • Globalization Comes Home • Consumer trends are changing more dynamically • Auto Industry • Clothing • Agricultural • Supplier Trends • Near Shoring • Campus Environment • Tier 1’s are more sub-assemblers than Manufacturing based • Auto • Electronics • Industry carried “Back up inventory” • Velocity Extremely Fast and agile • Supply base has “right Sized” no excess Capacity • NAFTA • Today NAFTA is bringing Manufacturing to the Consumer • Mexico Has Advantage

4. MEXICO Today Mexico • Seaports • Intermodal • Strong Infrastructure focus in past 10 years • Highway • Infrastructure Upgrades and Rapid improvement • Can Source Regionally Today • Growing Consumer Demand • Supplier Capacity • Workforce • Downside • Security Issues • Political Strife • Limited Logistics Expertise (Growing)

5. Changes in Strategy Manufactures • Campus Environment (Near Sourcing) • Tier 1’s (sub Assembly) on Campus • Parts are sequenced • Inventory owned by Tier • More capacity at Manufacturing sites • Forced Suppliers to Tier 1 • Consumer Electronics • Consumer Driven Velocity • Trends drive sourcing choices • Time to Market • Consumers tastes change and they want more for their $ • Retail-no longer seasonal, but stores are updated every 45-60 days • Automobiles, used to be 36 to 48 months concept to dealer floor • Dodge Dart 18 Months • Green Environment • Risk Mitigation • Sustainability

6. Changes in Strategy THEN NOW Collaborative Suppliers: Increased LTL Frequency Decreased Lead Time Decreased Inventory Reduced Transportation Spend Supplier Supplier Supplier Supplier Supplier Customer Supplier Supplier Supplier Customer Supplier Supplier

7. Current Supply Chain Issues Cross Border • Visibility • Security • High valued cargo • Merchandise easy to sell • Merchandise that is not traceable • Expedite • Mexico • US • Vendor set-up • Very little exchange still of capacity

8. Supply Chain Brief Discussion Design Why Outsource

9. Total Enterprise Solution Ocean Truck Air Rail Reducing Supply Chain Costs and Increasing Visibility Master Data, Customer Order Performance Reporting Level 1 SKU Level Planning Financial Settlement Transportation Management System Level 2 Shipment Planning & Optimization Supply Chain Event Mgmt Shipment Execution Global In-Transit Inventory Visibility

10. The Supply Chain Network The Design • Complexity drives the solution • Size and volume does not drive complexity • Forecasting integrity • A changing forecast drives • Mode change • Deviation and route fall off • Expedite • Visibility is the key • Multiple touch points need to have event marks

11. Network Design Types of Optimization Operational Tactical Strategic

12. 1. Loading 2. Warehouse receiving. Storage as required 3. Container stuffing 6. International transport (Land, Sea and/or Air) 4. Customs - origin 7. Customs -destination 5. Port services - origin 9. Container de-stuffing and warehouse receiving. Storage as required 8. Port services - destination 10. Truck loading 11. Final delivery Shipment Planning and Optimization Support a wide range of optimization needs • Consolidation • Service Provider OptimizedDecisions • Timing • Equipment • Route • Mode • Multi-Leg Multi-Mode Consolidation • Common Leg Consolidation • Multi Stop Consolidation • Multi-Tier Networks • LTL Consolidation • Continuous Moves • Service Time Calculation • 3-Dimensional Container Optimization • Itineraries & Profiles • Carrier Capacity • Throughput • Rating

13. Load Configuration • Shipment View • All Ship Units • By Item • By Commodity • By Stop • Change View Perspective • Nose • Tail • Top • Side • Manipulate, at the ship unit level • Sequence of loading • Orientation • Increase effective cube utilization • Provides detailed loading instructions • Reduces failed loads – loads that can not be loaded as planned • Inputs to drive utilization include SKU level detail • Stack ability, dimensions (LWH), dunnage

14. TOP 10 REASONS TO OURSOURCE • Global Reach • Leverage critical functions • Global resources • People, Process and Systems • Operating Expenditures (OpEx) Rules • No capital expenditures • Fees are operating costs • No need to show return on equity • Innovation and Interoperability • Outsources spend billions a year integrating new technology • Companies can tap into these resources

15. TOP 10 REASONS TO OURSOURCE • Service Transparency • As outsourcing has matured however, metrics have become a key indicator of the success • Organizations can benefit from best practices • Savings in Labor Cost • The cost of labor in developed countries for high level activities is extremely high • Shifting the location where this work takes place is definitely advantageous depending on the skill set. • Centralized Management of Resources and Functions • The ability for outsourcers to consolidate these functions is a core competency that many companies look to leverage. • Commonality across divisions and regions in process

16. TOP 10 REASONS TO OURSOURCE • Improving Regulatory Controls • Achieving, measuring and maintaining compliance is a complex and capital-intensive endeavor. Companies with limited compliance resources look to outsourcing for the design, execution and auditing of controls, while allowing companies to retain requisite internal oversight • Accelerating Process Maturity • Outsourcing can often become the catalyst to drive business maturity • Outsourcing can drive a set of best practices and recommendations that can be applied across the organization • Process integration is a key enabler to the improved delivery of services, and provides a comprehensive framework for aligning resources to deliver business value and repeatable processes across the Supply Chain

17. TOP 10 REASONS TO OURSOURCE • Increased Resources • Companies that need access to new skill sets for project work, mergers and acquisitions and/or to support expansion into a new region, outsourcing can offer a solution. • Leading outsourcing companies can support Strategic direction and develop new capacity as well as having a global reach to a broad talent pool • Improving Company Strategic Focus • Letting an outsourcer focus on managing operational functions allows companies to focus more strategically on their core business, saving time and improving efficiencies • Outsourcers today are in the business of driving innovation, managing data centers and applying non-disruptive technologies to help businesses succeed in an ever changing market

18. Solutions Environment Operational Tactical Strategic Focus Horizon Tools 3 to 6 Weeks 3 to 6 Months

19. Cost Reduction and Value Creation Order Optimization Reduce Shipments Mode Optimization Least-cost Mode Carrier Optimization Least-cost Carrier Order Visibility Inventory Reduction Business Intelligence Savings Validation 5 -15% Savings

20. The issues cause a ……. Ripple Effect…….

21. North America Capacity Market Issues • Capacity shortage predicted by mid 2013 • Capacity down 7% from 2008 (Source Credit Suisse) • ATA predicts a loss of capacity with CSA as cash strapped companies cannot afford in cab technology TT • Asset utilization poor • Empty miles are still high • Customer leverage deteriorates as rates increase with shortfall • Platform already strained in 1st and 2nd quarter 2012 • Natural Disasters • 2011 The year was telling

22. Transportation Industry Today 3.5 3.0 2.5 Capacity Shipments (Numbers) 2.0 1.5 Expenditures (Dollars) 1.0 Cass Freight Index 0.5 0 Jan 2011 Jan 2012

23. Planned for the Un-Planned • How far down the Supply Chain does your provider manage • Can you use the process to let you know • Event Management • Business Intelligence • Manage the exceptions • Utilization 23

24. Value Proposition

25. North American Supply Chain Trends Thank You