MD-900 EXPLORER UTILITY HELICOPTER (NOTAR) .CARGO DELIVERY TO OIL RIGS, REMOTE DRILLING SITES . CORPORATE DELIVERY OF HIGH PRIORITY DATA, PACKAGES, PARTS . SMALL PACKAGE DELIVERY WAS A DESIGN CONSIDER- ATION MD-900 CARGO CAPACITY FEDEX LD-3s AWAITING LOADING FEDEX PARETO ANALYSIS OF “DELIVERY FAILURES” ? PERCENT OF PACKAGES NOT BEING DELIVERED BY “10 AM NEXT DAY” WAS ANALYZED (e.g. 1 1/2% ) ? EACH FACTOR ANALYZED ( WRONG ? ZIPCODE, ROUTING MISTAKES, LOST PACKAGES, ETC. ? A FEDEX V.P. WAS ASSIGNED TO ELIMINATE EACH FAILURE CAUSE ?THE “SEE THROUGH” CONTAINER WAS THE SOLUTION TO SMALL PACKAGES “LOST” IN THE BOTTOM OF CONTAINERS!! “SEE-THROUGH” CONTAINERS FEDEX “VIRTUAL INVENTORY SYSTEM” ?PIONEERED SOFTWARETO PROVIDE “SEAMLESS” INTERFACE FROM: ? PRODUCT DESIGN ? ORDER PLACEMENT ? RAW MATERIAL P/U & DELIVERY ? FINISHED PRODUCT PICK-UP & ? DELIVERY TO END CUSTOMER FEDEX PROVIDES ALL PICK-UPS AND DELIVERIES WORLD-WIDE COMPANY CAN OPERATE WITH ZERO INVENTORY!!! . FEDEX: SUPPLY CHAIN SOLUTIONS ? PROVIDE WAREHOUSING AT MEMPHIS FOR CUSTOMERS WANTING TO OFFER 1 or 2 DAY DELIVERY OF CRITICAL ITEMS WORLD-WIDE (CATERPILLER TRACTOR) ? OFFER CUSTOMS BROKERAGE, INTERNATIONAL OCEAN FREIGHT FORWARDING, TRADE FACILITATION WHERE IS THE MARKET FOR AIR CARGO EXPECTED TO GO? AVERAGE FREIGHT REVENUE PER TON MILE 0 10 20 30 40 50 60 70 80 90 BARGE RAIL TRUCK AIR CARGO (DOMESTIC) OIL PIPELINE CENTS PER TON-MILE SOURCE: U.S. DEPARTMENT OF TRANSPORTATION, BUREAU OF TRANSPORTATION STATISTICS, 1985-1999; “TRANSPORTATION IN AMERICA,2000”-2001 U.S.TON-MILES OF FREIGHT 0 200 400 600 800 1000 1200 1400 1600 AIR CARGO TRUCK RAIL WATER (COASTAL) WATER (LAKE/RIVER OIL PIPELINE BILLIONS OF TON-MILES SOURCE: NATIONAL TRANSPORTATION STATISTICS, U.S. GOVERNMENT, BUREAU OF TRANSPORTATION STATISTICS, 2002 AVERAGE LENGTH OF HAUL DOMESTIC FREIGHT 0 200 400 600 800 1000 1200 1400 AIR CARGO TRUCK RAIL WATER (COASTAL) WATER( LAKE/RIVER) OIL PIPELINE STATUTE MILES SOURCE: “TRANSPORTATION IN AMERICA-2000”, 2001 TOTAL U.S. FREIGHT EXPENDITURES 0 5 10 15 20 25 30 35 40 AIR CARGO RAIL BARGE OIL PIPELINE DOLLARS (BILLIONS) NOTES: 1.INCLUDES INFRASTRUCTURE COSTS, TAXES, SUBSIDIES, AMTRAK SOURCE: “TRANSPORTATIN IN AMERICA-2000”, 2001 IATA INTERNATIONAL AIR FREIGHT FORECASTS INTERNATIONAL AIR CARGO FORECAST IATA DATA 2001 ICAO AIR CARGO FORECAST FOR THE YEAR 2010 WORLDWIDE ACTUAL ACTUAL FORECAST AVERAGE GROWTH RATE 1989 1999 2010 1989- 1999 1999- 2010 FREIGHT TONNE – KM - MILLIONS 57,215 108,043 202,650 6.6% 6.0% NOTE: EXCLUDES CIS SOURCE: ICAO FORECAST (2002) ICAO REGIONAL FORECAST OF AIR CARGO FOR 2010 (FREIGHT TONNE –KILOMETRES IN MILLIONS) 1989 1999 FORECAST 2010 RATE 0F GROWTH 1989-1999 RATE OF GROWTH 1999-2010 AFRICA 1,176 19,693 3440 5.3% 5.0% ASIA- PACIFIC 15,634 37,564 83,000 9.2% 7.5% EUROPE 19,246 31,193 52,120 4.9% 4.5% LATIN AMERICA 2626 4221 6950 4.9% 4.5% NORTH AMERICA SOURCE: ICAO 2010 FORECAST 15,962 29,028 51,000 6.2% 5.0% OUTLOOK FOR AIR CARGO ? WORLD AIRLINE PAX TRAFFIC FORECAST TO GROW 1999-2010 @ 4.5% ? WORLD AIR FREIGHT GROWTH 1999-2010 FORECAST @ 6.0% . ASIA-PACIFIC REGION EXPECTED TO DOMINATE AIR FREIGHT GROWTH MARKET . UNIT COSTS ( OPERATING COST PER AVAILABLE TONNE-KILOMETERS) (ATK) DECLINED AT AN AVERAGE ANNUAL RATE OF 3.0% FOR PERIOD 1960-1999) LARGER, MORE EFFICIENT FREIGHTERS ARE MAKING AIR FREIGHT MORE COMPETITIVE! CONCLUSIONS ? AIR CARGO MARKET IS TIED TO WORLD GDP; ALMOST A LEADING ECONOMIC INDICATOR ?USEDPAX AIRCRAFT CONVERTED TO FREIGHTERS ARE COST-EFFECTIVE! ? CORPORATE FOCUS ON “LEAN” HAS DRIVEN INTERNATIONAL AIR CARGO GROWTH . AIR CARGO IS RAPIDLY GROWING NICHE IN TOTAL CARGO MARKET!!!