Transcript Challenges in Trucking
The Challenges of Trucking Today Presented by Don Thornton, VP TransCore
National Association of Steel Pipe Distributors
February 25, 2005
© 2004 TC IP, Ltd. All rights reserved. All trademarks are the property of their respective owners.
Agenda
TransCore Overview Customer Profile – InTransit Economic Update: What is driving freight demand?
Trucking Demand: What are the trends?
Capacity: Additional limiting factors What can I do to get capacity?
TransCore Overview
TransCore – Industry Leader
More than 65 years in the transportation industry Installations in 41 countries More than 1,800 employees in 80+ locations
Freight Matching and Exchange Spot market freight matching More than 18,000 customers Multiple customer access points Private online trading communities Additional services available
Freight Services
North America’s largest network with more than 45,000 users posting shipment and equipment availability 220,000 to 500,000 shipments posted daily More than 60,000 daily truck listings Media/Electronic access to ~1.2M trucks Multi-media access via the Internet, call center, fax, and server-to-server integration
Truck Stop Services
Uniquely positioned national network of 1,200 load monitors and 150 call boards 1.2 million “looks” a day Real-time information on loads, jobs, weather and news Exclusive agreement with the two largest chains and 600 independent truck stops
Media: Digital Signage and Call Board
Intermediary and advertiser access to Drivers and Consumers Digital Signage Media rotate advertising Call boards have full-color back-lit displays and provide FREE phone access to products and services Targeted local, regional or national exposure for business, services, or products Messages constantly seen 24 hours-a-day, 7 days-a-week
Customer Profile - InTransit
Don Farthing, President/CEO, 800-547-2053 ext 1615
Economic Update: What is driving freight demand?
Manufacturing Production
Year-to-Year Percent Change
5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% 2000 2001 2002 2003 2004 Sources: Federal Reserve & ATA
Manufacturing Inventories Inventory/Sales Ratio; Through November 1.46
1.44
1.42
1.40
1.38
1.36
1.34
1.32
1.30
1.28
1.26
1.24
Manufacturing inventories remain very lean 1.22
1997 1998 1999 2000 2001 2002 2003 2004 Source: Department of Commerce
Non-Farm Payroll Employment Change from the previous year; Scale in Millions 2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
2000 2001 2002 2003 2004 Sources: U.S. Department of Labor & ATA
Trucking Demand: What are the trends?
ATA’s Monthly Truck Tonnage Index 1993=100
170 160
ATA’s Monthly Truck Tonnage Index (1993 = 100)
150 140 130
Tonnage is off its peak, but is poised to continue growing in 2005.
120 1997 1998 1999 2000 2001 2002 2003 2004
Source: American Trucking Associations
TransCore Freight Index Month January February March April May June July August September October November December Spot Market Freight Index 2002
248 251 428 523 672 709 599 611 616 649 488 411
2003
329 383 621 715 749 834 814 839 944 1028 841 653
2004
563 786 1156 1236 1294 1445 1144 1159 1245 1227 1063 838
Percent Change 03-04
71% 105% 86% 73% 73% 73% 41% 38% 32% 19% 26% 28%
Truckload Industry Loads 1993=100; Through November 2004
220 210 200 190 180 170 160 150 140 130 120 110 100
Large Truckload Carriers (Over $30 Million) Small Truckload Carriers (Under $30 Million)
1997 1998 1999 2000 2001 2002 2003 2004
Source: American Trucking Associations’ Trucking Activity Report
U.S. Class 8 Truck Sales 300,000 250,000 200,000 150,000 100,000 50,000 0
January 2005… 61% increase over Jan ’04…all time high as reported in TT Feb 21, 2005
1998 1999 2000 2001 2002 2003 2004 Sources: Ward’s Communications & ATA
Capacity: Additional limiting factors
Shippers Believe TL Capacity Is Tight Too (September Survey) Over Capacity 13% Balanced 15% Extremely Tight 30% Tight 42% Source: Bear, Stearns & Co. Inc.
Capacity Constraints
Lack of quality drivers are constraining ability to increase capacity Thousands of failures in 2001, 2002 HOS productivity loss New Engine Purchase delays and performance
Truckload Driver Turnover (Quarterly Annualized Rates ) 130% 120% 110% 100% 90% 80% 70% 60% 50% 2002 2003 Large TL Small TL 2004 Source: ATA’s Trucking Activity Report
National On-Highway Average Diesel Fuel Price ($/Gallon) $10 billion more spent on fuel in 2004 $2.30
$2.10
$1.90
$1.70
$1.50
$1.30
$1.10
$0.90
Average Price 1994 to Present ($1.30/gallon) $1.98
Sources: Department of Energy & ATA
Higher Diesel Prices Lead To More Trucking Failures 1,400 1,000 600 200 $1.85
$1.75
$1.65
$1.55
$1.45
$1.35
$1.25
$1.15
$1.05
$0.95
Trucking Failures National Avg. Price of Diesel Fuel Sources: A.G. Edwards & ATA
Insurance: Cost per Truck $6,500 $6,100 $5,700 $5,300 $4,900 $4,500
The liability insurance market is starting to level off, even fall in a few cases… …However, many carriers have & will continue to take on substantially more risk.
1999 2000 2001 Data based on information disclosed from publicly-held truckload carriers.
2002 2003
What Can you Do to Get Capacity
Work with companies (i.e. Intransit) that have the ability to find small trucking company capacity Understand market conditions and why capacity is tight; For example: Driver shortage, HOS, Fuel, etc.
Offer rates that are competitive and realistic (Rate Index) Always look at ways to make your business freight friendly Develop quicker freight payment solutions
In Summary
Economy and Manufacturing growth High Transportation Costs high due to Driver Shortage / Pay Increases Fuel, Insurance Costs HOS Demand Look for resources that find new capacity Intransit; TransCore