L.A. Port Congestion / 2015 Outlook

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Katelyn St. AnaNetwork FOB April 9th 2015

2014 CAPACITY CHALLENGES

• Polar Vortex – Terrible weather• Truck, Rail and Intermodal Services Slowed

• Product / Commodity shift• Increased movement of Oil and Shale

• Driver Shortages• Costs skyrocketed and OTR pool diminished• Estimated 200,000 drivers short by 2020

• Government Regulation• HOS 3% loss in 2014 (ATA)• California Air Resources Board (CARB)

• Transportation Provider Closures• Cold Train (August 2014)• McKay Transcold (November 2014)

• Barriers to Entry• Port Congestion

Cargo Ships waiting to make berth at Port of Long Beach CA 2015

Shortly after Atlanta was hit with unexpected snow late 2014

2015 CAPACITY FORECAST

• West Coad Port Ramp-up already impacting Capacity• Previously offer Intra US relief in Q1

• Driver Shortages Increase• TL Driver Turnover is 103%

• Additional Government Regulation

• Barrier to Entry not Improved

• Demand continues to increase

• Lack of rate stabilization

• Tighter Market than 2014

• One 2015 Positive: CP and CN averted strikes in L.A.

ADDITIONAL GOVERNMENT REGULATION

• 2015 West Coast Port Agreement

• Involves 29 ports from San Diego, CA to Seattle, WA

• Thomas Perez (U.S. Labor Secretary) was sent to intervene

• Agreement was reached on February 20, 2015

• Union workers will vote on May 22, 2015

• They handle about 25% of all international trade

• As of now, cargo ships off the coast are making berth as scheduled

• Port delays have subsided but we still have the issue of driver shortages

Thomas Perez at the Port of Long Beach

WHAT IS THE PROBLEM?

• Driver’s median age is over 46 years old

• HOS revisions 2014 through 2016

• Electronic Logging Device mandate (Coming between 2017 and 2018)

• Increased insurance minimums

• Speed Limitations – according to Eric Starks, President of research firm FTR Transportation Intelligence “Every one mile per hour drop adds 67,000 more trucks to move same freight,”

• Millennials’ are lazy and ‘resourceful’ which makes truck driving unappealing because of the “the government will take care of me” mindset.

HOW DO WE MOVE FORWARD?

• Trucking Operators expanded payroll by 46,000 jobs in 2014, compared to 24,900 in 2013.

• Driver Retention Programs• The top 4 approaches are increased pay, upgrading equipment,

performance based bonuses, and recognition/reward programs.

• Recruiting young adults in their 20’s

• Create better working conditions• Jason’s Law

• There is a push to increase max weights, the bill is up later this year • ATA wants states to allow a 97,000 lb, six-axel weight limit OR an

88,000 lb, five-axel weight limit, standarize trailer lengths at 53’ and allow two 33’ double trailers, up from 28’.