MIDWEST ASSOCIATION OF RAIL SHIPPERS...2017/04/06  · MIDWEST ASSOCIATION OF RAIL SHIPPERS 1/13/2016 Tom Sanderson CEO, Transplace Please do not use logo’s on title slide. Use company

MIDWEST ASSOCIATION OF RAIL SHIPPERS

1/13/2016 Tom Sanderson

CEO, Transplace

Please do not use logo’s on title slide. Use company names only. Please delete this box when ready to present

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CORE SERVICE OFFERINGS

• North America’s Largest Non-asset Based Provider

• Modes: TL, LTL, Bulk, Ocean, Air, Parcel

• Complete 3PL outsource, load control center, SaaS

• Customs/Cross-border • Supply Chain Consulting

• Top Ten Provider in North America • Core Capacity • Dry Van (TL, LTL) • Temperature Controlled

• Top Ten Provider in North America • Truck-like Door-to-Door Intermodal

Service • Domestic & Cross-border Services • Real-Time Shipment Monitoring

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TRANSPORTATION MANAGEMENT SIZE & SCALE

2009 2013 2016

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1,000+ CUSTOMERS

FREIGHT ECONOMY IS RELATIVELY SOFT

Housing starts around 1.1 million Retail sales growing 2% nominal, 1-2% real Manufacturing contracted last 2 months Inventories are up Strong dollar hurting exports Auto is exception, record sales in 2015

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TRUCK CAPACITY INCREASED IN 2015

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Strong Q3 & Q4 2014 Class 8 sales - Strong TL pricing environment in ‘14 – confidence up

Q1 to Q3 2015 Class 8 sales up double digits - Q4 will be down from ’14 - Orders down 10 consecutive months

Minimal loss of capacity to bankruptcy HOS roll back added 3-5% to effective capacity

CAPACITY – B IG CARRIERS STILL BELOW 2006 TRUCK COUNT

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Source: Avondale Partners

Q4-2006 Q4-2007 Q4-2008 Q4-2009 Q4-2010 Q4-2011 Q4-2012 Q4-2013 Q4-2014

Big 4 53,195 52,874 48,021 45,224 45,735 45,969 44,529 49,077 50,394

Second 7 20,846 20,645 20,263 19,187 19,607 20,706 20,424 21,095 20,309

Big 11 Total 74,041 73,519 68,284 64,411 65,342 66,675 64,953 70,172 70,703

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Num

ber o

f Tru

cks

Truckload Carrier CapacityBig 11 TL Carriers

Class 8 Sa les Up, Orders Down

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Source: ACT Research

CAPACITY – DEMAND BALANCE FAVORS SHIPPERS

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Source: Morgan Stanley

TL PRICING RISING AT SLOW RATE

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Source: Stephen’s Inc.

4.3% 4.5%

TRANSPLACE TL BID RESULTS SHOW STRONG SAVINGS

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Period Shipper Bids

Avg.

Carriers

per Bid

Annual Freight

Expense

Avg. Freight

Expense per Bid

Avg.

Low-Cost

Scenario

Savings

Average

Final

Award

Savings

2012 28 Companies 103 837,534,937$ 29,911,962$ 11% 10%

2013 29 Companies 106 775,579,031$ 26,744,105$ 14% 8%

2014 33 Companies 112 827,459,155$ 25,074,520$ 8% 3%

2015-Q1 10 Companies 35 169,863,567$ 16,986,357$ 17% 13%

2015-Q2 3 Companies 80 65,201,563$ 21,733,854$ 24% 18%

2015-Q3 5 Companies 71 392,292,582$ 78,458,516$ 11% 4%

LTL PRICING RISING FASTER IN 2015

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Source: Stephen’s Inc.

5.5% 2.1%

REGULATORY DRAG WILL NOT HARM TRUCKING IN 2016

HOS restart will not be rolled back CSA scores removed from web, not in SFD ELD mandate not effective until 2017 FMCSA may try to push rules and guidance in election year

• SFD Advance Notification of Proposed Rulemaking

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DIESEL PRICES WILL REMAIN LOW IN 2016

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$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

Dol

lars

Per

Gal

lon

U.S. Weekly Diesel Fuel Prices

$2.211

DOMESTIC INTERMODAL GROWTH WILL REMAIN SLOW IN ‘16

Excess TL capacity = minimal price increases Low fuel prices reduced economic advantage Railroads too aggressive on pricing in 2015

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LONGER TERM TL CAPACITY WILL T IGHTEN

Shippers must: Re-examine supply chain network design:

- Trade-offs between inventory, facilities & transportation costs - Greater use of intermodal - Greater use of local and regional TL - Greater use of dedicated/private

Asset-based TL and 1-3 large brokers Become preferred shipper - embrace best practices

- Accessorial benchmarking

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TL HIGHLY FRAGMENTED, MOST ARE VERY SMALL

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93% of carriers have 10 or fewer trucks 99% of carriers have 50 or fewer trucks 49% of all vehicles are in fleets of <50 trucks

CRITICAL FACTORS PREFERRED SHIPPER PROGRAM

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Relationship

Treats with respect Consider carriers costs and issues Bring carriers other opportunities

Driver Friendly Facilities

Onsite Parking Restrooms Communication Break room for driver

Driver Productivity

Transit Time Drop Trailers Shipper Load Count No-Touch Freight Weekend Loading/Unloading

Shipper Ratings

Market rates Fuel Surcharge Payment Terms Volume Potential Credit Rating