State of the Trucking Industry

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1 In This Issue... Pg. 1 - State of the Trucking Industry Pg. 3 - Crude Oil Continues to Fall, What Does It Mean? Pg. 4 - Central Freight Lines Purchases 100 New CNG Freightliners Pg. 5 - YRC Worldwide Teamster Employees Ratify Contract Pg. 6 - Carrier Service Metrics Pg. 7 - Carrier Profile - Dohrn Transfer State of the Trucking Industry President and CEO Rob Estes recently sat down for an in-depth interview about some of the challenges facing the trucking industry today. From issues like the current national driver shortage to new legislation and regulations, he offers a unique perspective on how Estes is navigating today s dynamic business environment. How has the implementation of the Affordable Care Act impacted Estes from both an internal and operational standpoint? Preparing to meet the requirements of the Affordable Care Act in 2014 has been complicated. Though we believe health-care reform legislation is well intended and making insurance available to everyone is an admirable goal, Estes has felt the strain along with all other companies of the millions of dollars in fees paid to the government. How has Estes overcome these challenges? While increased fees have really been eye-opening, Estes fiscally conservative business model has helped us through this big change. We continue to operate under a very low debt ratio, which allows us to manage costs and keep the company on an even keel. And that translates into very little impact on our customers due to the broad changes in the health-care market. On the home front, we re hoping that our new consumer-based health-care plan option will help bring transparency to medical costs and allow all of us to participate in a much healthier market for medical services. Estes employees 1

2 State Of The Trucking Industry Con t now have access to tools that help them make better-informed health-care decisions so they can exercise greater control over their own health-care expenses. Tax-advantaged, company-subsidized health savings accounts also incentivize employees to pay better attention to their own health and that of their families resulting in an especially good outcome for everyone. How has the driver shortage impacted Estes? The driver shortage is a concern for all freight transportation companies, but it has a somewhat smaller impact on those organizations that primarily provide less-than-truckload services. However, that is not to say Estes isn t feeling the effects. The driving workforce is aging our average driver age these days is 48 and as older, experienced drivers retire, we re not seeing as many younger people taking their place. Many of those older drivers started driving as soon as they graduated from high school. These days, however, drivers are not allowed to cross state lines in a truck until they turn 21. In those intervening years between high-school graduation and age 21, many more individuals are going to college to pursue white-collar work or establish a path in other directions. The best way to ensure public safety and low accident rates is to hire drivers with the cleanest records and solid driving experience. This fact hit home recently when a competitor pressured by the need for drivers recently lowered driving experience requirements and saw a 25% jump in their accident rate. Clearly, this is not an area for compromise, and the industry needs to find a way to help transition promising new drivers into experienced ones. What is Estes doing to recruit and retain experienced drivers with clean driving records? We re doing several things to proactively recruit safe drivers. First, we are ramping up our driving schools around the nation. Going forward, we have the capacity to graduate anywhere from drivers each year. And since Estes requires a high level of experience to help ensure everyone s safety, we ve developed ways to include hands-on experience as part of our drivertraining regimen once they complete the initial training. Another way we re handling the shortage is by recruiting experienced military personnel who are coming back to civilian life. Many servicemen and women have been certified drivers in the military, so they have the built-in experience required and often also the discipline needed to succeed. Of course, Estes remains committed to hiring only the safest drivers to protect everyone on the roadway as well as the freight we re carrying. The flip side of the hiring coin is driver retention, and we are working to ensure that we retain good drivers by offering competitive wages and benefits and a good working environment. How is Estes handling the current regulatory environment in the trucking industry? Beyond the driver shortage and the new cost of health care, the trucking industry or the economic circulatory system as President and CEO of the American Trucking Associations Bill Graves calls it has had to navigate through a great deal of regulatory hurdles. We can t argue with some of those regulations, especially those that make our roads safer and our operations more efficient. However, some are harder to justify than others. 2

3 State Of The Trucking Industry Con t With this said, one of the many benefits of our 82 years of experience as a freight transportation company is the fact that we ve proven it s possible to successfully navigate a changing landscape. As a matter of fact, we look at change as opportunity opportunity to become more efficient and to find better ways to serve our customers. Through the years, we have used flexibility as our watch-word, and that term applies in several ways. For example, operations can be flexible enough to handle the diverse needs of our customers. It can also mean that our service offerings are diversified enough to ensure long-term financial stability, something that s also very important to our customers. Finally, flexibility means we do what it takes to adapt to regulatory changes and maximize the opportunity to improve operations and customer relationships. In short, we never give up, and that resolve benefits our customers and our employees. Crude Oil Continues to Fall, What Does It Mean? Crude oil prices have fallen over $10 a barrel over the last 7 weeks and that means good news to all end consumers. Why this happening is and what should we expect in the coming weeks? The Why s? Geo Political tension seems to be quite for right now. That can change by the time I finish this article but for the last few weeks, no news is good news and no news means lower crude oil prices U.S. dollar believe it or not has been strong against the Euro. Since crude oil is traded in U.S. dollars this means you can buy more for your money with a strong dollar. Crude Oil is down $10 a barrel in the last 7 weeks. Typically for each dollar the price of crude oil falls, diesel fuel prices fall 2-3 cents a gallon and gas price fall similar. There has been a lack of demand for crude oil and finish product like diesel fuel and gas. The lack of demand has made a huge increase with inventory for all products. Great news for end users again. Remember this lower crude oil produces, lower diesel fuel prices, gas price, tire costs, oil and lubes, chap stick because if it has petroleum in it since crude oil is going lower so will these products. What to Expect! Crude oil should fall to less than $90 a barrel by the end of the year and has a remote shot at going as low as $85 a barrel That is roughly $6-$11 a barrel lower than it stands today. That kind of drop in crude oil, could equal a drop of cents in diesel fuel and gas prices. Could you say DOE national diesel fuel prices of $3.60 by January 1? Gas prices in most states under $3.00. Wow! What a New Year! Expect 2014 to be a good year as far as the cost of diesel fuel and gas prices go. We believe that nationwide gas prices will top out at $3.60. Yes, we know that is a lot more than what we are paying now, but it will also average out to be 20 cents less than what you paid in For diesel fuel, we see that topping out nationwide at $4.15 a gallon. Again, that is it topping out. We see the yearly average to be about $3.85 which is about where it is today. So there will be a little roller coaster ride but at the end of the year, you will have save about 20 cents per gallon compared to Author: Glen Sokolis, President of Sokolis Group fuel management. For more information about the Sokolis Group, contact Sales Executive Conor Proud. cproud@sokolisgroup.com

4 Dohrn Transfer Earns John Deere Recognition Award Dohrn Transfer has earned recognition as a Partner-level supplier for 2013 in the John Deere Achieving Excellence Program. The Partner-level status is Deere & Company s highest supplier rating. The Rock Island-based company was selected for the honor in recognition of its dedication to providing products and service of outstanding quality as well as its commitment to continuous improvement. Dohrn is a supplier of transportation and logistics to John Deere s Midwest operations. This is the forth time Dohrn Transfer has been awarded the Partner-level supplier for John Deere. We re proud to be recognized by John Deere for the level of service we have provided to them in recent years. It is a testament to our team s dedication and strength, and our employees all deserve the credit, from the drivers, to the dockworkers, to the support personnel in the office. It is rewarding to see their hard work being appreciated said Joe Dohrn, Executive Vice President. Suppliers who participate in the Achieving Excellence program are evaluated annually in several key performance categories, including quality, cost management, delivery, technical support and wavelength, which is a measure of responsiveness. John Deere Supply Management created the program in 1991 to provide a supplier evaluation and feedback process that promotes continuous improvement. Central Freight Lines Purchases 100 New CNG Freightliners Waco, Texas-based Central Freight Lines has added 100 CNG-fueled M2 112 trucks to its fleet of more than 1,600 vehicles, manufacturer Freightliner reports, noting that Central will support them with fueling stations being developed with partners in Fort Worth, San Antonio and Houston. The stations in Fort Worth and San Antonio are being developed by the Evo Trillium joint venture. Trucks on Houston will fuel at a Questar-ANGI facility (F&F, January 14). In 2012, we purchased CNG tractors that have been servicing the Houston area with proven efficiencies, Central president and CEO Don Orr says in a Freightliner release. As a result, we decided to continue investing in CNG tractors, specifically Freightliner trucks because of their reliability and the company s customer support. Waco, Texas-based Central Freight Lines has added 100 CNG-fueled Freightliner M2 112 trucks to its fleet of more than 1,600 vehicles. 4

5 Central Freight Lines Purchases 100 New CNG Freightliners Con t Taking Advantage of TERP We like Freightliner trucks for their quality, Orr said. They provide superior uptime and we get maximum utility over a long period. We also appreciate the dealer network. It s supportive and professional. Central is taking advantage of a Texas Emissions Reduction Plan program that allows participants to trade a less-efficient truck towards a cost reduction on each new CNG-fueled truck purchased, Freightliner says. YRC Worldwide Teamster Employees Ratify Contract Contract Extended to March 2019, Includes New Operating Flexibilities and Customer Service Enhancements OVERLAND PARK, Kan., Jan. 27, 2014 (GLOBE NEWSWIRE) -- YRC Worldwide Inc. (Nasdaq:YRCW) announced today that its employees represented by the International Brotherhood of Teamsters (IBT) overwhelmingly ratified an extension of its collective bargaining agreement to March My deepest thanks to our employees for their continued commitment to moving YRC Worldwide forward and putting us on the road to once again becoming a North American LTL industry leader. With this MOU extension, we took another significant step toward providing our employees the job security they deserve while providing our prospective lenders and equity investors the path they need for the company to achieve a complete recapitalization and achieve a healthy capital structure, stated James Welch, chief executive officer of YRC Worldwide. The five-year extension includes important customer service enhancements, cost savings and a profit sharing plan for eligible IBT employees that is dependent on operating performance and our ability to become more competitive in the marketplace, added Welch. We now move ahead with some of the most experienced transportation professionals in the industry and a more competitive wage and benefits package that will enable us to attract new members to our growing team. YRC Freight, Holland, Reddaway and New Penn emerge from this process with a renewed focus on achieving best-in-class performance in order to deliver great operating results for customers, employees and shareholders, concluded Welch. Forward-Looking Statements This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words will, would, anticipate, expect, believe, intend and similar expressions are intended to identify forward-looking statements. It is important to note that actual efficiencies from the new agreement, results of the contingencies to obtaining the efficiencies, closing of the proposed equity transaction discussed in this news release, our ability to restructure our pension fund debt and refinance our senior debt, and the overall results of our refinancing strategy, including the amount our existing stockholders will be diluted, will be determined by a 5

6 YRC Worldwide Teamster Employees Ratify Contract Con t number of factors, including (among others) those risk factors that are from time to time included in the company s reports filed with the SEC, including the company s reports on Forms 10-K and 10-Q and the company s Current Report on Form 8-K filed on December 9, Further, the company cannot provide you with any assurances that the efficiencies will be achieved, that the conditions contained in the definitive agreements related to the proposed equity transaction will be satisfied or that the proposed equity transaction, the pension fund debt restructuring or the senior debt refinancing can be completed in the timeframes required under the company s various agreements with its stakeholders, if at all. In addition, even if all the contemplated transactions are completed, the company s future results could differ materially from any results projected in such forward-looking statements because of a number of factors, including (among others) the risk factors that are from time to time included in the company s aforementioned reports. About YRC Worldwide YRC Worldwide Inc., a Fortune 500 company headquartered in Overland Park, Kan., is the holding company for a portfolio of successful companies including YRC Freight, YRC Reimer, Holland, Reddaway, and New Penn. YRC Worldwide has one of the largest, most comprehensive less-than-truckload (LTL) networks in North America with local, regional, national and international capabilities. Through its team of experienced service professionals, YRC Worldwide offers industry-leading expertise in heavyweight shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence. Please visit for more information. Carrier Service Metrics 4 th Quarter Averages % On Time ABF Conway Dayton Fgt. Extes Express NEMF Old Dominion Pitt Ohio SAIA Southeastern UPS Freight Ward Trucking YRC Freight Carrier 6

7 Issue 7 - Winter 2014 Carrier Profile - Dohrn Transfer dohrn21 North Dakota Minnesota South Dakota Nebraska Wisconsin Iowa Illinois Kansas e v e r y c i t y. Indiana Missouri e v e r y d a y. Dohrn Transfer has the highest saturation of trucks in the Midwest. We offer service into every city in our territory every day. Non-union and family owned and operated since 1981, Dohrn has grown to be the premier LTL carrier in the Midwest. Our fleet consists of primarily 53 foot trailers with straight trucks and liftgates available at every terminal. Dohrn Transfer has full state coverage in 6 states with a majority of that area being next-day service. While large enough to be your primary Midwest carrier, Dohrn has not lost the personal touch of its small company roots. Flexibility and customer service are the center of our company. 7