LOGISTICS February 8-11, 2009 Gaylord Texan Dallas, Texas. Title Sponsor :

Transcription

1 LOGISTICS 2009 February 8-11, 2009 Gaylord Texan Dallas, Texas Title Sponsor :

2 Transportation Discussion

3 Truck Capacity Truck capacity is declining. Is this permanent or temporary? Smaller regional carriers are impacted the most. Long term when economy revives what are the repercussions?

4 Transportation Costs US Logistics costs continue to rise, but recent developments are putting downward pressure on increases. Motor Carriers Total 671 Truck Intercity 455 Truck Local 216 Up 6.1% Fuel has declined steadily. Will prices remain stable? If yes, will the lower fuel prices cause companies to revert to old habits of empty miles?

5 Transportation Infrastructure Transportation infrastructure in the U.S. needs immediate repair/investment. Will the proposed stimulus package make a difference? Is it in time?

6 LOGISTICS 2009 February 8-11, 2009 Gaylord Texan Dallas, Texas Title Sponsor :

7 RILA S 2009 Logistics Conference Derek J. Leathers Chief Operating Officer DLeathers@Werner.com

8 Industry Update 2009 Current Supplier Strategy U.S. Economic Landscape Transportation Landscape Demand indicators Supply components Transportation Outlook Closing Comments, Questions 2

9 Current LSP Strategy Asset-Light Logistics Dedicated Asset-Intensive One-Way Truckload 3

10 U.S. Economic Recession Real GDP Comparison Change in real GDP % 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% 2008 Meltdown Q1 08 Q2 08 Q3 08 Q F/C Q1 08 Q2 08 Q3 08 Q F/C 4 th Quarter GDP 3.8% decrease is the largest drop since F/C 2011 F/C 2010 F/C 2011 F/C Source: Stiffel Nicholas, BEA historical data; EIU forecasts (Dec 08). 4

11 U.S. Economic Recession Dow Jones Comparison Dow s 34% drop in 2008 equates to a $6.9 Trillion loss in value Source: 5

12 Change in Domestic Truck Tonnage Year over Year Seasonally Adjusted 5.0% Percent change in tonnage 0.0% -5.0% -10.0% Largest monthly drop since April of % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Stiffel Nicholas, American Trucking Associations 6

13 For-Hire TL Dry Van Loads Index Dramatic demand fallout Q3 08 Six month decrease of 16.9% is largest since prior to 1993 Seasonally adjusted; 2000 = 100 Source: American Trucking Associations 7

14 Cumulative Decrease in Loads June 2008 through November 2008 Reefer Tank Dry Van Flatbed Source: American Trucking Associations 8

15 Total Trucking Failures vs. Average Diesel Fuel Price Does not account for existing fleet downsizing Failures 3,670 3,990 3,065 Avg Trk/Failure Trucks 117, , ,500 7% of capacity left the market in 2008 Source: Avondale Partners 9

16 Class 8 Truck Environment Orders and Builds Orders Builds Estimated Normal Replacement Level 230,000 trucks/yr 170,000 more trucks than normal were built in 2005 and % to 6% increase in supply. Excess supply is reversing with huge decline in class 8 truck builds. Do not expect industry pre-buy in

17 Fuel Price Trends DOE fuel price survey issued Monday of each week includes fuel taxes $5.00 $4.50 $ Forecasts: per gallon $3.50 $3.00 $2.50 $2.00 1/8/07 2/8/07 3/8/07 4/8/07 5/8/07 6/8/07 7/8/07 8/8/07 9/8/07 10/8/07 11/8/07 12/8/07 1/8/08 DOE National Fuel Average 2/8/08 3/8/08 4/8/08 5/8/08 6/8/08 7/8/08 8/8/08 9/8/08 10/8/08 11/8/08 12/8/08 1/8/09 2/8/09 3/8/09 4/8/09 * Dept. of Energy (DOE) fuel price survey of truck stops used by shippers/carriers for billing fuel surcharges. Fuel price includes fuel taxes. 11

18 Unemployment Rate Seasonally Adjusted Annual Unemployment percentage 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% Unemployment is inversely related with driver shortages Source: U.S Department of Labor 12

19 Sluggish Profitability Outlook Source: Baird Industrial Research 13

20 Summary & Watch-outs Continued soft economy in 09 Capacity under-demanded near-term Fuel price outlook appears stable however. Current one-way pricing not sustainable Provider size and scale does matter Core carrier strategy w/ balanced transportation spend will win 14

21 THANK YOU

22 Summary & Watch-outs Questions? 14

23 ARS Results Morning Breakout - Dallas As a shipper, what do you see as your primary industry concern? A) Fuel costs and expense control B) Highway Congestion C) Emissions and Regulatory issues D) Rail and Port Efficiencies E) Industry Shipping Capacity 65% 0% 8% 16% 11% A B C D E Total: 88

24 ARS Results Morning Breakout - Dallas Truck capacity declined throughout most of How concerned are you about having adequate truck capacity during 2009 and 2010? A) We're not concerned about it B) We are evaluating the situation C) It is a key concern 46% 23% 31% A B C Total: 102

25 ARS Results Morning Breakout - Dallas If you have concerns about capacity, which segment of the transportation industry most concerns you? A) Rail / Inter-modal Capacity B) LTL Capacity C) Large National Truckload Capacity D) Small Regional Truckload Capacity E) Owner Operator/Small carrier capacity 26% 22% 19% 19% 14% A B C D E Total: 73

26 Discussion ARS Results Morning Breakout - Dallas

27 ARS Results Morning Breakout - Dallas Fuel prices have declined steeply over the past several months. What actions are you taking to protect yourself from future fuel cost increases? A) Re-planning our network B) Working with Carriers to control dead head miles C) Working with Carriers to control their fleet fuel mileage D) No Action Planned E) Other 32% 23% 21% 11% 13% A B C D E Total: 87

28 ARS Results Morning Breakout - Dallas As a shipper, What Strategies do you expect your carriers be utilizing or exploring to improve their fuel productivity? A) Lower Fleet maximum speed B) Increase Driver Training and monitor driving habits C) Install Auxiliary Power Units D) Invest in more aerodynamic equipment over time E) All of the above 83% 15% 0% 0% 2% A B C D E Total: 60

29 ARS Results Morning Breakout - Dallas With fuel prices now at the lowest point in three years do you believe our industry will have the resolve to continue working to improve fuel utilization? A) Yes B) No 82% 18% Total: 98 Yes 80 No 18