Trucking Market Is Relief In Sight? 2
Jim Keeler Vice President, Sales & Marketing Logistics Management Resources, Inc. (LMR) 3
Agenda Trucking Industry Freight Demand Market Influences Solutions (?) 4
What Have The Polls Told Us? Greece will leave EU Great Britain will stay in EU Abortion vote in Ireland too close to call Catalan will leave Spain Hillary will win in a landslide 5
What Industry Pundits Are Telling Us 6
Industries Impacted Furniture Food Pantry Garbage Collection Oil & Gas Chemicals EU Australia North America Promo Products Air Cargo Bus Lines Beer Asphalt Retail Restaurants 7
Agenda Trucking Industry Freight Demand Market Influences Solutions (?) 8
US Trucking Industry Overview Industry 2017 Revenue $700.3 B (+3.5%) Tonnage 10.8 B (70.2%) # Carriers 442,338 # Trucks 3.7 Million # Drivers 3.5 Million Profit Margin 4.8% Trucking Companies 97% < / = 20 Trucks 91% < / = 6 Trucks 3% > 20 Trucks 194 Bulk Carriers (NTTC Members) ATA forecasting 35% volume growth by Y2029 Source: Truckers Report 9
US Trucking Industry Revenues/Expenses Trucking Industry Expenses 45% 40% 39% 35% 30% 25% 26% 20% 19% 15% 10% 10% 5% 4% 2% 0% Fuel Wages Equipment Maintenance Insurance Permits, Tolls, + 40% License 10
US Trucking Industry $ s / Mode $400,000 CCJ Top 250 Carriers (Y2017) $ / Tractor $ / Driver $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $332,779 $359,102 $228,178 $245,129 $247,610 $243,143 $267,523 $241,379 $258,016 $227,758 $238,531 $216,737 $227,048 $193,743 $190,341 $186,675 $165,734 $166,901 $50,000 $- Source: Commercial Carrier Journal 11
US Trucking Industry Hurdles Driver Ages Y2004 Y2018 60% 50% 40% 40% 52% 50% 60% out 6 months 35% out 3 months 30% 27% 20% 10% 3% 5% LTL = 10% 0% 55-64 > 45 <25 Truck Driver Wages Class-8 Tractor Cost Y1980 Adj Y2018 Walmart Avg Y2018 Tank Start $58,230 $67,430 $76,683 $82,000 $21/Hr. @ 70 Hr. Week $111,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $95,000 $140,000 $150,000 $180,000 Avg Y2013 $49,540 $40,000 $20,000 Avg Y1980 $38,618 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $0 Y2002 Y2018 Tesla E-Tractor 300 Mile Tesla E-Tractor 500 Mile Source: 1) Indeed.com 2) Zip Recruiter 3) Glassdoor.com 4) ATA 12
Agenda Trucking Industry Freight Demand Market Influences Solutions (?) 13
Transportation Indices +21.5% 120 100 US Truck Tonnage +33.4% 80 60 40 20 0 2011 2012 2013 2014 2015 2016 2017 2018 Source: 1) Bureau of Transportation Statistics 2) FRED Economic Data 14
Rail Intermodal Shipments (USA) Transit Day Turns From 14 to 15.5 Days = (-) 10% Available Containers 15
US Trucking Industry Demand/Capacity Source: DAT.com 16
Freight Volumes by Commodity Source: FreightWaves 17
Agenda Trucking Industry Freight Demand Market Influences Solutions (?) 18
Market Influences - Chemicals US Chemical Industry Growth (2018-2020) + 3.7% +36 million metric tons +723,000 truck shipments +808,000 container shipments 325 Projects Since Y2013 $194B 49% complete or under construction 45% in planning phase 6% unknown Increase from 97 projects / $72B Source: Duff and Phelps, BKD Corporate Finance 19
Market Influences Oil / Gas Crude Oil Drivers - $263K Avg Frac Sand 75+% growth 2,600,000 @ Y2022 Water extraction (60 trucks/day) Production overwhelming pipeline capacity Source: 1)Pipeline News 2) North American Pipelines 20
Market Influences General Port Volumes Top 20 = 98% total volume Total container volume +7% Q2-Q3 18 = record import containers Savannah, GA = records Baltimore, MD = records NY/NJ = significant growth Houston = 7,000 trucks/day (record) Panama Canal = record tonnage E-Commerce (Amazon Effect) $800 $600 $400 $200 $0 Fulfillment center wages ~ $17-$18/hour Highest $/Tractor, $/Driver revenues $42 Drug & Alcohol Clearing House + Failed tests E-Commerce Sales ($B) $390 Infrastructure $4.6 Trillion required for bridges, roads, ports $700 Y2002 Y2016 Y2022 21
Market Influences M & A, ELDs M & A Bulk Trucking - Recent Heniff purchases Miller Groendyke purchases McKenzie Buy drivers, not customers E-Log Impact 71% Earning less, 67% Driving fewer miles 660 Drive time minutes strictly monitored 400-800 One-way miles HOS, revenues Source: Duff and Phelps, BKD Corporate Finance 22
Agenda Trucking Industry Freight Demand Market Influences Solutions (?) 23
Solutions Who Wants What? Source: Inbound Logistics 24
Solutions Market Initiatives Market Initiatives: Changes to Hours of Service Driver flexibility for breaks Reducing interstate driver age Current 21 to 18 Opposed by Teamsters, OOIDA Continued driver pay increases Increase minority driver hiring Increase female driver hiring Increase military veteran hiring Market Initiatives: Adopt Twin-33 s Replace 28 pup trailers Parcel shipments only (Amazon effect) Adoption of aerodynamics, lower viscosity oil, shifting to neutral, direct-drive transmissions Growth in visibility tools (track/trace) Autonomous trucks Pipeline construction Siphon ~ 5% planned truck growth 25
Solutions Shipper of Choice Shipper of Choice (Driver Input) In/Out time Drivers lose $1,300-$1,500/year on detention Parking (overnight) 1 Hour/day searching = 10% wage loss Flexible appointment times Loading and delivery Deliver on driver s schedule? Amenities Personnel attitude (Plants) Shippers who respect the clock become shippers of choice 26
Solutions Shipper Initiatives Shipper Initiatives: Dedicated Fleets Dedicated pricing + Tender acceptance bonus Minimum acceptance, tiered levels Same day load/deliver Maximum legal driving hours Improved forecasting Shipper Initiatives: 24 x 7 Load/unload Zero free-time Pay for actual time in-plant Transition to regional freight Warehouses, terminals Blockchain Social network/virtual load matches 27
Logistics Management Resources, Inc. (LMR) LMR Portfolio - Established 1981, Privately Held, Debt Free - Non-asset 3PL - Truck Logistics Management - All modes (~9,000 Carriers) Bulk liquid/dry (~200 Carriers), truckload, hazardous materials, hazardous waste Order-tender Freight invoice audit/payment - ~ $200 Million = Freight Spend - Responsible Care and ISO certified LMR Ship Sites lmri.com Jim Keeler/VP Sales & Marketing 5605 Fountain Gate Road, Knoxville, TN 37918 james.keeler@lmri.com, 865-405-2065 28
Where s My Truck? Kentucky 2015 Tennessee 2018 29