Economic Dynamics of Freight & Modes

The Trucking Industry

Sources: ATA & U.S. Freight Transportation Forecast to 2024 & ATA Truck Rail Interstate Highway JIT/Supply Chain Billions of Tons Deregulation Historical Tonnage by Mode

Source: U.S. Freight Transportation Forecast to Truck Tonnage Only Distribution of Tonnage by Mode: 2012

Source: ATA Classes 7 & 8 Tractors Only 4.5 million Trucks Classes million Classes 7 & 8 Tractors Distribution of Trucks: 2012

The US Freight Economy We expected the economy to slow in Q1, but the weather was a significant drag. The housing recovery and auto production have been helping freight volumes. The US energy production boom is boosting truck tonnage. More optimistic on manufacturing activity this year, but it wasn’t a big help in Consumer spending has been choppy, but will accelerate in Most headwinds (x weather) that remain are primarily from DC.

Real GDP Forecast Source: ATA

What Drives Truck Freight Volumes?

Annual Housing Starts (Millions of Units) Sources: Census Bureau and ATA 2014 will be the highest level since 2007.

Real Consumer Spending (Annual Percent Change) Sources: BEA and ATA

Factory Output (Annual Percent Change) Sources: Federal Reserve and ATA

US Crude Oil Production (Millions of Barrels per Day) Source: EIA 67% increase

US Exports Diesel vs Gasoline Thousand of Barrels per Day Source: EIA

Trucking Trends: Demand

Changes in For-Hire Truck Freight Volumes Sources: ATA’s Monthly Truck Tonnage Report & Trucking Activity Report

Changes in TL Loads by Sector (Seasonally Adjusted) Source: ATA’s Trucking Activity Report Spot market did well in Q1 as shippers tried to get freight moved.

Total Truckload Loads & Miles Source: ATA’s Trucking Activity Report

Dry Van Average Length-Of-Haul is Down Source: ATA 772 miles

Miles Per Truck Per Month are Down too Source: ATA (Includes all types of TL carriers)

Trucking Trends: Capacity

Source: ATA based on Trucking Activity Report 2005 = 100 Through February 2014 TL Loads Index TL Tractor Count Index Oversupply TL Supply vs Demand

Costs & Drivers

Source: US Department of Energy WTI $/Barrel$97.91$95.33$89.79 Diesel Prices

The Class 8 Fleet Has Aged, but the Industry Is Struggling to Reduce It (Average Age in Years) Source: ACT Research

Motor Carriers Are Struggling to Replace Their Trucks New Diesel Tractor (Sleeper) Price Estimate (Annual Averages) Source: ACT Research

Source: ATA 2013 LTL: 11% TL Truck Driver Turnover Rates

Source: ATA Benchmarking Guide for Driver Recruitment & Retention Average Number of New Drivers Needed Per Year Over the Next 10 Years: 96,178

Intermodal Market

Growth in Tonnage Total Percent Increase from 2012 to 2024 Waterborne Rail Carload Trucking Rail Intermodal Air Pipeline Source: U.S. Freight Transportation Forecast to 2024

Billions of Tons Note: Maximum competitive freight is less than 1 billion tons in a total market (truck and rail only) of 11.4 billion tons, or less than 10%. Competitive freight includes all freight traveling at least 500 miles, but excludes coal tonnage. There is a significant amount of time definite freight in this category that really isn’t competitive, but it is included. So in reality, the competitive market is even smaller than suggested here. Trucks and Trains Compete on a Very Limited Basis Sources: Commodity Flow Survey (US Census Bureau) and ATA 2012 Competitive Freight Among Truck and Rail Tonnage

Trucking Rail Intermodal Sources: ATA & U.S. Freight Transportation Forecast to 2024 Tonnage Growth 2012 to 2024 & Market Share in 2024 (Baseline Forecast)

Trucking Rail Intermodal Sources: ATA & U.S. Freight Transportation Forecast to 2024 Instead of growing 67.8% from 2012 to 2024, we doubled Intermodal’s growth rate all at the expense of trucking – the impact is very small. Tonnage Growth 2012 to 2024 & Market Share in 2024 (Alternative Forecast #1)

Trucking Rail Intermodal Sources: ATA & U.S. Freight Transportation Forecast to 2024 Instead of growing 67.8% from 2012 to 2024, we tripled Intermodal’s growth rate all at the expense of trucking – the impact is very small. Tonnage Growth 2012 to 2024 & Market Share in 2024 (Alternative Forecast #2)

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