Best Practices Consortium Supply Chain Best Practices Consortium Core Carrier Programs Executive Seminar Track 3, Session A September, 2006

Scope This session covers core carrier program strategies and trends: Core Carrier Program Utilization Carrier Selection Core Carrier Performance and Rate Trends Core Carrier Service Agreement Trends

TL Core Carrier Satisfaction Ratings Selected TL core carrier satisfaction ratings over the past 3 years: Rates Breadth of Lanes Capacity Availability 2005 responses appear to demonstrate an acceptance of a cost versus capacity/breadth of lanes tradeoff. In 2006, however, respondents were less satisfied with rates as well as capacity.

Core Carrier Program Utilization What percentage of Supply Chain Consortium members employ a core carrier program? % of Respondents with Core Carrier Program Years with Core Carrier Program Overwhelmingly, core carrier programs are well established.

Core Carrier Program Definition How are core carrier programs defined? Services provided by carriers? Number of carriers utilized? Contractual obligations? Performance measurement systems? Other criteria?

Interstate Distributing Company Core Carrier Profile Truck Load (TL) Core Carrier Profile From 2004-2006, 152 carriers have been identified as core TL carriers. Of those TL carriers, the Top 10 most frequently noted carriers account for 42% of the responses and the Top 20 account for 54%. Smaller carriers still play an important role with most shippers. TL Top 10 Swift JB Hunt Schneider National US Express Werner CH Robinson Covenant Transport Hub Group Interstate Distributing Company Crete

Conway Transportation New England Motor Freight Core Carrier Profile Less Than Truck Load (LTL) Core Carrier Profile From 2004-2006, 56 carriers have been identified as core LTL carriers. Of those LTL carriers, the Top 10 most frequently noted carriers account for 70% of the responses and the Top 20 account for 85%. National and super-regionals, as expected, are most often utilized. LTL Top 10 Yellow Freight Roadway Express Overnight ABF FedEx Old Dominion Watkins Conway Transportation New England Motor Freight USF

TL Core Carrier Satisfaction Ratings (continued) Selected TL core carrier satisfaction ratings over the past 3 years: On-Time Performance Responsiveness Tracking & Visibility Trends in service related ratings dropped in 2005 and 2006, although shipment visibility improvements were recognized.

LTL Core Carrier Satisfaction Ratings Selected LTL core carrier satisfaction ratings over the past 3 years: Rates Breadth of Lanes Capacity Availability While satisfaction decreased in 2005 for LTL rates, it appears to be on the upswing for 2006. Capacity and breadth of lanes look to be satisfactory and improving.

LTL Core Carrier Satisfaction Ratings (continued) Selected LTL core carrier satisfaction ratings over the past 3 years: On-Time Performance Responsiveness Tracking & Visibility Service related ratings show mixed results, although on-time performance was up slightly in both 2005 and 2006.

Core Carrier Contractual Relationships Typical profile of core carrier service agreements: Average Duration of Contract Average Years Between Freight Bids Contract durations are getting shorter, while time between freight bids is increasing. Are shippers moving away from formal freight bids to a less formal approach?

Your Expectations What would you like to learn from this session? Important issues? What’s working? What’s not working? What’s changing? Shared good and bad experiences? Reasonable performance expectations?

Potential Discussion Points What are the top two or three factors in achieving a successful core carrier strategy? What strategies do you use to refresh your core carrier mix? In what ways do you seek to leverage relationships with core carriers? How do you measure the success of a core carrier program? What technology benefits have you gained from core carrier relationships? What impact has industry consolidation had on your program?

Potential Discussion Points (continued) What strategies have you employed to gain access to or maintain capacity? How responsive are your core carriers to addressing performance issues? How have rising fuel costs impacted your core carrier strategies? In what roles do you utilize non-core carriers? How frequently do you meet with core carriers and what are the objectives of those meetings?

Important Takeaways Some important Benchmarking & Best Practices core carrier strategy takeaways include: Clearly defined objectives – While most shippers have a core carrier program in place, objectives for the program are often narrowly defined. Access to better rates and capacity are commonly cited, however, other benefits are possible such as access to carrier technology, seasonal planning and leveraging carrier networks. Communicate expectations – Periodic meetings with core carriers can open up opportunities to gain more from relationships. Leveraging partnerships – Leveraging carrier tools, networks and expertise can provide service benefits and/or partially offset rate increases. Carrier involvement – Involve carriers in operational and seasonal planning to find win-win solutions. Refresh the Program – At a minimum, annually review carrier performance and business needs. Consider refreshing the mix of carriers in the program.

Questions?

Benchmarking & Best Practices References Information on core carrier program strategies can be found in the following references: