Trucking today & Tomorrow Jim Mele Editor Emeritus Fleet Owner jm.fo@outlook.com

A Few Questions Help me focus on what’s most important to you Are you shippers, fleet operators, both or none of the above? How many have own truck fleet? Depend on backhauls to generate some revenue? How many have a dedicated or contract carrier? How many use 3PL to manage/purchase freight? How many use brokers? How many manage freight in-house?

Trucking Today Good news and bad depending on your perspective Rates rising rapidly, capacity tightening How high, how fast? DAT’s NA Freight Index up 9% over August for record high since 2000 Spot freight loads up 74% YOY Largest YOY growth in truckload demand since 2010 Contract rates rising for first time in 18 months DAT – digital load board and industry source of freight activity FTR Assoc. source for contract rates

Trucking Today cont. Flatbed numbers: Load activity up 3% over Aug. Had declined in Sept. for last 6 years Spot rates up18% YOY at $2.26/mi., highest monthly average since 2014 Increases continued into first week of Oct., up $.05/mi. vs. last week in Sept. 41.8 loads available per truck in Sept., up 227% YOY

Why? General economy Harvey and Irma – long-range impact for flatbed Fleet’s aren’t adding capacity Unfortunately … Van TL flattening after hurricanes, but flatbed involved in rebuilding, so demand will remain elevated for at least a few quarters.

Tomorrow – Capacity Pressures ELDs coming home to roost Confusion over implementation, but now coming Dec. 18 60% haven't switched yet FMCSA won't put out of service until April, but will fine Fleets that have warn of big productivity drop 5-7% Fleets restructuring business models in response 494 mi. one-day, 1000 mi. two day YES, 600-700 mi. NO Detention time now really important and quantifiable There will be good and bad loads, customers Many will exit industry -- not one O/O adopted ELD in Sept. survey Electronic Logging Devices – replacing paper records of HOS used since 1930s Paper logs easy to manipulate, create “extra” hours Adopting ELDs not simple process – takes time to understand impact on business

Tomorrow - Capacity Pressures cont. Drivers at a premium again ELD pressure on earnings just as turnover returns New entrants – economy, training, testing. Immigration wild card Fleets can’t add capacity without new drivers Pay will increase, so will rates Drivers paid by mile in TL sector, so if they lose miles to HOS enforcement, lowers pay New drivers – rapid adoption of automated transmissions – almost 100% on new truck orders CDL training and testing rules a high barrier and expensive to train. Economy improving means more competition for workers in jobs with better lifestyle

Big Changes Ahead Connectivity, automation and energy diversity Advanced safety systems, GHG come at high cost Driver demographics – work environment, lifestyle Data tailoring equipment and operations Rate of change over next 10 years in trucking higher than experienced over the last 100 years Connectivity means more data about trucks, drivers and CUSTOMERS to optimize fleet operations Automation further out than public media thinks, but still coming Energy diversity – powertrain for trucks – electric, natural gas, hydrogen, ? All chosen for specific applications Advanced safety systems – trucking in safety crosshairs – fatalities up again last year. Success of ABS, ESC now leading to blind spot warning, auto emergency braking, other systems that work but carry cost GHG standards for HD trucks still coming

Q & A FleetOwner.com jm.fo@outlook.com