Tracking the Trucking Industry… 2004 and Beyond Presented by Dan Murray American Transportation Research Institute

The Economy Matters…

Source: Institute for Supply Management Manufacturing Production Purchasing Managers Index False Start Growth Threshold December’s reading was the highest level in 20 years.

Sources: Department of Labor & ATA Manufacturing Productivity (1992=100) The surge in productivity has been good for businesses and consumers, but a mixed bag for manufacturing workers: Incomes Employment Trend line 1970s 2.7% 1980s 2.6% 1990s 3.2% 2000s 4.1%

Source: Department of Commerce Retail Sales Year-Over-Year Growth Consumer spending is more than 2/3 of the economy! Sales excluding Autos Total Sales

Source: The Conference Board Consumer Confidence The problem with consumer confidence is that it can be impacted by more than just economic events. September 11th Corp. Scandals Iraq War

Today’s Trucking Economics…

Source: American Trucking Associations 1993=100 ATA’s Monthly Truck Tonnage Index 1993=100

Source: American Trucking Associations Trucking’s Progress Since % Average Annual Growth Rate ATA’s Monthly Truck Tonnage Index (1993 = 100)

Source: ATA’s Trucking Activity Report Truckload Loads (1993=100) Small Carriers (Less than $30 Million in annual revenues) Large Carriers (More than $30 Million in annual revenues)

Source: ATA’s Trucking Activity Report Truckload Loads (1996=100; average length of haul basis)

Source: ATA’s Trucking Activity Report LTL Volumes (1993=100) Small Carriers (Less than $300 Million in annual revenues) Large Carriers (More than $300 Million in annual revenues) Strike Recession hit LTL freight hard

Sources: A.G. Edwards & ATA Higher Diesel Prices Lead To More Trucking Failures

Insurance Cost per Truck Data based on publicly held truckload carriers which disclose this information.

Truckload Driver Turnover (Quarterly Annualized Rates )

Trucking in the Future

Industry Snapshot: Freight Movement Total Tonnage Moved: Billion Tons Billion Tons … A 13.7% increase in 6 years. Trucks carry 67.9% of total domestic tonnage in the U.S. U.S. Freight Transportation Forecast…To 2014

Industry Snapshot: Revenue Total Revenue: $585.3 Billion $745.0 Billion … A 27.2% increase in 6 years. Trucking revenue represents 86.5% of all freight revenue

Industry Snapshot: Firms, Employment & Equipment 610,000 Interstate for-Hire Carriers Total Employment: million employees million truck drivers (CDL) 2.6 Million Class 8 Trucks; 4.9 Million Trailers

Non-Trucking Freight Growth Rail Trends… – 1.75 Billion Tons Moved in 2002 – Estimated Annual Rail Car Tonnage Growth 2003 – 2008:2.2% – Rail Carload Revenue $34.7 Billion Truck Issue: intermodal growth way up (8.8% in Q4, ’03)

Non-Trucking Freight Growth Air Cargo Trends… – 17.4 Million tons moved in 2002 – Estimated Annual Tonnage Growth : 4.7% – Air Cargo Revenue $14.1 Billion Truck Issue: Air cargo “interline” service growing fast!

Strategic Issues Taxes and User Fees – 2003 Annual Taxes Paid on 5-Axle Semi: State- $4,567 Federal - $6,139 TOTAL - $10,706 New User Fees – SAFETEA & FAST Lanes

Strategic Issues Insurance Costs – 20% - 50% increases for “good” carriers New “Hours of Service” Regulations? Fuel Cost Volatility – Jan. ’02 - $1.16/Gallon – June ‘04 - $2.00/Gallon

Strategic Issues Driver Issues – HOS – Heated Economy & Wage Increases – Looming Retirements – Turn-over vs. Churning Technology Utilization – Growing; Faster Among Large Carriers

Strategic Issues Congestion – Problematic but solutions may be worse Tolls Truck Bans Security Costs?? – US Patriot Act – Truck Tracking – Port Systems Shipper-Carrier Relationships

Conclusion…. “Good Time To Be A Survivor” “Good Time To Be A Survivor” Questions?