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MIDWEST ASSOCIATION OF RAIL SHIPPERS
1/13/2016 Tom Sanderson
CEO, Transplace
Please do not use logo’s on title slide. Use company names only. Please delete this box when ready to present
© Transplace. All contents confidential.
2
CORE SERVICE OFFERINGS
• North America’s Largest Non-asset Based Provider
• Modes: TL, LTL, Bulk, Ocean, Air, Parcel
• Complete 3PL outsource, load control center, SaaS
• Customs/Cross-border • Supply Chain Consulting
• Top Ten Provider in North America • Core Capacity • Dry Van (TL, LTL) • Temperature Controlled
• Top Ten Provider in North America • Truck-like Door-to-Door Intermodal
Service • Domestic & Cross-border Services • Real-Time Shipment Monitoring
© Transplace. All contents confidential. 3
TRANSPORTATION MANAGEMENT SIZE & SCALE
2009 2013 2016
© Transplace. All contents confidential.
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1,000+ CUSTOMERS
FREIGHT ECONOMY IS RELATIVELY SOFT
Housing starts around 1.1 million Retail sales growing 2% nominal, 1-2% real Manufacturing contracted last 2 months Inventories are up Strong dollar hurting exports Auto is exception, record sales in 2015
© Transplace. All contents confidential.
5
TRUCK CAPACITY INCREASED IN 2015
© Transplace. All contents confidential.
6
Strong Q3 & Q4 2014 Class 8 sales - Strong TL pricing environment in ‘14 – confidence up
Q1 to Q3 2015 Class 8 sales up double digits - Q4 will be down from ’14 - Orders down 10 consecutive months
Minimal loss of capacity to bankruptcy HOS roll back added 3-5% to effective capacity
CAPACITY – B IG CARRIERS STILL BELOW 2006 TRUCK COUNT
© Transplace. All contents confidential.
7
Source: Avondale Partners
Q4-2006 Q4-2007 Q4-2008 Q4-2009 Q4-2010 Q4-2011 Q4-2012 Q4-2013 Q4-2014
Big 4 53,195 52,874 48,021 45,224 45,735 45,969 44,529 49,077 50,394
Second 7 20,846 20,645 20,263 19,187 19,607 20,706 20,424 21,095 20,309
Big 11 Total 74,041 73,519 68,284 64,411 65,342 66,675 64,953 70,172 70,703
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Num
ber o
f Tru
cks
Truckload Carrier CapacityBig 11 TL Carriers
Class 8 Sa les Up, Orders Down
© Transplace. All contents confidential.
8
Source: ACT Research
CAPACITY – DEMAND BALANCE FAVORS SHIPPERS
© Transplace. All contents confidential.
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Source: Morgan Stanley
TL PRICING RISING AT SLOW RATE
© Transplace. All contents confidential.
10
Source: Stephen’s Inc.
4.3% 4.5%
TRANSPLACE TL BID RESULTS SHOW STRONG SAVINGS
© Transplace. All contents confidential.
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Period Shipper Bids
Avg.
Carriers
per Bid
Annual Freight
Expense
Avg. Freight
Expense per Bid
Avg.
Low-Cost
Scenario
Savings
Average
Final
Award
Savings
2012 28 Companies 103 837,534,937$ 29,911,962$ 11% 10%
2013 29 Companies 106 775,579,031$ 26,744,105$ 14% 8%
2014 33 Companies 112 827,459,155$ 25,074,520$ 8% 3%
2015-Q1 10 Companies 35 169,863,567$ 16,986,357$ 17% 13%
2015-Q2 3 Companies 80 65,201,563$ 21,733,854$ 24% 18%
2015-Q3 5 Companies 71 392,292,582$ 78,458,516$ 11% 4%
LTL PRICING RISING FASTER IN 2015
© Transplace. All contents confidential.
12
Source: Stephen’s Inc.
5.5% 2.1%
REGULATORY DRAG WILL NOT HARM TRUCKING IN 2016
HOS restart will not be rolled back CSA scores removed from web, not in SFD ELD mandate not effective until 2017 FMCSA may try to push rules and guidance in election year
• SFD Advance Notification of Proposed Rulemaking
© Transplace. All contents confidential.
13
DIESEL PRICES WILL REMAIN LOW IN 2016
© Transplace. All contents confidential.
14
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
Dol
lars
Per
Gal
lon
U.S. Weekly Diesel Fuel Prices
$2.211
DOMESTIC INTERMODAL GROWTH WILL REMAIN SLOW IN ‘16
Excess TL capacity = minimal price increases Low fuel prices reduced economic advantage Railroads too aggressive on pricing in 2015
© Transplace. All contents confidential.
15
LONGER TERM TL CAPACITY WILL T IGHTEN
Shippers must: Re-examine supply chain network design:
- Trade-offs between inventory, facilities & transportation costs - Greater use of intermodal - Greater use of local and regional TL - Greater use of dedicated/private
Asset-based TL and 1-3 large brokers Become preferred shipper - embrace best practices
- Accessorial benchmarking
© Transplace. All contents confidential.
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TL HIGHLY FRAGMENTED, MOST ARE VERY SMALL
© Transplace. All contents confidential.
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93% of carriers have 10 or fewer trucks 99% of carriers have 50 or fewer trucks 49% of all vehicles are in fleets of <50 trucks
CRITICAL FACTORS PREFERRED SHIPPER PROGRAM
© Transplace. All contents confidential.
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Relationship
Treats with respect Consider carriers costs and issues Bring carriers other opportunities
Driver Friendly Facilities
Onsite Parking Restrooms Communication Break room for driver
Driver Productivity
Transit Time Drop Trailers Shipper Load Count No-Touch Freight Weekend Loading/Unloading
Shipper Ratings
Market rates Fuel Surcharge Payment Terms Volume Potential Credit Rating