Randy Mullett

Vice President - Government Relations & Public Affairs, Con-way Inc.

FHWA Talking Freight Webinar

February 16, 2011

Riding the U.S. and Global Economic Rebound - Opportunities and

Challenges

Con-way Today – who we are

2

• $5.0 Billion Industry Leader in Freight Transportation and Logistics• Con-way Freight

• Con-way Truckload

• Menlo Worldwide Logistics

• 30,000 employees worldwide•Over 500 operating locations

• 11,500 trucks, 35,000 trailers, 20 million sq ft warehouse space globally• 150,000 customer pickups and deliveries daily in N. America

• Nearly one billion miles annually moving freight on USA highways

• Consume 150 million gallons of diesel fuel annually

Trucking / Intermodal Statistics

•Over 500,000 trucking companies in the US• 97% have fewer than 20 trucks• Pay 40% of HTF total and drive 13% of the miles

• 70% of all goods (by weight) in the US move by truck• 83% by value• 97% of all consumer goods

•Future modal shares are expected to stay fairly constant • Over 80% of US communities are served only by truck• Shipments traveling >500 miles only 13.4% of the truck freight

market• If rail intermodal capacity doubled by 2020, market share will be only

1.8% vs. today’s 1.5% if capacity stayed constant

A Framework to Remember

We can not separate

economic growth from the

growth of transport

resources and infrastructure.

Motor Carrier Motor Carrier TrendsTrends

DemandDemand

Source: ATA

ATA’s For-Hire Tonnage Index ATA’s For-Hire Tonnage Index

Seasonally Adjusted; 2000 = 100

Through December 2010

In 2010 Truck Tonnage was up 5.7%

Source: ATA

ATA’s For-Hire TL Loads Index ATA’s For-Hire TL Loads Index Seasonally Adjusted; 2000 = 100

Through November 2010

Sources: Department of Commerce and ATA

Total Business Inventories-to-Total Business Inventories-to-Sales RatioSales Ratio

(Includes retail, wholesale, and manufacturing; Through November 2010)

Source: ATA’s Trucking Activity Report

Loads Jan - Nov 2010 Compared with Same Loads Jan - Nov 2010 Compared with Same Period in 2009Period in 2009

Motor Carrier Motor Carrier TrendsTrends

SupplySupply

Source: Avondale Partners, LLC

Trucking FailuresTrucking Failures

Failures only includes fleets Failures only includes fleets with at least five truckswith at least five trucks

Source: Wards

U.S. Class 8 Truck SalesU.S. Class 8 Truck SalesMonthly Retail Sales; Through December

2010

Annual Figures

2005:253k

2006:284k

2007:151k

2008:133k

2009: 95k2010:

106k

Source: ATA

For-Hire TL Supply vs DemandFor-Hire TL Supply vs Demand2005 = 100

Through November 2010

TL Loads Index

TL Tractor Count Index

Oversupply

Long-Run Freight Long-Run Freight Transportation Transportation

Outlook Outlook

Growth in TonnageGrowth in Tonnage Total Increase from 2009 to 2021Total Increase from 2009 to 2021

WaterborneWaterborneRail CarloadRail Carload

TruckingTrucking

Rail Intermodal

AirAir

Pipeline

Source: U.S. Freight Transportation Forecast to 2021

Distribution of Tonnage by Mode: 2009 vs 2021Distribution of Tonnage by Mode: 2009 vs 2021

Source: U.S. Freight Transportation Forecast to 2021

2009 2021

Source: IHS Global Insight

Crude Oil Prices Crude Oil Prices WTI, US$ per BarrelWTI, US$ per Barrel

Source: Energy Information Administration

On-HighwayOn-Highway DieselDiesel PricesPrices

PricePrice Per Gallon Per Gallon

Why does it matter?

•Freight in all modes will increase (26% by 2020) with resulting capacity constraints

•Energy and sustainability concerns will increase.

•Rates will increase. Delays will occur. Economy will be affected.

•Supply chain disruptions will result in “near sourcing”

•Feds, States, and Communities will rediscover that freight and freight infrastructure are the underpinnings of economic development.

Challenges

•CSA

•Hours of Service Rules

•Fuel / Energy / Sustainability

• International Competitiveness

• Livability

•Physical Capacity / Productivity

Railroad, Airline, Trucking, and Private BusinessTotal Factor Productivity 1987–2008

Politics: Potential opportunity?

•Underlying issues that existed during our freight capacity “crisis” are unchanged

• Changes in Congress

• No Tax Increase Pledge

• No Earmarks

• Tea Party Influence

• State Responsibility

Remember

ECONOMIC GROWTH

cannot be separated from

TRANSPORT GROWTH.