Tracking the Trucking Tracking the Trucking Industry…Industry…

2004 and Beyond2004 and Beyond

Presented by

Dan MurrayAmerican Transportation Research Institute

The Economy Matters…The Economy Matters…

Source: Institute for Supply ManagementSource: Institute for Supply Management

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004

Manufacturing ProductionPurchasing Managers Index

False StartFalse Start

Growth ThresholdGrowth Threshold

December’s reading was the highest level in 20 years.

Sources: Department of Labor & ATASources: Department of Labor & ATA

405060708090

100110120130140150160

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1993

1995

1997

1999

2001

2003

Manufacturing ProductivityManufacturing Productivity(1992=100)(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 CommerceSource: Department of Commerce

-2%

0%

2%

4%

6%

8%

10%

12%20

00

2001

2002

2003

2004

Retail SalesRetail SalesYear-Over-Year GrowthYear-Over-Year Growth

Consumer spending is more than 2/3 of the economy!

Sales excluding Autos

Total Sales

Source: The Conference BoardSource: The Conference Board

50

75

100

125

150

2000 2001 2002 2003 2004

Consumer ConfidenceConsumer ConfidenceThe problem with consumer confidence is that it can be impacted by more than just economic events.

September 11th

Corp. Scandals

Iraq War

Iraq War

Today’s Trucking Today’s Trucking Economics…Economics…

Source: American Trucking AssociationsSource: American Trucking Associations

128

132

136

140

144

148

152

15619

99

2000

2001

2002

2003

ATA’s Monthly Truck Tonnage Index 1993=1001993=100

Source: American Trucking AssociationsSource: American Trucking Associations

55

75

95

115

135

155

175Ja

n-85

Jan-

86

Jan-

87

Jan-

88

Jan-

89

Jan-

90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Trucking’s Progress Since 1985

6% Average Annual Growth Rate6% Average Annual Growth Rate

ATA’s Monthly Truck Tonnage IndexATA’s Monthly Truck Tonnage Index(1993 = 100)(1993 = 100)

Source: ATA’s Source: ATA’s Trucking Activity ReportTrucking Activity Report

75

100

125

150

175

200

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Truckload Loads(1993=100)

Small CarriersSmall Carriers(Less than $30 Million(Less than $30 Millionin annual revenues)in annual revenues)

Large CarriersLarge Carriers(More than $30 Million(More than $30 Millionin annual revenues)in annual revenues)

Source: ATA’s Source: ATA’s Trucking Activity ReportTrucking Activity Report

100

125

150

175

200

225

1996 1997 1998 1999 2000 2001 2002 2003Short-haul (Less than 500 miles)Medium-haul (500 to 1,000 miles)Long-haul (Greater than 1,000 miles)

Truckload Loads(1996=100; average length of haul basis)

Source: ATA’s Source: ATA’s Trucking Activity ReportTrucking Activity Report

75

100

125

150

175

200

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

LTL Volumes(1993=100)

Small CarriersSmall Carriers(Less than $300 Million(Less than $300 Millionin annual revenues)in annual revenues)

Large CarriersLarge Carriers(More than $300 Million(More than $300 Millionin annual revenues)in annual revenues)Strike

Recession hitLTL freight

hard

Sources: A.G. Edwards & ATASources: A.G. Edwards & ATA

250

450

650

850

1,050

1,250

Q1

90

Q1

91

Q1

92

Q1

93

Q1

94

Q1

95

Q1

96

Q1

97

Q1

98

Q1

99

Q1

00

Q1

01

Q1

02

Q1

03

$0.95

$1.05

$1.15

$1.25

$1.35

$1.45

$1.55

$1.65

Trucking Failures National Avg. Price of Diesel Fuel

Higher Diesel Prices Lead To More Higher Diesel Prices Lead To More Trucking FailuresTrucking Failures

Insurance Cost per TruckInsurance Cost per Truck

Data based on publicly held truckload carriers which disclose this information.

$4,500$4,900$5,300$5,700$6,100$6,500

1999 2000 2001 2002

70%

80%

90%

100%

110%

120%20

00:Q

1

00:Q

3

2001

:Q1

01:Q

3

2002

:Q1

02:Q

3

2003

:Q1

03:Q

3

Large TL Small TL

Truckload Driver TurnoverTruckload Driver Turnover(Quarterly Annualized Rates )(Quarterly Annualized Rates )

Trucking in the FutureTrucking in the Future

Industry Snapshot:Industry Snapshot:Freight MovementFreight Movement

Total Tonnage Moved:

2002 - 8.88 Billion Tons

2008 - 10.1 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:Industry Snapshot:RevenueRevenue

Total Revenue:

2002 - $585.3 Billion

2008 - $745.0 Billion

… A 27.2% increase in 6 years.

Trucking revenue represents 86.5% of all freight revenue

Industry Snapshot:Industry Snapshot:Firms, Employment & EquipmentFirms, Employment & Equipment

610,000 Interstate for-Hire Carriers

Total Employment:- 10.1 million employees- 3.2 million truck drivers (CDL)

2.6 Million Class 8 Trucks; 4.9 Million Trailers

Non-Trucking Freight GrowthNon-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

2002 - $34.7 Billion Truck Issue: intermodal growth way up

(8.8% in Q4, ’03)

Non-Trucking Freight GrowthNon-Trucking Freight Growth

Air Cargo Trends…– 17.4 Million tons moved in 2002– Estimated Annual Tonnage Growth

2003 - 2008: 4.7%– Air Cargo Revenue

2002 - $14.1 Billion Truck Issue: Air cargo “interline” service

growing fast!

Strategic IssuesStrategic 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 IssuesStrategic 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 IssuesStrategic Issues

Driver Issues– HOS– Heated Economy & Wage Increases– Looming Retirements– Turn-over vs. Churning

Technology Utilization– Growing; Faster Among Large Carriers

Strategic IssuesStrategic 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 Good Time To Be A Survivor”Survivor”

Questions?

Dmurray@trucking.org