NASSTRAC State of the Industry Report:
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1 Issue 5 - Spring 2013 In This Issue... Pg. 1 - NASSTRAC State of the Industry Report Pg. 2 - NASSTRAC Report cont d Pg. 3 - NASSTRAC Carrier of the Year Awards, Hours of Service Rules Pg. 4 - YRC Freight Implements Network Optimization Plan Enhances service reliability Carrier Performance Metrics Pg. 5 - Carrier Profile DRT Transportation NASSTRAC State of the Industry Report: Freight Transportation 2013 This unique report, sponsored by NASSTRAC, explores shippers perspectives of emerging trends in freight transportation. It addresses issues related to supply chain strategy, mode use, rates and capacity and more. Here s a snapshot of key findings in these areas. NASSTRAC conducted a comprehensive survey of qualified transportation decision-makers in November 2012 to obtain perspectives on key issues and trends. A total of 130 online surveys were completed, making the research statistically valid. Approximately one-third of the respondents say their total transportation expenditures represent less than 5% of their annual sales revenue. Another 26.6% say 6-10% of revenue is spent on transportation. Company s Transportation Spend As Percentage of Gross Sales For 22.9%, however transportation takes a more significant toll on budgets, representing more than 15% of revenues Supply Chain Strategy Many companies today consider their supply chain to offer a strategic advantage. In fact, the vast majority of shippers surveyed (88.7%) say their company has a long-term supply chain strategy (defined as minimum of three years). This strategy aligns with broader business goals for 93.8% of these respondents. And nearly all respondents (96.9%) say they have a transportation planning strategy that ties directly to their overall supply chain strategy. This may be because the leader at the top of the supply chain is only one or two steps removed from the transportation function in the most organizations. This Expect Rate Increases positions the transportation function to have a real strategic advantage when aligned properly within the organization s overall goals. 1
2 NASSTRAC State of the Industry Report: Cont d Mode Use Survey results indicate that companies leverage various modes as part of their transportation mix. Respondents use Truckload (59.6%), LTL (58.8%), ground or air parcel (57%), heavy weight air (52.6%), rail/intermodal (51.8%), and/or ocean transportation (50.9%). Shippers are exploring their mode alternatives, driven predominantly by price and efficiencies. In the past year, a majority of shippers have shifted freight to different modes (66.2%). Manufacturers made the greatest shift with 78.6% shifting to a different mode, compared to 53.8% of retailers and 43.8% of wholesalers/distributors. Moving to rail/intermodal was the most common choice for 37.7% of respondents overall. Just 13.2% shifted to full truckload, and 4.4% shifted to LTL. This shift is reflective of a growing industry trend. Intermodal growth continues to accelerate as the Company s Transportation Spend railroads make significant investments in infrastructure. Domestic container volume for the As Percentage fourth quarter of Gross in a Sales row in Intermodal continues to be a growth sector in transportation. Survey respondents offered similar explanations for their mode shifts. Seeking a more cost-effective means of transportation (41.2%) was, by far, the most common reason for the shift. Respondents also mention more capacity (10.5%), improved reliability (8.8%), more efficiency (8.8%) and shifts in transit time (6.1%). There is still more change to come. Of those surveyed in NASSTRAC s study, 57.7% anticipate a modal shift in their transportation strategy in Clearly respondents are recognizing that a multimodal strategy can help them meet goals for delivery and transit times, cost control and more and build a stronger supply chain. Rates and Capacity Expect Rate Increases Respondents foresee increased rates across all modes in Truckload and LTL are expected to see the greatest increase. In fact 45.6% of shippers said they anticipate truckload rates to increase while 47.4% say LTL rates will increase. The increases may be needed to help off-set rising costs associated with the driver shortage and driver retention, rising insurance premiums, diesel fuel prices and equipment purchases and maintenance costs. Rate increases are also expected for intermodal (32.5%), ocean (28.9%) and air cargo (23.7%). Not surprisingly, survey respondents expect truckload capacity to be an issue in the coming year, with 34.2% expecting it to decrease. According to several NASSTRAC shipper sources, CSA compliance issues have already reduced industry capacity. Higher equipment prices are also affecting the fleet size. The driver shortage and increased driver turnover, compounded by reduced driver productivity due the new Hours of Services rule, will also contribute to capacity issues. Industry observers forecast that new trucking regulations and slowly rising freight volumes will cause a tightening of capacity, resulting in higher rates for shippers. These conditions are likely to result in a difficult scenario for shippers in Capacity is expected to increase, however, ocean (21.9%), intermodal (18.4%), and LTL (15.8%) offering an additional incentive for shippers to explore a multimodal strategy. For more information on how to become a member of NASSTRAC, contact Brian Damiani, VP Logistics, Simplified Logistics and also NASSTRAC Executive Board Member at or brian@simplifiedlogistics.com 2
3 NASSTRAC Carrier of the Year Awards, Hours of Service Rules NASSTRAC recognizes annually transportation providers on a quantitative scale in five key areas: Customer Service, Operational Excellence, Pricing, Business Relationship, Leadership and Technology. Simplified Logistics is pleased to congratulate our LTL carrier partners on their recent selection of NASSTRAC Carrier of the Year: National Category ABF Freight Systems Multi-Regional Category Old Dominion Freight Line Regional Northeast Category New England Motor Freight Regional Southeast Category Southeastern Freight Lines Regional Midwest Category Dayton Freight Lines Regional West Category Dependable Highway Companies Time running out for Hours of Service rule change July 1, 2013 will bring to an end a long battle and ring in a new era of rules for drivers in the trucking industry. For several years the FMSCA (Federal Motor Carrier Safety Administration) had proposed to change the amount of time a driver may drive to protect public safety. Originally a ten (10) hour time limit was presented, which would have had a dramatic effect on transit times and costs for most trucking companies. After several years of challenges from industry organizations such as the American Trucking Association and NASSTRAC, the FMSCA decided to retain the eleven (11) hour time limit for daily driving with the imposition of some new rules. These new rules require a driver to take at least one half-hour break during and eight hour period. It also changes the restart provisions and mandates that a driver must have two consecutive periods from 1:00-5:00AM before the driver can resume driving. According to some Truckload companies the change could reduce capacity as much as 7-9%. 3
4 YRC Freight Implements Network Carrier Profile - Saia Optimization Plan Enhances service reliability OVERLAND PARK, Kan., May 20, YRC Freight, a subsidiary of YRC Worldwide (NASDAQ: YRCW), moves forward with continuous improvements, implementing a change in operations which will deliver even greater service reliability and consistency across their network. The network changes enhance operational efficiencies by increasing network density, reducing shipment touches, and reducing the number of empty miles. Our primary goal is to provide our customers with consistent, reliable, damage-free service, said Jeff Rogers, president of YRC Freight. The change in operations we are implementing today will give our customers an improved experience when they ship with us. A leader in North American LTL shipping, YRC Freight remains focused on continuous improvement efforts. The results of this directive are visible in its financial performance (three consecutive quarters of positive operating income), improved key safety measures, increased speed in more than 24,000 lanes, and investments in sustainability programs, such as the partnership with Clean Energy Fuels Corp. to test liquefied natural gas (LNG) trucks in the Port of Long Beach and other surrounding areas. YRC Freight, a leading transporter of industrial, commercial and retail goods, specializes in less-than-truckload (LTL) shipping solutions for businesses. Based in Overland Park, Kan., YRC Freight provides comprehensive North American coverage and offers a broad portfolio of LTL services to bring flexibility and reliability to customers supply chains. For more information, visit Carrier Service Metrics 1 st Quarter Averages 2013 % On Time ABF Conway Dayton Fgt. Extes Express NEMF Old Dominion Pitt Ohio SAIA Southeastern UPS Freight Ward Trucking YRC Freight Carrier 4
5 Carrier Profile - DRT Transportation 5
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