Trucking Industry & Driver Update

March 2018

Bob Costello

Chief Economist & Senior Vice President

American Trucking Associations

Real Gross Domestic Product Growth

2.7%

2.1%

2.9%

1.5%

2.3%

2.7% 2.7%

0%

1%

2%

3%

4%

Avg 2000-2007 Avg 2010-2014 2015 2016 2017 2018 2019

Sources: BEA & ATA

Forecasts Notes: • New tax law adds 0.3 percentage points in 2018• 4 interest rate hikes in 2018

Drivers of Truck FreightThe 3.5 Buckets of Freight

Job Market

0

50

100

150

200

250

300

350

400

201

4

201

5

201

6

201

7

201

8

Monthly Job Changes(Thousands)

Sources: BLS & ATA

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

201

4

201

5

201

6

201

7

201

8

Unemployment Rate(Percent)

2015 2016 2017 2018

5.3% 4.9% 4.4% 3.9%

Employment Costs

3.2%

1.8%

2.3% 2.4%2.6%

2.9%

3.3%

4.7%

2.5%

1.6% 1.6%

2.2% 2.2%

2.6%

0%

1%

2%

3%

4%

5%

Avg 2000-2007 Avg 2010-2014 2015 2016 2017 2018 2019

Wages & Salaries

Benefits

Sources: BLS & ATA

Real Personal Consumption Growth(Goods Only)

3.3%

4.6%

3.7%3.9%

4.6%

2.5%

0%

1%

2%

3%

4%

5%

Avg 2010 - 2014 2015 2016 2017 2018 2019

Sources: BEA & ATA

Single-Family Housing Starts Will Continue Their Upward Climb

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Total Housing Starts(Monthly; Annualized Rate; Millions)

2015 2016 2017 2018 2019

H.S. 1.11 M 1.18 M 1.21 M 1.29 M 1.40 M

Sources: Census & ATA

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Single-Family vs Multi-Family Units(Monthly; Annualized Rate; Millions)

Single-Family

Multi-Family

Factory Output is Improving

90

95

100

105

110

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Factory Output(Index)

Sources: Federal Reserve & ATA

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

Factory Output(Year-over-Year Percent)

2015 2016 2017 2018 2019

Output 0.2% 0.2% 1.7% 3.3% 3.0%

Source: Census Bureau

Total Business Inventory-to-Sales Ratio(Data adjusted for seasonal, holiday, and trading-day differences, but not price changes)

Likely Optimal Range

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: American Trucking Associations’ Economics Department

13,36617,988

31,3546,683

8,994

15,677

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Canada Mexico Total

2017 U.S. Trucking Employment From Truck Transported NAFTA Trade

Non-Drivers

Drivers

26,981

20,234

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

Canada Mexico Total

2017 U.S. Trucking Revenue From Truck Transported NAFTA Trade (Billions)

$3.81

$2.81

47,031 $6.62

The Economic Risks to Trucking: Trade Wars

Source: Department of Labor

U.S. Manufacturing EmploymentMillions of Employees

10

12

14

16

18

20

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

2000 China joins the WTO: Manufacturing employment falls by 3.9 million 2000 - 2007

1994 NAFTA Starts: Manufacturing employment increased by 500,000 from 1994-2000

Drivers of Truck Freight

Source: ATA’s Trucking Activity Report

Total For-Hire TL LoadsIndex: January 2010=100; 3-Month Moving Average

Includes Dry Van, Flatbed, Temp Controlled, and Tank Truck

Truckload Loads

2.6%

1.0%

0.1%

3.0%

0%

1%

2%

3%

4%

Avg 2010-2014 2015 2016 2017

Source: ATA

For-Hire Truckload Loads

0.1%

3.0%

6.0%

0.8%

2.1%

6.4%

-0.3%

5.0%

5.9%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

2016 2017 Q4 2017 YOY

Total TL

Dry Van

Temp Control

Source: ATA

Source: ATA’s Trucking Activity Report

Total For-Hire TL MilesIndex: 2010=100; Seasonally Adjusted; 3-Month Moving Average

Includes Dry Van, Flatbed, Temp Controlled, and Tank Truck

Source: ATA

Dry Van Truckload Average Length-Of-Haul is Down

796 Miles

527 Miles

Source: ATA’s Trucking Activity Report

LTL TonnageIndex: 2010=100; 3-Month Moving Average

LTL Tonnage

5.7%

1.0%

-0.8%

1.4%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Avg 2010-2014 2015 2016 2017

Source: ATA

Industry Capacity

Source: ATA’s American Trucking Trends 2016 & ACT Research

US Retail Class 8 Truck Sales

Includes Tractors & Straight Trucks

Thousands

-7.0%

-5.0%

-3.0%

-1.0%

1.0%

3.0%

5.0%

7.0%

Large TLs Small TLs

-0.2%

4.0%

-5.0%

5.1%

-5.0%

-0.2%

2015

2016

2017

Small Fleet: Less than $30 million in annual revenue

TL Tractor Changes: Large vs Small Fleets

Source: ATA’s Trucking Activity Report

Includes company tractors and independent contractor equipment

TL Truck Counts(Index: 2015 = 100)

Source: ATA’s Trucking Activity Report

LTL Truck Counts(Index: 2015 = 100)

Source: ATA’s Trucking Activity Report

Source: ATA’s Trucking Activity Report & DAT.com

Rates and Rate Proxies: Contract vs SpotIndex: January 2010=100; 3-Month Moving Average

Includes Dry Van, Flatbed, Temp Controlled, and Tank TruckContract = For-Hire Truckload Average Revenue per Mile x FSC

Driver Situation

Source: ATA

50% 52%

83%

98% 96% 95% 93%

81%86%

8% 9% 8% 9% 11% 11% 11% 9% 8%0%

25%

50%

75%

100%

2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD

TL LTL

Truck Driver Turnover RatesTL Q3 2017: 95%

10 Million CDL Holders

3.5 Million “Truck” Drivers

1.7 Million Heavy &Tractor-Trailer Drivers

864,000 For-Hire Trucking Heavy &

Tractor-Trailer Drivers

Driver Shortage

Source: ATA’s Truck Driver Shortage Analysis 2017

Source: ATA’s Truck Driver Shortage Analysis 2017

Download ATA’s Report for Free at:

http://trck.ng/drivershortage

So When Will the Current Tight Capacity Market End?

What Can Shippers Do?

Thanks

Twitter: @ATAEconBob