Managing Cost and Service in a Dynamically Changing Carrier Market

September 22, 2014

Agenda

• Meet the Panel

• Panel Discussion– A look back at the first half of 2014– Driver shortage– Government regulations– Preparing for the rest of 2014– The future of the industry

Meet the Panel

Ed Medlock• SVP Distribution, Logistics and Program Management for

Wendy’s QSCC– Responsible for distribution of food and paper for Wendy’s North

America, the planning/communication of new and limited time products and management of inbound freight for the Wendy’s system

– Previous experience as entrepreneur, an independent distribution consultant, and various supply chain positions at PepsiCo/Yum

– Graduate of Miami University (OH) and completed executive education coursework at Northwestern University

Meet the Panel

Dave Geyer • Senior Vice President and General Manager, Van Truckload

at Schneider– Responsible for leading all commercial, operational, and financial

aspects of the $1.3 billion North American Van Truckload division

– Previously served as SVP, Global Commercial Services, and in a variety of roles in Sales & Marketing and business unit leadership

– Received a Bachelor’s of Science degree in Industrial Technology from the University of Wisconsin, Stout and completed finance and revenue management work at The University of Chicago

Meet the Panel

David Marsh• Chief Supply Chain Officer at Hub Group

– Responsible for Unyson Logistics and Hub Group Highway

– Previously served as Chief Marketing Officer and Executive Vice President of Highway at Hub Group

– Received a Bachelor of Science degree in Marketing and Physical Distribution from Indiana University - Indianapolis

Q1: The “Snowpocalypse”

Sources: National Weather Service; Google Images

• 23 major storms were named from November 2013 – March 2014

• Capacity constraints

• Delayed transits

• Polar Vortex– Highway closures– Slowed Mainline &

Switching operations– Re-routed

interchange traffic

First half of 2014: High demand, tight capacity, increasing costs

Dry Van Truckload Freight Index Refrigerated Truckload Freight IndexYearly Comparison (2007-2011) Yearly Comparison (2007-2011)

Source: Morgan Stanley

First half of 2014: High demand, tight capacity, increasing costs

National Average Line Haul Rates and Fuel SurchargesAugust 2013-August 2014

Source: DAT Solutions

Question #1

How have the transportation challenges from the first half of the year affected your business?

Audience Discussion

Driver Shortage

• Shortage of 30,000 drivers, and growing annually

• Causes:– Government

regulations– Lifestyle– Leaving for other

industries with higher pay

– Retirements

Source: American Trucking Association

Question #2

What are your thoughts on the driver shortage and what needs to be done to bring more drivers into the industry to make up for the ones that are leaving?

Audience Discussion

Government Regulations

• Final rule on Hours of Service– Work week limited – 34 hour restart period– 3-5% reduction in effective capacity

• E-Logs– Transitional costs estimated at $320 million

• MAP-21 expires October 21, 2014– Impact on infrastructure– Temporary funding solution through May 2015

Sources: American Trucking Association; US Dept. of Transportation; APTA; FTR Transportation Intelligence Events; Google Images

Question #3

Are there areas the government should be addressing that would have immediate impacts on truck capacity, driver eligibility and rail capacity?

Audience Discussion

What the rest of the year looks like…

• Back to where we were:– Higher demand– Tighter capacity– Increased costs

Sources: CSCMP’s 25th State of Logistics Report; Google Images

Question #4

What actions are you taking to prepare for the balance of the year?

Audience Discussion

Question #5

Is there a new paradigm for the transportation industry, if so, how is your company handling it?

Source: Google Images

Audience Discussion

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