State of the Trucking Industry

Issue 7 - Winter 2014
In This Issue...
Pg. 1 - State of the Trucking Industry
Pg. 3 - Crude Oil Continues to Fall, What Does It Mean?
Pg. 4 - Central Freight Lines Purchases 100 New CNG Freightliners
Pg. 5 - YRC Worldwide Teamster
Employees Ratify Contract
Pg. 6 - Carrier Service Metrics
Pg. 7 - Carrier Profile - “Dohrn
Transfer”
State of the Trucking Industry
President and CEO Rob Estes recently sat down for an in-depth interview about
some of the challenges facing the trucking industry today. From issues like the
current national driver shortage to new legislation and regulations, he offers
a unique perspective on how Estes is navigating today’s dynamic business
environment.
How has the implementation of the Affordable Care Act impacted
Estes from both an internal and operational standpoint?
Preparing to meet the requirements of the Affordable Care Act in 2014 has
been complicated. Though we believe health-care reform legislation is well intended and making insurance available to everyone is an admirable goal, Estes
has felt the strain—along with all other companies—of the millions of dollars in
fees paid to the government.
How has Estes overcome these challenges?
While increased fees have really been eye-opening, Estes’ fiscally conservative
business model has helped us through this big change. We continue to operate
under a very low debt ratio, which allows us to manage costs and keep the
company on an even keel. And that translates into very little impact on our
customers due to the broad changes in the health-care market.
On the home front, we’re hoping that our new consumer-based health-care
plan option will help bring transparency to medical costs and allow all of us to
participate in a much healthier market for medical services. Estes employees
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Issue 7 - Winter 2014
State Of The Trucking Industry Con’t…
now have access to tools that help them make better-informed health-care decisions so they can exercise greater control over
their own health-care expenses. Tax-advantaged, company-subsidized health savings accounts also incentivize employees to
pay better attention to their own health and that of their families—resulting in an especially good outcome for everyone.
How has the driver shortage impacted Estes?
The driver shortage is a concern for all freight transportation companies, but it has a somewhat smaller impact on those organizations that primarily provide less-than-truckload services. However, that is not to say Estes isn’t feeling the effects.
The driving workforce is aging—our average driver age these days is 48—and as older, experienced drivers retire, we’re not
seeing as many younger people taking their place. Many of those older drivers started driving as soon as they graduated from
high school. These days, however, drivers are not allowed to cross state lines in a truck until they turn 21. In those intervening
years between high-school graduation and age 21, many more individuals are going to college to pursue white-collar work or
establish a path in other directions.
The best way to ensure public safety and low accident rates is to hire drivers with the cleanest records and solid driving experience.
This fact hit home recently when a competitor pressured by the need for drivers recently lowered driving experience requirements
and saw a 25% jump in their accident rate. Clearly, this is not an area for compromise, and the industry needs to find a way to
help transition promising new drivers into experienced ones.
What is Estes doing to recruit and retain experienced drivers with clean driving records?
We’re doing several things to proactively recruit safe drivers. First, we are ramping up our driving schools around the nation.
Going forward, we have the capacity to graduate anywhere from 250–300 drivers each year. And since Estes requires a high
level of experience to help ensure everyone’s safety, we’ve developed ways to include hands-on experience as part of our drivertraining regimen once they complete the initial training.
Another way we’re handling the shortage is by recruiting experienced military personnel who are coming back to civilian life.
Many servicemen and women have been certified drivers in the military, so they have the built-in experience required—and often
also the discipline needed to succeed.
Of course, Estes remains committed to hiring only the safest drivers to protect everyone on the roadway as well as the freight
we’re carrying. The flip side of the hiring coin is driver retention, and we are working to ensure that we retain good drivers by
offering competitive wages and benefits and a good working environment.
How is Estes handling the current regulatory environment in the trucking industry?
Beyond the driver shortage and the new cost of health care, the trucking industry—or the economic circulatory system as
President and CEO of the American Trucking Associations Bill Graves calls it—has had to navigate through a great deal of
regulatory hurdles. We can’t argue with some of those regulations, especially those that make our roads safer and our operations more efficient. However, some are harder to justify than others.
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State Of The Trucking Industry Con’t…
With this said, one of the many benefits of our 82 years of experience as a freight transportation company is the fact that we’ve
proven it’s possible to successfully navigate a changing landscape. As a matter of fact, we look at change as opportunity—
opportunity to become more efficient and to find better ways to serve our customers.
Through the years, we have used “flexibility” as our watch-word, and that term applies in several ways. For example, operations
can be flexible enough to handle the diverse needs of our customers. It can also mean that our service offerings are diversified
enough to ensure long-term financial stability, something that’s also very important to our customers. Finally, flexibility means we
do what it takes to adapt to regulatory changes and maximize the opportunity to improve operations and customer relationships.
In short, we never give up, and that resolve benefits our customers and our employees.
Crude Oil Continues to Fall, What Does It Mean?
Crude oil prices have fallen over $10 a barrel over the last 7 weeks and that means good news to all end consumers.
Why this happening is and what should we expect in the coming weeks?
The Why’s?
What to Expect!
•
•
Geo Political tension seems to be quite for right now. That
of the year and has a remote shot at going as low as $85
few weeks, no news is good news and no news means
a barrel
lower crude oil prices
•
•
That is roughly $6-$11 a barrel lower than it stands today.
That kind of drop in crude oil, could equal a drop of 12-33
Euro. Since crude oil is traded in U.S. dollars this means
cents in diesel fuel and gas prices. Could you say DOE
you can buy more for your money with a strong dollar.
national diesel fuel prices of $3.60 by January 1? Gas
prices in most states under $3.00. Wow! What a New Year!
Crude Oil is down $10 a barrel in the last 7 weeks. Typically
fall 2-3 cents a gallon and gas price fall similar.
There has been a lack of demand for crude oil and finish
product like diesel fuel and gas.
•
•
U.S. dollar believe it or not has been strong against the
for each dollar the price of crude oil falls, diesel fuel prices
•
Crude oil should fall to less than $90 a barrel by the end
can change by the time I finish this article but for the last
The lack of demand has made a huge increase with
inventory for all products. Great news for end users again.
Remember this lower crude oil produces, lower diesel fuel prices,
gas price, tire costs, oil and lubes, chap stick because if it has
petroleum in it since crude oil is going lower so will these products.
•
Expect 2014 to be a good year as far as the cost of diesel
fuel and gas prices go. We believe that nationwide gas
prices will top out at $3.60. Yes, we know that is a lot
more than what we are paying now, but it will also average
out to be 20 cents less than what you paid in 2013.
For diesel fuel, we see that topping out nationwide at $4.15 a
gallon. Again, that is it topping out. We see the yearly average
to be about $3.85 which is about where it is today. So there will
be a little roller coaster ride but at the end of the year, you will
have save about 20 cents per gallon compared to 2013.
Author: Glen Sokolis, President of Sokolis Group fuel management. www.sokolisgroup.com
For more information about the Sokolis Group, contact Sales Executive Conor Proud. cproud@sokolisgroup.com | 267-482-6159
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Issue 7 - Winter 2014
Dohrn Transfer Earns John Deere
Recognition Award
Dohrn Transfer has earned recognition as a Partner-level supplier for 2013 in the John Deere Achieving Excellence Program. The
Partner-level status is Deere & Company’s highest supplier rating. The Rock Island-based company was selected for the honor
in recognition of its dedication to providing products and service of outstanding quality as well as its commitment to continuous
improvement.
Dohrn is a supplier of transportation and logistics to John Deere’s Midwest operations. This is the forth time Dohrn Transfer has
been awarded the Partner-level supplier for John Deere.
“We’re proud to be recognized by John Deere for the level of service we have provided to them in recent years. It is a testament to
our team’s dedication and strength, and our employees all deserve the credit, from the drivers, to the dockworkers, to the support
personnel in the office. It is rewarding to see their hard work being appreciated” said Joe Dohrn, Executive Vice President.
Suppliers who participate in the Achieving Excellence program are evaluated annually in several key performance categories,
including quality, cost management, delivery, technical support and wavelength, which is a measure of responsiveness. John
Deere Supply Management created the program in 1991 to provide a supplier evaluation and feedback process that promotes
continuous improvement.
Central Freight Lines Purchases 100 New CNG Freightliners
Waco, Texas-based Central Freight Lines has added
100 CNG-fueled M2 112 trucks to its fleet of more than
1,600 vehicles, manufacturer Freightliner reports, noting
that Central will support them with fueling stations being
developed with partners in Fort Worth, San Antonio and
Houston.
The stations in Fort Worth and San Antonio are being
developed by the Evo Trillium joint venture. Trucks on
Houston will fuel at a Questar-ANGI facility (F&F, January
14).
“In 2012, we purchased CNG tractors that have been
servicing the Houston area with proven efficiencies,” Central
president and CEO Don Orr says in a Freightliner release. “As
a result, we decided to continue investing in CNG tractors,
specifically Freightliner trucks because of their reliability and
the company’s customer support.”
Waco, Texas-based Central Freight Lines has added 100
CNG-fueled Freightliner M2 112 trucks to its fleet of more
than 1,600 vehicles.
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Central Freight Lines Purchases 100 New CNG
Freightliners Con’t…
Taking Advantage of TERP
“We like Freightliner trucks for their quality,” Orr said. They provide superior uptime and we get maximum utility over a long
period. We also appreciate the dealer network. It’s supportive and professional.”
Central is taking advantage of a Texas Emissions Reduction Plan program that allows participants “to trade a less-efficient truck
towards a cost reduction on each new CNG-fueled truck purchased,” Freightliner says.
YRC Worldwide Teamster Employees Ratify Contract
Contract Extended to March 2019, Includes New Operating Flexibilities and Customer
Service Enhancements
OVERLAND PARK, Kan., Jan. 27, 2014 (GLOBE NEWSWIRE) -- YRC Worldwide Inc. (Nasdaq:YRCW) announced today that its
employees represented by the International Brotherhood of Teamsters (IBT) overwhelmingly ratified an extension of its collective
bargaining agreement to March 2019.
“My deepest thanks to our employees for their continued commitment to moving YRC Worldwide forward and putting us on the
road to once again becoming a North American LTL industry leader. With this MOU extension, we took another significant step
toward providing our employees the job security they deserve while providing our prospective lenders and equity investors the
path they need for the company to achieve a complete recapitalization and achieve a healthy capital structure,” stated James
Welch, chief executive officer of YRC Worldwide. “The five-year extension includes important customer service enhancements,
cost savings and a profit sharing plan for eligible IBT employees that is dependent on operating performance and our ability to
become more competitive in the marketplace,” added Welch.
“We now move ahead with some of the most experienced transportation professionals in the industry and a more competitive
wage and benefits package that will enable us to attract new members to our growing team. YRC Freight, Holland, Reddaway
and New Penn emerge from this process with a renewed focus on achieving best-in-class performance in order to deliver great
operating results for customers, employees and shareholders,” concluded Welch.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “will,” “would,” “anticipate,” “expect,”
“believe,” “intend” and similar expressions are intended to identify forward-looking statements. It is important to note that actual
efficiencies from the new agreement, results of the contingencies to obtaining the efficiencies, closing of the proposed equity
transaction discussed in this news release, our ability to restructure our pension fund debt and refinance our senior debt, and the
overall results of our refinancing strategy, including the amount our existing stockholders will be diluted, will be determined by a
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YRC Worldwide Teamster Employees Ratify
Contract Con’t…
number of factors, including (among others) those risk factors that are from time to time included in the company’s reports filed
with the SEC, including the company’s reports on Forms 10-K and 10-Q and the company’s Current Report on Form 8-K filed on
December 9, 2013. Further, the company cannot provide you with any assurances that the efficiencies will be achieved, that the
conditions contained in the definitive agreements related to the proposed equity transaction will be satisfied or that the proposed
equity transaction, the pension fund debt restructuring or the senior debt refinancing can be completed in the timeframes required
under the company’s various agreements with its stakeholders, if at all. In addition, even if all the contemplated transactions are
completed, the company’s future results could differ materially from any results projected in such forward-looking statements
because of a number of factors, including (among others) the risk factors that are from time to time included in the company’s
aforementioned reports.
About YRC Worldwide
YRC Worldwide Inc., a Fortune 500 company headquartered in Overland Park, Kan., is the holding company for a portfolio of
successful companies including YRC Freight, YRC Reimer, Holland, Reddaway, and New Penn. YRC Worldwide has one of the
largest, most comprehensive less-than-truckload (LTL) networks in North America with local, regional, national and international
capabilities. Through its team of experienced service professionals, YRC Worldwide offers industry-leading expertise in
heavyweight shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods
with confidence. Please visit www.yrcw.com for more information.
Carrier Service Metrics
4th Quarter Averages 2013
% On
Time
100.0
98.5
97.0
95.5
94.0
92.5
91.0
89.5
88.0
86.5
85.0
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Issue 7 - Winter 2014
Carrier Profile - “Dohrn Transfer”
www.dohrn.com
888.dohrn21
North Dakota
Minnesota
South Dakota
Nebraska
Wisconsin
Iowa
Illinois
Kansas
e v e r y c i t y.
Indiana
Missouri
e v e r y d a y.
Dohrn Transfer has the highest saturation of trucks in the Midwest.
We offer service into every city in our territory every day. Non-union
and family owned and operated since 1981, Dohrn has grown to be
the premier LTL carrier in the Midwest. Our fleet consists of primarily
53 foot trailers with straight trucks and liftgates available
at every terminal.
Dohrn Transfer has full state coverage in 6 states with a majority of that
area being next-day service. While large enough to be your
primary Midwest carrier, Dohrn has not lost the personal touch of its
small company roots. Flexibility and customer service are
the center of our company.
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