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The Workings and Operations of Regional Transportation

Gain insights into the workings of regional transportation with a detailed overview of the LTL industry, SWOT analysis, emerging trends, operations variances, and opportunities and threats facing regional LTL carriers.

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The Workings and Operations of Regional Transportation

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  1. Geoffrey Muessig, EVP/Chief Marketing Officer, PITT OHIO The Workings and Operations of Regional Transportation Government Transportation Forum April 23, 2014

  2. Summary • Overview of the LTL Industry • Differences between regional and long haul networks. • SWOT Analysis - what are the strengths and weaknesses of regional trucking? • Emerging LTL Industry Trends

  3. LTL Industry Developments The barriers to entry are rising: • Capital intensive business • Increased regulation is leading to an industry wide driver shortage • Terminal NIMBY issue • Technology requirements • Increasing penetration of freight brokers • Cyclical markets – easy to generate cash flow but hard to turn a profit. The LTL industry is becoming more concentrated. • Top 25 LTL carriers control 90% of the market • Top 8 LTL carriers control 65% of the market. Source: SJ Consulting Group, Inc.

  4. Who Are the Top 20 LTL Players

  5. Regional Trucking • Regional Focus • Full state and all points coverage – minimal reliance on agents to serve remote markets. • Privately Held, Family Owned • Focus on next day delivery • Partnerships for inter-regional service

  6. Operations are Configured Differently • Precisely scheduled departures vs load factor • Direct loading vs break bulk operation • 48 and 53 foot trailers versus 28 foot pup trailers • Over the road versus intermodal • Speed • Reliability and less variance • All points coverage vs use of cartage agents to serve remote points

  7. Sample LTL Shipment Burlington, NJ to Detroit, MI Regional Carrier – Direct Load Differing Operations Networks Origin NJ Terminal Destination MI Terminal Shipper Burlington, NJ Consignee Detroit, MI

  8. Sample LTL Shipment Burlington, NJ to Detroit, MI Long Haul Carrier – Break Bulk Shipper Burlington, NJ Consignee Detroit, MI Destination MI Terminal Differing Operations Networks Origin NJ Terminal Origin Break Bulk Harrisburg, PA

  9. Sample LTL Shipment Riverside, CA Long Haul Carrier – Double Break Bulk Shipper Burlington, NJ Consignee Riverside, CA Origin NJ Terminal Destination CA Terminal Differing Operations Networks Origin Break Bulk Harrisburg, PA Destination Break Bulk Chino, CA

  10. Regional LTL Strengths • Fewer claims • More reliable – less variance in transit days • Faster • Lower overhead, can be less expensive • Specialists with a lot of expertise in their core service areas. • Direct coverage • More flexible • Focus on specific industries – e.g. chemicals, retail • Privately held – focus on long-term success

  11. Regional LTL Weaknesses • More information required upfront for planning purposes. • Niche player vs a generalist – stay away from foodstuffs, appointment retail, or chemicals • Lack of nationwide coverage – not a one stop shop • Fewer ancillary services – TL, Supply Chain • Some regional LTL providers are information and technology challenged

  12. Regional LTL Opportunities • Expansion of LTL Coverage Area. Legacy long haul carriers have not cracked the code to transition into regional next day carriers however regional carriers have succeeded in growing into multiregional carriers. • Consolidation (Vitran sold off in pieces) • Leverage the LTL brand to develop ancillary revenue streams • TRNet Solutions – layer long haul service over regional service thereby gaining expanded coverage area without incurring significant investment expense.

  13. Regional LTL Threats • Continued industry consolidation in the aftermath of industry downturns. • Bundling of services by larger competitors • Failure to keep pace with information technology developments and requirements. • Re-capitalization requirements. • Globalization of trade – how many regional specialists are needed?

  14. Emerging LTL Industry Trends • National carriers have purchased regional carriers (e.g. YRC & FDX) • Poorly capitalized and technology challenged LTL carriers will be acquired or close. (e.g. Milan, Midstates, & Vitran) • Asset light solutions are emerging (e.g. Roadrunner, Daylight Transport) • Regional LTL carriers are developing seamless and reliable long haul services (TRNET)

  15. TRNET - The Reliance Network

  16. Map of TRNET

  17. Thank You!

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