Special Committee on Special Committee on Intermodal Transportation and Intermodal Transportation and Economic Expansion WorkshopEconomic Expansion Workshop

October 23, 2009October 23, 2009

Patrick E. QuinnPatrick E. QuinnCo-Chairman & PresidentCo-Chairman & PresidentU.S. Xpress EnterprisesU.S. Xpress Enterprises

Industry FactsIndustry Facts

• Represents roughly 5% of the nation’s gross domestic product (GDP)

• $660 billion industry, hauling 10.2 billion tons of freight annually

•8.9 million people throughout the economy employed in trucking jobs

• 3.5 million truck drivers, including local & over-the-road

Industry FactsIndustry Facts

• Operates 2.0 million truck-tractors and 7.0 million total heavy duty commercial trucks

• Class 8 trucks log 139 billion miles annually

•Consumes 39 billion gallons of diesel annually

• Exclusively serves over 80% of communities in the U.S.

Truck 68.8%

Pipeline9.9%

Rail Intermodal

1.1%Air

0.1%

Water6.3%

Rail Carload13.8%

Distribution of Tonnage by Mode: Distribution of Tonnage by Mode: 2008 vs 20202008 vs 2020

Source: U.S. Freight Transportation Forecast to…2020

Truck 70.9%

Pipeline8.5%

Rail Intermodal

1.5%Air

0.1%

Water5.7%

Rail Carload13.3%

2008 2020

Sources: Department of Labor and ATA

1,000

1,100

1,200

1,300

1,400

1,500

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

U.S. For-Hire Trucking U.S. For-Hire Trucking EmploymentEmployment Through September 2009

Thousands

Lowest level since 1995

Sources: S&P/Case-Shiller National Index and ATA

50

75

100

125

150

175

200

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Housing Price Index Housing Price Index

Average Annual Growth Rate: 4.4%

1987-1999

Ave

rage

Ann

ual G

rowth

Rat

e: 1

5.0%

2000

- 20

05

Average Annual Growth Rate: -9.4%2006 – 2009:Q2

Sources: Federal Reserve Board and ATA

90.0

95.0

100.0

105.0

110.0

115.0

1998 2000 2002 2004 2006 2008

U.S. Manufacturing ProductionU.S. Manufacturing Production Through August 2009; 2000 = 100

6.7% drop peak-to-trough

17.3% drop peak-to-trough

Sources: Department of Commerce and ATA

1.2

1.3

1.4

1.5

1.6

1992 1994 1996 1998 2000 2002 2004 2006 2008

Total Business Inventories-to-Total Business Inventories-to-Sales RatioSales Ratio

(Includes retail, wholesale, and manufacturing; Through August 2009)

Significant progress has been made to clear out bloated inventories.

Source: ATA

95

100

105

110

115

120

125

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

ATA’s For-Hire Truck Tonnage ATA’s For-Hire Truck Tonnage Index Index

Seasonally Adjusted; 2000 = 100

Through August 2009Aug: -7.5% from Aug 2008

Looks like a bottom, finally.

Source: ATA

80

90

100

110

120

130

140

150

2001 2002 2003 2004 2005 2006 2007 2008 2009

ATA’s For-Hire Truck Revenue ATA’s For-Hire Truck Revenue Index Index

2000=100; Through August 2009

Aug: -24.9% from Aug 2008

Source: Avondale Partners, LLC

200

400

600

800

1,000

1,200

1,400

Q1

00

Q1

01

Q1

02

Q1

03

Q1

04

Q1

05

Q1

06

Q1

07

Q1

08

Q1

09

Trucking FailuresTrucking Failures

Failures only includes fleets Failures only includes fleets with at least five truckswith at least five trucks

Failures are surprisingly low, but truck counts are more important than the number of carriers that fail.

Source: ATA’s Trucking Activity Report

-10%-9%-8%-7%-6%-5%-4%-3%-2%-1%0%1%

Last 9 Quarters Year Earlier

Fleets Continue to Downsize

! This slide shows the change in the fleet size for those TL carriers that are surviving. It is not total industry capacity, which has fallen significantly more.

Cumulative Decrease Aug 2009 vs Aug 2008

Source: Wards

0

5,000

10,000

15,000

20,000

25,000

30,000

2005 2006 2007 2008 2009

U.S. Class 8 Truck SalesU.S. Class 8 Truck Sales

No Pre-buy Here

Monthly Retail Sales; Through August 2009

Truck sales are running well below

historical replacement rates.

Source: Energy Information Administration

$0.90

$1.40

$1.90

$2.40

$2.90

$3.40

$3.90

$4.40

$4.90

J an-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08

On-Highway Diesel PricesOn-Highway Diesel PricesPrice Per GallonPrice Per Gallon

Record: $4.76(07/14/08)

$2.58(10/5/09)

Top Industry Issues 2009Top Industry Issues 2009

1. Economy2. Government Regulation3. Fuel Issues4. Congestion/Highway Infrastructure5. Hours of Service6. Commercial Driver Issues7. Environmental Issues8. Tolls/Highway Funding9. Truck Size and Weight10.Onboard Truck Technology

Congestion/Highway InfrastructureCongestion/Highway Infrastructure

FHWA report on top highway bottlenecks

226 Million Hours Lost Annually Cost $19 Billion/year (ATRI) Physical bottlenecks account for 40% of congestion

ATA supports diesel tax increase provided funds dedicated to addressing bottlenecks

Tolls/Highway FundingTolls/Highway Funding

Fuel tax fairest, most efficient source of funding for highwaysOppose tolls on existing highways

High administrative costs Cause diversion to local roads

Oppose privatization of existing highwaysWould consider supporting shipper fees provided truck driver/carrier is not tax collector and no serious administrative/collection issues

Revenue should go to freight infrastructure projects proportionate to modal contribution

Truck Size and WeightTruck Size and Weight

Reforms can produce safety, energy & emissions, economic benefits

ATA supports a process under which states can petition the federal government for regulatory relief

Support state option – no mandates

Commission Freight RecommendationsCommission Freight Recommendations

Create and fund a national freight transportation program in conjunction with States and metropolitan areas and consistent with a National Freight Transportation Plan, that eliminates chokepoints and increases throughputFederal grants for meritorious projectsEstablish dedicated freight fund