1. Best Practices for Acquiring Transportation Services Surviving Capacity “Crunches” & The Impact of CSA 2010 GSA’s 2011 Transportation Forum Washington, DC, April 20, 2011 Jeffrey Tucker CEO, Tucker Company Worldwide, Inc. CEO, QualifiedCarriers.com Board Member & Treasurer, Transportation Intermediaries Association Board Member, National Industrial Transportation League

2.  Shrunken and weakened marketplace meets surging economy and freight volumes  Fuel costs escalating  Rapid-fire new regulations  Hours of Service (HOS)  EOBRs  Possible legislation  Panic over CSA (formerly CSA 2010) Many “Moving Parts”

3. Great Recession  Trucking industry shrank over 15%  Equipment purchasing nearly halted Recovery  210% increase in Feb Class 8 truck sales –FTR Associates & ACT Research  84% of carriers expect higher contract rates this year –UBS Investment  55% increase in “spot market” volume 4Q2010 –TransCore  8% growth in Jan. truck tonnage – American Trucking Associations  11.4% increase in Feb number of shipments YOY—Cass Freight Index  35% increase in Feb total freight expenditures YOY –Cass Freight Index Freight Indices Improved

4. U.S. Freight Expenditures YOY Expenditure growth rate nearly triple that of monthly growth.

5. DOE Nat Avg. Retail Diesel: 4/18/2011$4.105 Prior Year$3.015 vs. 4/18/2010$1.031 Increase 33.5% Factors at play:  Middle East & North Africa events  US cold winter  Significant increase in freight moving (LA/Long Beach activity increased 25% in 2010 vs. 2009, a record YOY increase)  US EIA expected record $85.17 per bl. in 2011 ($101.13 on 3/11)  Transport industry increases use/demand Fuel Costs

6.  FMCSA (USDOT) launched first phase12/12/10  Replaced SafeStat (SEA Scores)  Enormous new emphasis on driver behavior  Bad drivers fired, driver pool reduced, safer drivers sought ($$$)  2 driver scores (unsafe driving & fatigued driving) were correlated to crash risk in first study  Behavior of some shippers and brokers: overreaction  Some rewriting contracts to eliminate carriers with a BASIC Alert before they understand the program, or the consequences  Shippers are afraid of costly litigation (negligent hiring & vicarious liability for carriers’ accidents CSA (formerly CSA 2010)

7. What are CSA BASICs? SMS 6 BASICs + Crash IndicatorExamples of violations include: Unsafe Driving Speeding, reckless driving, improper lane change, and inattention Fatigued DrivingHOS, ill, fatigued, logbook errors Driver FitnessInvalid/no CDL; endorsements, medical cert. Controlled Substances & AlcoholUse/possession alcohol, illegal drugs, misuse of Rx Vehicle MaintenanceBrakes, lights, mechanical defects, failure to repair * Improper Loading/Cargo Securement Shifting Loads, spilled or dropped cargo, unsafe HM * Crash IndicatorHistories/patterns of high crash involvement * Not available to the pubic to view

8.  Total “For Hire” Motor Carriers: 155,240 Of Carriers with at least 1 BASIC score reported:  Carriers with at least 1 score:54,813 (35% of Total)  Carriers w/ 1 BASIC Alert: 21,640 (40%)  Carriers w/ 2 BASIC Alerts: 7,594 (14%)  Carriers w/ Unsafe Driving Alert: 8,448 (15%)  Carriers w/ Fatigued Driving Alert: 21,837 (40%)  Sources: USDOT & QualifiedCarriers.com, through April 7, 2011 Current State of U.S. Truck Safety Data

9. * FMCSA Safety Rating alone determines a motor carrier’s fitness for use, and should always take precedence over, and clearly outweigh, any single score, or collection of scores, or data set, including CSA’s SMS or BASIC scores. * Some courts may differ, so why has TIA arrived at this determination? Collectively, all of FMCSA’s data, and all of its law enforcement designed data and processes, its carefully designed, internal, non-public processes applied to all of its data, still do not arrive at a Safety Rating for a motor carrier. * FMCSA new guidance (March 2010): “Unless a motor carrier in the SMS has received an UNSATISFACTORY safety rating pursuant to 49 CFR Part 385, or has otherwise been ordered to discontinue operations by the FMCSA, it is authorized to operate on the nation’s roadways.” TIA Formal Position on FMCSA Safety Data

10.  Expect and build increases to your freight budgets  5-15% each of the next two to three years (*)  Introduce and encourage flexibility in your operations and freight expectations  Build your transportation resources carefully. Quality of relationships matters most.  Rely on existing partnerships that work.  Encourage your Agency leadership to contact FMCSA. (*)Sources: Baird, FTR, BB&T “Crunch” Survival 2011-2012

11.  Be attractive to carriers and service providers  Carriers are firing shippers  Use drop trailers if volume can sustain it  Shorten or eliminate driver waiting time (keep drivers happy)  Add lead time to orders. Pre-book as often as possible & beat the competition to the truck.  Prohibit your carriers from using other carriers on your freight. This is double-brokering. It’s illegal, voids most cargo insurance & eliminates SOP & security training. “Crunch” Survival 2011-2012

12.  Introduce new service providers now  If you wait, it will be too late  Relationships must be built before capacity becomes precious  Brokers & 3PLs with strong procedures can become your most precious resource  Consider CSA BASIC scores as a good service indicator  Tends to find better performers  Provides limited quantifiable evidence regarding the carrier’s operation  Spend on-going resources to train service providers on your needs, SOPs, Security. Then go audit them. “Crunch” Survival 2011-2012

13. Jeffrey Tucker jefft@TuckerCo.com www.TuckerCo.com www.QualifiedCarriers.com www.tianet.org 856-317-9600, ext. 122 Thank you