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  • Besides market factors driven by the strategic landscape, transportation providers are beset with other changes: What is the economy doing? What will the impact of new and future regulations be? Will cost pressures continue to mount or abate?
  • JBHT response is to focus on what we call CVD. Customers universally value the same three attributes of transportation offerings: service level, capacity and cost. The value they desire is unique: are you shipping cotton or computers? Service – adapt our offerings to both customer and driver needs. Slower, less expensive. Faster, more $$. High levels of reliability, more $$. Technology is critical to tight coordination and low admin. costs. Examples: appt. scheduling or freight invoicing and payment. Capacity – We’re putting capital $$ where we can get a fair return. OTR margins too thin: high risk, low reward. No additional capacity. IM boxes being added, dedicated contracts being signed. IM infrastructure key to its competitiveness with truck. Following freight mix into regional networks. (graph)

    1. 1. Hours of Service and Other Current Trucking Issues Gary L. Whicker J.B. Hunt Transport
    2. 2. J.B. Hunt Transport <ul><li>3 business segments </li></ul><ul><ul><li>Truck – Over the road capacity </li></ul></ul><ul><ul><li>Intermodal – Premium truck/rail service </li></ul></ul><ul><ul><li>Dedicated Contract Services – Private fleet outsourcing </li></ul></ul><ul><li>Assets </li></ul><ul><ul><li>10,253 company-owned tractors </li></ul></ul><ul><ul><li>1,179 independent contractors </li></ul></ul><ul><ul><li>47,257 trailers/containers </li></ul></ul><ul><li>Employees </li></ul><ul><ul><li>12,172 drivers </li></ul></ul><ul><ul><li>15,713 total employees </li></ul></ul>
    3. 3. What HOS rule?
    4. 4. Newest rule vacated! <ul><li>Why? - “Arbitrary and Capricious” </li></ul><ul><ul><li>Failed to consider impact of rule on drivers’ health </li></ul></ul><ul><ul><li>This alone vacated the rule, but other concerns existed: </li></ul></ul><ul><ul><ul><li>Increasing allowable driving hours from ten to eleven </li></ul></ul></ul><ul><ul><ul><li>Continuing to allow sleeper berth exception </li></ul></ul></ul><ul><ul><ul><li>NOT studying/requiring electronic on board recorders </li></ul></ul></ul><ul><ul><ul><li>Allowing 34-hour restart </li></ul></ul></ul><ul><li>For now, it is still the operative rule </li></ul>
    5. 5. HOS Impact <ul><li>$3,000,000 spent by JBHT to convert </li></ul><ul><li>Simulation showed ~ 8% reduced velocity </li></ul><ul><li>Actual results have been ~ 1% (2004 vs. 2003, through July) </li></ul><ul><li>So, why the difference? </li></ul><ul><ul><li>Changing shipper/receiver/carrier behaviors: </li></ul></ul><ul><ul><ul><li>Live pickups: - 7.1% </li></ul></ul></ul><ul><ul><ul><li>Live load time: - 3.9% </li></ul></ul></ul><ul><ul><ul><li>Live deliveries: - 2.2% </li></ul></ul></ul><ul><ul><ul><li>Live unload time: - 13.9% </li></ul></ul></ul><ul><ul><ul><li>Multi-stop loads: - 18.3% </li></ul></ul></ul><ul><ul><ul><li>Move towards more appointment “windows” versus firm appointment times </li></ul></ul></ul>
    6. 6. HOS Impact <ul><li>On the supply chain </li></ul><ul><ul><li>Most drivers now follow a fixed schedule </li></ul></ul><ul><ul><ul><li>Work during the day, rest at night </li></ul></ul></ul><ul><ul><li>Overnight short hauls (200-300 miles) difficult to service, unless dedicated capacity is used </li></ul></ul><ul><ul><ul><li>Must be planned / tendered early in the day </li></ul></ul></ul><ul><ul><li>Window appointments work better than fixed </li></ul></ul><ul><ul><li>Shipment information quality key </li></ul></ul>
    7. 7. HOS Impact <ul><li>On safety performance </li></ul><ul><ul><li>JBHT has always made safety it’s primary focus, so improvement is from many initiatives </li></ul></ul><ul><ul><ul><li>“ 15 and 7” campaign  </li></ul></ul></ul><ul><ul><li>That said, under the new HOS, JBHT has seen an: </li></ul></ul><ul><ul><li>8% reduction in DOT reportable accidents </li></ul></ul><ul><ul><li>18% reduction in driver injuries from MVA </li></ul></ul>
    8. 8. What’s Next? <ul><li>One person’s thoughts… </li></ul><ul><ul><li>Following a circadian schedule makes sense </li></ul></ul><ul><ul><li>Early results under new rule are positive </li></ul></ul><ul><ul><li>Nobody wants an unsafe system </li></ul></ul><ul><ul><ul><li>The court 1 quoted the following C&W song and described driver non-compliance as “the stuff of legend” </li></ul></ul></ul><ul><ul><li>Compliance (with any regulation) is the key </li></ul></ul><ul><ul><ul><li>Require EOBRs for all </li></ul></ul></ul>
    9. 9. Other Issues <ul><li>Regulatory </li></ul><ul><ul><li>Engines – higher costs </li></ul></ul><ul><ul><li>TSA – more stringent driver qualification </li></ul></ul><ul><li>Economic </li></ul><ul><ul><li>Freight demand, up or down? </li></ul></ul><ul><ul><li>Truckload capacity shrinking </li></ul></ul><ul><ul><li>Unemployment directly related to driver supply </li></ul></ul><ul><li>Cost pressures </li></ul><ul><ul><li>Driver wages, health care, fuel, insurance, taxes, fees, equipment, lost productivity </li></ul></ul>
    10. 10. Carrier Response <ul><li>Service </li></ul><ul><ul><li>Deliver safely on-time consistently </li></ul></ul><ul><ul><li>Provide options: over-the-road (OTR), dedicated, intermodal, etc. </li></ul></ul><ul><li>Capacity </li></ul><ul><ul><li>Put capital to work where it pays (intermodal, dedicated) </li></ul></ul><ul><ul><li>Go where the freight is (regional markets) </li></ul></ul><ul><ul><li>Ensure driver supply availability </li></ul></ul><ul><li>Cost </li></ul><ul><ul><li>Utilize technology to plan, route and track shipments </li></ul></ul><ul><ul><li>Fanatical management of controllable expenses </li></ul></ul><ul><ul><li>Behavior-based pricing: good behavior = lower price </li></ul></ul>
    11. 11. Questions?