how carriers price their freight may 24, 2012 website:

How Carriers Price Their FreightMay 24, 2012

Website: www.3PLogistics.com

Copyright © 2012 Armstrong & Associates, Inc.

ATA Not-Seasonally Adjusted (NSA) Truck Tonnage Index Trends

2

Source: ATA Truck Tonnage, Morgan Stanley Research

Straight-Line Forecast for Monthly YoY % Change in ATA NSA Truck Tonnage Index


Cass Shipment Index Trends & Straight-Line Forecast

3

Source: Cass Freight Index, Morgan Stanley Research

Straight-Line Forecast for Monthly YoY % Change in Cass Shipment Index


Primary Costing System Features

4

P&L Financial Data

Modifications based on freight bill and operational info.

Operational data, length of haul, class of freight, lane

balance, trailer cube, linehaul speed, pickup times,

freight handling times, etc.

Unit costs, linehaul/mile,

pickup-delivery, dock, admin./shipment

Computerized formula to give individual shipment costs

Pricing/Yield Management

Marketing/Sales


Cost Per Mile Comparisons for Carrier X

5

CPM without fuel - all milesCPM with fuel - all milesCPM loaded miles


Mileages – Cost Relationships

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ShipmentWeight

Mileage at which Pickup-Delivery Cost is 50% or Greater of Total Cost

Mileage at which Linehaul Costs Exceed Terminal Costs*

200 825 None

500 475 1,740

1,000 450 1,175

2,000 240 915

5,000 180 485

10,000 175 415

20,000 145 215

40,000 225 240

*Terminal costs include pickup-delivery, platform and billing-collecting.


Fuel Prices

7

Sources: U.S. Energy Information Administration, Bloomberg News / Graphic by Transport Topics

$4.06

$98.00


Fuel Surcharge

8

Base $1.20Fuel Cost $4.00Difference $2.80

Miles Per Gallon Fuel Surcharge5.5$0.516.0$0.476.5$0.43

Issues: 1) Short Haul MPG <5.52) Empty Miles 10-25% (Biggest Challenge <300

Miles)


Werner Enterprises, Inc. – Systems Results

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2011

Operating ratio (consolidated)¹ 91.3%Average revenues per tractor per week² $3,480Average annual miles per tractor 118,086Average annual trips per tractor 236Average trip length in miles (loaded) 442Total miles (loaded and empty)³ 855,180Average revenues per total mile² $1.533Average revenues per loaded mile² $1.736Average percentage of empty miles4 11.7%Average tractors in service 7,242Total tractors (at year end): Company 6,600 Independent contractor 600 Total Tractors 7,200Total trailers (Truckload and Intermodal, at year end)

23,045

¹Operating expenses expressed as a percentage of operating revenues. Operation ratio is a common measure in the trucking industry used to evaluate profitability.²Net of fuel surcharge revenues.³Amounts in thousands.4”Empty” refers to miles without trailer cargo.


Werner Enterprises, Inc. – Operating Expenses per Mile

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2011

Salaries, wages and benefits $.596Fuel .481Supplies and maintenance .186Taxes and licenses .108Insurance and claims .078Depreciation .182Rent and purchased transportation .166Communications and utilities .017Other (.016) Total $1.798

Note: Fuel expense line does NOT include owner operator fuel.

Thank You!

Stoughton Wisconsin OfficeRichard Armstrong

Armstrong & Associates, Inc.100 Business Park Circle

Suite 202Stoughton, WI 53589 USA

608-873-8929

Milwaukee Wisconsin OfficeEvan Armstrong

Armstrong & Associates, Inc.10401 West Lincoln Avenue

Suite 207West Allis, WI 53227 USA

414-545-3838

how carriers price their freight may 24, 2012 website:

Documents

armstrong associates

cass shipment index

cass freight index

fuel cost

miles cpm

ata truck tonnage

freight bill

class of freight