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Jan 02, 2024 •279 likes •407 views

3 Ways the Shale Boom Will Impact the Trucking Industry 2013 Insights from the transportation industry survey conducted in collaboration with: Benesch National Tank Truck Carriers (NTTC) Ohio Trucking Association (OTA) 1 2

  1. 3 Ways the Shale Boom Will Impact the Trucking Industry 2013 Insights from the transportation industry survey conducted in collaboration with: • Benesch • National Tank Truck Carriers (NTTC) • Ohio Trucking Association (OTA) 1 2 3

  2. 3 Ways the Shale Boom Will Impact the Trucking Industry Contents: 1 • Executive Summary • Impact One: Overall Industry Growth - Revenue Growth - Volume Growth - Segments of Growth 2 • Impact Two: Shortages in Means of Production - Shortage of Workers (drivers and mechanics) - Shortage of Equipment - Meeting Needs through Acquisition 3 • Impact Three: Regulatory Change - Federal Trucking Industry Regulations - State Oil/Gas Industry Regulations - Impact on Growth • Conclusions • About NTTA • About OTA • About Benesch 2 3 Ways The Shale Boom Will Impact The Trucking Industry

  3. It summarizes and interprets Shale energy exploration, the growing practice of deep horizontal the results of a survey recently completed by Benesch, an Ohio drilling to harvest oil and natural Executive Summary based fjrm with a nationally- gas previously beyond reach, has recognized transportation and changed America’s energy industry logistics practice, in collaboration and overall economy. According to the American Chemistry Council, with National Tank Truck Carriers (NTTC) in Washington, DC and the abundant natural gas is creating Ohio Trucking Association (OTA) in an “American manufacturing Columbus, Ohio. renaissance” that is expected to produce more than 400,000 new American jobs, and over $132 billion The survey provides a snapshot of changes in the initial four years in new U.S. economic output. And of the shale boom, as well as in the areas where the actual drilling expectations for the coming half- occurs—Ohio, Pennsylvania, Texas, decade both in areas of active Louisiana and North Dakota—there are even more direct economic shale gas production, and the nation as a whole. impacts of what has been called the “shale boom.” These impending economic changes “As many economists present both challenges and will tell you, [trucking] is monumental opportunity. an important harbinger As a leader in the transportation of economic vitality and industry, it is important to have the change. Increases in information necessary to position trucking activity signal your company to capitalize on corresponding changes in opportunities in this new market. manufacturing and industry. This white paper identifjes three After all, you can’t make important ways that the shale boom or sell a product without will impact the trucking industry. transportation playing a key • Increased Demand for Trucking role in the process.” • Shortages of Workers and Supplies Richard Plewacki, partner Benesch’s Transportation & Logistics • Regulatory Changes 3 3 Ways The Shale Boom Will Impact The Trucking Industry

  4. 1.The Shale Boom will spur trucking industry growth: 1 fjve years these groups are even As the US and global economies more optimistic, with the percentage begin to emerge from recession, anticipating growth rising to almost the trucking industry is showing 92% of Ohio trucking companies and early signs of growth, and the shale 95% of national trucking companies. boom is a signifjcant part of this equation. When asked about activity from 2009 to 2012, 80% of Ohio trucking companies and 85% of national trucking companies reported growth. Looking ahead to the next 4 3 Ways The Shale Boom Will Impact The Trucking Industry

  5. And much of this anticipated growth is due to the activity in the shale industry. When asked whether shale 1 would impact the trucking industry, 97% of national companies, and 91% of Ohio companies agreed. The impact is expected to be positive, with 16% of future growth attributed to shale nationally, and 11% in Ohio. 5 3 Ways The Shale Boom Will Impact The Trucking Industry

  6. While shale-driven growth will cut across sectors of the trucking industry, the greatest impact will 1 be in the tank sector. Nationally respondents anticipated 77% growth “Because of fracking, in the tank sector, and 50% growth in the bulk sector. In emerging the process to get shale plays like Ohio, the increased natural gas out of shale, demand continues to be for the dry tank trucks will be the van and specialized trucks needed best sector.” for building infrastructure, but will transition to bulk and tank as these Bob Costello, ATA Chief Economist fjelds build to full production. Trucking 2013 forecast 6 3 Ways The Shale Boom Will Impact The Trucking Industry

  7. The Shale Boom will increase shortages in means of production. 2 The shortage of qualifjed drivers and mechanics is not a new concern in the trucking industry, but the increased demand will put more pressure on a workforce already in short supply. This shortage has already limited growth for some companies, and it continues to be a primary limiting factor for companies looking to take advantage of opportunities presented by the shale boom. 7 3 Ways The Shale Boom Will Impact The Trucking Industry

  8. When asked to identify the single biggest barrier to capitalizing 2 on shale opportunities, driver and mechanic recruitment was identifjed by 47% of national companies, and 24% of Ohio “We’ve seen small companies. The rate of workforce growth is expected to be 17% fmeets have to downsize nationally, including 12% of Ohio- because they had to sell based companies. two older tractors just to buy one new tractor.” Bob Costello, ATA Chief Economist, Trucking 2013 forecast 8 3 Ways The Shale Boom Will Impact The Trucking Industry

  9. Shortages of available equipment as a means to growth. are also a concern, and according Nationally, 27% of companies 2 to American Trucking Associations are considering acquisition in Chief Economist Bob Costello, new the next 5 years (an increase equipment is replacing aging trucks of 11%), and in Ohio 15% of rather than building fmeet capacity. companies are considering acquisition in the next fjve years These combined shortages of labor (an increase of 6%). and equipment have companies increasingly considering acquisition 9 3 Ways The Shale Boom Will Impact The Trucking Industry

  10. The Shale Boom will require companies to comply with 3 complex, changing regulations. “The regulatory While nationally less than 10% of conditions are respondents identifjed regulation signifjcant, as is the as the primary barrier to growth, absence of many/most in Ohio—the hotbed of activity carriers (unless they in the emerging Utica shale play whose oil and gas regulations are true hazardous are still emerging—regulation materials transporters) was identifjed as the leading understanding what barrier to growth by over 24% of they have to do to be in respondents. compliance.” --Ohio Survey Respondent 10 3 Ways The Shale Boom Will Impact The Trucking Industry

  11. Capitalizing on shale activity requires trucking companies to be 3 knowledgeable and compliant with not only Federal transportation law, but oil and gas production law, “There is no reason why which is regulated by individual with due diligence, Ohio states. But the difference in the level of concern about regulations motor carriers cannot between national and Ohio position themselves to be carriers is likely a function of prior competitive as the Utica experience in the oil and gas Shale play grows.” arena—not one of ability. National carriers have had experience in Richard Plewacki, partner other settings outside of Ohio and Benesch’s Transportation & Logistics have become educated about and familiar with applicable regulations and other oil fjeld operational challenges. And while regulations continue to evolve, the changes can be anticipated and planned for. Carriers should already be planning for a change of the Hours of Service Regulations (which are anticipated to come into effect July, 2013), as well as the prohibition against traditional motor carrier-to- motor carrier subcontracting that recently became effective through MAP-21. But these regulatory changes are just part of the industry, like changing customer requirements, and community initiated limitations with respect to infrastructure and transport and oil fjeld conduct. 11 3 Ways The Shale Boom Will Impact The Trucking Industry

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