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January 2 2023

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92 Journal of Commerce | J anuar y 2, 2023 EXECUTIVE COMMENTARY ANNUAL REVIEW & OUTLOOK 2023 Surface Transportation ◀ "Shippers and carriers need to be honest with each other, share as much insight and data as possible, and speak to the facts." Greg Orr capacity, and improve options for shippers in 2023 and beyond. These new options and the capacity that comes with them are examples of how the supply chain can become more resilient going forward. Resiliency also means offering customers options and letting their business decisions guide our invest - ments. In 2020, CP acquired the Central Maine & Quebec Railway and launched a new ocean container service through the port of Saint John, N.B. As customers began routing shipments through this deepwater port, we have hired crews and invested in track capacity. The result has truly been a benefit to CP and our customers. That is just the beginning. For example, our Lázaro Cárdenas-to-Midwest intermodal train, launched earlier this year on an interline basis with KCS, is a proof of concept and a sign of things to come with a combined Canadian Pacific Kansas City (CPKC) network. Our story is all about growth. We are investing in our network and our people to support the tremen - dous growth potential that would flow from new competitive and reli- able rail transportation options for inland shippers. CFI Greg Orr President For the truck- load market, finding and retaining good quality drivers remains a continuing challenge, and with more veteran drivers expected to retire this year than new drivers joining the profes - sion, the pressure isn't letting up. We have to be more creative, innova- tive, and opportunistic about how and where we look for and encourage people to become professional drivers. Yet today, that challenge pales in comparison to the surging costs of running a business. From fuel to maintenance to parts, through labor, liability insurance, utilities, equipment costs, and health care, all are running at a pace that is unsustainable. It's especially tough on mid-sized carriers and small inde - pendents — they will struggle to survive. According to industry reports, some 7,000 carriers shut their doors in the third quarter. These carriers are the "circuit break- ers" of the business, capacity that flexes with the ups and downs of demand. As this pool shrinks, capac- ity will again tighten. At the same time, shippers are coming to the table more aggres- sively demanding rate reductions. I recognize their costs are going up, too. But in this accelerated inflationary environment, few trucking firms, already dealing with rising costs, can afford yet more pressure on pricing in a challenging market. Ultimately that will catch up with the shipping community very quickly as capacity is forced out of the marketplace, and that capac - ity will not come back. A word of caution: Shippers and carriers need to be honest with each other, share as much insight and data as possible, and speak to the facts. Ultimately, this market could flip on a dime into a capacity short - age if shippers get overly aggressive too quickly. Until we figure out as a country how to get oil prices under control, we are going to continue to see CloudTrucks Tobenna Arodiogbu CEO The trucking industry has seen capacity remain tight throughout the year due to driver retention. This, coupled with the growing probability of a recession, increasing financial pressure on consumers, and rising fuel prices, is likely the reason that we won't see sizable changes in capac - ity constraints over the next few months. Instead, trucking capacity is expected to increase slowly in the beginning of 2023 (after the holiday season) and could show more consid - erable improvement in the second quarter. To ensure shippers secure capacity beyond observing the traditional "shipper of choice" best practices, they should leverage data and technology to streamline processes and stay com- petitive. Not only does utilizing data help shippers make predictions, but it can also optimize their operations, improve decision-making, and cut costs. More importantly, the use of technolo- gy-driven solutions continues to help bridge the gap between shippers and carriers by supporting more efficient payment processes and automating manual efforts. The biggest challenge facing this industry, similar to most, is the rising cost of simply running a business. Truck drivers are facing historically high fuel prices and inflation is continu - ing to raise interest rates, and we're not expecting to see those trends decrease any time soon. Because the industry is currently in a down market, drivers have to be smarter than ever when making financial decisions — paying close attention to key metrics such as costs, load distances, and cash flow (not just revenue or payment per mile). Owner-operators, in particular, are the ones that struggle the most in markets such as this because they may have fewer resources or visi - bility into their operations to help them run as efficiently as enterprise companies. The industry can combat this challenge by providing the kind of operational support drivers are sorely needing right now and will continue to need well into next year. Drivers need better tools to track their revenue, access to market insight reports so they can see where on the map they should be going based on how rates are appearing, and better visibil - ity into their performance so they can negotiate for better rates. It is crucial that companies trying to support driv- ers are enabling them to make those better- informed, cost-effective decisions, because operational efficiency is more important now than it was even a year ago. Drivers cannot afford to be inefficient. This means developing mission-critical software to help drivers better understand their metrics, lower costs, and get more cash in their wallets. "It is crucial that companies trying to support drivers are enabling them to make those better-informed, cost-effective decisions."

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