Werner Expands Capabilities and Network Scope

Omaha, Nebraska USA

April 16, 2007

By

Evan Armstrong

Key Personnel:

Derek Leathers, Sr. Exec. VP VAS & International

Marty Nordlund, Sr. Exec. VP Specialized Services

Steve Phillips, Sr. VP Van Division

Craig Stoffel, VP Global Logistics

Skip Schollaert, VP of Brokerage and Intermodal Services

Lance Dixon, VP Mexico Division

Anthony DeCanti, VP AIS

Fred Thayer, Director of Corporate Communications

Founded in 1956, Werner Enterprises has grown from a small trucking company into a large multifaceted logistics provider with 2006 revenues of $2.1 billion and net income of $98.6 million. Werner's service offering is split between truckload transportation, dedicated contract carriage and non-asset based transportation management through its Value Added Services (VAS) division. Werner has over 14,000 employees (including over 3,000 non driver employees) and approximate trucking assets of 9,000 tractors and 25,200 trailers as of 12/31/06. 

Value Added Services (VAS) Division Overview

To expand beyond its core North American trucking operations, Werner has invested sizably in its VAS division which encompasses its non-asset based transportation management operations--Freight Management and Brokerage, Intermodal operations, and Werner Global Logistics. According to Derek Leathers, Senior Executive Vice President of VAS & International, Werner's VAS and dedicated fleet operations will represent a significant portion of Werner's future growth.

VAS evolved from Werner Logistics Services which was founded in 1994.  In 2000 Werner Logistics Services became part of Transplace. Transplace was a created from a merger of six of the nation's largest publicly held truckload carrier’s third-party logistics (3PL) operations. In 2002, Werner parted ways with Transplace and formed VAS as a completely in-house 3PL operation. In four years VAS revenues have grown to approximately $266 million in 2006. $100 million came from its Brokerage operations with the balance coming from Freight Management, Intermodal and International.

Werner's VAS Brokerage operations have grown rapidly since being formed in 2003. The operation now has a staff of 78 working out of 10 North American offices. Werner Brokerage has contracts with over 5,000 carriers in the following modes: dry van, flatbed, refrigerated/temperature controlled, and less than truckload (LTL). It also performs cross-border transportation, power-only driver/tractor services for customers with trailers, and cross-docking services. In addition to stand-alone services, the operation benefits from handling overflow loads from Werner's trucking operations. 

When a more extensive transportation management approach is desired by a shipper, Werner Freight Management (WFM) provides a holistic approach to managing customer’s transportation from transportation network analysis and design to shipment execution and visibility. Werner estimates that WFM will manage over $200 million in transportation in 2007. It utilizes Werner's tier-one proprietary transportation management system "SMART" to optimize transportation modes and consolidate orders, create shipments, and route shipments to carriers. WFM manages inbound and outbound transportation, tracks carrier routing compliance, and insures proper freight bill payment. WFM customers include:  Dollar General, Frito-Lay, Home Depot, Kraft, Gordmans, Mervyns, OfficeMax, and RR Donnelley.

Intermodal road/rail operations have a staff of 16 based in Omaha and leverage an equipment base of over 25,000 trailers.  75% were handled as trailer on flatcar (TOFC), 20% were container, and 5% were handled via "Free Runners" (rail-ready trailers).

Werner Global Logistics (WGL) was founded in 2006 to meet its customers logistics needs in China. Import/export services include: Ocean and air freight forwarding, Non-vessel operating common carrier (NVOCC) shipping, shipment consolidation/deconsolidation, and customs brokerage. WGL has established alliances with select Chinese logistics providers to provide inland distribution from major ports and warehousing and transportation services from 20 distribution centers throughout China. WGL has also established an agent network in Europe, Central America, South America, India, and the Caribbean. Additional WGL services include purchase order and vendor management programs.

Dedicated Fleet Services

Established in 1992 Werner's Dedicated Fleet Services (DFS) has had rapid growth over the past five years. It accounts for approximately 40% of Werner Enterprises truck fleet with 3,600 trucks. DFS manages over 140 individual customer fleets ranging from one to 700 tractors.  About 60% of the fleets are managed on-site at customer locations and about 40% of the smaller fleets are managed from Werner's operations center in Omaha. Equipment/trailer types provided to DFS customers include: dry van, temperature controlled, curtainside, flatbed, and high cube drop deck vans.

DFS’s largest customer is Dollar General.  Some of the other major DFS accounts include: Family Dollar, Anheuser Busch, and Home Depot. 

Summary

Werner has its vision set squarely on strategically developing complementary non-asset based logistics operations and dedicated fleet services to meet customers' global supply chain needs.  As it expands, it will continue to leverage its corporate culture and long-term focused values in developing relationships which provide Werner with significant competitive advantages.

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