The Transport & Logistics Week in Review

Transcription

1 AIRFREIGHT & SURFACE TRANSPORTATION Airfreight & Logistics Market Weight Railroads Market Overweight Trucking Market Weight FRIDAY FREIGHT The Transport & Logistics Week in Review Welcome to our Friday Freight report. We distribute this product each Friday mid-day, so clients have some freight reading material to make their weekends truly worthwhile! We always appreciate your feedback if you have any suggestions. Have a great weekend! This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Trahan. Included are (1) key takeaways, selected shipper comments; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight & logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. SOUND BITES FROM WHAT WE RE HEARING Trucking (Market Weight): We spoke with five public and private TL carriers this week about demand and capacity conditions ahead of Black Friday. Our contacts have noticed stronger demand trends over the last two weeks, but not necessarily more volume this week as most shippers at this point have already built up enough inventory for Black Friday and the subsequent days of inventory replenishment. Most carriers we spoke with indicated that November is shaping up to be stronger than October and the year ago period. Volumes with retail-related customers are relatively strongest currently, driven particularly by online retailers which in some cases have led to increased expedited business. Looking out the next few weeks, the carriers we spoke with expect peak type demand levels to last through the first or second week of December. However, visibility beyond peak season is limited as shippers remain cautious and continue to manage tighter inventories with shorter lead times. As a result, our contacts expect volumes to be down slightly y/y in 1Q:12. Still, strong pricing gains are expected to continue with these carriers expecting increases in the 4%-5% range in C12, similar with Lastly, we also asked our contacts if they have seen any temporary volumes shifts from rail into concerns of a potential rail strike. All five carriers commented that they had not seen any incremental volumes related to a potential strike and were not preparing for potential volume shifts as they believe the situation will be resolved without a strike. Airfreight & Logistics (Market Weight): We spoke with a large consumer staples manufacturer about recent international air and ocean shipping trends. On the demand side, our contact indicated that peak season shipping activity has been more sluggish than seasonally normal so far this year as he believes retailers are satisfied with Company Name Canadian National Railway Co. (CNI) Canadian Pacific Railway Ltd. (CP) CSX Corporation (CSX) Heartland Express Inc. (HTLD) Kansas City Southern (KSU) Landstar System Inc. (LSTR) Pacer International Inc. (PACR) Union Pacific Corp. (UNP) OP=Outperform, PP=Peer Perform, UP=Underperform, NR=Not Rated Closing Rtg Price $73.85 UP $56.04 UP $20.23 OP $12.90 UP $63.43 PP $43.84 PP $4.02 PP $96.00 OP Edward M. Wolfe (646) EWolfe@WolfeTrahan.com Scott H. Group (646) SGroup@WolfeTrahan.com Reena Krishnan (646) RKrishnan@WolfeTrahan.com Ivan Yi (646) IYi@WolfeTrahan.com Carol A. Krakowski (646) CKrakowski@WolfeTrahan.com Charlie Legg (646) CLegg@WolfeTrahan.com DO NOT FORWARD DO NOT DISTRIBUTE DOCUMENT CAN ONLY BE PRINTED TWICE This report is limited solely for the use of clients of Wolfe Trahan & Co. Please refer to the DISCLOSURE SECTION located at the end of this report for Analyst Certifications and Other Disclosures. For Important Disclosures, please go to or write to us at Wolfe Trahan & Co., 420 Lexington Avenue, Suite 648, New York, NY WolfeTrahan.com Page 1 of 13

2 generally lean inventory stocks. With respect to capacity, this shipper typically utilizes annual contracts directly with a group of ocean carriers rather that freight forwarders. Almost none of our contact s volumes are moved on spot rates, but he is looking to shift more towards market-based pricing going forward. Although carriers have started to pull ships from some lanes with very weak pricing, this shipper is not having any issues finding capacity and has not had any containers roll, and he isn t concerned about capacity getting tight in 2012 either. On his international airfreight shipments, our contact noted that capacity remains abundant and pricing very favorable. He has not seen any signs of tightening capacity heading into peak shopping season, and he doesn t expect capacity to tighten the last month of the year. In fact, his group of airfreight forwarders has actually approached our contact with voluntary rate reductions which are very rare. As a result, this shipper has put out a series of regional RFPs, which he has not done historically, in order to take advantage of the favorable pricing environment. Railroads (Market Overweight): We spoke with a specialty grain products shipper about recent volume and pricing trends with the rails. Our contact s volumes have been holding steady in recent months and are tracking up modestly compared to 2010, with exports continuing to outpace domestic demand. This shipper uses all of the Class I rails and his rates have increased 4%-5% on average this year net of fuel, up slightly from last year s rate increases. Our contact added that her rate increases have varied by lane, but NSC was generally most aggressive in pursuing rate increases this year. This shipper believes she has little ability to push back on rail rate increases since most of her facilities are served by a single rail and it s very difficult to shift to truck service. Rail service levels for our contact have generally been good recently, but freight car capacity remains tight. This shipper leases her own railcars and noted that tank and covered hopper cars are particularly difficult to obtain, likely due to strong demand from the oil industry to transport both crude oil and frac sand. Crew capacity also seems tight, although our contact believes this issue should improve in the near term as she understands the rails are nearing the completion of training classes to increase their crews. We also discussed the rail labor situation - our contact is not making any contingency plans for a possible strike in early December when the Presidential Emergency Board s cooling off period ends. [Since we spoke with this shipper, the rails announced on Wednesday an agreement with one of the unions to extend the cooling off period until February 8, and the rails are hopeful to announce similar agreements with the other two unions without a new labor contract. We continue to see little strike risk for the rails. See our separate ifreight blog for more details Wolfe Trahan comment]. Trucking (Market Weight): Earlier this week, we spoke with a mid-sized discount retailer about pricing and capacity trends heading into Black Friday. Our contact uses primarily truckload, but also does some LTL, ocean, small package and a small amount of intermodal. This shipper complained that without warning, an ocean carrier rolled over a few of his containers that were supposed to arrive in time for Black Friday. After a round of negotiations, our contact was able to get the ocean carrier to pay to have this freight rushed via expedited truck as soon as it reached the port so that it could reach stores in time for Black Friday. While ocean carriers are trying to cut capacity and roll over boxes again, our contact believes that domestic capacity has seemingly loosened the past few weeks. However, he continues to fear tightening capacity in 2012 due ongoing driver shortages facing TL carriers. Due to our contact s worries about TL capacity, he is starting to do a little intermodal, where there is more capacity and slightly better pricing than TL. Our contact doesn t seem committed to intermodal though, as he finds it significantly less convenient with sub-par service relative to truckload. In terms of truck pricing, this shipper expects about 4%-5% rate increases from TL carriers next year, and much larger 7%-10% increases with his LTL carriers as he is re-pricing an expiring three-year contract with significantly discounted rates. We also spoke briefly about small package pricing, and our contact expects about a 5% domestic rate increase next year with both UPS and FDX. WolfeTrahan.com Page 2 of 13

3 Auto & Truck Manufacturing (Market Weight, Tim Denoyer): We spoke with a European trucking consultant about Daimler s plans for incremental powertrain vertical integration in North America and nearterm sentiment in the European trucking sector on capex. Our contact believes Daimler intends to bring a more European, i.e. vertically integrated, manufacturing style to Freightliner, which could displace current transmission and axle suppliers Eaton, Meritor and Dana to a degree starting next year. This is consistent with Daimler s October announcement of the Detroit brand, under which it is rebranding its Alliance Axles to be identified more with Detroit Diesel, and our contact believes Daimler plans to intensify the marketing push at the 2012 Mid-America Truck Show. Consistent with our fleet feedback, our contact is not sure if the industry will quickly switch to the vertically integrated powertrains, thus he believes Daimler is looking to other OEMs, including Volvo, to sell axles as it ramps up internal axle production. Still, significant capex will be required and a sharp ramp in 2012 seems unlikely. In terms of near-term European truck order trends, this consultant sees the situation worsening, with trucking fleets pushing 4Q purchases into 2012 due to low visibility to economic trends. Though our contact expects a surge in truck demand in 2013 ahead of the Euro VI emissions standard change in 2014, a pre-buy is far below the potential breakup of the Euro in terms of concerns at the moment, which is limiting capex planning to 3-6 months at many fleets. Note: Each of the comments above represents the viewpoint of a single shipper or industry contact. They are not necessarily representative of the overall market and do not necessarily reflect the opinion of Wolfe Trahan unless specified. UPCOMING EVENTS: TRANSPORTATION INDUSTRY EVENTS OF NOTE Sign up for events and check out our new Research Library tab on our website at WolfeTrahan.com December 5, 2011: Wolfe Trahan will host a tour and meetings with UPS Senior Management at their headquarters in Atlanta, GA. December 7, 2011: Ed Wolfe, Scott Group and Chris Senyek will host a Wolfpack Roundtable Lunch in Boston, MA December 15, 2011: Ed Wolfe, Scott Group and Michael Kantrowitz will host a Wolfpack Roundtable Lunch in New York City. February 8, 2012: Wolfe Trahan will host meetings with Meritor Senior Management at their headquarters in Troy, MI. February 9-10, 2012: Wolfe Trahan will host meetings with Cummins Senior Management in Boston, MA. May 22-23, 2012: Save the Date: Wolfe Trahan 5 th Annual Global Transportation Conference in New York City. HIGHLIGHTS FROM OUR TRANSPORTATION RESEARCH THIS WEEK: On Track, Week 46 Ending November 19: Rail Volume Growth Moderates Again (11/23/11). Total Week 46 Rail vols increased 1.7% y/y, slightly decelerated from +1.8% and +3.1% the past 2 weeks. While y/y vols have been positive for 7 straight weeks to begin 4Q, growth has moderated the past several weeks into slowing industrial-related vols and a negative inflection in coal vols this week. Still, vols are tracking up WolfeTrahan.com Page 3 of 13

4 2.4% QTD, improved from +0.7% during 3Q. U.S. rail vols are up 2.6% QTD, ahead of Canadian vols up 1.2%. Looking out to next week, the rails face a normal comp with Thanksgiving in the current and year-ago weeks. Inside Freight: Busy Day for Rails in DC What Does it Mean? (11/23/11). We received many questions after a policy analyst at another firm indicated a federal judge was likely to certify a class action lawsuit against the major U.S. rails regarding their fuel surcharge programs. We had written about this issue back in April when we thought class certification was likely back then. After speaking with several lawyers yesterday, it seems likely that the judge will certify the class in the near future, possibly as soon as Friday. The Wolfe Monthly Macro Watch: More Mixed Signals from Freight Domestic Continues to Feel Better than International (11/21/11). This month s macro examines Sept. and Oct. data. Overall, trends remain mixed with 7 of 15 series this month improved y/y compared with the prior month, similar with the pace of improvement witnessed last month. Rail vols have improved y/y so far in 4Q relative to 3Q and the Ceridian Pulse of Commerce index (based on trucker fuel consumption) improved in Oct. for its best month in the past 4. However, the broad-based Cass shipment index slowed materially in Oct. and West Coast ocean port vols inflected back negative y/y in Oct. despite our channel checks which indicate signs of a late peak season. With some series improving and some decelerating, our view is that freight remains choppy but relatively stable overall with few signs of an impending material slowdown or recession. RECENT CONFERENCE CALLS AND REPORTS: Ed Wolfe & Scott Group Conference Call: Repositioning EPS Forecasts and Ratings for Change in Market Conditions (9/6/11). Ed Wolfe and Scott Group hosted a conference call discussing the following key topics: What is the market telling us about freight demand and the Stocks?; What should investors do from here with the transports?; Recent survey results reflect further slowing in international air and ocean pricing and recent deceleration in TL, Rail, Intermodal & Small Package pricing; Updated look at valuation after earnings changes; Which transport sub-sectors are best positioned?; What secular forces in transports should help offset weaker economic demand?; and Why are we near term bullish on transports? The State of the Freight: Third Quarter (8/22/11). This 74-page report analyzes the responses from nearly 125 traffic managers that filled out our third-quarter survey during July and early August. Within the report, we discuss in detail: pricing, volume, service and capacity trends across all modes of freight transportation. The report looks at inventory restocking trends and how shippers expectations for targeted inventory levels going forward have now been reduced. Looking forward, shippers expect the greatest increases in Rail and TL pricing, while intermodal volumes decelerated sharply. Our survey also points to continued tight TL capacity as well as increasing volume shifts to rail/intermodal. The Wolfe Monthly Macro Watch: Buying Opportunity for the Transports into Signs that Freight is Stable and Not Slowing Materially (8/16/11). This month s macro examines mostly June and July data. While y/y and sequential vols have slowed throughout the year, this month s macro reveals that freight vols have stabilized the past couple of months. Notably, 8 of 14 data series in June improved y/y vs. the prior month and 3 of 7 more recent data points through July improved y/y compared with June. Moreover, sequential vols trended in line with normal seasonal patterns in June and the early data points for July are positive (see Slide 10). Thus, into slower but seemingly stable freight vols, we believe the transport stocks continue to reflect too much bad news and should continue to lead the market back up in the near term. Ed Wolfe & Scott Group Conference Call: Freight Points to a Slowdown, But Not End of the World Here's a List of Transport Stocks to Navigate that Environment (8/8/11). Ed Wolfe and Scott Group WolfeTrahan.com Page 4 of 13

5 hosted a conference call recapping current freight trends into early August and out of 2Q transport earnings reports. Freight and the overall economy are clearly slowing, but our companies and shippers mostly remain upbeat and comparisons generally get easier in the second half of the year. Pricing across domestic modes also remains strong, although international pricing trends continue to weaken. In this call, we update our thesis on the transport stocks in light of slowing volumes but the sharp pullback in the stocks as valuation seems compelling for the first time in over a year. We highlight our favorite stocks to own that can continue to grow earnings solidly, even in a low growth macro environment. TNTE Initiation: Lots of Potential Ways to Unlock Value (7/18/11). We are initiating coverage of TNT Express with an Outperform rating and 10 year-end 2012 target price based on our 2013 EPS estimate of TNT has struggled the past couple of years with weak pricing in Europe, integration issues in Brazil and management distractions during the demerger process. However, we believe earnings trends have finally bottomed and we favor longer term express industry fundamentals in Europe given the region s dense population that lends itself to high margin and return on capital ground operations. Valuation also appears attractive after the sharp underperformance of the stock since the demerger, and we now have only the second Outperform recommendation among 23 analysts. Tim Denoyer Conference Call with NAV Engineers (6/28/11). Tim Denoyer moderated this conference call with key Navistar emissions systems engineers updating the development of its Exhaust Gas NOx Reduction (EGNR) system. Participants included Sergio Sgarbi, General Manager, North America Business, Navistar Engine Group; and Houman Kashanipour, President, Pure Power Technologies; VP/GM Components, Navistar Engine Group. The call focused on the operating and capital cost advantages of EGNR versus traditional SCR systems, its NOx emissions reduction capability, and the company s progress on system development. Changing Lanes: Pendulum Ready to Shift Back to Large TL Carriers (5/25/11). This 75-page report lays out our thesis that Truckload (TL) carriers are in the early innings of a multi-year pricing upswing that should increasingly favor large, well-capitalized carriers. Within the report, we analyze data gathered from our proprietary truck capacity survey and discuss how over the last several years small carriers held a financial advantage that allowed them to gain market share over large carriers. However, with increasing headwinds from tighter credit standards, higher fuel costs, and rising new truck prices, we expect further reductions in truck capacity, which along with impending regulatory changes, should allow the profitability pendulum to swing back to the favor of large carriers. François Trahan Conference Call: Everything Is About To Change Take Two! A Peak In Leading Indicators Often Heralds Fog Of War Mentality (5/12/11). François Trahan hosted this 45 minute presentation covering: Questioning the Consensus Belief that QE2 Was the Catalyst Behind the Recent Rally; Applying R.S. McNamara s Eleven Lessons of War to Financial Markets; and A Non-Consensus Take on the Investment Implications of a Post-QE Environment. Rail Regulatory Cheat Sheet (Updated 4/8/11). We expect an increasingly active Surface Transportation Board over the next few years. This 2-page rail regulatory cheat sheet is perfect for your bulletin board as a handy reference piece. We lay out 13 key regulatory issues important for the railroads and highlight winners and losers among the group from potential regulatory reform. We also discuss what authority the STB has to implement policy changes on its own without Congress, and list current rate cases pending before the Board. The First Days are the Hardest Days (3/18/11). This 248-page primer provides a comprehensive overview of the airline industry in a historical, current, and future context. We examine important structural WolfeTrahan.com Page 5 of 13

6 changes that have occurred in the worldwide airline industry over the last five years, almost all of which were driven by two crises, both unprecedented in scope, that sent many airlines to the brink of insolvency: the spike in fuel prices in 2008, and the ubiquitous revenue collapse in See also, Hunter Keay s Conference Call - Initiating Coverage of the Passenger Airline Sector (3/18/11). Freight Starts the Year Slower After In-Line Reports (2/23/11). This 70-page mini-slide book with a prologue was based on our February 17, conference call entitled Freight Starts the Year Slower After In- Line Reports. On that conference call, used in conjunction with the slides below, we examined recent freight trends and takeaways from fourth-quarter earnings reports. We also highlighted freight trends to monitor for potential inflections, as we continue to expect a freight slowdown during 2011 as inventory restocking and the pace of inventory have slowed from a year ago. We then discussed current versus historical valuations and looked at how the transport stocks have performed during periods of rising and declining inflation since As always, we concluded the call with our updated thesis on the transports, including our favorite long, short and pair trade stock recommendations. A replay of the call is available through our website at WolfeTrahan.com. Swift Transportation Company: Leveraged For Success (1/31/11). We initiated coverage of Swift with an Outperform rating and a $19 year-end 2011 target price. Swift has high-end operating and financial leverage within the Truckload sector and thus we believe should have some of the most upside earnings potential over the next few years in that sector into expected continued strong industry pricing fundamentals as well as an evolving company specific turnaround. "Understanding Upcoming Truck Driver Regulations including Hours of Service and CSA 2010" (1/7/11). Ed Wolfe hosted a conference call including representatives from the FMCSA, the ATA, several TL and LTL carriers, and shippers to discuss: What is Timing of HOS and CSA Regulations?; What is Expected Impact on Driver Capacity and Productivity?; What is the Impact on Rates and Wages?; Which Companies are Best & Worst Positioned?; and Is this a Positive or Negative for Brokers Like CHRW? Please register below for call-in details. Transport Update Conference Call: After a Big Run for the Transport Stocks, How Can Investors Make Money in 2011 (11/23/10)? On this 45-minute call, we examined recent freight trends and presented our expectation for freight demand to gradually slow throughout 2011 as inventory inflects from a tailwind to a headwind for freight. We also looked at transport stock performance in different business cycles and highlighted key investable freight trends to watch for in We then unveiled our 2011 target prices and fair values and methodology. We concluded the call with our updated thesis on the stocks entering 2011, including our recent stock and sector ratings changes as we continue to re-position the group ahead of an expected economic and freight slowdown. A replay of the call is available through our website at WolfeTrahan.com. General Motors Company Initiation: Return of the General Compelling End Markets & Valuation (11/22/10), Tim Denoyer (Auto & Truck Manufacturing). We initiate coverage of General Motors Company with an Outperform rating and a $47 year-end 2011 target price. We believe GM s strong positions in emerging markets, restructured North American operations with labor stability, and compelling valuation more than compensate for the risks we detail in this report. Truck Demand Outlook Conference Call (11/4/10), Tim Denoyer (Auto & Truck Manufacturing). Tim Denoyer hosted a conference call with Guest Speaker Eric Starks, President FTR Associates, to discuss October Class 8 truck orders and the outlook for 2011 truck demand. Please register for call replay details. WolfeTrahan.com Page 6 of 13

7 Covenant Transportation Group Initiation: Solid TL Fundamentals Plus a Company Specific Turnaround Story (10/21/10). We are initiating coverage of TL carrier CVTI with an Outperform rating and an $11 year-end 2011 TP. After 3 years of operating and financial struggles, CVTI in July reported what we expect to prove an inflectional 2Q earnings report. Audio Brief: Third-Quarter Truck Equipment Survey (9/01/10), Tim Denoyer (Auto & Truck Manufacturing). This audio brief and accompanying slides summarize the key takeaways from our recent proprietary 3Q:10 trucker survey. Our survey themes included truck demand fundamentals, fleet utilization and capacity, future equipment purchasing decisions, and the new 2010 engine technologies. Parcel Paradise Are Express Carriers Ready to Reclaim Pricing Power? (5/25/10). This 245-page primer report lays out our thesis for investing in the express stocks UPS, FedEx, and TNT. We provide detailed background and market share data on the express industry, as well as histories of UPS and FedEx. We then discuss historical volume and yield trends, explore relevant regulatory/legislative issues, and review current and historical valuations and stock performance through cycles. We also lay out our thesis on why better pricing fundamentals for UPS and FedEx could be the most important drivers of their stocks over the next five years. We conclude with detailed profiles of each company and explain why we currently favor UPS over FedEx. Wabtec Corporation Initiation: Braking the Cycle - Solid Play on PTC (5/20/10). Wabtec is one of the world s largest suppliers of equipment for the freight and transit rail industries, and the company s products can be found on virtually all U.S. locomotives, freight cars, subway cars and buses. Wabtec is well diversified across its freight and transit, domestic and international, and OEM and aftermarket segments, and seems well positioned to benefit from secular trends in favor of rail. Fasten Your Seatbelts Rough Road Ahead (4/8/10), Tim Denoyer (Auto & Truck Manufacturing). This 438-page Auto & Truck Manufacturing industry primer explains in detail our fundamental investment thesis on the industry. It includes our proprietary survey of the trucking industry regarding equipment and capital spending plans, as well as our proprietary U.S. auto sales forecast model. The report also includes deep dives on industry economics, industry data and background, regulatory issues and trends in vehicle electrification. The next section of our report discusses our eleven individual company theses, with each company section averaging about 20 pages. A Training Manual Will Rail Renaissance Survive Recession and Re-Regulation? (05/20/09). This 400-page report provides an in-depth overview of the railroads historical and current operating, financial, and regulatory trends and changes. It includes analysis of rail financial performance during past recessions, including rail volumes back to the Great Depression and rail financial and stock performance out of historical downturns. We also provide a deep dive on rail end-segment customers as well as a full analysis of railroad pricing, expenses (including an in-depth discussion on pension and labor unions and costs), capital spending and returns on capital. The report concludes with individual company reports and models for all nine public railroad companies in our coverage. The Whole Trucking Story In-Depth Update, Industry Primer and Truck Carrier Survey (05/19/09). This 340-page trucking industry primer provides an in-depth look at our fundamental trucking thesis, including deep dives on the macro environment, industry background, regulatory issues and pensions. This report also breaks down the TL and LTL sectors, including analysis of valuation, volume, pricing and fuel, with discussion of competition with railroads and a large LTL bankruptcy case study. The report WolfeTrahan.com Page 7 of 13

8 includes our truck carrier capacity and equipment survey results, and concludes with individual company reports and models for all 11 public trucking companies in our coverage universe. Updated and Revised Rail Map (05/19/09). Our updated and revised railroad map includes all of the major North American railroads as well as short-line railroads Genesee and Wyoming and RailAmerica. Our new map highlights new Rail, Coal and Ports including updates of recent track build-outs plus key lanes for each major Rail. It is available in hard copy for Wolfe Trahan clients by request. WolfeTrahan.com Page 8 of 13

9 WOLFE TRAHAN S TRANSPORTATION STOCK PERFORMANCE C11 Past 7 Rolling Five- C11 Past 7 Rolling Five- Company C08 C09 C10 YTD Days Year CAGR C08 C09 C10 YTD Days Year CAGR Airfreight (Asset-Based) Less-than-Truckload FedEx Corp. (FDX) -28.1% 30.1% 11.5% -17.7% -6.0% -8.2% Arkansas Best (ABFS) 37.2% -2.3% -6.8% -37.1% -14.0% -15.1% United Parcel Service (UPS) -22.0% 4.0% 26.5% -7.8% -3.5% -3.2% Con-way Inc. (CNW) -36.0% 31.2% 4.8% -31.8% -12.3% -12.2% Group Average -25.0% 17.0% 19.0% -12.8% -4.8% -5.7% Old Dominion Freight (ODFL) 23.2% 7.9% 56.3% 11.0% -7.5% 13.9% Saia, Inc. (SAIA) -18.3% 36.5% 11.9% -34.0% -10.3% -16.7% Other Airfreight YRC Worldwide, Inc. (YRCW) -83.2% -70.7% -82.3% -98.9% 0.0% -86.8% Atlas Air Worldwide (AAWW) -65.1% 97.1% 49.9% -36.8% -8.7% -2.5% Group Average -15.4% 0.5% -3.2% -38.1% -8.8% -23.4% Non-Asset Based Service Providers Railroads (Class I) C.H. Robinson (CHRW) 1.7% 6.7% 36.5% -20.5% -4.8% 8.4% Canadian National (CNI) -21.7% 47.9% 22.3% 11.1% -4.6% 9.2% Expeditors Int'l (EXPD) -25.5% 4.5% 57.0% -26.5% -9.2% -3.1% Canadian Pacific (CP) -48.0% 60.6% 20.0% -13.5% -6.8% -0.2% Group Average -11.9% 5.6% 46.8% -23.5% -7.0% 2.7% CSX Corporation (CSX) -26.2% 49.3% 33.2% -6.1% -8.2% 10.9% Norfolk Southern (NSC) -6.7% 11.4% 19.8% 12.0% -5.0% 7.2% Asset-Light Based Forwarders Union Pacific (UNP) -23.9% 33.7% 45.0% 3.6% -5.9% 16.0% Forward Air (FWRD) -22.1% 3.1% 13.4% 3.4% -9.9% -3.1% Group Average -25.3% 40.6% 28.1% 1.4% -6.1% 8.6% Hub Group (HUBG) -0.2% 1.0% 31.2% -18.4% -6.5% -0.5% Landstar (LSTR) -8.8% 0.9% 5.6% 7.1% -3.9% -1.1% Railroads (Regional) Pacer Int'l (PACR) -28.6% -69.7% 116.5% -41.2% -13.7% -33.0% Genesee & Wyoming (GWR) 26.2% 7.0% 62.2% 3.7% -7.9% 15.4% Universal Truckload (UACL) (1) -26.1% 27.8% -12.0% -18.0% -3.9% -12.5% Kansas City Southern (KSU) -44.5% 74.8% 43.8% 32.5% -4.6% 18.0% UTi Worldwide (UTIW) -26.8% -0.1% 48.0% -34.8% -7.7% -12.9% RailAmerica (RA) N/A N/A 6.1% 1.5% -4.8% N/A Group Average -18.8% -6.2% 33.8% -17.0% -7.6% -10.5% Group Average -9.2% 40.9% 37.4% 12.6% -5.8% 16.7% Truckload Other Rail Celadon Group (CLDN) -6.9% 27.2% 36.3% -35.8% -11.6% -13.7% Wabtec Corporation (WAB) 15.4% 2.7% 29.5% 17.8% -6.9% 14.0% Covenant Transportation (CVTI) -70.2% 110.5% 129.9% -70.0% -9.7% -25.3% Heartland Express (HTLD) 11.1% -3.1% 4.9% -19.5% -4.2% -4.4% Other Truck J.B. Hunt (JBHT) -4.6% 22.8% 26.5% 5.2% 0.8% 14.6% Ryder System (R) -17.5% 6.2% 27.9% -9.7% -9.3% -2.4% Knight Transportation (KNX) 8.8% 19.7% -1.5% -26.3% -4.6% -5.2% Swift Transportation (SWFT) N/A N/A N/A -39.7% -16.1% N/A S&P % -38.5% 23.5% 4.2% -7.6% -3.7% Werner Enterprises (WERN) 1.8% 14.2% 14.1% -1.1% -5.0% 3.4% Group Average -10.0% 31.9% 35.0% -26.7% -7.2% -5.1% Prices dated as of: 11/23/11 WOLFE TRAHAN S TRANSPORTATION RECENT FUEL COST TRENDS 4Q:10 1Q:11 2Q:11 3Q:11 To Date Week 41 Week 42 Week 43 Week 44 Week 45 Week 46 Average Oil Price (WTIC, $/barrel) $84.75 $93.32 $ $89.80 $90.49 $85.35 $86.82 $92.32 $93.24 $96.97 $99.32 y-o-y change 12.4% 18.7% 31.6% 18.2% 6.8% 3.9% 7.0% 12.5% 9.8% 11.6% 20.8% change from previous period 11.6% 10.1% 10.2% -12.6% 0.8% 7.5% 1.7% 6.3% 1.0% 4.0% 2.4% Avg On-Highway Diesel Price (Truck; $/gallon) $3.158 $3.630 $4.017 $3.858 $3.875 $3.801 $3.825 $3.892 $3.887 $3.987 $4.010 y-o-y change 15.2% 27.2% 32.6% 31.2% 22.7% 23.7% 24.7% 26.9% 24.7% 25.2% 26.5% change from previous period 7.4% 15.0% 10.7% -4.0% 0.4% 2.1% 0.6% 1.8% -0.1% 2.6% 0.6% Rail Diesel (No. 2 NY Heating Oil, $/gallon) $2.335 $2.806 $3.049 $2.970 $3.008 $2.949 $3.007 $3.045 $3.029 $3.125 $3.105 y-o-y change 20.5% 37.5% 45.3% 47.1% 28.8% 31.0% 35.4% 36.9% 30.8% 30.7% 35.8% change from previous period 15.6% 20.2% 8.7% -2.6% 1.3% 5.5% 2.0% 1.3% -0.5% 3.2% -0.6% Avg Jet Fuel Price (Gulf Coast, $/gallon) $2.331 $2.855 $3.143 $3.022 $3.014 $2.949 $3.003 $3.041 $3.027 $3.127 $3.094 y-o-y change 19.5% 39.2% 48.0% 46.4% 29.3% 31.1% 34.7% 35.4% 30.9% 30.7% 35.3% change from previous period 13.0% 22.5% 10.1% -3.9% -0.3% 3.2% 1.8% 1.3% -0.5% 3.3% -1.1% Note: Most recent week's data represents closing prices on November 18, 2011, for oil, rail diesel, and jet fuel prices; and Dept of Energy survey prices on November 21, 2011, for highway diesel. WolfeTrahan.com Page 9 of 13

10 Railroads Edward M. Wolfe Scott H. Group Footnotes: (1) Most recently reported (quarterly basis) fully-diluted share count. (2) Date of last rating change along with direction of change (U=Upgrade, D=Downgrade, S=Suspended, I=Initiated). (3) Please go to WolfeTrahan.com/Disclosures for risks to our price targets for Outperform and Underperform rated stocks. (4) "FactSet average rating" -- 1 = "Buy", 2="Hold", 3 = "Sell", all of which as defined by FactSet. "# of Analysts" -- number of sell side analysts covering the stock. (5) S&P 500 forward EPS based on FactSet Consensus estimates. (6) Enterprise value defined as market cap plus debt minus cash and cash equivalents. For EV/EBITDAR calculation, we have added present value of off balance sheet debt to EV and rental expense to EBITDA. (7) Blended 12-Month Rolling Forward P/E and EV/EBITDAR consist of 12-month forward estimates from current date. (8) Historical 5- and 10-year averages based on weekly averages of forward-rolling metrics using Consensus estimates. (9) Based on Adjusted EBITDA(R) for RA beginning in 2009, which removes $17M sale of Section 45G tax credits shown as contra expense in Other expenses. WOLFE TRAHAN RAILROAD UNIVERSE P/E, EV/EBITDAR, AND PRICE/BOOK VALUE MULTIPLES E Share Market Rating 2012 Avg Rating Dividend SECTOR WEIGHTING: Price ($) 52 week range Count Cap Since Target and # of Yield Market Overweight 11/23/2011 High Low (M)(1) ($M) Rating (U/D)(2) Price (3) Analysts (4) (%) Large-Cap Railroads Canadian National (CNI) $73.85 $81.26 $ $33,336 Underperform 9/6/11 (D) $ / 24 firms 1.8% Canadian Pacific (CP) $56.04 $69.92 $ $9,555 Underperform 3/9/09 (D) $ / 23 firms 2.1% CSX Corp. (CSX) $20.23 $27.06 $ ,077.0 $21,788 Outperform 9/6/11 (U) $ / 28 firms 2.4% Norfolk Southern Corp. (NSC) $70.35 $78.40 $ $24,552 Peer Perform 11/23/10 (D) / 28 firms 2.4% Union Pacific (UNP) $96.00 $ $ $46,858 Outperform 10/28/09 (U) $ / 26 firms 2.5% Small-Cap Railroads Genesee and Wyoming (GWR) $54.89 $63.73 $ $2,350 Outperform 9/6/11 (U) $ / 16 firms - Kansas City Southern (KSU) $63.43 $68.50 $ $6,969 Peer Perform 4/28/10 (D) / 20 firms - RailAmerica (RA) $13.14 $17.34 $ $684 Peer Perform 3/3/10 (D) / 14 firms - Other Rail Wabtec Corporation (WAB) $62.32 $72.43 $ $3,014 Peer Perform 5/20/10 (I) / 9 firms 0.2% S&P 500 1, , , % EPS Estimates Book Value / Share E E 2012E 2013E 2010 Current 2011E 2012E 2013E Large-Cap Railroads Canadian National (CNI) $2.86 $4.07 $4.83 $5.10 $5.50 $23.28 $25.82 $26.31 $27.53 $29.04 Canadian Pacific (CP) $2.22 $3.74 $3.30 $4.10 $4.65 $27.64 $30.49 $30.57 $33.00 $36.21 CSX Corp. (CSX) $0.90 $1.38 $1.67 $1.80 $2.15 $7.54 $7.68 $9.28 $10.99 $13.02 Norfolk Southern Corp. (NSC) $2.74 $3.92 $5.29 $5.60 $6.45 $28.69 $29.38 $34.21 $39.85 $45.05 Union Pacific (UNP) $3.56 $5.54 $6.55 $7.80 $9.00 $35.36 $38.04 $38.18 $41.79 $46.03 Small-Cap Railroads Genesee and Wyoming (GWR) $1.55 $2.15 $2.77 $3.10 $3.60 $19.53 $21.14 $22.29 $25.35 $28.95 Kansas City Southern (KSU) $0.62 $2.07 $2.86 $3.35 $3.85 $22.78 $24.29 $24.45 $27.02 $29.92 RailAmerica (RA) $0.33 $0.61 $0.77 $0.90 $1.05 $12.86 $12.92 $12.72 $13.71 $14.87 Wabtec Corporation (WAB) $2.36 $2.56 $3.75 $4.15 $4.60 $18.82 $20.97 $21.80 $25.53 $29.74 S&P 500 (5) Absolute P/E Multiples Rolling Price / Book Value (Absolute) 5-Year 10-Year 12-Month E Avg. (8) Avg. (8) 2011E 2012E 2013E Fwd (7) Current 2011E 2012E 2013E Large-Cap Railroads Canadian National (CNI) 13.9x 13.8x 15.3x 14.5x 13.4x 14.5x 2.9x 2.8x 2.7x 2.5x Canadian Pacific (CP) 14.0x 13.5x 17.0x 13.7x 12.1x 13.9x 1.8x 1.8x 1.7x 1.5x CSX Corp. (CSX) 13.6x 13.5x 12.1x 11.2x 9.4x 11.3x 2.6x 2.2x 1.8x 1.6x Norfolk Southern Corp. (NSC) 13.0x 13.6x 13.3x 12.6x 10.9x 12.6x 2.4x 2.1x 1.8x 1.6x Union Pacific (UNP) 14.1x 14.3x 14.7x 12.3x 10.7x 12.5x 2.5x 2.5x 2.3x 2.1x Group Average 13.7x 13.7x 14.5x 12.8x 11.3x 13.0x 2.5x 2.3x 2.1x 1.9x Small-Cap Railroads Genesee and Wyoming (GWR) 17.9x 16.3x 19.8x 17.7x 15.3x 17.9x 2.6x 2.5x 2.2x 1.9x Kansas City Southern (KSU) 19.2x 20.8x 22.2x 18.9x 16.5x 19.2x 2.6x 2.6x 2.3x 2.1x RailAmerica (RA) 19.4x 13.6x 17.0x 14.6x 12.5x 14.8x 1.0x 1.0x 1.0x 0.9x Group Average 18.8x 16.9x 19.7x 17.1x 14.7x 17.3x 2.1x 2.0x 1.8x 1.6x Wabtec Corporation (WAB) 15.5x 17.0x 16.6x 15.0x 13.5x 15.1x 3.0x 2.9x 2.4x 2.1x Railroad Average 15.6x 15.1x 16.4x 14.5x 12.7x 14.6x 2.4x 2.3x 2.0x 1.8x S&P x 16.8x 12.0x 11.3x 10.0x 11.4x Enterprise Value / EBITDAR (6) Rolling Enterprise Value / EBITDA (6) 5-Year 10-Year 12-Month E Avg. (8) Avg. (8) 2011E 2012E 2013E Fwd (7) E 2012E 2013E Large-Cap Railroads Canadian National (CNI) 8.2x 8.2x 9.0x 8.6x 8.1x 8.6x 10.6x 9.3x 8.9x 8.4x Canadian Pacific (CP) 7.8x 6.0x 8.6x 7.7x 7.1x 7.8x 8.9x 9.2x 8.2x 7.5x CSX Corp. (CSX) 6.6x 6.2x 6.1x 5.9x 5.3x 5.9x 7.4x 6.7x 6.5x 5.8x Norfolk Southern Corp. (NSC) 7.0x 7.3x 7.1x 6.9x 6.3x 6.9x 8.9x 7.5x 7.3x 6.6x Union Pacific (UNP) 6.9x 6.7x 7.3x 6.5x 5.9x 6.6x 8.4x 7.5x 6.6x 6.0x Group Average 7.3x 6.9x 7.6x 7.1x 6.5x 7.2x 8.9x 8.1x 7.5x 6.9x Small-Cap Railroads Genesee and Wyoming (GWR) 9.5x 7.7x 10.6x 9.6x 8.6x 9.7x 15.3x 11.2x 10.2x 9.0x Kansas City Southern (KSU) 7.9x 7.9x 9.7x 9.1x 8.3x 9.1x 12.7x 10.8x 10.0x 9.1x RailAmerica (RA) (9) 6.3x 6.3x 6.7x 6.4x 6.1x 6.4x 7.4x 6.9x 6.5x 6.3x Group Average 7.9x 7.3x 9.0x 8.4x 7.7x 8.4x 11.8x 9.6x 8.9x 8.2x Wabtec Corporation (WAB) 8.6x 8.7x 9.6x 8.9x 8.2x 8.9x 13.5x 9.9x 9.1x 8.4x Railroad Average 7.6x 7.2x 8.3x 7.7x 7.1x 7.8x 10.4x 8.8x 8.2x 7.5x Source: Company reports; FactSet Research Systems Inc.; Wolfe Trahan & Co. estimates. WolfeTrahan.com Page 10 of 13

11 WOLFE TRAHAN GROUND TRANSPORT TRUCK UNIVERSE EPS, EV/EBITDA AND BOOK VALUE MULTIPLES E Trucking Edward M. Wolfe Scott H. Group Footnotes: (1) Most recently reported (quarterly basis) fully-diluted share count. (2) Date of last rating change along with direction of change (U=Upgrade, D=Downgrade, S=Suspended, I=Initiated). (3) Please go to WolfeTrahan.com/Disclosures for risks to our price targets for Outperform and Underperform rated stocks. (4) "FactSet average rating" -- 1 = "Buy", 2 = "Hold", 3 = "Sell", all of which as defined by FactSet. "#Analysts" -- number of sell side analysts covering the stock. (5) CGI's EPS shown on calendar basis and P/E and EV/EBITDA are based on calendar estimates. All other numbers represent its June end Fiscal year. Our F12 and F13 EPS estimates are $0.76 and $0.80, respectively. (6) Blended 12-Month Rolling Forward P/E and EV/EBITDAR consist of 12- month forward estimates from current date. Average Forward P/E for LTLs excludes ABFS. (7) Enterprise value defined as market cap plus debt minus cash and cash equivalents. Excludes OBD. Ryder is an EV/EBITDAR calculation which includes off-balance sheet debt in EV and includes Rental Expense. (8) S&P 500 forward EPS based on FactSet Consensus estimates. (9) YRCW has been excluded from average P/E and P/B calculations. 1.9B shares outstanding to reflect full impact of recent 97.5% shareholder dilution. (10) Historical 10-year averages based on weekly averages of forward-rolling metrics using Consensus estimates. (11) CVTI has been excluded from average P/E, EV/EBITDA and P/B calculations given expectations for operating losses in Share Market Rating 2012 FactSet Dividend SECTOR WEIGHTING: Price ($) 52 week range Count Cap Since Target Avg. Rating / Yield Market Weight 11/23/2011 Low High (M)(1) (MM) Rating (U/D)(2) Price (3) Analysts (4) (%) Truckload (TL) Celadon Group, Inc. (CGI) $9.50 $8.18 $ $215 Peer Perform 6/6/11 (U) / 11 firms 0.8% Covenant Transportation (CVTI) $2.90 $2.35 $ $43 Peer Perform 10/11/11 (D) / 5 firms - Heartland Express (HTLD) $12.90 $12.75 $ $1,163 Underperform 11/14/11 (D) $ / 18 firms 0.6% Knight Transportation (KNX) $14.00 $12.63 $ $1,123 Outperform 6/7/10 (U) $ / 25 firms 1.7% Swift Transportation Co. (SWFT) $7.54 $5.39 $ $1,052 Outperform 1/26/11 (I) $ / 16 firms - Werner Enterprises (WERN) $22.36 $19.78 $ $1,637 Outperform 8/4/11 (U) $ / 24 firms 0.9% Less-than-Truckload (LTL) Arkansas Best Corp. (ABFS) $17.26 $14.22 $ $439 Peer Perform 9/8/10 (D) / 18 firms 0.7% Con-way Inc. (CNW) $24.95 $20.56 $ $1,400 Peer Perform 4/12/10 (D) / 23 firms 1.6% Old Dominion (ODFL) $35.51 $27.40 $ $2,040 Peer Perform 9/6/11 (D) / 19 firms - Saia, Inc. (SAIA) $10.95 $9.27 $ $177 Peer Perform 9/6/11 (D) / 8 firms - YRC Worldwide Inc. (YRCW) (9) $0.04 $0.03 $ $76 Underperform 10/12/10 (D) $0 2.4 / 9 firms - Other Truck Ryder System Inc. (R) $47.52 $34.28 $ $2,412 Peer Perform 10/26/11 (U) / 14 firms 2.4% S&P 500 1, , , % EPS Estimates Absolute P/E Multiple Rolling 10-Year 12 Month E E 2012E 2013E Avg. (10) 2011E 2012E 2013E Forward (6) Truckload (TL) Celadon Group, Inc. (CGI) (5) ($0.01) $0.46 $0.70 $0.80 $ x 13.5x 11.8x 10.6x 11.9x Covenant Transportation (CVTI) (11 ($0.85) $0.20 ($0.23) $0.20 $ x NM 14.7x 9.6x 17.9x Heartland Express (HTLD) $0.50 $0.63 $0.72 $0.75 $ x 17.9x 17.1x 15.2x 17.2x Knight Transportation (KNX) $0.60 $0.72 $0.72 $0.90 $ x 19.4x 15.6x 13.3x 15.9x Swift Transportation Co. (SWFT) ($1.83) ($0.55) $0.57 $0.77 $ x 13.2x 9.8x 7.9x 10.0x Werner Enterprises (WERN) $0.78 $1.10 $1.40 $1.55 $ x 15.9x 14.4x 13.2x 14.6x Group Average x 16.0x 13.9x 11.6x 13.9x Less-than-Truckload (LTL) Arkansas Best Corp. (ABFS) ($2.38) ($1.35) $0.51 $0.98 $ x 33.5x 17.6x 9.8x 18.3x Con-way Inc. (CNW) $0.61 $0.47 $1.65 $1.90 $ x 15.1x 13.1x 10.6x 13.2x Old Dominion (ODFL) $0.62 $1.35 $2.41 $2.60 $ x 14.8x 13.6x 12.5x 13.7x Saia, Inc. (SAIA) ($0.66) $0.08 $0.68 $0.93 $ x 16.1x 11.8x 10.0x 12.1x YRC Worldwide Inc. (YRCW) (9) ($253.75) ($8.30) ($0.41) ($0.09) ($0.08) 10.0x NM NM NM NM Group Average x 15.3x 12.8x 11.0x 13.0x Other Truck Ryder System Inc. (R) $1.56 $2.25 $3.49 $3.90 $ x 13.6x 12.2x 10.6x 12.3x Trucking Average x 17.3x 13.8x 11.2x 13.9x S&P 500 (8) x 12.0x 11.3x 10.0x 11.4x Enterprise Value / EBITDA (7) Rolling Price / Book Value (Absolute) 10-Year 12 Month E Avg. (10) 2011E 2012E 2013E Forward (6) 2010 Current 2011E 2012E 2013E Truckload (TL) Celadon Group, Inc. (CGI) (5) 4.1x 4.1x 4.1x 3.8x 4.1x 1.4x 1.2x 1.2x 1.2x 1.1x Covenant Transportation (CVTI) (11 2.0x 4.7x 3.8x 3.5x 3.8x 0.4x 0.5x 0.4x 0.4x 0.4x Heartland Express (HTLD) 8.3x 6.5x 6.2x 5.7x 6.2x 3.5x 3.3x 3.3x 3.0x 2.8x Knight Transportation (KNX) 8.2x 6.7x 5.8x 5.2x 5.9x 2.3x 2.4x 2.3x 2.1x 1.9x Swift Transportation Co. (SWFT) 5.6x 5.2x 4.7x 4.4x 4.7x NM NM NM 5.6x 3.1x Werner Enterprises (WERN) 4.8x 4.7x 4.5x 4.2x 4.5x 2.3x 2.2x 2.3x 2.2x 2.2x Group Average 6.2x 5.4x 5.0x 4.7x 5.1x 2.4x 2.3x 2.3x 2.8x 2.2x Less-than-Truckload (LTL) Arkansas Best Corp. (ABFS) 4.5x 3.2x 2.7x 2.1x 2.7x 0.9x 0.9x 0.9x 0.8x 0.8x Con-way Inc. (CNW) 5.6x 4.3x 4.1x 3.7x 4.1x 1.6x 1.6x 1.6x 1.4x 1.3x Old Dominion (ODFL) 6.3x 7.0x 6.5x 5.8x 6.5x 2.3x 2.4x 2.3x 2.0x 1.8x Saia, Inc. (SAIA) 4.4x 3.9x 3.3x 3.0x 3.4x 0.8x 0.7x 0.8x 0.8x 0.7x YRC Worldwide Inc. (YRCW) (9) 6.4x 11.6x 6.5x 5.5x 6.9x NM NM NM NM NM Group Average 5.4x 6.0x 4.6x 4.0x 4.7x 1.4x 1.4x 1.4x 1.3x 1.1x Other Truck Ryder System Inc. (R) 3.8x 4.0x 3.7x 3.5x 3.7x 1.8x 1.7x 1.7x 1.6x 1.5x Trucking Average 5.3x 5.5x 4.6x 4.2x 4.7x 1.7x 1.7x 1.7x 1.9x 1.6x Source: Company reports; FactSet Research Systems Inc.; Wolfe Trahan & Co. estimates. WolfeTrahan.com Page 11 of 13

12 WOLFE TRAHAN AIRFREIGHT & LOGISTICS UNIVERSE EPS, EV/EBITDA AND BOOK VALUE MULTIPLES E Airfreight/Logistics (5 of 6) Edward M. Wolfe Scott H. Group Footnotes: (1) TNTE price and EPS denominated in Euros ( ); traded on Euronext Amsterdam. Historical per share numbers based on initial sharecount of 542M. Share Market Rating 2012 FactSet Dividend SECTOR WEIGHTING: Price ($) 52 week range Count Cap Since Target Avg. Rating/ Yield Market Weight 11/23/2011 Low High (MM) (2) (MM) Rating (U/D) (3) Price (4) # Analysts (5) (%) Express/Parcel Carriers FedEx Corp. (FDX) $76.56 $64.07 $ $24,346 Peer Perform 3/18/10 (D) / 29 firms 0.7% TNT Express N.V. (TNTE ) (1) ,545 Outperform 7/18/11 (I) / 24 firms 1.7% United Parcel Service (UPS) $66.90 $60.74 $ $66,030 Peer Perform 9/6/11 (D) / 27 firms 3.1% Atlas Air Worldwide (AAWW) $35.30 $29.50 $ $934 Underperform 9/6/11 (D) $ / 10 firms - Non-Asset-Based Forwarders C.H. Robinson (CHRW) $63.74 $62.30 $ $10,483 Outperform 10/3/08 (U) $ / 26 firms 1.8% Expeditors International (EXPD) $40.11 $38.25 $ $8,612 Outperform 11/23/10 (U) $ / 20 firms 1.2% Asset-Light Forwarders Forward Air (FWRD) $29.34 $23.70 $ $867 Underperform 11/23/10 (D) $ / 14 firms 1.0% Hub Group (HUBG) $28.69 $25.77 $ $1,062 Outperform 8/10/11 (U) $ / 17 firms - J.B. Hunt Transport (JBHT) $42.95 $34.42 $ $5,202 Outperform 10/14/09 (U) $ / 28 firms 1.2% Landstar System (LSTR) $43.84 $35.85 $ $2,077 Peer Perform 11/14/11 (U) / 21 firms 0.5% Pacer International (PACR) $4.02 $3.30 $ $141 Peer Perform 11/14/11 (U) / 12 firms - Universal Truckload (UACL) $13.05 $11.14 $ $203 Peer Perform 6/6/11 (U) / 5 firms - UTi Worldwide (UTIW) $13.82 $11.94 $ $1,431 Peer Perform 3/24/11 (D) / 16 firms 0.4% S&P 500 1, , , % (2) Most recently reported (quarterly basis) fully diluted share count. EPS Estimates Absolute P/E Multiples 12 Month 10-Year 2011E 2012E 2013E Rolling (3) Date of last rating change along Check FDX Footnote E E 2012E 2013E Avg. (11) Forward (10) with direction of change F07 (U=Upgrade, - $ linked D=Downgrade, Express/Parcel Carriers F08 S=Suspended, - $ linked I=Initiated). FedEx Corp. (FDX) (6) $2.73 $4.51 $5.56 $6.25 $ x 13.8x 12.3x 11.0x 12.4x F07 - $ hard code TNT Express N.V. (TNTE ) (1) NA 23.7x 12.7x 8.6x 13.2x (4) Please go to F08 - $ hard code United Parcel Service (UPS) $2.31 $3.56 $4.22 $4.70 $ x 15.9x 14.2x 12.6x 14.4x WolfeTrahan.com/Disclosures for Group Average x 14.8x 13.2x 11.8x 13.4x risks to our price targets for Outperform and Underperform rated Atlas Air Worldwide (AAWW) $3.45 $5.78 $4.26 $3.70 $ x 8.3x 9.5x 9.3x 9.4x stocks. (5) "FactSet average rating" -- 1 = "Buy", 2= "Hold", 3 = "Sell", all of which as defined by FactSet. "#Analysts" -- number of sell side analysts covering the stock. (6) FDX's EPS shown on calendar basis and P/E and EV/EBITDA are based on calendar estimates. All other numbers represent its May end Fiscal year. Our F12 and F13 EPS estimates are $5.75 and $6.70. (7) UTIW fiscal year ends January 31. F12, F13, and F14 end Jan. 31, 2012, 2013 and 2014, and represent calendar years 2011, 2012, and 2013, respectively. (8) S&P 500 forward EPS based on FactSet Consensus estimates. (9) Enterprise value defined as market cap plus debt minus cash and cash equivalents. Excludes OBD for most, except for FDX, TNTE, UPS, AAWW and PACR where EV/EBITDARs include Off- Balance Sheet Debt in EV and associated Rental Expense in EBITDAR. (10) Blended 12-Month Rolling Forward P/E and EV/EBITDAR consist of 12-month forward estimates from current date. (11) Historical 10-year averages based on weekly averages of forward-rolling metrics using Consensus estimates. AAWW uses a 7 year avg (emerged from Non-Asset-Based Forwarders C.H. Robinson (CHRW) $2.13 $2.33 $2.65 $3.00 $ x 24.1x 21.2x 18.5x 21.5x Expeditors International (EXPD) $1.11 $1.59 $1.83 $2.03 $ x 21.9x 19.8x 17.8x 19.9x Group Average x 23.0x 20.5x 18.2x 20.7x Asset-Light Forwarders Forward Air (FWRD) $0.49 $1.10 $1.56 $1.63 $ x 18.8x 18.0x 15.4x 18.0x Hub Group (HUBG) $0.95 $1.16 $1.62 $1.85 $ x 17.7x 15.5x 13.4x 15.7x J.B. Hunt Transport (JBHT) $1.10 $1.58 $2.09 $2.35 $ x 20.5x 18.3x 15.9x 18.5x Landstar (LSTR) $1.37 $1.81 $2.33 $2.50 $ x 18.8x 17.6x 15.4x 17.7x Pacer International (PACR) ($0.64) $0.08 $0.35 $0.35 $ x 11.4x 11.3x 8.9x 11.3x Universal Truckload (UACL) $0.36 $0.60 $1.08 $1.21 $ x 12.1x 10.8x 10.1x 10.9x UTi Worldwide (UTIW) (7) $0.45 $0.69 $0.75 $0.87 $ x 18.3x 15.9x 13.9x 16.0x Group Average x 16.8x 15.3x 13.3x 15.4x Universe Average x 17.3x 15.2x 13.1x 15.3x S&P 500 (8) x 12.0x 11.3x 10.0x 11.4x Enterprise Value / EBITDA(R) (9) 12 Month Price / Book Value (Absolute) 10-Year 2011E 2012E 2013E Rolling E Avg. (11) Forward (10) 2010 Current 2011E 2012E 2013E Express/Parcel Carriers FedEx Corp. (FDX) (6) 6.9x 5.9x 5.4x 5.1x 5.5x 1.7x 1.5x 1.5x 1.4x 1.2x TNT Express N.V. (TNTE ) (1) NA 4.7x 4.0x 3.4x 4.1x 0.9x 0.9x 0.9x 0.8x 0.8x United Parcel Service (UPS) 9.8x 8.6x 8.1x 7.4x 8.1x 8.3x 8.4x 8.4x 8.0x 6.8x Group Average 8.4x 7.3x 6.8x 6.3x 6.8x 5.0x 5.0x 5.0x 4.7x 4.0x Atlas Air Worldwide (AAWW) 7.4x 7.1x 6.8x 5.6x 6.8x 0.9x 0.8x 0.8x 0.8x 0.7x Non-Asset-Based Forwarders C.H. Robinson (CHRW) 14.3x 13.7x 12.2x 11.2x 12.3x 8.8x 8.3x 8.3x 7.8x 7.0x Expeditors International (EXPD) 15.5x 11.2x 10.1x 9.2x 10.2x 5.0x 4.4x 4.7x 4.3x 4.0x Group Average 14.9x 12.4x 11.2x 10.2x 11.3x 6.9x 6.3x 6.5x 6.0x 5.5x Asset-Light Forwarders Forward Air (FWRD) 11.1x 8.7x 8.4x 7.6x 8.4x 3.3x 3.2x 3.1x 2.8x 2.5x Hub Group (HUBG) 9.9x 9.7x 8.5x 7.4x 8.6x 2.9x 2.5x 2.5x 2.1x 1.8x J.B. Hunt Transport (JBHT) 7.0x 9.1x 8.5x 7.9x 8.6x 9.6x 10.5x 10.2x 9.6x 9.0x Landstar (LSTR) 10.9x 10.2x 9.7x 9.2x 9.7x 8.6x 7.5x 6.8x 6.7x 6.2x Pacer International (PACR) 5.7x 4.9x 4.8x 4.5x 4.8x 1.4x 1.2x 1.2x 1.1x 1.0x Universal Truckload (UACL) 7.0x 5.0x 4.6x 4.4x 4.6x 1.3x 1.3x 1.2x 1.1x 1.0x UTi Worldwide (UTIW) (7) 10.1x 7.3x 6.6x 6.0x 6.6x 1.6x 1.5x 1.4x 1.5x 1.5x Group Average 8.8x 7.8x 7.3x 6.7x 7.3x 4.1x 3.9x 3.8x 3.5x 3.3x Universe Average 9.6x 8.2x 7.5x 6.8x 7.6x 4.2x 4.0x 3.9x 3.7x 3.3x Source: Company reports; FactSet Research Systems Inc.; Wolfe Trahan & Co. estimates. WolfeTrahan.com Page 12 of 13