Industry Challenges: 2015 January 22 nd, 2015

2 Fiscal Pressures across all service offerings  Driver shortage and retention  Regulations and hours of service  Capacity  Railroad investment  Equipment costs  Productivity  Intermodal  Over the road  Brokerage  Dedicated Trucking

Driver Market Dynamics

4 Stagnant wages Fewer qualified drivers Drivers are retiring/aging and are not being replaced at the same rate) Alternative job market (construction, oil industry, ports, etc.) Higher requirements for career entry (regulations, hair testing, ELDs) Fierce driver recruiting competition Strong freight demand Driver Landscape

5 Equivalent when adjusted for inflation Stagnant Wages

6 Source: FTR Associates Driver Shortage Worsening

7 The industry needs to find roughly 96,000 new drivers annually to keep pace with demand. If freight demand grows as it is projected to, the driver shortage could balloon to nearly 240,000, according to ATA data. Source: ATA

8 Productivity Driver and asset productivity decreasing 11 hour work day results in about 7 driving hours 34 hour restart reduces hours by 15% ATRI survey revealed 80% of carriers had loss in productivity Carriers have segmented freight into two groups Inefficient, unproductive freight Not in carrier’s network Time consuming- empty miles or over one hour loading/unloading Dwell time on the load Leads to higher rates Productive, favorable freight Better pricing Efficient loading/unloading or preloaded Good payload miles Within carrier’s network Source: ATA

9 Railroad Issues Service recovery is happening slowly due to growth 7.9% intermodal growth 5.6% carload growth 21.5% increase in grain movements All commodities use the same tracks, locomotives, crews, etc Service issues related to locomotive and crew capacity Only one company (GE) producing new locomotives until 2017 Recruiting and hiring crews has become more difficult

10 Railroad Investment CAPEX spend Increase of 9% in 2014 across Class I railroads Railroads will invest over 18% of annual revenues on capex- 3% in “average industrial company”

11 Capacity Likely to remain near tipping point with new regulations set for 2016 Per FTR Forecast- shipping costs will rise in 2015 Consolidation, optimization, and mode conversion important Due to increase in labor and purchased transport costs

12 Pre-recession used as base (4Q-2006) Driver Market Heating Up

13 Increasing Driver Demand Employment in transportation and warehousing. Seasonally adjusted in thousands

14 Alternative Job Market $38,000 $41,600 $47,200 $80,000 +

15 Competing Jobs Construction Over-the-month change, January 2011 – March 2014 Seasonally adjusted in thousands Bureau of Labor Statistics, Current Employment Statistics survey, April 04, 2014

16 Competing Jobs Manufacturing Over-the-month change, January 2011 – March 2014 Seasonally adjusted in thousands Bureau of Labor Statistics, Current Employment Statistics survey, April 04, 2014

17 Generous unemployment benefits Alternative job demand increasing with improving economy Construction, oil field, drayage, etc. Stricter qualifications CSA, Hair Testing Technology ELD’s- late 2015/2016 Retirement Private fleets Factors Reducing Driver Supply Source: National Transportation Institute; The Journal of Commerce

18 Changing Hours of Service (HOS)

19 a Industry Turnover Increasing Quarterly Truck Driver Turnover Source: American Trucking Associations

20 Aging Driver Demographic Source: National Transportation Institute 51% over 45 17% over 55

21 4 in % of workers over age 55 transportation industry ranks TH Aging Driver Demographic

22 New Driver Deficit and Recruiting 66, ,000 Annual Training School Graduates Annual Expected New Driving Jobs Source: Commerical Driver Training Foundation; National Association of Publicly Funded Truck Driving Schools Georgia Center of Innovation for Logistics GAP 48,500 drivers Retention vs. Recruiting Emphasis has to be on retention Driver regard and in-truck specifications Home every weekend and get consistent miles

23 Driver Turnover % Annual W2 (in thousands) $40$42$44$46$48$50$52 50% 75% 100% 125% 150% Dedicated Intermodal Truck Source: J.B. Hunt CDP Report (3/21/2014) $54 IBU Wage vs. Turnover

24 Drayage Flashpoints

25 Cost of Delays

Freight Market Dynamics

27 Record increase in demand Supply is constrained by demographics and regulations Regional supply is seasonally inelastic Mode optimization is increasing Shippers seek comprehensive and value-added partnerships Supply Chain Landscape

28 Driver recruiting and retention Government regulations CSA Map21 HOS CARB Equipment age and higher cost basis Cost of fuel and managing budgets What if we experience 2.5-3% GDP growth? Supply Chain Challenges (Over the next 2-5 Years)

29 CSA HOS update EPA and NHTSA- new engine standards- between 2015 and 2018 reduce emissions by 29% Cost of engine and maintenance unknown What if we experience 2.5-3% GDP growth? Government Regulations (Over the next 2-5 Years)

30 Strengthening Freight Demand FTR Truck loadings Index: Actual and Year/Year Percentage Source: FTR Associates; Index: 2000=100

31 Pricing Moves with Demand Dry VanRefrigeratedFlatbed MDI UPDATE COMING

32 Truckload Rates Increasing Truckload Spot Index vs. Contract Pricing Spot Market Imbalances Tend to Lead Contract Pricing Directionally

33 Truckload Rates Increasing Source: Transport Fundamentals, FTR Associates’