1. Surface Capacity-Is 2012 Finally the Tipping Point? [No] Thom Albrecht, CFA Managing Director (804) 787-8210 talbrecht@bbandtcm.com FOR REQUIRED DISCLOSURES, INCLUDING ANALYST CERTIFICATION, PLEASE REFER TO THE IMPORTANT DISCLOSURES SECTION AT THE END OF THIS PRESENTATION; Cover Photos: BBTCM; clip art on cartoon

2. Thom Albrecht 804-787-8210 Let’s Start with the Right BBT! 2 NOT!

3. Thom Albrecht 804-787-8210 A Snapshot of Supply, Demand & Inventories Classic early June Freight Picture Retail inventories in good shape 3 Note: red sections are loads, yellow are trucks. Source: U.S. Census Bureau

4. Thom Albrecht 804-787-8210 4 Non-Conventional Signals: Mixed but Okay 4 Blast Furnace (Steel) Utilization TOFC Loads (Piggyback/overflow) are Disconcerting Sources: AMM, AAR and ACT.

5. Thom Albrecht 804-787-8210 4 More Signs are Relatively Okay 5 Truck Tonnage-Up 30 Straight Months BIFMA (Business Institutional Furniture) Construction is up 6.0% yoy; non-residential is up 18% yoy Chemical carloads,Wk22 +5.2%; ( 6-week rolling average up 7.1%) Sources: Calculated Risk, ATA and AAR.

6. Thom Albrecht 804-787-8210 4 More Indicators-On Balance Okay 6 Sources: American Institute of Architects, National Association of Realtors, Wright-DBC, Federal Reserve Board. EHS supply is 6.6 months, 3rd lowest since April 2006.

7. Thom Albrecht 804-787-8210 Restaurant Trends Positive for Economy 7 Source: NY Times, March 17, 2012

8. Thom Albrecht 804-787-8210 Lending: Bottoming & Starting to Grow 8 Source: Federal Reserve Board. C&I is commercial and industrial and RE is real estate

9. Thom Albrecht 804-787-8210 The Gap Between Spending on Equipment & People is the Widest of Any Recovery 9 Source: Wall Street Journal, January 17, 2012

10. Thom Albrecht 804-787-8210 Truckload Supply & Demand-At Equilibrium Blue=TL Tractor Count Red=Loads Excess Supply Sources: ATA TRAC and BBTCM analysis.

11. Thom Albrecht 804-787-8210 Spot Market at High Levels Despite Mediocre Economy 11 Sources: TransCore for left chart; Internet Truckstop for right. On right chart, above 7.0 favors carriers; below 5.0 favors shippers; 5 to 7 is “neutral zone”, in terms of pricing and capacity. Picture source: K.W. Thompson.

12. Thom Albrecht 804-787-8210 Except for 2003 & 2005, the Truck Peak is Essentially Done by June & is No Longer in the Fall 12 Source: TCNAFI

13. Thom Albrecht 804-787-8210 Why is Data So Much Better than Anecdotes? Load board velocity is slower; “crap” loads sitting longer ‘Non-bid’ “bids” keep a lid on rates Coming capacity shortage has been foretold since 2007 freight recession Shippers unlikely to be caught off- guard as in 2H’03-2004 Carriers still have slack in their systems so utilization still being soaked up (see chart) Shippers 5 tools: a) Dedicated; b) Intermodal; c) More core carriers; d) more brokers; e) grow in-house fleet Mark Twain: “Reports of my death have been greatly exaggerated.” Freight corollary? “Reports of the capacity shortage have been greatly exaggerated.” Carriers are smarter about what they accept from spot market-- don’t have to take any load Shippers’ inventory velocity is slow so ‘deep in route’ guide isn’t a panic 13

14. Thom Albrecht 804-787-8210 What You All are Wondering… A Synopsis of Freight Since the Great Recession 2010: spot shortage and big surge from March-June 2011: spot shortage in March; Q2 good, not crazy 2012: amazingly calm, slow and steady 2013: depends on the election and Europe (partly) 2014: the next Nirvana? [think 1994, 2004-depends on HOS ruling] Will another 2004 (Nirvana) ever happen again? Unlikely, but… May ‘03: Bush marginal rate tax cuts June ’03: HOS announced (effective 1-4-04) ’00-’02: 3 years of high carrier failure rates ’01-’03: 3 years of corporate cost cutting Auto sales 16M units and housing 1.8M units 2014: might be interesting… 14

15. Thom Albrecht 804-787-8210 Key Equipment & Productivity Trends-Death by a Thousand Cuts! (Not the 2 ‘other’ theories) 15 Pictures: BBTCM, JBT Photos; Facebook for “Death by a Thousand Cuts”

16. Thom Albrecht 804-787-8210 Tractors: $40,000 More Expensive Since ‘01 But Nothing Added to Residuals; Shortage of Late Model Equipment Will Hurt Many Carriers 16 Sources: Tractor values from Navistar from 2000-2010, 1990, 1995 and 2012E figures are BBTCM estimates; Class 8 tractor sales from A.C.T. Research. 1 st year D&A is approximately $38,000, meaning value is $85K after one year. Value After 1 Year $87,000 Lots of late model used trucks in last 2 downturns; few now

17. Thom Albrecht 804-787-8210 13% Shrinkage in Tractors 8-Years Old or Newer TL Fleet (8 years old or newer) has shrunk 14.4% or 231,380 units; 1.5% growth in 2011; 0.5% growth expected in 2012 Fleet that is 15 years old or newer has shrunk 13% or 290,011 units; 0.9% shrinkage in 2011; 1.5% growth expected in 2012 Tractor growth has been below GDP 8 of the last 10 years It has also been below Industrial Production most years Trucking is more cyclical than the broader economy Deregulation’s 20-year window of growth has run its course Freight grows slower than GDP growth most years 17 Sources: A.C.T. Research and BBTCM analysis. Population figures in millions. Photos: Express archives.

18. Thom Albrecht 804-787-8210 Active Trailer Populations Refrigerated Trailers Flatbed Trailers 18 Source: ACT Research; pictures from Ryder and JBT Photos

19. Thom Albrecht 804-787-8210 19 Source: A.C.T. Research. Trailers are Old; Also, Van Population has Shrunk 11% Reefer Vans (Avg. Age) PopulationAvg. Age (Years) 19981,624,0666.39 19991,719,5486.24 20001,789,0726.25 20011,769,9686.60 20021,745,5976.94 20031,742,8817.13 20041,766,4767.17 20051,795,5957.17 20061,833,0467.15 2007 1,832,1137.28 2008 1,783,3497.61 2009 1,691,2748.11 2010 1,628,1908.43 20111,618,3688.40 2012E1,622,3618.23 Dry Vans Flatbed (Avg. Age)

20. Thom Albrecht 804-787-8210 Productivity Down, Rates up Modestly, Input Costs Up 20 Sources: BBTCM analysis of a composite of carriers. Trailer tractor ratio was 1.7; 2.0; 2.5; 2.8 and 2.5, respectively. All 4 data figures began at 100.0 in 1990. Cartoon: Transport Topics.

21. Thom Albrecht 804-787-8210 CSA, DRIVERS, RATES & INTERMODAL 21 Cartoon from Transport Topics

22. Thom Albrecht 804-787-8210 Population Demographics are Lousy for Driver Recruiting White males aged 35-54 have shrunk by 3M during the last decade Van pay is typically under $0.40 a mile and annual pay averaged about $46,500 in 2010; will be about $48,000 in 2011 Private not-for hire fleets have low turnover (<15%) and average $64,000 in annual driver pay This implies TL for-hire pay needs to rise to $0.50 to $0.55 per mile CSA and lousy demographics are steep headwinds 22 Sources: U.S. Census Bureau. Unemployment is from the Bureau of Labor Statistics (BLS). BBTCM analysis below. Picture: BBTCM and FSA, circa 2005.

23. Thom Albrecht 804-787-8210 Driver Turnover is Rising Even With a Modest Housing Recovery— Could get Really Difficult when Housing Gets Strong If HOS (hours of service) is trimmed (2013?) and housing keeps modestly improving, then the stage could be set for a very challenging driver and capacity market in 2013; 2014 similar to 2004 and 1994? Each housing start generates about 8 TL loads Once housing begins to recover it could rise for 8-10 straight years Housing starts of 800K-850K in 2013 and 950+K in 2014 could do far more damage to driver availability than all those years when housing starts were above 1.5M 23 Sources: U.S. Census Bureau on left; ATA TRAC Report on right, which reflects large TL fleet (above $30M of revenue) annualized driver turnover. Unemployment is from the Bureau of Labor Statistics (BLS). BBTCM analysis below and 2Q12E of 94%.

24. Thom Albrecht 804-787-8210 Annual Change in Construction Jobs (000s)-Negative Implications for Truck Drivers-But Why is Hiring Down in 2012? Year Total Construction Jobs Residential Construction Jobs Non- Residential Jobs 2002-8588-173 2003127161-34 200429023060 2005416268148 2006152-62214 2007-198-27375 2008-787-510-277 2009-1053-431-622 2010-149-113-36 2011462026 2012 YTD -30-9-21 24 Source: Bureau of Labor Statistics, May 2012 report

25. Thom Albrecht 804-787-8210 Why Drivers Leave Their Jobs 25

26. Thom Albrecht 804-787-8210 JBHT is Driving Intermodal Conversion 26 Sources: Company reports.

27. Thom Albrecht 804-787-8210 What Can You as a Carrier Do? Develop a smart network New TL pricing model: charge a rate per hour for your assets How much time does it take to service your customer and what are the assets involved? Consider tiering driver pay, with 3 to 5 tiers Analyze how and when customers can tender loads (48 hrs, 7 days, etc.?) Analyze how quickly loads are accepted and why? Is your approach fresh or a tradition? What is your average profit per load? $50, $60…$100? Do do you even know? Let’s explore the network concept… 27

28. Thom Albrecht 804-787-8210 Is Your Network the Equivalent of a Rotary Phone or “Dumb Phone”? Or… 28 Is it a head-haul or backhaul lane? What is the market rate? That’s what I’ll charge… Incorporates revenue per mile Length of Haul Maybe part of the weekly computation of revenue per truck But lacking data on efficiency of loads…

29. Thom Albrecht 804-787-8210 Or is Your Network More Like a Smart Phone ? Loading and unloading info Reefer run time; was product loaded warm? Cargo thefts-likely truck stops Lock-down fuel card network How many hours before pick-up did reefer run & after delivery? Next load options if you accept current load Next load backhaul or head-haul? Impact on driver HOS & network both today & in 48 hours Ability to rate loads ‘1’ to ’10’? 29 How data intensive is your information about every lane, account, location? Dwell time at that location? Accessorial payment history? [Impacts ability to pay layover, detention to driver, etc.] Driver turnover @ that spot? Probability of a better load in 4 hours? Data on high, low and average market rates Toll info & contracts (22/100) Loading & unloading info Average, surge and seasonal info

30. Thom Albrecht 804-787-8210 MISCELLANEOUS CONSIDERATIONS & INFLUENCES 30

31. Thom Albrecht 804-787-8210 Truck Tonnage (Seasonally Adjusted Index) Total TL Loads (Not Seasonally Adjusted Index) Wards N.A. Car & Truck Production (In Millions) Housing Starts (In Thousands) 1999105.5102.817.61,640.9 2000100.0 (-5.2%)100.0 (-2.7%)17.71,568.7 200199.5 (-0.5%)106.0 (+6%)15.81,602.7 2002103.6 (+4.1%)111.1 (+4.8%)16.71,704.9 2003106.7 (+3.0%)111.6 (+0.5%)16.21,847.7 2004112.9 (+5.8%)109.7 (-1.7%)16.21,955.8 2005115.7 (+2.5%)109.2 (-0.5%)16.32,068.3 2006113.6 (-1.8%)109.3 (0%)15.91,800.9 2007112.1 (-1.3%)110.0 (+0.6%)15.41,355.0 2008113.3 (+1.1%)110.9 (+0.8%)12.9905.5 2009103.4 (-8.7%)94.4 (-14.9%)8.76 (-32.1%)554.0 2010109.4 (+5.8%)99.0 (+4.9%)12.15 (+38.7%)586.9 2011115.9 (+5.9%)102.5 (+3.5%)13.46 (+10.8%)606.9 2012E~3% to 4% growth~2% to 3% growth~14.8 to 15.2M~680-700 31 Truck Tonnage & Loads Versus Auto & Housing; Incremental Changes More Adverse to Drivers & Capacity this Cycle Sources: ATA for tonnage and loads; www.wardsauto.com for autos; U.S. Census Bureau for housing. Auto sales through December were 12.7M units up from 11.6M in 2010.

32. Thom Albrecht 804-787-8210 Dry Van Loads (“NSA” Yr/ Yr %Δ) Flatbed Loads (“NSA”; Yr/ Yr %Δ) Refrigerated Loads (“NSA”; Yr/ Yr %Δ) LTL Shipments (not tonnage) (“NSA Yr/Yr %Δ) 19997.9%17.4%10.2% 2000(0.6%)9.1%7.2% 20018.2%3.6%0.0%(10.8%) 20026.7%0.2%(1.1%)(2.2%) 2003(1.2%)7.5%(11.0%)4.2% 2004(3.7%)4.5%5.0%9.9% 2005(1.3%)5.2%1.5%6.6% 2006(0.3%)(0.7%)7.7%2.9% 20071.0%(5.2%)6.6%(2.8%) 2008(2.7%)(9.5%)7.6%1.6% 2009(15.0%)(20.7%)3.1%(21.7%) 20101.4%3.9%2.6%(4.0%) 2011(3.0%)(1.5%)(4.4%)12.0% 2012 YTD1.7%6.7%(0.5%)5.6% 32 Trucking Segment Shipment Trends Source: ATA May 2012 TRAC report.

33. Thom Albrecht 804-787-8210 Canary in the Coal Mine? Which 4-Letter Word- Lull or Slow? Chemical rail carloadings: down 19 of the last 23 weeks (US & Canadian Rails) Cass: May shipments up 2.2% yr/yr; up 1.8% sequentially Loans: credit cards (+2.6%) and consumer loans (+4.5%) up noticeably last 2 months CLOs (pools of junk bonds) remain positive yr/yr Oh, and gas prices… 33 Chemical Carloadings Sources: AAR and Cass.

34. Thom Albrecht 804-787-8210 Gas Prices as a Percentage of Disposable Income  In May gas prices averaged 4.06% of disposable income  The all-time high was 4.92% in July 2008  Historically, 4% has led to a deceleration in tonnage and consumer spending  “Wiggle room” today includes some job growth, more fuel efficient vehicles (63% vs. 48%), Internet shopping and fewer miles driven  Our sense? At 4.2% to 4.3% it gets worrisome 34 Sources: U.S. government economics departments of BEA and EIA. Commentary: BBTCM analysis.

35. Thom Albrecht 804-787-8210 Disclosures 35

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37. Thom Albrecht 804-787-8210 37