1. 1 Is 2015 the Peak? And What’s Behind This Year’s Lull? “A pessimist sees the difficulty in every opportunity; an optimist sees opportunity in every difficulty.” -Winston Churchill Agenda: How the Lull is Playing Out Is the recent “soft patch” over? Economy: Beyond the Obvious Capacity: Across the Modes & Influences E-Commerce: Think Behavior Capacity Crunch: How Much?... …And For How Long? Source: Cartoon on left from BB&TCM; cartoon on right from Transport Topics

2. 2 The Economy: Stuck Between a “Square Root” Recovery and a “Hockey Stick” Recovery Source: GDP figures from BEA website; commentary BB&TCM; photos from Microsoft Office 2010 The economy is healing in spite of Washington, DC! Falling Oil Prices and a Strong Dollar are Hurting CapEx in 2015 but there are long-term positives

3. 3 Why 2015 is Experiencing a “Lull” Source: BB&TCM analysis and comments; cartoon from Transport Topics 2014 (the “Perfect Storm”) HOS carryover from H2’13 Awful Q1’14 weather Almost no pricing in 2012-2013 Lousy rail service Port strike worries and then… Port congestion and slowdown Zaniness created by e-commerce 2015 (“less than perfect”) HOS restart to pre-July 2013 Class 8 tractor growth of 4.1% in last 12 months The “creeping regulatory crunch” is pausing until late 2015 Oil’s fall and a strong dollar are hurting some capital goods Unlikely to go back to looseness of 2012-2013, but it doesn’t feel as fun as 2014

4. 4 Lull # 1: Industrial Production Slowed Mostly Due to Oil’s Fall Source: BB&TCM analysis and comments of Federal Reserve Board IP data  When IP dips below 3%, freight volumes get sloppy  In the five quarters before Q4’13, IP averaged 2.5% growth, with one quarter (Q1’13 at 4.2%) subsidizing that stretch  IP is more important to freight creation than GDP  Example: Q1’14 GDP shrank 2.1%, but IP grew 3.9%; but Q1’15 IP fell 0.3% and GDP fell 0.7%  Many GDP components create minimal freight—e.g., tax, law, consulting, entertainment, education, healthcare, etc.

5. 5 Lull #2: Exports Have Been Hurt by Strong Dollar Source: BB&TCM analysis of BEA GDP report The strong dollar has hurt the demand for U.S. exports, making our products more expensive to overseas buyers Many international economies have slowed, a separate issue from a strong dollar During Q1’15: 91,000 jobs were lost in the energy industry

6. 6 Lull #3: Class 8 Fleet up 4.4% in Last Year, But… Source: BB&TCM commentary; ACT Research and ATA (Transport Topics) for data.  This includes all tractors, even 30 year old tractors  The “true” inter-city fleet (tractors 12 years old or newer) grew < 3%  The US/Canadian fleet is ~3.2M trucks; remainder is Mexico  The inter-city fleet had shrunk ~16.5% from 2007-2012  LTL, tank and private fleet grew >5%; dry van TL and reefer were ~+1% to 2% growth N.A. Class 8 Tractor Fleet (Figs in 000s)

7. 7 Case Study: Oil’s 67% Slump in ‘85-’86; Parallels for Now? Sources: Bureau of Economic Analysis (BEA) and Federal Reserve Board (FRB) for GDP and IP; Bloomberg for oil prices. Commentary is BB&TCM analysis.  Oil fell from $30 to $10 ~ 8 to 9 months in 1985-1986  Oil’s collapse in 2H’85 and 1H’86 contributed to a slump in industrial production (IP) those 2 years…but there were also other factors  GDP was solid because of the 3-year phase in of the Reagan tax cuts (1982- 1984), but by 1986 growth was slowing…  GDP and IP accelerated in 1987 as the negative impact of oil on capex wore off and as new tax cuts (’87) kicked in  Summary: Expect more stimulus from the “oil tax cut” in 2016; capex cuts and energy layoffs a drag in 2015, but restaurants benefitting now

8. 8 The Economy: Beyond the Obvious Source: Microsoft Office 2010 for cartoons

9. 9 But Spending Patterns Have Changed Since 2007 Source: BB&TCM commentary; Bureau of Labor Statistics for US middle-income spending data o The three fastest-growing areas of spending for Americans create little freight per se o Remember the days of a $40 a month phone bill? For many families, cell and data plans today are often $200– $300 o Some of the leading decliners for spending are more “freight intensive” than other categories

10. 10 Housing Percolating, but Auto Leveling Off Source: BB&TCM commentary, US Census Bureau (housing), and Bloomberg (auto production). Housing in 000s; autos in millions  Housing permits are picking up after a 2-year stall in 2013-2014  Auto production is up 100% since a 2009 low (and 48% since 2011) but is beginning to level off; 1%–4% unit growth from here on out?  70+% of all new jobs in the last three years are part-time versus a long-term average of 53%  The average job created in 2007 paid $60K; today it is $40K; in 2014 more homes over $400K were sold than under $200K-1 st time ever

11. 11 U.S. residential permits are up 8.1% YTD vs. +5.6% in 2014 May permits of 1.275M highest since August ’07 at 1.321M But 4 key energy states (~19% of all permits) are off 3% YTD Houston-by itself-issued 76% of what all of California did in 2014 Had these states maintained last year’s growth, permits would be up ~12% Watch: personal bankruptcies from 2007-2009 beginning to break out of 7-year credit freeze Exploring the Percolating Housing Market Source: U.S. Census Bureau; YTD building permit figures are through April for the 4 key energy states (TX, ND, OK, SD) and through May for the U.S. 201320142014 YTD2015 YTD U.S. 990,822 +19.4% 1,046,363 +5.6% 320,100346,100 +8.1% 4 Key Energy States 177,057 +9.3% 198,061 +11.9% 63,18461,282 -3.0% Building Permits Issued

12. 12 Households are Deleveraging… Source: Federal Reserve Board (FRB). Both measure household debt in different ways. The right table shows that total household indebtedness as a percent of disposable income has fallen to 107% from 138% in 2006. Photo from Microsoft Office 2010

13. 13 …And Bank Lending is Improving Source: Federal Reserve Board. C&I = commercial and industrial, RE = real estate

14. 14 Long-Term Positive: Household Formations Trending Up Source: US Census Bureau and BB&TCM analysis; photo from Microsoft Office 2010

15. 15 Capacity: TL, LTL, Intermodal & Other Influences Source: Microsoft Office 2010 for photo

16. 16 East Coast Ports May Gain Modest Share Source: Global Port Tracker North America February 2015 survey of 403 shippers and 191 3PLs indicate they plan to migrate, on average, 20% of their volumes from West to East 40% of shippers using only the West Coast plan to shift some to East Coast 33% of retailers and 25% of manufacturers will shift some to the East JOC June 2015 survey: 43% of shippers plan to shift, but just 5% of volumes

17. 17 Shipments: LTL Led in 2014; Reefer Leads in 2015 Source: ATA TRAC report; photo from BB&TCM; YTD is through April 2015

18. 18 LTL Has Grown Much Faster than TL Until Recently Source: ATA TRAC report; photo from BB&TCM; 2015 YTD is through April  Inflation-adjusted LTL shrank from 1980-2010  LTL is now growing faster than van LTL  LTL is no longer in secular decay—Why? e-Commerce More of an industrial recovery vs. consumer Tight TL capacity 3D printing

19. 19 Reefer is Really Smoking (pun intended)! Source: BB&TCM commentary; ATA for load data; ACT Research for reefer trailers; Microsoft Office 2010 for photo. Since the end of 2006, reefer loads have grown 24.5% but trailers are up just 5.9% Reefer loads have grown ten of the last eleven years Reefer loads have averaged 3.3% annual growth since the end of 2003 Reefer trailers grew 2.4% in 2014 but could grow 4+% in 2015 Factors? Organic food, demographics (pharmaceuticals, etc), food safety regs, life sciences, etc. Reefer Loads Up 24.5% ’06-’14

20. 20 Case Study in Reefer Trailers: Marten Transport Source: Company reports and BB&TCM Since 2004 MRTN added 1,113 reefer trailers or 35% growth But MRTN added fewer than 200 tractors Its LOH fell 41% to 598 miles Live loads have gone from ~98% of shipments to ~80% Summary: Most of the trailer growth was to accommodate shorter LOH, more drop & hook and TOFC intermodal (slower turns than OTR)

21. 21  Even with the “great recession”, food trade between the US and Mexico has averaged 10.2% annual growth  3 of 5 years since “great recession” food trade has exceeded 16%  Since 2004, exports have grown 9.9% annually while imports have averaged 10.5% annual growth US-Mexico Food Trade is Growing Rapidly Source: U.S. Department of Transportation, Bureau of Transportation Statistics

22. 22 Flatbed Trends: Loads down 28% from Peak, but Sqf Growing Sources: U.S. Census Bureau; measures avg. Sq. ft. of new construction homes; Flatbed loads from ATA TRAC report and trailer population from ACT Research.

23. 23 HOS Impact: Much Greater than the 3% “Conventional Wisdom” Source: BB&TCM survey of ~100 carriers in August 2014. Measures weekly miles per truck impact. Photo from Microsoft Office 2010. Conventional wisdom is that solo operations were impacted by 2.5%– 3% Team operations were impacted 4%–4.5% Our survey work suggests those figures were low Practically speaking, between the restart provision and the 30- minute break, the 3% figure didn’t make sense Given the market tightness, we believe the 3% figure was low Suspension of restart could free up 2%–3% capacity

24. 24 Driver Miles Equals Driver Smiles Source: BB&TCM and a large private fleet, sub-90 OR Prep time = pre-trip inspection, fueling, drug tests, DOT inspections PT = breaks, meals, communications, route planning, logging Time at S/R = inefficient appointments, paperwork, check-in, check-out DTE = holidays, surges, traffic, day of week booking, network changes UT = appointment times, parking issues, fatigue, 70- hour rule, planning uncertainty, day of week bookings DT = Most fleets believe they can add 30–75 minutes with shipper/receiver help Note: 660 available drive time minutes per day July’13-Dec’14 HOS: More like 6.5 hours until suspension

25. 25 3D Printing: Some Industries More Suitable Than Others Source: BB&TCM analysis  Shorter supply chains  Production located closer to end consumer/user  Fewer prototypes needed for final manufacturing  Being closer to end user will reduce the need for planes, trains, and trucks  More specialized manufacturing of custom- designed products instead of mass production of less- sophisticated products  Reduce the need for products from overseas, which also reduces freight movements

26. 26 E-Commerce: Behavior’s Impact on Freight Flows Source: Microsoft Office 2010 for photos

27. 27 Here’s What’s Being Bought Online Source: BB&TCM research of a variety of information 5 of the fastest-growing product sales are diapers, toiletries, pet food, bottled water and computer printing paper!!! Preliminary figures: Groceries are now at 3.5% & furniture at 8%

28. 28 Capacity: Prolonged Crunch, or Rolling Headaches in 2014–2017? Source: BB&TCM/Thom Albrecht for cartoon on left; Transport Topics for cartoon on right

29. 29  21 years ago 30% of the drivers were 25 to 34 years old  Today, they are less than 16%  21 years ago 9% of drivers were 55 to 64 years old  Today, they are 20% Psst…Drivers are Older-Not Just Carrier Rhetoric! Sources: ATA, ATRI and BB&TCM analysis

30. 30 It’s Paid to be Almost Anything but a Driver! Source: BB&TCM analysis, Bureau of Labor Statistics; photo from Microsoft Office 2010. Chart on left is inflation-adjusted.

31. 31 Is the Driver Challenge Worse? Yes and No … Source: BB&TCM analysis of public carriers CGI, CVTI, JBHT (truck only), KNX, MRTN, SWFT, WERN and 2 private carriers; photo from BB&TCM; for Q4’14, we estimate that ~1,050 tractor additions were from acquisitions, implying organic growth of 370 units. Total for the group was 1,435 including acquisitions. Cartoon from Transport Topics. Q4’04 tied for worst turnover last cycle, while Q3’04 was the 3rd worst Driver turnover was >100% 24 out of 25 quarters last cycle; it remains below 100% this cycle No, it’s not different: Pay raises immediately helped truck count (see right chart) Yes, it’s different: What constitutes an acceptable driver hire has totally changed the last ten years *

32. 32 Timetable for 7 Key Future Regulations Source: BB&TCM photo; regulations from the government’s advance notice of public rulemaking (ANPRM) o ELD rule by September 30, 2015; mandated by Sept. 2017 o NHTSA to publish speed limiters around July 27, 2015 o Carrier safety fitness determination rule to be published on August 17, 2015 (we’ll see) o CDL drug and alcohol clearinghouse rules to be published Sept. 30, 2015 o Rule prohibiting coercion of drivers by carriers and brokers to be published by September 10, 2015 (likely to be delayed) o Minimum insurance proposal likely to be raised; announcement in the summer or fall? o Hair follicle test to be discussed by FMCSA; Key #s: at Schneider 120 pre-employment drivers failed drug urine test; 1,400 failed hair follicle; JBHT: 110 and 3,845!

33. 33 “We can’t solve problems by using the same kind of thinking we used when we created them” — Albert Einstein Closing Thoughts “A cynic knows the price of everything and the value of nothing” — Help your customers not be this person! “If You’ve Got the Bucks, We’ve Got the Trucks!” — overheard at a trade show When President Obama took office in 2009, there was one person at DOT making over $170,000 annually Today, there are 1,800+ people at DOT making over $170,000. No wonder you have a headache! Source: Cartoon from Transport Topics

34. 34 IMPORTANT DISCLOSURES To receive price charts on the companies mentioned in this report, please contact BB&T Capital Markets Research at 800-552-7757 x8785. BB&T Capital Markets rating distribution by percentage (as of June 22, 2015): All companiesAll companies under coverage to which it has provided under coverage:investment banking services in the previous 12 months: Buy (1) 44.92% Buy (1) 23.36% Hold (2) 53.44% Hold (2) 22.09% Underweight/Sell (3) 1.31% Underweight/Sell (3) 25.00% Not Rated (NR) 0.33% Not Rated (NR) 0.00% BB&T Capital Markets Ratings System: The BB&T Capital Markets Equity Research Department Stock Rating System consists of three separate ratings. The appropriate rating is determined by a stock’s estimated 12-month total return potential, which consists of the percentage price change to the 12-month price target and the current yield on anticipated dividends. A 12-month price target is the analyst’s best estimate of the market price of the stock in 12 months. A 12-month price target is highly subjective and the result of numerous assumptions, including company, industry, and market fundamentals, both on an absolute and relative basis, as well as investor sentiment, which can be highly volatile. The definition of each rating is as follows: Buy (1): estimated total return potential greater than or equal to 10%, Hold (2): estimated total return potential greater than or equal to 0% and less than 10%, Underweight (3): estimated total return potential less than 0% B: Buy H: Hold UW: Underweight NR: Not Rated NA: Not Applicable NM: Not Meaningful SP: Suspended Stocks rated Buy (1) are required to have a published 12-month price target, while it is not required on stocks rated Hold (2) and Underweight (3). BB&T Capital Markets Equity Research Disclosures as of June 22, 2015 BB&T Capital Markets makes a market in the securities of ArcBest Corporation, American Railcar Industries, Inc., Celadon Group, Inc., C. H. Robinson Worldwide, Inc., Con-way Incorporated, Covenant Transportation Group, Inc., Echo Global Logistics, Inc., The Greenbrier Companies, Inc., Genesee & Wyoming Inc., Heartland Express, Inc., J.B. Hunt Transport Services, Inc., Knight Transportation, Inc., Landstar System, Inc., Marten Transport, Ltd., Old Dominion Freight Line, Inc., Roadrunner Transportation Systems, Inc., Saia, Inc., Swift Transportation Company, Trinity Industries, Inc., Universal Truckload Services, Inc., Wabtec Corporation, Werner Enterprises, Inc. and YRC Worldwide Inc.. BB&T Capital Markets has managed or co-managed a public offering of securities for Covenant Transportation Group, Inc., Echo Global Logistics, Inc., Heartland Express, Inc. and Trinity Industries, Inc. in the last 12 months. BB&T Capital Markets has received compensation for investment banking services from Covenant Transportation Group, Inc., Echo Global Logistics, Inc., Heartland Express, Inc. and Trinity Industries, Inc. in the last 12 months. BB&T Capital Markets expects to receive or intends to seek compensation for investment banking services from ArcBest Corporation, American Railcar Industries, Inc., Celadon Group, Inc., C. H. Robinson Worldwide, Inc., Conway Incorporated, Covenant Transportation Group, Inc., Echo Global Logistics, Inc., The Greenbrier Companies, Inc., Genesee & Wyoming Inc., Heartland Express, Inc., J.B. Hunt Transport Services, Inc., Knight Transportation, Inc., Landstar System, Inc., Marten Transport, Ltd., Old Dominion Freight Line, Inc., Roadrunner Transportation Systems, Inc., Saia, Inc., Swift Transportation Company, Trinity Industries, Inc., Universal Truckload Services, Inc., Wabtec Corporation, Werner Enterprises, Inc. and YRC Worldwide Inc. in the next three months. An affiliate of BB&T Capital Markets received compensation from ArcBest Corporation, American Railcar Industries, Inc., Con-way Incorporated, The Greenbrier Companies, Inc., Genesee & Wyoming Inc., J.B. Hunt Transport Services, Inc., Landstar System, Inc., Old Dominion Freight Line, Inc., Roadrunner Transportation Systems, Inc., Saia, Inc., Swift Transportation Company, Trinity Industries, Inc. and Wabtec Corporation for products or services other than investment banking services during the past 12 months. The analyst or employees of BB&T Capital Markets with the ability to influence the substance of this report know or have reason to know the foregoing facts. ADDITIONAL INFORMATION AVAILABLE UPON REQUEST For valuation methodology and related risk factors on Buy (1)–rated stocks, please refer to the body text of this report or to individual reports on any covered companies referenced in this report. The analyst(s) principally responsible for preparation of this report received compensation that is based upon many factors, including the firm’s overall investment banking revenue. Analyst Certification The analyst(s) principally responsible for the preparation of this research report certify that the views expressed in this research report accurately reflect his/her (their) personal views about the subject security(ies) or issuer(s) and that his/her (their) compensation was not, is not, or will not be directly or indirectly related to the specific recommendations or views contained in this research report. OTHER DISCLOSURES The information and statistics in this report have been obtained from sources we believe are reliable but we do not warrant their accuracy or completeness. We do not undertake to advise the reader as to changes in figures or our views. This is not a solicitation of an order to buy or sell any securities. BB&T Capital Markets, a division of BB&T Securities, LLC, member FINRA/SIPC, is a wholly owned nonbank subsidiary of BB&T Corporation. The securities sold, offered or recommended are not a deposit, not FDIC insured, not guaranteed by a bank, not guaranteed by any federal government agency and may go down in value. The opinions expressed are those of the analyst(s) and not those of BB&T Corporation or its executives.