1. Transportation At The Precipice March 2016 Noël Perry – Transportation Economics - FTR Copyright – Transportation Economics 2016 1

2. Transportation At The Precipice The Next Five Years Copyright – Transportation Economics 2016 2

3. Transportation At The Precipice Economics Copyright – Transportation Economics 2016 3

4. Recession! Source: FTR Copyright – Transportation Economics 2016 4 Source: FTR, Transportation Economics

5. Global troubles will keep us from setting a new record for recovery length. Source: FTR Copyright – Transportation Economics 2016 5 Source: Trading Economics

6. Recession is a real possibility in China. Source: FTR Copyright – Transportation Economics 2016 6 Source: The Economist

7. Transportation At The Precipice Energy Copyright – Transportation Economics 2016 7

8. Lesson: The cost of drilling sets the market price of oil over time – not OPEC. Source: Transportation Economics Source: Transportation Economics, EIA

9. Energy – Current Situation Source: EIA, FTR Copyright – Transportation Economics 2016 9 Source: EIA, Transportation Economics

10. Transportation At The Precipice Water Copyright – Transportation Economics 2016 10

11. The container capacity bubble is bursting. Source: FTR Copyright – Transportation Economics 2016 11 Source: SCDigest.com

12. Rates are falling despite the best efforts of the carrier groups. Source: FTR Copyright – Transportation Economics 2016 12 Source: Flexport, Cass Container Rates

13. Overcapacity and weak demand have depressed bulk ocean rates. Source: FTR Copyright – Transportation Economics 2016 13 Source: Bloomberg Baltic Dry Index

14. Overall inland volumes are down on weakness in coal and crude shipments. Source: FTR Copyright – Transportation Economics 2016 14 Source: Waterborne Commerce Statistics Center

15. The grain trade is level, but has shown no growth in four years. Source: FTR Copyright – Transportation Economics 2016 15 Source: Waterborne Commerce Statistics Center

16. The slow trend has been developing for a lot longer.. Source: FTR Copyright – Transportation Economics 2016 16 Source: FTR, Waterborne Commerce Statistics Center

17. Transportation At The Precipice Rail Copyright – Transportation Economics 2016 17

18. The rail renaissance is over. Source: FTR Copyright – Transportation Economics 2016 18 Source: FTR

19. The railroads have learned how to manage their oligopoly. Source: FTR Copyright – Transportation Economics 2016 19 Source: FTR

20. Transportation At The Precipice Truck Copyright – Transportation Economics 2016 20

21. GDP – Freight Multipliers Source: FTR Copyright – Transportation Economics 2016 21

22. Source: FTR, BLS 22 Recruiting drivers is getting progressively harder due to unfavorable demographic trends. Source: Transportation Economics, Census Bureau Copyright – Transportation Economics 2016

23. Regulatory Drag Source: FTR Copyright – Transportation Economics 2016 23 Source: FTR, Transportation Economics

24. Capacity utilization Source: FTR Copyright – Transportation Economics 2016 24 Source: FTR

25. Truckload Pricing Forecast Source: FTR Copyright – Transportation Economics 2016 25 Source: FTR

26. Transportation At The Precipice The Following 10 Years Copyright – Transportation Economics 2016 26

27. Transportation At The Precipice The Great Reckoning Copyright – Transportation Economics 2016 27

28. The principal exposure in the Twenties is governmental. Source: Transportation Economics 28 Source: Transportation Economics

29. Source: FRED Economic woes encourage continuation of short-term fiscal policy, raising the possibility of a major financial correction. Source: St Louis Federal Reserve Bank

30. This problem will become very real if interest rates rise. Source: Transportation Economics

31. It’s worse overseas Source: McKinsey, Transportation Economics Source: Economist, Transportation Economics

32. Depressions Happen now! Source: Trading Economics Source IMF

33. Depressions do end Source: Trading Economics Source: Census Bureau

34. Transportation At The Precipice The Next Wave - Automation Copyright – Transportation Economics 2016 34

35. Source: Transportation Economics 35 A revolution in manufacturing automation will dramatically reduce imports of finished goods. Source: Transportation Economics

36. U.S. Transport should see an acceleration of the existing trend towards an economizing on transportation. Bad Recessions Source: Transportation Economics

37. Automation will also revolutionize transport. Source: Transportation Economics 37 Source: Transportation Economics

38. Much technology is already in use. Source: Transportation Economics In Play In Prototype In Regulation 2015

39. The result will be the end of the driver crisis and an era of falling prices. Source: Transportation Economics, FTR 39 Source: Transportation Economics

40. Technology is steadily improving fuel economy – an a pace to meet the new federal Greenhouse Gas Standards. Source: Transportation Economics, EPA

41. Source: Transportation Economics 41 Railroad operation will be also automated, perhaps before trucks. Source: Transportation Economics

42. Market conditions will change radically, dividing this forecast timeframe into two very different eras. Source: FTR, Transportation Economics

43. Transportation At The Precipice Questions Slides at ftrintel.com/NGFftrintel.com/NGF Copyright – Transportation Economics 2016 43