1. US Logistics/Transportation Market Overview Procurement – Market Intelligence Team March 18, 2009

2. 2 Macro-Economic Overview Macro-Economic Trends

3. 3 A “Technical” Recession… US GDP with 2 consecutive quarters contracting. 2008 Q4 GDP growth revised to -6.2% US GDP to contract -1.6% in 2009 (IMF). Global Insight projection is -3.7% PMI below 50 for 13 consecutive months. Last 5 months below 40 (worst since 1980’s) PMI considered a leading indicator -> dropped below 43 in all recession periods since 1948

4. 4 Macro-Economic Trends No “decoupled” economies. Economic downturn has rippled through the supply chain, affecting emerging economies. Most advanced economies projected to contract in 2009. Deceleration reflected in commodity prices and overall country inflation. PMI for Europe at historical lows as well. …a Global Recession Source: IMF Source: Markit Indices (Ariba)

5. 5 Macro-Economic Trends Other Parameters: Unemployment, Consumer Confidence, Interest Spreads, Home Values Source: Wikipedia Source: Conference Board Source: Standards & Poor

6. 6 Macro-Economic Trends Industrial Output and Trade Activity US Industrial Output declining for 7 consecutive months. US trade deficit has declined for six consecutive months. US goods and services fell by 6.7% in January, while exports fell 5.7% Industrial output in negative territory for developed countries. Source: US Department of Commerce Source: Haver Analytics, IMF staff Source: Trading Economics

7. 7 Macro-Economic Trends A Weak Economy Machinery sectors down between 4-8% in 2009. Housing starts down more than 50% from peak levels (above 2 million units) Steel output set to decline globally by 2-3%. In US, mills operating below 40% capacity. Decline in manufacturing output for US deeper than GDP contraction. Source: IHS Global Insight

8. 8 US Trucking Indices US Trucking

9. 9 US Trucking – Market Environment Sources: IHS Global Insight, American Trucking Association Supply-Demand conditions Operators actively downsizing fleet size. Smaller TL companies downsized earlier. Class 3-8 truck sales dropped 19% in 2008 and are expected to decline 14% in 2009. Sales to spike in advance of emissions legislation effective in 2010. American Trucking Association (ATA) Truck Tonnage index contracted 7.8% in December 2008, and increased by 3.0% in January (2 nd lowest level since October 2002) Freight demand to remain low due to generalized downturn affecting multiple sectors of the economy.

10. 10 US Trucking – Cost Drivers Cost Structure: NAICS 48412 Long-distance freight trucking Fuel cost component represents 27% of total cost structure, however this is set to decline given the drop in diesel prices. EIA forecasts $2.3/gal for 2009 Wages remain main cost driver, expected to show minimal increase in 2009 (roughly 2% increase) Financial results of trucking companies depend on cost structure and asset base. Source: BLS Source: IBIS World

11. 11 US Trucking – Forecast 2008/09 Operators actively reducing supply, but demand slowing down at much faster pace. Decline in diesel prices have eased up pressure on providers. Tough market environment with mixed operational/financial results, sometimes driven by geographic coverage. Trend towards industry consolidation around larger, stronger players. US Trucking Freight Outlook: Sources: IHS Global Insight, Stifel Nicolaus (forecasts) TL Price Trends (% change year-on-year)

12. 12 US Rail Indices US Rail

13. 13 US Rail – Market Environment Source: IHS Global Insight, AAR Supply-Demand conditions At beginning of 2008, about 40% of fleet had been in operation for 25+ years. Freight-car deliveries expected at 60k units for 2008, a decline of 4.3%, and to drop below 40k for 2009. Push for productivity and efficiency improvements will drive the need for upgrades in equipment/technology. AAR reported a decline of 18% in US rail carloads for the first 2 weeks of 2009. Intermodal volumes down 14%.

14. 14 US Rail – Market Environment Source: AAR May 2008 report Railroad Freight Revenue Segmentation Largest commodity is coal representing 21% of revenue. Agriculture outlook is positive, but includes ethanol-related production. All manufacturing related products have slowed significantly. Steel volumes and metals in general have dropped rapidly as mills have cut production in response to very weak demand. Commodity freight dropping by double digits (except coal).

15. 15 US Rail – Cost Drivers Total wages remain as the main cost input. Data released for January show an increase of 4.7% Fuel cost component increased by 15% in 2008, but now back to 2007 levels. All Class 1 railroads imposed fuel surcharge to offset increase anyways. Railroads are estimated to have a 30% cost advantage versus trucking services, because of higher fuel efficiency (source: MFS value fund) Cost Structure: NAICS 48211 Rail Transportation Source: IBIS World, BLS Support Activities for Other Transportation Including Rail, CEU4348890008 Average Hourly Earnings (AHE), % Change Y-o-Y

16. 16 US Rail – Forecast 2008/09 Supply is tighter to some degree, and demand has now slowed across all commodities. However - Highly concentrated industry (4 class 1 railroads). Result: railroads able to increase rates plus fuel surcharges. 2008 rates 14.4% above 2007 levels. Freight rate outlook is less volatile in rail (not considering fuel surcharges) Significant hikes in captive markets and/or long-term contracts with escalation clauses. Outlook for 2009 ranges from slight declines of 2-3% up to increases of 4- 7% as expressed at end of fiscal years by the Class 1 operators. Railroad Freight Outlook: Sources: IHS Global Insight, Union Pacific

17. 17 Financial Performance

18. 18 NASDAQ Transportation Index vs S&P 500 Index Financial Performance Nasdaq Transportation Index containes 65 securities (air, rail road, water transport and related services) S&P 500 is a value indexed fund of 500 large cap common stocks. Nasdaq: National Association of Securities Dealers Automated Quotation System.

19. 19 A couple examples in trucking: Financial Performance US Truck (USK) JB Hunt Transport Services (JBHT) Source: Companies’ Financial Reports

20. 20 A couple examples in rail: Financial Performance Source: Companies’ Financial Reports Burlington Northern Santa Fe - BNSF (BNI)CSX Corporation (CSX)