1

2015: More of the Same?  Or is a Lull Out There?

“A pessimist sees the difficulty in every opportunity; an optimist sees opportunity in every difficulty.”‐Winston Churchill

Agenda:What Happened in 2014?

And What Will the 2015 Encore be Like?Capacity: Across the Modes & Influences

E‐Commerce: Think BehaviorEconomy: Beyond the ObviousCapacity Crunch: How Much?...

…And For How Long?

Photos from BB&TCM

2

2014 in Synopsis—What a Year!

Source: BB&TCM; Microsoft Office 2010 for exclamation point

Weather1) Networks out 

of kilter2) Killed older 

capacity

HOS: 3% Hit (really?)

IP Accelerated

Easy Comps vs. late 2013

May onward: port strike fears

Rail Service meltdown: ~150,000 loads left rails first 11 weeks of 2014; thousands thereafter Nov/Dec: good finish to 

the year

3

We’re Transitioning from a “Square Root” Recovery to Something Just Short of a “Hockey Stick” Recovery

Source: GDP figures from BEA website; commentary BB&TCM; photos from Microsoft Office 2010

US GDP has grown 3.5% or higher in four of the last five quarters after ZERO quarters of 3% GDP growth since 2010; the economy is healing in spite of Washington, DC! 

4

From Q4’13 Onward, IP Really Picked Up

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% 

Many GDP components create minimal freight—e.g., tax, law, consulting, entertainment, education, healthcare, etc.

2.5%

4.9%

3.9%

5.7%

4.1%

5.6%

0%

1%

2%

3%

4%

5%

6%

Q3'12‐Q3'13

Q4'13 Q1'14 Q2'14 Q3'14 Q4'14E

Industrial Production

5

And the Freight Components of GDP Accelerated

Source: BB&TCM analysis of Bureau of Economic Analysis (BEA) GDP data; measures point contribution to GDP growth (e.g., GDP grew 4.6% in Q2’14 and equipment was 63 bps of that growth)

The“freightcreation”bucketsoftheGDPreportallacceleratedinQ2’14

Thenine‐quarteraveragewasfromQ1’12throughQ1’14

IneitherQ4’13orQ1’14,fixedinvestments,equipment,andexportshadbeguntopercolateafteralongslumber

Note:whileresidential(housing)wasonlyslightlyabovethenine‐quarteraverage,ithadbeennegative—(0.28)and(0.17)—thepriortwoquartersbeforeQ2’14

1.45

1.18

0.63

0.32 0.27

1.26

0.71

0.47

0.22 0.25 0.190.15

0.30

0.45

0.60

0.75

0.90

1.05

1.20

1.35

1.50

Q2'14 GDP Components Previous 9 Quarter Avg

6

But Don’t Get Too Cocky—A Lull Could be on the Way

Source: BB&TCM analysis and comments; cartoon from ATA

2014(the“PerfectStorm”)• HOScarryoverfromH2’13• AwfulQ1’14weather• Almostnopricingin2012‐2013• Lousyrailservice• Portstrikeworriesandthen…• Portcongestionandslowdown• Zaninesscreatedbye‐commerce

2015• HOSrestartrevertstopre‐July2013• Class8truckgrowthof3.5%in2014

and4%–5%in2015• The“creepingregulatorycrunch” is

pausinguntilH2’15• Oil’sfallandastrongdollarwillhurt

somecapitalgoods• Unlikelytogobacktoloosenessof

2012‐2013,butalullappearslikely

7

Capacity: LTL, Intermodal & Other Influences

Source: Microsoft Office 2010 for photo

8

Shipments: LTL Leads the Pack in 2014

Source: ATA TRAC report; photo from BB&TCM

3.5%1.1% 1.3%

2.0%

‐1.7%‐3.0%

‐1.4% 1.1%2.1%

‐1.4%‐1.5%

6.1%

1.1%

‐4.4%

‐9.9%‐4.4%

1.1%2.5%

3.4%

‐3.6%

12.0%

2.7% 3.0%

6.5%

1.3%

14.9%

6.2% 6.6%

1.8%

‐0.3%

‐15%

‐10%

‐5%

0%

5%

10%

15%

20%

2011 2012 2013 2014YTD 2014 Nov

Total TL Loads Van Flatbed Reefer LTL Tank

9

365,72

4 

322,91

9 

 ‐

 50,000

 100,000

 150,000

 200,000

 250,000

 300,000

 350,000

 400,000

1990

1993

1996

1999

2002

2005

2008

2011

2014E

Pup Population Pup Replacement

Source: ACT Research for trailers and BB&TCM analysis in left comments; BB&TCM for photo

LTLtrailerpopulation atyear‐end2013isaboutwhereitwasin1998

Trailersareforecasttogrow1%in2014andanother2% in2015(orbarely7,000units,netofreplacements)

LTLdockdoorsare18%lowerthanthe2007peak

LTL Capacity: Pup Trailers Off 12% from 2007 Peak

10

LTL has been Growing Faster than TL Since the Great Recession

Source: ATA TRAC December report; photo from BB&TCM

‐3.0%‐1.4%

1.1%2.1%

12.0%

2.7% 3.0%

6.5%

‐4%

‐2%

0%

2%

4%

6%

8%

10%

12%

14%

2011 2012 2013 2014YTD

Van LTL Inflation‐adjustedLTLshrankfrom1980‐2010

LTLisnowgrowingfasterthanvanLTL

LTLisnolongerinseculardecay—Why?

e‐Commerce Moreofanindustrial

recoveryvs.consumer TightTLcapacity 3Dprinting

11

3D Printing will Reshape Freight Flows in the Future

Source: Commentary by BB&TCM; photos from Microsoft Office 2010

Shortersupplychains Productionlocatedclosertoend

consumer/user Fewerprototypes neededfor

finalmanufacturing Beingclosertoenduserwill

reducetheneedforplanes,trains,andtrucks

Morespecializedmanufacturingofcustom‐designedproductsinsteadofmassproductionofless‐sophisticatedproducts

Reducetheneedforproductsfromoverseas,whichalsoreducesfreightmovements

12

Intermodal’s 2014 Success Masks Legitimate Challenges

Source: BB&TCM; ATA and IANA data in chart; photo from Microsoft Office 2010

Intermodaloutperformedpartlyduetotighttruckcapacity

Morethan20%ofdrayloadshaveawaitexceedingtwohours

Alocomotiveshortageremainsintact Largershipswillkeepcoming ChassisshortageworkstoJBI’s

advantage Huge, 4% loadgrowth(domestic&

internationalcombined)requiresatleasttwonewterminalsindustrywide

At7% growth(nearly1.4Mmoreloads)wouldrequireuptofourmoreterminals,costingupto$600Mayear

Aloomingdraydrivercrisis

7.0%

5.3%3.9%

0.2%

4.8%

9.3%7.0%

2.9%

13.3%

9.6%

12.2%

9.4%

6.0%6.7%

‐1.2%

‐3.7%‐1.3%

‐0.3%

1.0%

‐2.7%

‐15.0%

1.4%

‐3.0%‐1.4%

1.1% 2.1%

‐15%

‐10%

‐5%

0%

5%

10%

15%

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

E YTD

Domestic Containers Dry Van Loads

13

Domestic Intermodal: A Donut Hole of an Opportunity

Source: FTR Research and IANA, along with BB&TCM analysis and commentary. Chart is JBHT company reports; photo from Microsoft Office 2010

29% ofintermodalloadsare2,001–2,500miles

10% are>2,500miles 28%moves751–1,000miles Andeven19%moves<750

miles(thinkOhiotoSyracuse,etc.)

Butonly13%moves1,001–2,000miles.Why?Andisn’tthatagreatopportunityforyourindustry?

46%

38%

26%

12%

20%

26%30%

26%23%

28%32%31%

35%

28%

21%22%

15%19%

14%14%17%

9%

17%19%14%

5%10%15%20%25%30%35%40%45%50%

4Q08

2Q09

4Q09

2Q10

4Q10

2Q11

4Q11

2Q12

4Q12

2Q13

4Q13

2Q14

4Q14

JBI Eastern Intermodal Load Growth

JBI Eastern Load Growth

14

Reefer is Really Smoking (pun intended)!

Source: BB&TCM commentary; ATA for load data; ACT Research for reefer trailers; Microsoft Office 2010 for photo.

• Sincetheendof2006,reeferloadshavegrown20.3%buttrailersareupjust3.4%

• Reeferloadshavegrownnineofthelasttenyears

• Reeferloadshaveaveraged3.3%annualgrowthsincetheendof2003

• ButReefertrailersgrewabout5%in2014andcouldgrow6%–7%in2015

7.7%

6.6%

7.6%

3.1% 2.6%

‐4.4%

1.1%2.5%

‐6%‐4%‐2%0%2%4%6%8%10%

80

90

100

110

120

130

140

2006 2008 2010 2012

339,189 

337,537  35

0,592 

 330,000

 335,000

 340,000

 345,000

 350,000

 355,000

2006 2008 2010 2012

Reefer Trailers Have Grown 3.4% in 7 Years

Reefer Loads Up 20% Since ‘06

15

The Class 8 Fleet was up 3.9% in Q3 Yr/Yr

Source: BB&TCM commentary; ACT Research and ATA (Transport Topics) for data. 

• Netofretirements,theNorthAmericanClass8fleethasgrown>1%sequentiallyforthreestraightquarters

• Thefleethadshrunk~16.5%from2007‐2013

• TheN.A.fleetwasup3.9%yr/yr inQ3and~3.5%YTD

• Lessthan1Mofthetrucksareinthefor‐hiremarket,servingdeliveriesof>150miles

3,550 3,580 3,590 

3,600 

3,660 

3,710 

3,750 

0.3%

0.8%

0.3% 0.3%

1.7%

1.4%

1.1%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

3,500

3,550

3,600

3,650

3,700

3,750

3,800

Q1'13 Q3'13 Q1'14 Q3'14

N.A. Class 8 Tractor Fleet (Figs in 000s)

16

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.

Conventionalwisdomisthatsolooperationswereimpactedby2.5%–3%

Teamoperationswereimpacted4%–4.5%

Oursurveyworksuggeststhosefigureswerelow

Practicallyspeaking,betweentherestartprovisionandthe30‐minutebreak,the3%figuredidn’tmakesense

Giventhemarkettightness,webelievethe3%figurewaslow

Suspensionofrestartcouldfreeup2%–3%capacity

14%

26%

45%

15%

10%

20%

30%

40%

50%

0% to 2% 3% to 4% 5% to 8% Over 8%

17

Driver Miles Equals Driver Smiles

Source: BB&TCM and a large private fleet, sub‐90 OR

• Preptime=pre‐tripinspection,fueling,drugtests,DOTinspections

• PT=breaks,meals,communications,routeplanning,logging

• TimeatS/R=inefficientappointments,paperwork,check‐in,check‐out

• DTE=holidays,surges,traffic,dayofweekbooking,networkchanges

• UT=appointmenttimes,parkingissues,fatigue,70‐hourrule,planninguncertainty,dayofweekbookings

• DT=Mostfleetsbelievetheycanadd30–75minuteswithshipper/receiverhelp

30

90

108

48

120

438 (7.3 hours)

A Driver's 14‐Hour Day (840 minutes)

Prep Time

Personal Time

Time atShipper/Receiver

Drive Time Empty

Unused Time

Drive Time

Note: 660 available drive time minutes per day

Pre‐HOS; Since then more like 6.5 hours

Pre‐HOS; Since then more like 6.5 hours

18

E‐Commerce: Behavior’s Impact on Freight Flows 

Source: Microsoft Office 2010 for photos

19

Here’s What’s Being Bought Online

Source: BB&TCM research of a variety of information

• Butfourofthefastest‐growingproductsalesarediapers,toiletries,petfood,andcomputerprintingpaper

2%

4%

7%

11%

13%

14%

16%

22%

23%

24%

39%

0% 10% 20% 30% 40% 50%

Groceries

Furniture

Personal Care

Pet

Clothing

Appliances

Sporting Goods

Toys

Baby

Electronics

Books

E‐Commerce as a Percentage of Overall Spending by Type of Good (2013)

20

2014 Holiday Conclusions of e‐Commerce

Source: US Census Bureau for e‐Commerce figures. UPS comment from a company press release. Photos: Microsoft Office

Brick‐and‐mortarretailsalesweredown11%

Onlineretailsaleswereup21% UPS:45%ofitsdeliveriesare

tiedtoe‐commerce,andthisisexpectedtobe50%inlessthantwoyears

Storefoottrafficisoff~60%lastfouryears

0.9%1.1%1.4%1.8%2.1% 2.5%

3.0%3.5%3.6%

4.0% 4.4%4.7%5.2%

6.5%

8.0%

0%1%2%3%4%5%6%7%8%9%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014E

E‐Commerce: % of Retail Sales

21

Retailer2012 % Web 

Sales2013 % Web 

Sales 2011 Stores 2012 Stores 2013 StoresFutureClosures

Sears Holdings 11.0% 13.5% 4010 2548 2249 300

Barnes & Noble 19.0% 20.5% 691 675 661 223

Staples 42.0% 45.0% 1917 1886 1846 225

Macy's 11.0% 14.9% 842 841 840 na

JC Penney 8.0% 9.1% 1102 1104 1094 na

Abercrombie 16.0% 18.9% 1045 1041 1006 180

Aeropostale na na 918 984 949 175

American Eagle 13% 15.9% 1069 1044 1066 150

Walgreens 1% 1.4% 8210 8385 8582 76

Retailers: Brick and Mortar isn’t what it used to be

Source: Company filings. Photo from Microsoft Office 2010 

22

The Economy: Beyond the Obvious

Source: Microsoft Office 2010 for cartoons

23

Households are Deleveraging…

36%

69%

93%

107%

112%

135% 13

8%13

1%12

9%12

4%12

4%12

5%12

3%12

0%11

8%11

7%11

6%11

6%11

6%11

5%11

4%11

4%11

3%11

2%11

2%11

1%11

0%11

0%10

9%11

0%10

9%10

8%

40%

60%

80%

100%

120%

140%

160%

1952

1993

2003

2006

2008

Q2'

09Q

4'09

Q2'

10Q

4'10

Q2'

11Q

4'11

Q2'

12Q

4'12

Q2'

13Q

4'13

Q2'

14

Total Household Indebtedness

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 108% from 138% in 2006. Photo from Microsoft Office 2010

9

9.5

10

10.5

11

11.5

12

12.5

13

13.5

14

3/31

/198

0

3/31

/198

2

3/31

/198

4

3/31

/198

6

3/31

/198

8

3/31

/199

0

3/31

/199

2

3/31

/199

4

3/31

/199

6

3/31

/199

8

3/31

/200

0

3/31

/200

2

3/31

/200

4

3/31

/200

6

3/31

/200

8

3/31

/201

0

3/31

/201

2

3/31

/201

4

Deb

t Ser

vice

Rat

io

14

14.5

15

15.5

16

16.5

17

17.5

18

18.5

19

19.5

20

FOR

Rat

ioDebt Service RatioFinancial Obligations Ratio

24

…And Bank Lending is Improving

Source: Federal Reserve Board. C&I = commercial and industrial, RE = real estate

7.7%

-1.0%

3.5%

0.8%

-20% -10% 0% 10%

C&I loans

RE loans

Consumer

Credit cards

2013 2012 2011 2010 2009

25

149%188%

308%61%

72%85%

120%58%65%

37%107%

64%219%

53%82%

93%94%

43%

0% 50% 100% 150% 200% 250% 300% 350%

2013

2011

2009

2007

2005

2003

2001

1999

1997

Household Formation Ratio to Housing Starts

Long‐Term Positive: Household Formations are Running Way Above Housing Starts (Huge student loans holding housing back)

Source: US Census Bureau and BB&TCM analysis; photo from Microsoft Office 2010

26

But Spending Patterns Have Changed Since 2007

Source: BB&TCM commentary; Bureau of Labor Statistics for US middle‐income spending data

• Thethreefastest‐growingareasofspendingforAmericanscreatelittlefreightperse

• Rememberthedaysofa$35amonthphonebill?Formanyfamilies,cellanddataplanstodayareoften$200–$300

• Someoftheleadingdeclinersforspending aremore“freightintensive” thanothercategories

(30.7%)(26.5%)

(17.7%)(11.5%)

(8.3%)(5.4%)(4.5%)(3.8%)(3.8%)

0.2% 2.3% 

10.5% 12.5% 

22.9% 24.2% 26.0% 

42.1% 49.1% 

81.3% 

‐60% ‐40% ‐20% 0% 20% 40% 60% 80% 100%

Residential PhoneHousehold Textiles

Women's Apparel (16+)Homes (Owned)

Major AppliancesEntertainment

AlcoholFood Away From Home

FurnitureIncome

Total SpendingPets

Food at HomeEducation

Health CareHomes (Rent)

Health InsuranceCellular PhonesHome Internet

Changes in Spending by Middle‐Income Americans2013 vs. 2007

27

Chemicals: Quietly Signaling Future Strength

Source: Association of American Railroads (AAR), Bloomberg, and BB&TCM commentary; photo from Microsoft Office 2010

• Chemicalcarloadsontherailroadsareencouraging

• 53weeksin’14;31weeksup• 22 downweeksin2014(vs.16down

weeksinallof2013),muchofthatwasweatherinQ1’14

• Chemicalshipmentshavebeenup6ofthelast7weeksand10ofthelast12(includingsofarin2015)

• Chemicalcarloadings areaproxyforindustrialactivity

• Inthenextthreeyears,morethan120newchemical,fertilizerandpetrochem plantsandexpansionswillcomeonlineintheGulfCoast,totalingmorethan$120B

28

But, Two Key Freight Drivers have “Leveled Off”

Source: BB&TCM commentary, US Census Bureau (housing), and Bloomberg (auto production). Housing in 000s; autos in Ms

• Housingstartsareup60+%since2011,butpermitshavestalledsinceApril’13

• Permits arenotimpactedbyweatherlikehousingstartsare

• Autoproductionisup93%sincea2009low(and27%since2011)butisbeginningtoleveloff;1%–4%unitgrowthfromhereonout?

• Morerobustjobandincomegrowthwillberequiredformateriallygreaterimprovements

• Risinginterestratesprobablyslowedhousingsome

• 70+%ofallnewjobsinthelastthreeyearsarepart‐timeversusalong‐termaverageof53%

• Theaveragejobcreatedin2007paid$60K;todayitis$40K

624 

1,005  1,032 

0

500

1,000

1,500

2011

2013

May July

Sept

Nov Jan

Mar

May July

Sept

Nov

Housing Permits

17.217.016.6

15.913.4

11.98.8

0 5 10 15 20

2015E

2013

2011

2009

N.A. Auto Production

29

Capacity: Prolonged Crunch, or Rolling Headaches in 2014–2017?

Source: BB&TCM/Thom Albrecht for cartoon on left; ATA for cartoon on right 

30

254,000 

11,400  10,500  10,700  ‐

 25,000 50,000 75,000

 100,000 125,000 150,000 175,000 200,000 225,000 250,000 275,000

Nov ’13 through Nov ‘14

Trucking, esp. TL, is Losing the “Jobs Arms Race”

Source: Bureau of Labor Statistics (not seasonally adjusted data) and BB&TCM analysis and commentary; cartoon from the ATA

• Radicalchangesareneededintruckload

• TLis5xbiggerthantherailindustryand8xbiggerthanLTL, soit’sactuallylosinggroundonarelativebasis

• Constructionwinsthelifestylecontestandholdsitsownonwages

31

Since 2011, Construction has Hired 704,000 Workers—Up to 160,000 were ex‐Truck Drivers

Source: BLS, December 2014 report for left table; ATA TRAC report for driver turnover; BLS for unemployment; US Census Bureau for housing starts

Year TotalConstructionJobs (000s)

ResidentialConstructionJobs (000s)

Non‐Resid.Jobs(000s)

2002 ‐85 88 ‐173

2003 127 161 ‐34

2004 290 230 60

2005 416 268 148

2006 152 ‐62 214

2007 ‐195 ‐271 76

2008 ‐789 ‐515 ‐274

2009 ‐1,047 ‐428 ‐619

2010 ‐192 ‐131 ‐61

2011 144 50 94

2012 114 58 56

2013 156 116 40

2014 290 132 158

97%

0

500

1,000

1,500

2,000

2,500

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

20%

40%

60%

80%

100%

120%

140%

Housing Starts Driver Turnover

97%

39%

127%136%

20%

40%

60%

80%

100%

120%

140%

160%

00:Q

1

00:Q

4

01:Q

3

02:Q

2

03:Q

1

03:Q

4

04:Q

3

05:Q

2

06:Q

1

06:Q

4

07:Q

3

08:Q

2

09:Q

1

09:Q

4

10:Q

3

11:Q

2

12:Q

1

12:Q

4

13:Q

3

14:Q

2

2%

4%

6%

8%

10%

12%

Driver Turnover Unemployment Rate

Construction hiring picked up a bit in 2013, with further acceleration in 2014Lots of cash payments in 2012 and absorption of late ‘11‐early ‘12 hiringDrivers are targeted for hiring

32

It’s Paid to be Almost Anything but a Driver!

Source: BB&TCM analysis, Bureau of Labor Statistics; photo from Microsoft Office 2010 

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Inde

xed Wage (199

9 = 1.0)

Heavy and Tractor‐Trailer Truck DriversConstruction LaborersFood Prep and Serving Related OccupationsAutomotive Service Technicians and MechanicsRegistered Nurse

33

Would you Take This Job if this Was Your 40‐Year Wage Trend?$2

4.81

$21.96

$21.38

$19.68

$10

$13

$16

$19

$22

$25

$28

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Average Hourly Driver Wages (inflation adjusted)

Source: BLS. Figures are inflation‐adjusted (using 2013 dollars) and reflect union and non‐union drivers.

34

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

• Truckadds/(deletions)measuressequentialchangesintractorcounts,bothcompanyequipmentandowner‐operators

• Q4’04tiedfortheworstdriverturnoverlastcycle,whileQ3’04wasthethirdworst

• Driverturnoverwas>100%24outof25quarterslastcycle;itremainsbelow100%thiscycle

• No,it’snotdifferent:Payraisesimmediatelyhelpedtruckcounts

• Yes,it’sdifferent:Whatconstitutesanacceptabledriverhirehastotallychangedthelasttenyears

759

‐16

‐483

336121%

136%

96%97%

0%

20%

40%

60%

80%

100%

120%

140%

160%

‐600

‐200

200

600

Q3'04 Q4'04 Q2'14 Q3'14E

Truck Adds/(Deletions) Driver Turnover

35

• Regulationsarebrokenintosixbuckets:(1)CSA;(2)Immigration;(3)HealthRegulations;(4)EmployeeFreeChoice;(5)Drug&AlcoholDatabase;(6)EntryProficiency

• 6areasreducetheactivedriverpool• 10increaseturnover ormakehiringlessproductive• 10reducetheproductivityofpeopleandassets

6 Buckets for 20 Pending & Actual Regulations

Source: BB&TCM analysis; cartoon from Microsoft Office 2010

36

Timetable for 7 Key Future Regulations 

Source: BB&TCM photo; regulations from the government’s advance notice of public rulemaking (ANPRM)

o ELDrulebyJune1,2015;mandatedbyJune2017o NHTSAtopublishspeedlimitsbyMarch16,2015o CarriersafetyfitnessdeterminationruletobepublishedbyApril2,2015

o CDLdrugandalcoholclearinghouserulestobepublishedbyOctober30,2015

o RuleprohibitingcoercionofdriversbycarriersandbrokerstobepublishedbySeptember10,2015

o Minimuminsuranceproposallikelytoberaised;announcementinthespring?

o HairfollicletesttobediscussedbyFMCSA.

37

• WhenPresidentObamatookofficein2009,therewasonepersonatDOTmakingover$170,000annually

• Today,thereare1,800+peopleatDOTmakingover$170,000

• Nowonderyouhaveaheadache!

Stat of the Day

Source: US Congress for DOT information; picture from BB&TCM

38

“We can’t solve problems by using the same kind of thinking we used when we created them” 

— Albert Einstein

Closing Thoughts

“If You’ve Got the Bucks, We’ve Got the Trucks!” 

— overheard at a trade show

39

IMPORTANTDISCLOSURES

Toreceivepricechartsonthecompaniesmentionedinthisreport,pleasecontactBB&TCapitalMarketsResearchat800‐552‐7757x8785.

BB&TCapitalMarketsratingdistributionbypercentage(asofDecember31,2014):Allcompanies Allcompaniesundercoveragetowhichithasprovidedundercoverage: investmentbankingservicesintheprevious12months:Buy(1) 47.60% Buy(1) 23.74%Hold(2) 51.03% Hold(2) 18.12%Underweight/Sell(3) 1.03% Underweight/Sell(3) 33.33%NotRated(NR) 0.34% NotRated(NR) 0.00%

BB&TCapitalMarketsRatingsSystem:TheBB&TCapitalMarketsEquityResearchDepartmentStockRatingSystemconsistsofthreeseparateratings.Theappropriateratingisdeterminedbyastock’sestimated12‐monthtotalreturnpotential,whichconsistsofthepercentagepricechangetothe12‐monthpricetargetandthecurrentyieldonanticipateddividends.A12‐monthpricetargetistheanalyst’sbestestimateofthemarketpriceofthestockin12months.A12‐monthpricetargetishighlysubjectiveandtheresultofnumerousassumptions,includingcompany,industry,andmarketfundamentals,bothonan absoluteandrelativebasis,aswellasinvestorsentiment,whichcanbehighlyvolatile.Thedefinitionofeachratingisasfollows:Buy(1):estimatedtotalreturnpotentialgreaterthanorequalto10%,Hold(2):estimatedtotalreturnpotentialgreaterthanorequalto0%andlessthan10%,Underweight(3):estimatedtotalreturnpotentiallessthan0%B: BuyH: HoldUW: UnderweightNR: NotRatedNA: NotApplicableNM: NotMeaningfulSP: SuspendedStocksratedBuy(1)arerequiredtohaveapublished12‐monthpricetarget,whileitisnotrequiredonstocksratedHold(2)andUnderweight(3).

BB&TCapitalMarketsEquityResearchDisclosuresasofDecember 31, 2014BB&TCapitalMarketsmakesamarketinthesecuritiesofArcBest Corporation,AmericanRailcarIndustries,Inc.,CeladonGroup,Inc.,C.H.RobinsonWorldwide,Inc.,Con‐wayIncorporated,CovenantTransportationGroup,Inc.,EchoGlobalLogistics,Inc.,TheGreenbrierCompanies,Inc.,Genesee&WyomingInc.,HeartlandExpress,Inc.,J.B.Hunt TransportServices,Inc.,KnightTransportation,Inc.,Landstar System,Inc.,MartenTransport,Ltd.,OldDominionFreightLine,Inc.,RoadrunnerTransportationSystems,Inc.,Saia,Inc.,Staples,Inc.,SwiftTransportationCompany,TrinityIndustries,Inc.,UniversalTruckloadServices,Inc.,UnitedParcelService,Inc.,WabtecCorporation,WalgreenCo.,WernerEnterprises,Inc.andYRCWorldwideInc..BB&TCapitalMarketshasmanagedorco‐managedapublicofferingofsecuritiesforCovenantTransportationGroup,Inc.andTrinityIndustries,Inc.inthelast12months.BB&TCapitalMarketshasreceivedcompensationforinvestmentbankingservicesfromCovenantTransportationGroup,Inc.andTrinityIndustries,Inc.inthelast12months.BB&TCapitalMarketsexpectstoreceiveorintendstoseekcompensationforinvestmentbankingservicesfromArcBest Corporation,AmericanRailcarIndustries,Inc.,CeladonGroup,Inc.,C.H.RobinsonWorldwide,Inc.,ConwayIncorporated,CovenantTransportationGroup,Inc.,EchoGlobalLogistics,Inc.,TheGreenbrierCompanies,Inc.,Genesee&WyomingInc.,HeartlandExpress,Inc.,J.B.HuntTransportServices,Inc.,KnightTransportation,Inc.,Landstar System,Inc.,MartenTransport,Ltd.,OldDominionFreightLine,Inc.,RoadrunnerTransportationSystems,Inc.,Saia,Inc.,Staples,Inc.,SwiftTransportationCompany,TrinityIndustries,Inc.,UniversalTruckloadServices,Inc.,UnitedParcelService,Inc.,WabtecCorporation,WalgreenCo.,WernerEnterprises,Inc.andYRCWorldwideInc.inthenext threemonths.AnaffiliateofBB&TCapitalMarketsreceivedcompensationfromArcBest Corporation,AmericanRailcarIndustries,Inc.,Con‐wayIncorporated,TheGreenbrierCompanies,Inc.,Genesee&WyomingInc.,J.B.HuntTransportServices,Inc.,Landstar System,Inc.,OldDominionFreightLine,Inc.,RoadrunnerTransportationSystems,Inc.,Saia,Inc.,SwiftTransportationCompany,TrinityIndustries,Inc.,WabtecCorporationandWalgreenCo.forproductsorservicesotherthaninvestmentbankingservicesduringthepast12months.TheanalystoremployeesofBB&TCapitalMarketswiththeabilitytoinfluencethesubstanceofthisreportknoworhavereasontoknowtheforegoingfacts.

ADDITIONALINFORMATIONAVAILABLEUPONREQUESTForvaluationmethodologyandrelatedriskfactorsonBuy(1)–ratedstocks,pleaserefertothebodytextofthisreportortoindividualreportsonanycoveredcompaniesreferencedinthisreport.Theanalyst(s)principallyresponsibleforpreparationofthisreportreceivedcompensationthatisbaseduponmanyfactors,includingthefirm’soverallinvestmentbankingrevenue.

AnalystCertificationTheanalyst(s)principallyresponsibleforthepreparationofthisresearchreportcertifythattheviewsexpressedinthisresearch reportaccuratelyreflecthis/her(their)personalviewsaboutthesubjectsecurity(ies)orissuer(s)andthathis/her(their)compensationwasnot,isnot,orwillnotbedirectlyorindirectlyrelatedtothespecificrecommendationsorviewscontainedinthisresearchreport.

OTHERDISCLOSURESTheinformationandstatisticsinthisreporthavebeenobtainedfromsourceswebelievearereliablebutwedonotwarranttheir accuracyorcompleteness.Wedonotundertaketoadvisethereaderastochangesinfiguresorourviews.Thisisnotasolicitationofanordertobuyorsellanysecurities.BB&TCapitalMarkets,adivisionofBB&TSecurities,LLC,memberFINRA/SIPC,isawhollyownednonbanksubsidiaryofBB&TCorporation.Thesecuritiessold,offeredorrecommendedarenotadeposit,notFDICinsured,notguaranteedbyabank,notguaranteedbyanyfederalgovernmentagencyandmaygodowninvalue.Theopinionsexpressedarethoseoftheanalyst(s)andnotthoseofBB&TCorporationoritsexecutives.