37
Lou Smyrlis, Group Publisher & Research Director TRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst

TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

  • Upload
    others

  • View
    5

  • Download
    0

Embed Size (px)

Citation preview

Page 1: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Lou Smyrlis,

Group Publisher

&

Research Director

TRANSPORTATION TRENDS 2017

Kevin Chiang, CFA

Research Analyst

Page 2: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Survey Demographics

Shipper Volume & Pricing Projections

Current Capacity Picture

Road and Rail Thesis

Key Indicators to Watch

Questions

Today’s Agenda

TRANSPORTATION TRENDS 2017

Page 3: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Statistics Canada, Transport Canada, Canada Cartage infographic

Page 4: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends 2016, Newcom Business Media

49% spending over $1M on supply chain

Page 5: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Survey Demographics

Shipper Volumes & Pricing Projections

Current Capacity Picture

Road and Rail Thesis

Key Indicators to Watch

Questions

Today’s Agenda

TRANSPORTATION TRENDS 2017

Page 6: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends 2016, Newcom Business Media

34.1%

4.7%

61.2%

Regional distribution

Western Canada Eastern Canada Central Canada

7%

16%

4%

34%

25%

7%

8%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Freight forwarder

Third-party logistics

Resources

Manufacturing

Distribution

Wholesale

Retail

Sectors represented

Page 7: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

16%

16%

6%

14%

6%

15%

9%

6%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Less than $5million

Over $5 million to $15million

Over $15 million to $30 million

Over $30 million to $60 million

Over $60 million to $100 million

Over $100 million to $500 million

$Over $500 million to $2 billion

Over $2 billion

Estimated annual sales

15%

21%

8%

23%

12%

7%

15%

0% 5% 10% 15% 20% 25%

Under $100,000

$100,000 to $500,000

$500,000 to $1 Million

$1 Million to $5 Million

$5 Million to $10 Million

$10 Million to $20 Million

$20 Million or more

Transportation spend

Source: Transportation Buying Trends 2016, Newcom Business Media

Page 8: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Printing/Publishing

Forestry/Forestry Products

Agriculture

Pulp and Paper

Services

Utilities

Industrial Products

Construction

Pharmaceuticals/Medicine/Health

Textiles

Metals

Chemical and Allied Products

High Tech

Automotive

Food and Kindred Products

Transportation

Consumer Products

Other (please specify)

Industries represented

Source: Transportation Buying Trends 2016, Newcom Business Media

Page 9: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Survey Demographics

Shipper Volumes & Pricing Projections

Current Capacity Picture

Road and Rail Thesis

Key Indicators to Watch

Questions

Today’s Agenda

TRANSPORTATION TRENDS 2017

Page 10: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends Survey, Newcom Business Media

DOSE OF REALITY

2016

• Only 34% actually increased freight volumes in 2016

• 31% actually decreased freight volumes in 2016

• 31% kept volumes about the same as previous year

7%

9%

15%

31%

24%

5%

5%

3%

0% 5% 10% 15% 20% 25% 30% 35%

Down more than 20%

Down 10-20%

Down 5-10%

About same

Up 5-10%

Up 10-20%%

Up more than 20%

Not sure

Freight volume trends 2016

Page 11: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends Survey, Newcom Business Media

DOSE OF REALITY

2016

• Only 34% actually increased freight volumes in 2016

• 31% actually decreased volumes in 2016

2017

• 0nly 54% expect freight volume increases in 2017

• 41% expect flat freight volumes in 2017

71%

60%58%

52%

43%

27%

46%

60%

50%53%

58% 58%

46%

54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Shippers projecting freight volume increase compared to previous year

Page 12: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends Survey 2016, Newcom Business Media

DOSE OF REALITY

• In 2016 43% of Eastern Canada shippers increased their freight volumes and 27% decreased their freight volumes

• In 2017 56% of Eastern Canada shippers expect to increase their freight volumes; 41% expect freight volumes to be about same

Eastern Canada Shippers

Page 13: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

DOSE OF REALITY

• In 2016 only 22% of Western Canada shippers increased their freight volumes and 37% decreased their freight volumes

• In 2017 53% of Western Canada shippers expect to increase their freight volumes; 39% expect freight volumes to be about same

Source: Transportation Buying Trends Survey 2016, Newcom Business Media

Western Canada Shippers

Page 14: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends Survey 2016, Newcom Business Media

23%

30%

41%

16%

32%

23%

15%

20%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Rail

Truckload

LTL

Private Truck

Courier

Marine

Air Cargo

Intermodal

Anticipated increase in use of mode 2017

Page 15: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Survey Demographics

Shipper Volumes & Pricing Projections

Current Capacity Picture

Road and Rail Thesis

Key Indicators to Watch

Questions

Today’s Agenda

TRANSPORTATION TRENDS 2017

Page 16: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends Survey, Newcom Business Media

2015

28%

40%

46%

22%

47%

34%

34%

31%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Rail

Truckload

LTL

Private Truck

Courier

Marine

Air Cargo

Intermodal

Shippers expecting base rate increases by mode in 2017

Page 17: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends Survey 2016, Newcom Business Media

7%

27%

24%

16%

6%

14%

7%

0% 5% 10% 15% 20% 25% 30%

Rail

Truckload

LTL

Courier

Airfreight

Marine

Intermodal

Modes expected to wield greatest pricing power in 2017

Page 18: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Survey Demographics

Shipper Volumes & Pricing Projections

Current Capacity Picture

Road and Rail Thesis

Key Indicators to Watch

Questions

Today’s Agenda

TRANSPORTATION TRENDS 2017

Page 19: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends Survey 2016, Newcom Business Media

4.50

4.04

3.76

4.24

3.56

4.32

4.07

4.27

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

Rail

For-Hire Truckload

For-Hire Less than Truckload

Private Fleet Truck

Courier

Marine

Air cargo

Intermodal

Canadian shipper perceptions on available capacity by mode (5 = balanced capacity; 10 = very tight capacity)

Page 20: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Transportation Buying Trends Survey, 2016 Newcom Business Media

5%

20%

55%

7%

1%

13%

0% 10% 20% 30% 40% 50% 60%

Well above normal levels

Above normal levels

Around normal levels

Below normal levels

Well above normal levels

No opinion

Shipper views on competitive activity between modes

Well below normal levels

Page 21: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Equipment Buying Trends Survey 2016, Newcom Business Media

Page 22: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Equipment Buying Trends Survey 2016, Newcom Business Media

Page 23: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

TRANSPORTATION TRENDS 2017

Source: Equipment Buying Trends Survey 2016, Newcom Business Media

Page 24: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

CONFIDENTIAL

2017 Transportation Buying Trends Survey

CIBC Freight OutlookKevin Chiang, CFA

Research Analyst

[email protected]

416-594-7198

Page 25: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Key Themes

1. Economic backdrop improving with a more constructive outlook on manufacturing

2. Headwinds becoming modest tailwinds

3. Freight volumes have stabilized reflecting improved macro backdrop and easier comps

4. Freight pricing has stabilized reflecting improved capacity supply/demand balance and sequential volume

improvement

5. Weaker C$ -> starting to see some benefit

6. Political uncertainty the wild card

CONFIDENTIAL

Page 26: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Economic Outlook – Canada Bouncing Off The Bottom

CIBC World Markets Inc., StatsCan

CONFIDENTIAL

2015A 2016F 2017F 2018F 2015A 2016F 2017F 2018F 2015A 2016F 2017F 2018F

BC 3.3 2.6 2.1 2.2 3.8 3.8 3.9 4.4 6.2 5.8 5.5 5.2

AB (3.6) (2.2) 1.7 1.3 (12.5) (5.2) 6.7 4.8 6.0 7.9 8.4 8.0

SK (1.3) (0.7) 1.8 1.4 (5.7) (3.0) 5.8 4.9 5.0 6.2 6.2 6.1

MB 2.2 1.6 1.7 1.8 3.1 2.8 3.5 4.0 5.6 6.0 5.9 5.8

ON 2.5 2.5 2.1 2.3 4.9 3.7 3.9 4.6 6.8 6.7 6.6 6.4

QC 1.2 1.5 1.5 1.6 2.6 2.7 3.3 3.8 7.6 7.2 6.9 6.6

NB 2.3 0.4 0.7 1.0 2.9 1.6 2.5 3.1 9.8 9.7 9.4 8.9

NS 1.0 1.3 1.1 1.1 2.4 2.5 2.9 3.2 8.6 8.5 8.2 7.9

PEI 1.3 0.8 0.7 1.0 3.9 2.0 2.5 3.1 10.4 11.3 11.1 10.9

N&L (2.0) 0.2 (3.8) (1.7) (11.5) (2.2) 0.2 1.8 12.8 12.9 12.6 11.9

Canada 1.1 1.2 1.7 1.9 0.5 1.6 4.2 4.4 6.9 7.0 6.9 6.7

Real GDP (Y/Y % Chg) Nominal GDP (Y/Y % Chg) Unemployment Rate (%)

CIBC Economic Forecast - Canada

GDP moving higher and unemployment grinding lower

Alberta exiting recession with every province except Newfoundland and Labrador expected to post positive

growth.

Page 27: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Commodity Prices Showing Some Signs Of Life – A Positive Read-through For Canada

CIBC World Markets Inc.

CONFIDENTIAL

2013 2014 2015 2016 2017F 2018F

Oil (WTI) $/bbl 98 93 49 43 53 58

Natural Gas (Henry) $/Mn Btu 3.73 4.35 2.61 2.40 2.95 2.80

Gold $/troy oz 1202 1184 1061 1250 1200 1250

Silver $/troy oz 19.50 15.70 13.80 17.60 16.90 18.10

Iron Ore (62% Fe) $/mt 136 97 56 65 58 56

Copper $/lb 3.33 3.12 2.50 2.18 2.23 2.20

Aluminum $/lb 0.84 0.85 0.76 0.74 0.71 0.68

Nickel $/lb 6.82 7.68 6.38 4.36 4.96 4.92

Zinc $/lb 0.87 0.98 0.95 0.96 1.16 1.08

Lumber $/'000 bd ft 345 338 268 298 335 350

Potash $/tonne 379 297 304 250 230 240

Commodity Price Outlook

Looking for a more stable and constructive energy market

Page 28: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Fiscal Stimulus – An Added Boost (We Hope) 28

Statistics Canada, Infrastructure Canada and CIBC World Markets Inc.

CONFIDENTIAL

Fiscal Stimulus

- $180 billion has been committed to infrastructure over the 12-year period to 2028.

- Investments are spread across public transit, green infrastructure, and social infrastructure.

Canadian Federal Government Infrastructure Spend (1990-2027)

Page 29: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Economic Outlook – U.S. Remains Healthy 29

CIBC World Markets Inc., Bloomberg

CONFIDENTIAL

(0.3%)

(2.8%)

2.5%

1.6%

2.2% 1.7%

2.4% 2.6%

1.5%

2.2% 2.1%

(4.0%)

(3.0%)

(2.0%)

(1.0%)

0.0%

1.0%

2.0%

3.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

E

2017

E

2018

E

US Real GDP Growth (Y/Y %)

5.8%

9.3% 9.6% 8.9%

8.1% 7.4%

6.2%

5.3% 4.9% 4.8% 4.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

E

2017

E

2018

E

US Unemployment Rate

-4

-2

0

2

4

6

8

10

1/1/

2010

4/1/

2010

7/1/

2010

10/1

/201

0

1/1/

2011

4/1/

2011

7/1/

2011

10/1

/201

1

1/1/

2012

4/1/

2012

7/1/

2012

10/1

/201

2

1/1/

2013

4/1/

2013

7/1/

2013

10/1

/201

3

1/1/

2014

4/1/

2014

7/1/

2014

10/1

/201

4

1/1/

2015

4/1/

2015

7/1/

2015

10/1

/201

5

1/1/

2016

4/1/

2016

7/1/

2016

10/1

/201

6

US Industrial Production (Y/Y %)

30

40

50

60

70

80

90

100

110

120

1/1/

2010

4/1/

2010

7/1/

2010

10/1

/201

0

1/1/

2011

4/1/

2011

7/1/

2011

10/1

/201

1

1/1/

2012

4/1/

2012

7/1/

2012

10/1

/201

2

1/1/

2013

4/1/

2013

7/1/

2013

10/1

/201

3

1/1/

2014

4/1/

2014

7/1/

2014

10/1

/201

4

1/1/

2015

4/1/

2015

7/1/

2015

10/1

/201

5

1/1/

2016

4/1/

2016

7/1/

2016

10/1

/201

6

US Consumer Confidence

Page 30: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

U.S. Consumer – Remains A Bright Spot

Bloomberg and CIBC World Markets Inc.

CONFIDENTIAL

U.S. Consumer Indicators Remain Healthy

$300

$320

$340

$360

$380

$400

$420

$440

$460

$480

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Jan-

15

Jul-1

5

Jan-

16

Jul-1

6

US

$ B

ln

U.S. Retail Sales

200

400

600

800

1000

1200

1400

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Jan-

15

Jul-1

5

Jan-

16

Jul-1

6

Tho

usan

ds

U.S. Housing Starts By Month (SAAR)

8

10

12

14

16

18

20

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Jan-

15

Jul-1

5

Jan-

16

Jul-1

6

Mln

s

U.S. Auto Sales (SAAR)

Page 31: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

PMI + NMI = Constructive Outlook 31

Bloomberg

CONFIDENTIAL

US PMI And NMI Hitting Recent Highs -> A Good Sign For The Overall Economy

US PMI A Good Leading Indicator For Freight Volumes

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

45.0

47.0

49.0

51.0

53.0

55.0

57.0

59.0

61.0

63.0

65.0

Jan-

10

May

-10

Sep

-10

Jan-

11

May

-11

Sep

-11

Jan-

12

May

-12

Sep

-12

Jan-

13

May

-13

Sep

-13

Jan-

14

May

-14

Sep

-14

Jan-

15

May

-15

Sep

-15

Jan-

16

May

-16

Sep

-16

Ben

chm

ark

Jan.

199

0 =

1.0

US PMI Versus Cass Freight Shipments

US PMI Cass Freight Shipments Index

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

Jan-

00

Sep

-00

May

-01

Jan-

02

Sep

-02

May

-03

Jan-

04

Sep

-04

May

-05

Jan-

06

Sep

-06

May

-07

Jan-

08

Sep

-08

May

-09

Jan-

10

Sep

-10

May

-11

Jan-

12

Sep

-12

May

-13

Jan-

14

Sep

-14

May

-15

Jan-

16

Sep

-16

US PMI

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

Jan-

00

Sep

-00

May

-01

Jan-

02

Sep

-02

May

-03

Jan-

04

Sep

-04

May

-05

Jan-

06

Sep

-06

May

-07

Jan-

08

Sep

-08

May

-09

Jan-

10

Sep

-10

May

-11

Jan-

12

Sep

-12

May

-13

Jan-

14

Sep

-14

May

-15

Jan-

16

Sep

-16

US NMI

Page 32: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Manufacturing Output

Bloomberg

CONFIDENTIAL

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

Jan-

00

Sep

-00

May

-01

Jan-

02

Sep

-02

May

-03

Jan-

04

Sep

-04

May

-05

Jan-

06

Sep

-06

May

-07

Jan-

08

Sep

-08

May

-09

Jan-

10

Sep

-10

May

-11

Jan-

12

Sep

-12

May

-13

Jan-

14

Sep

-14

May

-15

Jan-

16

Sep

-16

US Industrial Production (M/M %)

65.0

67.0

69.0

71.0

73.0

75.0

77.0

79.0

81.0

83.0

85.0

Jan-

00

Sep

-00

May

-01

Jan-

02

Sep

-02

May

-03

Jan-

04

Sep

-04

May

-05

Jan-

06

Sep

-06

May

-07

Jan-

08

Sep

-08

May

-09

Jan-

10

Sep

-10

May

-11

Jan-

12

Sep

-12

May

-13

Jan-

14

Sep

-14

May

-15

Jan-

16

Sep

-16

US Capacity Utilization (%)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

Jan-

00

Sep

-00

May

-01

Jan-

02

Sep

-02

May

-03

Jan-

04

Sep

-04

May

-05

Jan-

06

Sep

-06

May

-07

Jan-

08

Sep

-08

May

-09

Jan-

10

Sep

-10

May

-11

Jan-

12

Sep

-12

May

-13

Jan-

14

Sep

-14

May

-15

Jan-

16

Sep

-16

US Industrial Production Versus Cass Freight Index(Correlation = 0.75)

US Industrial Production (M/M %) Cass Freight Index (RHS)

Page 33: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Inventory-To-Sales – Moving Past The Peak

US Federal Reserve

CONFIDENTIAL

1.20

1.30

1.40

1.50

1.60

1.70

1.80

Jan-

92

Dec

-92

Nov

-93

Oct

-94

Sep

-95

Aug

-96

Jul-9

7

Jun-

98

May

-99

Apr

-00

Mar

-01

Feb

-02

Jan-

03

Dec

-03

Nov

-04

Oct

-05

Sep

-06

Aug

-07

Jul-0

8

Jun-

09

May

-10

Apr

-11

Mar

-12

Feb

-13

Jan-

14

Dec

-14

Nov

-15

Oct

-16

US Retail Inventory-To-Sales Ratio

1.10

1.20

1.30

1.40

1.50

1.60

1.70

Jan-

92

Dec

-92

Nov

-93

Oct

-94

Sep

-95

Aug

-96

Jul-9

7

Jun-

98

May

-99

Apr

-00

Mar

-01

Feb

-02

Jan-

03

Dec

-03

Nov

-04

Oct

-05

Sep

-06

Aug

-07

Jul-0

8

Jun-

09

May

-10

Apr

-11

Mar

-12

Feb

-13

Jan-

14

Dec

-14

Nov

-15

Oct

-16

US Manufacturing Inventory-To-Sales Ratio

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

Jan-

92

Dec

-92

Nov

-93

Oct

-94

Sep

-95

Aug

-96

Jul-9

7

Jun-

98

May

-99

Apr

-00

Mar

-01

Feb

-02

Jan-

03

Dec

-03

Nov

-04

Oct

-05

Sep

-06

Aug

-07

Jul-0

8

Jun-

09

May

-10

Apr

-11

Mar

-12

Feb

-13

Jan-

14

Dec

-14

Nov

-15

Oct

-16

US Wholesale Inventory-To-Sales Ratio

Page 34: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Freight Volumes Stabilizing 34

AAR, ATA, Bloomberg

CONFIDENTIAL

0

50

100

150

200

250

300

350

400

1/1/

2010

4/1/

2010

7/1/

2010

10/1

/201

0

1/1/

2011

4/1/

2011

7/1/

2011

10/1

/201

1

1/1/

2012

4/1/

2012

7/1/

2012

10/1

/201

2

1/1/

2013

4/1/

2013

7/1/

2013

10/1

/201

3

1/1/

2014

4/1/

2014

7/1/

2014

10/1

/201

4

1/1/

2015

4/1/

2015

7/1/

2015

10/1

/201

5

1/1/

2016

4/1/

2016

7/1/

2016

10/1

/201

6

TransCore’s Canadian Freight Volumes Index

100

105

110

115

120

125

130

135

140

145

150

1/1/

2010

4/1/

2010

7/1/

2010

10/1

/201

0

1/1/

2011

4/1/

2011

7/1/

2011

10/1

/201

1

1/1/

2012

4/1/

2012

7/1/

2012

10/1

/201

2

1/1/

2013

4/1/

2013

7/1/

2013

10/1

/201

3

1/1/

2014

4/1/

2014

7/1/

2014

10/1

/201

4

1/1/

2015

4/1/

2015

7/1/

2015

10/1

/201

5

1/1/

2016

4/1/

2016

7/1/

2016

10/1

/201

6

ATA For Hire Truck Tonnage Index (SA)

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

01/0

1/16

02/0

1/16

03/0

1/16

04/0

1/16

05/0

1/16

06/0

1/16

07/0

1/16

08/0

1/16

09/0

1/16

10/0

1/16

11/0

1/16

12/0

1/16

Rail Carloads - Rolling 4 Week Avg - Y/Y %

Page 35: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Freight Rates Stabilizing

Nulogix, Cass

CONFIDENTIAL

90

95

100

105

110

115

120

125

130

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Jan-

15

Jul-1

5

Jan-

16

Jul-1

6

Cass TL Linehaul Index

90

95

100

105

110

115

120

125

130

135

140

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Jul-1

4

Jan-

15

Jul-1

5

Jan-

16

Jul-1

6

Cass Intermodal Index

1,000

1,050

1,100

1,150

1,200

1,250

Jan-

08A

pr-0

8Ju

l-08

Oct

-08

Jan-

09A

pr-0

9Ju

l-09

Oct

-09

Jan-

10A

pr-1

0Ju

l-10

Oct

-10

Jan-

11A

pr-1

1Ju

l-11

Oct

-11

Jan-

12A

pr-1

2Ju

l-12

Oct

-12

Jan-

13A

pr-1

3Ju

l-13

Oct

-13

Jan-

14A

pr-1

4Ju

l-14

Oct

-14

Jan-

15A

pr-1

5Ju

l-15

Oct

-15

Jan-

16A

pr-1

6Ju

l-16

Oct

-16

Canadian Freight Index - Base Freight (Ex. Fuel Surcharges)

Page 36: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Weaker C$ - Not The Stimulant We Thought, But Starting To Become A Tailwind 36

CIBC World Markets Inc.

CONFIDENTIAL

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18

CADUSD 0.75 0.74 0.72 0.73 0.72 0.72

USDCAD 1.34 1.36 1.39 1.37 1.38 1.38

USDJPY 114 112 110 108 106 106

EURUSD 1.04 1.07 1.1 1.12 1.14 10.15

GBPUSD 1.22 1.23 1.25 1.27 1.3 1.32

AUDUSD 0.72 0.72 0.74 0.76 0.77 0.78

USDCHF 1.04 1.01 0.99 0.98 0.96 0.97

FX Forecast

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Jan-9

7

Nov-9

7

Sep-9

8

Jul-

99

May-0

0

Mar-

01

Jan-0

2

Nov-0

2

Sep-0

3

Jul-

04

May-0

5

Mar-

06

Jan-0

7

Nov-0

7

Sep-0

8

Jul-

09

May-1

0

Mar-

11

Jan-1

2

Nov-1

2

Sep-1

3

Jul-

14

May-1

5

Mar-

16

$ M

ln

Canada-US Merchandise Trade Balance (SA)

0

1,000

2,000

3,000

4,000

5,000

6,000

Jan-1

0

May-1

0

Sep-1

0

Jan-1

1

May-1

1

Sep-1

1

Jan-1

2

May-1

2

Sep-1

2

Jan-1

3

May-1

3

Sep-1

3

Jan-1

4

May-1

4

Sep-1

4

Jan-1

5

May-1

5

Sep-1

5

Jan-1

6

May-1

6

Sep-1

6

$ M

ln

Canada-US Merchandise Trade Balance (SA)

Page 37: TRANSPORTATION TRENDS 2017 - CITTTRANSPORTATION TRENDS 2017 Kevin Chiang, CFA Research Analyst. Survey Demographics ... Economic Outlook ... Alberta exiting recession with every province

Uncertain Political Environment

Donald Trump’s trade platform:

- Opposes the Trans-Pacific Partnership (TPP)

- Opposes the North American Free Trade Agreement (NAFTA)

- Border tax

Implications for trade:

- Canada – hit by “friendly fire” -> while Canada is not the focus, any renegotiation of NAFTA is unlikely to be

positive

37

US Bureau of Economic Analysis

CONFIDENTIAL

Category 2014 2015

Petroleum & products 334,003 181,973

Houshould goods (including cell phones) 163,648 172,318

Computers, peripherals & semi-conductors 165,732 166,182

Passenger cars, new & used 153,362 166,122

Industrial & serv ice machinery 161,937 161,796

Parts, engines, bodies & chassis 142,910 148,011

Apparel, footw ear & household goods 135,873 142,469

Other consumer nondurables 120,472 137,438

Medicinal, dental, pharma, v itamins 91,970 108,193

Agri, food, bev erages 97,472 100,796

Chemicals 804,894 73,376

Other electrical equipment 71,586 71,715

Total Imports 2,356,366 2,248,232

Top 12 Categories Of US Imports (US$, 000)