Presentation on state of the industry in logistics distribution, transportation, and banking center

1. Freight Demand & Supply in a Crazy World! January 2009 Thom S. Albrecht, CFA Managing Director (804) 727-6235 [email_address] The analyst primarily responsible for the preparation of the content of this presentation certifies that (i) all views expressed in this presentation accurately reflect the analyst’s personal views about the subject companies and securities, and (ii) no part of the analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the analyst in this presentation. Required disclosures may be found on page 43 of this presentation. Info posted on Bill Stankiewicz-VP Shippers Warehouse Linkedin Web Link from conference I attended with Thom Albrecht as key speaker

4. Housing’s Impact to Economic Growth Sources: U.S. Bureau of Economic Analysis and Haver Analytics. The “1% of GDP” figure is annualized.

5. Supplies of New and Existing Homes Are Double What They Should Be… Source: Calculated Risk Blog Financial Analytics. Blue areas are recessions. For new homes Oct’08 was 11.1 months (peak this cycle was 11.4 in Aug ’08); all-time high was 11.6 in April 1980. For existing homes 10.2 months of supply exists. The all-time high is 11.5 months during 1982. This represents supply of 4.23 million existing homes (not new).

6. … Meaning New Home Starts Will Remain Weak (Now at the Lowest Level Since 1959) Source: Calculated Risk Blog Financial Analytics. Blue vertical areas are recessions; red and blue lines are the seasonally adjusted annual housing build starts.

7. The “Home Equity ATM” Is Broke Source: Calculated Risk Blog Financial Analytics. Based upon underlying study by Alan Greenspan and Dr. James Kennedy of the Federal Reserve Board. MEW is mortgage equity withdrawal and NSA is not seasonally adjusted.

8. Case-Shiller Index Shows Residential Real Estate Still Declining Top 10 : off 19.1% yoy and 25.0% from peak Top 20 : off 18.0% yoy and 23.4% from peak Sources: Case-Shiller and Calculated Risk Blog Financial Analytics.

9. 90-Day Home Mortgage Delinquency Rate & Overall Foreclosures Remain on the Rise Source: Mortgage Bankers Association (MBA). Both are percentages of all mortgage loans outstanding (inc. prime, Alt-A & subprime loans) on one to four-unit residential property. Data is seasonally adjusted. Foreclosure rate measures “in progress” foreclosures; closed foreclosures in Q3’08 was 1.3%.

10. Retail Sales and Credit Card Payments Will Continue to Weigh on 2009 Economic Activity Sources: Caclulated Risk Blog Financial Analytics & U.S. Census Bureau for left chart; TransUnion LLC for right chart.

11. Historically, Housing Bottoms a Few Months Before Recessions End and Then Becomes an Engine of Growth Source: Calculated Risk Blog Financial Analytics.

12. 4 Keys That Will Signal Housing Is Bottoming Source: Calculated Risk Blog Financial Analytics and Case-Shiller. OFHEO stands for Office of Federal Housing Enterprise Oversight. HPI is House Price Index.

13. Commercial Construction and Real Estate Will Be Headliners During 2009 “Developers Ask U.S. for Bailout as Massive Debt Looms” ( Wall Street Journal *) Source: Headline and chart from page A1 of the December 22, 2008 Wall Street Journal .

14. The ABI Signaled Weakness in Early 2008 That Is Now Becoming a Reality Sources: Calculated Risk Blog Financial Analytics and the American Institute of Architecture (AIA). ABI is a leading index of commercial construction. Quarterly data.

15. And You Thought Most of the Issues Were Subprime Related? Source: Calculated Risk Blog Financial Analytics, U.S. Treasury and T2 Partners LLC.

16. 2 Examples of Weakness in the Commercial Properties Market Source: Calculated Risk Blog Financial Analytics. Occupancy rates are rising due, in part, to over-investment

17. Note the Steep Drop in the Blue Line (Nonresidential Construction) Since August Source: Calculated Risk Blog Financial Analytics. Left chart contains August ’08 data, while the right chart contains November ’08 data.

18. The International Outlook Just as Ugly as the U.S.

20. Exports Drive a Lot of Economies, Meaning International Weakness Has Seriously Negative Consequences Sources: Organization for Economic Cooperation & Development (OECD) and Bureau of Economic Analysis (BEA). Chart on the left is for 2007. Since Q4’07 U.S. growth has been non-existent.

21. Key Facts and Figures on the Trucking Industry

22. Key Trucking Trends: OR and Driver Composition Source: Both from American Trucking Trends 2008-2009 book. Chart on right measures percentage of total drivers.

23. 3 Things Never Change: Death, Taxes & Driver Turnover Source: All from the American Trucking Association (ATA) STATS newsletter. Large carriers have revenue above $30 million and small are below that.

24. Demographics Remain Unfavorable for Significant Driver Additions Source: U.S. Census Bureau.

25. Breakdown of Fleets by Tractor Size and Trailer Types Sources: FMCSA and U.S. DOT, Stephens Inc. analysis and 2008-2009 American Trucking Trends book. Left chart includes private fleets and for-hire fleets.

30. Trucking: A Quiet Revolution Is Under Way

33. Freight Brokerage, Once a Dirty Word Is Now an Integral Part of the Market Measures percentage of CHRW shipments from carriers with 100 or less tractors. Sources: CHRW 10-K reports for left chart; Transportation Intermediary Association (TIA) and Stephens Inc. estimates for right chart.

34. When Will Capacity Tilt Back in Favor of the Providers?

36. Capacity Growth Was Slowest in Dry Van, But Excess Capacity Is the Worst-Why? 2003-2006 CAGR : 1.54%; cumulative 4.7% -2.9% 2003-2007 CAGR : 3.4%; cumulative: 14.3% 2003-2007 CAGR: 3.1%; cumulative: 13.1% Source: A.C.T Research.

37. Tank Trailer Capacity Trends Source: A.C.T. Research. 2004-2008 Growth: 1.7% CAGR; 6% Shrinkage from 1999-2004 trough 2003-2008 Growth: 2.6% CAGR; 3.3% cumulative shrinkage from 1999-2003 trough 13.6% total growth 6.9% total growth