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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
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“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
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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.