Global Third-Party Logistics Market Trends & Analysis

1. Global Third-Party Logistics Market Trends & Analysis Website: www.3PLogistics.com

2. Founded in 1980 Supply Chain Market Research and Consulting Services Over 19,400 Newsletter Subscribers Current Market Research: Who's Who in Logistics and Supply Chain Management – Americas Who's Who in Logistics and Supply Chain Management – International Over 350 Detailed 3PL Profiles; 6,000+ 3PL Customer Relationships “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” Targeted in-depth market research papers Articles & Press Coverage:American Shipper, Global Logistics & Supply Chain Strategies, Journal of Commerce, Logistics Management, Logistics Quarterly, Modern Materials Handling, Traffic World, Transport Topics, Wall Street Journal Consulting Services:Logistics Outsourcing, Benchmarking, Supply Chain Evaluation & Redesign, Strategic Planning, Mergers & Acquisitions, Expert Witness, Systems Evaluation & Selection Global Resources:U.S. Organization; Eric Xiang, Shanghai China; Latin America, Japan and South Korea Alliance Partners About Armstrong & Associates, Inc.

3. http://www.3plogistics.com/Site_Visits.htm A&A has reviewed over 100 distinct 3PL operations, some multiple times. 3

4. http://www.3PLAdvisor.com.htm Provider profile information and 3PL customer reviews 4

5. Domestic and International Providers Connect the Global Supply Chain 3PL “Connectivity” Manufacturing Ports Suppliers Sourcing Distribution Centers Carriers Customers Customs Repair Center 5

6. Top Global Fortune 500 Buyers of 3PL Services 49 53 51 42 42 41 39 35 36 32 31 30 30 29 6

7. Global 3PL Market Trends by Major Geographic Region US$ Billions 7

8. 2011 Global Logistics Costs & 3PL Revenue (US$ Billions) Adjusted for currency fluctuations, the global 3PL market grew by 4.9% from 2010 to 2011. Most global 3PL activity is within developed and developing geographic regions where services can be readily contracted for with providers. Physical infrastructure (roads, rail networks, shipping ports) and governmental regulation impact the logistics costs as a percent of overall economic activity in each country and region. Those countries with better infrastructure and fewer regulatory barriers have the lowest logistics costs as a percent of overall GDP. 8 ¹CIA official exchange rate GDPs

9. Top 25 Global 3PLs – 2011 3PL has been dominated by large European and U.S.-based 3PLs. Growing Asia-Pacific 3PLs, like Toll Holdings are experiencing above average recent growth. The largest global 3PLs have operations in geographies representing over 90% of the world’s GDP. *Revenues are company reported or A&A estimates and have been converted to US$ using the average exchange rate in order to make non-currency related growth comparisons. 9

10. Top 25 Global ITM/Freight Forwarders – 2011 10

11. Transportation and Warehousing Services Dominate Demand Primary 3PL services provided are led by transportation management (23.7%), warehousing (19.4%) and value-added services (18.7%). 11

12. 3PL Gross Revenue by Industry 2005-2012E – Fortune 1000 (US$B) 12

13. U.S. 3PL Market 1996 – 2012E (US$ Billions) 1996 – 2011 CAGR = 10.3% The U.S. 3PL industry has experienced a strong rebound from the economic downturn in 2009. For 2011, 3PL growth has been three times the growth in U.S. gross domestic product (GDP). With Asia cooling and Europe in decline, estimated growth for 2011 is 5.1% and 6.3% for 2012. 13

14. Trends in 3PL/Customer Relationships % of Domestic Fortune 500 Companies using 3PLs 14

15. Growth by 3PL Market Segment Net Revenue Growth by 3PL Segment ITM has been the Highest Growth Segment, but has cooled. (US$ Millions) VAWD is Maturing. DCC is Mature.

16. After-Tax Net Income Margin Trends by 3PL Market Segment 2011 , 17.4% 7.3% 4.5% 3.0% 16

17. U.S. DTM Network Transportation Managers • Robust TMS for network transportation planning and execution • Heavy EDI/electronic systems interfaces • Some Buy/Sell side arrangements with a lot of Freight Under Management • FUM = Freight Under Management, Managed Transportation • Shipper may hold contracts with core carriers • Shipper contracts with a 3PL which gets a management fee (5-7% GM) 17

18. Top 30 DTM/Freight Brokers Ranked by 2011 Net Revenue 8,740 CHRW is 40% of the total top 30 net revenue. 18

19. 3PLs – Expanding Oil & Natural Gas Business in the Bakken Formation • Bakken Formation, a Significant New Domestic Source of Oil and Natural Gas: • According to the 2008 United States Geological Survey, the Bakken Formation of the Williston Basin Province in Montana and North Dakota has estimated average undiscovered volumes of: • 3.65 billion barrels of technically recoverable oil, • 1.85 trillion cubic feet of associated/dissolved natural gas, • and 148 million barrels of natural gas liquids. • According to OilShaleGas.com, there are now over 6,000 active oil wells in the Bakken Formation with most activity in Montana and North Dakota. Source:  USGS 19

20. 3PLs – Expanding Oil & Natural Gas Business in the Bakken Formation • BNSF Logistics Bakken Operations Logistics Support Case Study Example: • BNSFL manages up to 10 to 15 oil rig moves per month for multiple oil & gas exploration companies including Continental Resources and Brigham Oil. • Each move requires approximately 30 days to relocate a rig from one location to another. • To assemble a rig, 20 to 30 truckloads of materials and components are needed. • Overhead cranes are required to unload larger rig components. • To locally coordinate the oil rig moves, BNSFL opened an office in Williston, North Dakota last year. • To support natural gas fracking operations, BNSFL manages inbound transportation for multiple exploration/drilling companies to the drilling sites. • Inbound materials include drilling pipe, pumping units, frac sand, and fracking chemicals. • The frac sand is sourced domestically from mines in Illinois and Wisconsin and a small amount of “ceramic” sand is imported via ocean containers from China and Brazil. • BNSFL supports frac sand moves with door-to-door ocean import services, rail to truck transload services and intermodal rail-truck deliveries. • In 2011, BNSFL transloaded sand from 528 rail hopper cars to trucks for final delivery to drilling sites. • BNSFL’s parent BNSF Railway delivered over 25,000 railcars of frac sand into the Bakken last year. 20

21. Select 3PL Acquisitions 21

22. Top 20 Dedicated Contract Carriage Providers – 2011 22

23. Top North American Warehousing 3PLs by Millions Sq.Ft. Most major North American value-added warehousing and distribution (VAWD) 3PLs have national warehousing networks. 23

24. Types of Warehouses Based on Use Profile Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” 24

25. Warehousing Contract Lengths Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” Contract lengths tend to be longer for larger 3PLs. Three smaller companies reported over a third of their warehousing contracts had one year terms. For the other participants, 12.1% of contracts were one year, 57.6% were for three years, 25.3% were for five years and 5% had other terms. 25

26. Contract Warehouses by Size (n = 511) Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” 26

27. Value-Added Warehousing Services Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” 27

28. Annual Revenue from Contract Warehousing Customers (Sample, n = 302) Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” • Customer Contract Highlights: • Customers have one to twenty-three locations. • 25% of customers have contracts involving multiple locations. • The average (mean) customer utilizes 384,000 square feet of warehouse space. • The average (mean) revenue is $4.9M and the median is $2.4M (from $37,000 to $47M per year.). 28

29. Top 25 Mexican Motor Carriers – 2011

30. Thank You! Milwaukee Wisconsin Office Evan Armstrong Armstrong & Associates, Inc. 10401 West Lincoln Avenue Suite 207 West Allis, WI 53227 USA 414-545-3838 Stoughton Wisconsin Office Richard Armstrong Armstrong & Associates, Inc. 100 Business Park Circle Suite 202 Stoughton, WI 53589 USA 608-873-8929