Transportation & Logistics

1. Anthony P. Gallo, CFA (410) 625-6319 office, (410) 382-7084 mobile anthony.gallo@wellsfargo.com Michael R. Busche (704) 715-6406 office, (910) 987-1363 mobile michael.busche@wellsfargo.com Understanding CSA Transportation & Logistics December 2012 All estimates/forecasts are as of 12/03/2012 unless otherwise stated. Please see page 27 for rating definitions, important disclosures and required analyst certifications. Wells Fargo Securities, LLC does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report and investors should consider this report as only a single factor in making their investment decision.

2. Agenda • Understanding CSA • The State of the Trucking Industry • Q & A

3. “Good Intentions, Unclear Outcomes” • FMCSA mission is to reduce crashes, injuries and fatalities involving large trucks and buses • Identify unsafe motor carriers for intervention, • Identify safety performance within broad areas at carriers, • Monitor safety performance on a near-continuous basis • Compliance, Safety, Accountability (CSA) was developed in furtherance of this mission and to focus limited resources on the most problematic carriers • CSA assigns percentile rankings in seven “BASICs” (Behavior Analysis and Safety Improvement Categories) • Unsafe Driving, Fatigued Driving, Driver Fitness, Controlled Substances, Vehicle Maintenance, Cargo-Related and Crash Indicator • On May 16, 2012 FMCSA essentially placed due diligence responsibilities on brokers, shippers and insurers.

4. Our findings Wells Fargo Securities; three studies, most recently across a universe of 4,600 carriers with at least 50 inspections. • No meaningful statistical relationship (using simple regression analysis) between unfavorable BASIC scores and actual accident incidence, • A Federal program executed at the State level with unexplainable differences in State enforcement and inspection protocols, • Severity weights that did not appear to accurately capture driving behaviors that lead to accidents, • Disproportionate inspection rate for small carriers, • Potential negative “feedback loop”, • Problematic crash reporting.

5. What others have found • UMTRI: high correlation between BASIC scores and crash rates • Wells Fargo Securities: no meaningful statistical relationships, only modestly higher accident rates for above threshold carriers, various problems with the program • “University of Maryland, Gimpel study”: highlights problems with selection bias • Transplace, Iyoob: refutes several UMTRI findings • ATRI: strong safety relationship for Unsafe Driving, Fatigued Driving, and Vehicle Maintenance, no positive relationship between Driver Fitness and Controlled Substance,/Alcohol BASIC. • No study has introduced control variables, such as time of day, traffic density or other factors that influence crashes and safety

6. We think the scope of CSA is limited

7. Accidents versus BASIC categories

8. Snapshot of publicly traded trucking company CSA BASICs

9. Snapshot of publicly traded trucking company CSA BASICs

10. A simple regression analysis showed very low correlations

11. Above Threshold carriers in certain BASICs did have higher accident rates

12. Inconsistent enforcement among states and jurisdictions Source: Vigillo, LLC and Wells Fargo Securities, LLC Source: Vigillo, LLC and Wells Fargo Securities, LLC Source: Vigillo, LLC and Wells Fargo Securities, LLC Source: Vigillo, LLC and Wells Fargo Securities, LLC

13. Fatigued Driving severity weights and violation description

14. The strongest relationship we observed was inspections to scores

15. Small carriers appear to have disproportionate inspection rates

16. Industry wide inspection statistics

17. Potential negative feedback loop

18. Lack of “responsibility” assigned to accidents is problematic in our view

19. FMCSA commentary demonstrates program limitations

20. Might shippers, brokers and insurers be confused? • FMCSA properly uses BASICs for safety interventions and prioritization, but makes BASIC scores available to the public, • All motor carriers are lumped together despite vast differences in operations (LTL, long-haul TL, dedicated fleets, parcel, etc.) • FMCSA explains that “BASIC assessments are not safety ratings” • …but “believes [BASICs] provide users…informed, current and comprehensive picture of a motor carrier’s safety and compliance…” • Only 19% of active carriers have at least one BASIC score • Nearly 58% of active carriers have insufficient data to have a BASIC score • 54% of carriers with a BASIC score have had fewer than 20 inspections • Nearly 57% of crashes are from carriers with NO scores above threshold

21. Agenda • Understanding CSA • The State of the Trucking Industry • Q & A

22. A very fragmented industry

23. Driver turnover remains an industry headwind

24. Industry fleet age is at all time highs…

25. Maintainence expense accelerates after ~5 years

26. Equipment prices have grown consistently over the past 5 years

27. Agenda • Understanding CSA • The State of the Trucking Industry • Q & A

28. Disclosures

29. Disclosures