The Long, Slow Road to Recovery

$26.5 Billion LTL Market in North

America in 2009

Defined in Carrier Terms of Service:

Next Day<500 Miles

$12.1 billion

2 - 5 Day

$14.5 billion

2 Day 3 –5 Day

<1000 Miles >1000 Miles

$6.4 billion $8.1 billion

Down -26% from LTL revenue peak of 2006

YRC National Transportation

ABF Freight Systems

FedEx National LTL

Con-way Freight

FedEx Freight

Estes Express Lines

UPS Freight

Old Dominion Freight Line

YRC Regional Transportation

AAA Cooper Transportation

Southeastern Freight Lines

Saia Motor Freight

Averitt Express

R+L Carriers

Vitran Express

National Carriers

Super Regional Carriers

Regional Carriers

The Major LTL Competitors

Industry ConsolidationsR

A

N

K

COMPANY

1979

Revenue

$MM

2009

Revenue

$MM

NOTES

1 Roadway Express $1,098 $1,674 Acquired by Yellow Corp., 12/2003

2 Consolidated Freightways $849 Closed 09/02

3 Yellow Freight Systems $805 $1,814

4 PIE Nationwide $561 Closed

5 McLean Trucking $540 Closed

6 Pacific Intermountain Express $403 Merged with Ryder

7 Spector Industries $316 Closed

8 Smith's Transfer $253 Closed

9 Transcon Lines $238 Closed

10 East Texas Motor Freight Lines $235 Merged with ABF Freight

11 Interstate System $233 Closed

12 Overnite $229 $1,807 Acquired by UPS, Inc. 5/2005

13 ABF Freight Systems $229 $1,384

14 American Freight System $223 Closed

15 Carolina Freight System $216 Merged with ABF Freight Systems

16 Hall's Motor Transit $199 Closed

17 Mason & Dixon Lines $184 LTL business merged with Central Transport

18 Lee Way Motor Freight $172 Closed

19 T-I-M-E DC $170 Closed

20 Wilson Freight $165 Closed

21 Preston Trucking $160 Closed

22 IML Freight $159 Closed

23 Associated Truck Lines $156 Combines with Garrett and Grave to form ANR

24 Central Freight Lines $154 $224 Went private ownership status in 2006

25 Jones Motor $148 LTL business closed. Now TL carrier

Decline in Unionized Trucking - Past

The decline of the unionized carrier has occurred due in part to the recent number of bankruptcies of these carriers whose workers belonged to IBT. The primary reason for the bankruptcies of these carriers is the higher union wages, benefits and lack of work rules flexibility.

At the time of deregulation, 55 out of the top 60 carriers in the LTL industry were unionized. Now only two are left.

Non Union – 49%

Union – 27%

Non Union – 73%

Union – 51%

1990 2009

Tonnage Market Share of Unionized LTL Carriers has Declined

Market Share – Present & Future

LTL Carriers

ABF Freight Systems 3.82% 3.78%

Con-way Freight 12.43% 12.08%

FedEx Freight 14.98% 12.67%

Old Dominion Freight Line 6.28% 6.17%

UPS Freight 6.20% 6.52%

Saia Motor Freight 5.07% 5.29%

Vitran Express 3.64% 3.52%

YRC National Transportation 8.96% 9.88%

YRC Regional Transportation 7.33% 7.96%

All Other Carriers 31.29% 32.13%

Q4 2009 Market Share Q3 2009 Market Share

CNW was 9.2%, FDX was 12.5%, YRC was 22.2% in Q4 2008

Market Share – Present & Future

LTL Carriers

ABF Freight Systems 3.82% 4.3%

Con-way Freight 12.43% 13.5%

FedEx Freight 14.98% 16.3%

Old Dominion Freight Line 6.28% 7.2%

UPS Freight 6.20% 7.1%

Saia Motor Freight 5.07% 5.8%

Vitran Express 3.64% 4.2%

YRC National Transportation 8.96% 6.1%

YRC Regional Transportation 7.33% 5.4%

All Other Carriers 31.29% 30.3%

Q4 2009 Market

Share

Q1 2011 Market

Share

Shipper Trends in the LTL Sector

• DC Bypass

• Pool Distribution

• Growth in Outsourcing

• One-Stop Shopping

• Blurring the Lines of Freight Transportation

Asia

1. Before the container

doors are closed2. After the container

doors are opened

Shipping Patterns – DC Bypass

Two of the best places to affect the efficiency of the Asia to US supply chain for DC Bypass:

Shipping Patterns – Pool Distribution

Shipper's have changed their distribution patterns to have added more regional DCs vs. one national DC. This results from the need to be closer to their customers and have shorter lead times (product needs to be there tomorrow, not in three days).

Growth in Outsourcing – 3PLs

Many shippers realize that transportation is outside their core competency. The shift to outsourcing will benefit the LTL industry at the expense of the private fleet sector. Shippers see the value of leveraging the expertise of a LTL firm as a way to lower costs and compress the logistics cycle time.

3PLs grow much faster than asset truckers

Percentage of Fortune 500 Companies Using 3PLs by Ranking

Service/Price Bundling - “One-Stop Shopping”

Large integrated package carriers such as UPS, FedEx, and DHL will continue to offer shippers a “One-Stop Shopping” solution for all modes. These integrators bundle services and price to customers, as they via for the entire transportation share of wallet of a customer.

UPS and FedEx’s sales and marketing power to bundling its LTL service with its small package offerings should enable them to exceed market growth. DHL will also offer LTL service in the future.

Blurring the Lines of Freight Transportation

LTL Demand Trends

Monthly volumes likely bottomed in Q3 2009. Signs of sequential improvement this year, but still below historical norms.

Inventory restocking - home improvement retailers indicate better trends

Federal stimulus programs pulled weak demand forward

Freight diversion from struggling carrier

TL volumes stronger, TL capacity tighter, LTL weight per shipment increasing

Industry capacity should continue to exit in 2011. However, trying to predict capacity reduction, like with YRC, has proven difficult with banks and debt holders willing to restructure deals rather than force closure and sell off assets in a weak environment. Shippers are NOT going back to YRC

What else can we expect to see in 2011?

LTL Pricing Pressure

Rates growth typically follows volume growth by a few quarters. Rates should be better in Q3, while rates in Q1 and Q2 will have a modest uptick in 2011. (Increased fuel surcharges, minimum charge floors, capacity, TL and intermodal usage and average shipment weight)

Rates will not get significantly better until meaningful capacity exits or an economic tailwind takes hold.

Regional pricing much more aggressive than longer haul rates. LTL bid activity was at all time high levels in 2009. GP3PL programs will continue to be popular in 2011.

Fuel surcharge rates were less of an issue in 2009 versus 2008. But 2010 saw fuel expense rise and this will continue in 2011.

The longer the freight recession lasts, the better the rebound. Rate recovery from the economy or a major trucking closure will push pricing power back to the carriers. (greater than ’06 and’99 levels).

Can YRC Carriers Survive in the Long-Term? 140,953 shipments a day in Q2 2008

138,286 shipments a day in Q3 2008

123,148 shipments a day in Q4 2008

103,082 shipments a day in Q1 2009

96,330 shipments a day in Q2 2009

91,560 shipments a day in Q3 2009

82,745 shipments a day in Q4 2009

75,250 shipments a day in Q1 2010

Freight Overflow To Other Modes

In the near term, the LTL industry would have trouble absorbing an abrupt closure of YRC, as labor capacity would be the bottle neck. Initially, overflow of YRC freight would also benefit other modes such as (purchased transportation) TL, Intermodal, Forwarders and Small Pack carriers.

LTL industry terminal (dock doors) capacity = 25 to 30%

LTL industry equipment (truck/trailer) capacity = 20 to 25%

LTL industry labor (driver/dockworker) capacity = <5%

Who Will Survive in the Long-term?

Integrated package carriers with LTL offerings like UPS and FDX

Large super regional LTLs having partnerships with other modes

Regional LTL carriers that serve niche markets will gain national footprints

Future LTL Trends

YRC market share erosion continues (41.4% 1990 to 11.5% 2011)

Modal indifference: ”Blurring the lines of freight transportation”

Price bundling: "One Stop Shipping" for all modes of transportation

Pricing pressure will continue until meaningful capacity is removed or an economic tailwind takes hold.

Further industry consolidation: another LTL acquisition by large integrator and super regional get national footprint (after 2011).

Growth of 3PLs will continue

Class 8 equipment demand grows with better freight levels, EGR-SCR technology evolves along with EPA and DOT mandates

Driver shortages (CSA, hours of service, insurance costs)

Future LTL Trends

Profitable Growth Segments of LTL Trucking

• Regional Deliveries (JIT inventory)

• Expedited (air, ground hot shot)

• International (Canada, Mexico, Puerto Rico, HI, AK)

• Specialized Shipments (Government, Tradeshow, White Glove)

Long term, shippers are redesigning supply chain to remove more costs (costly modes, packaging/weight, fuel)

Long slow road to recovery—The “new normal” in LTL demand (3%+ GDP)

The longer the freight recession lasts, the better the rebound will be, as someone has to physically haul the freight. The future will be bright for those that survive, “Darwinism at its best”.