Wolfe Research, LLC's published research http://wolferesearch.com/ en-us Mon, 5 Jan 2009 09:09:47 -0500 Mon, 5 Jan 2009 09:08:05 -0500 FeedForAll v2.0 (2.0.2.9) http://www.feedforall.com This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20090102_FridayFreight.pdf _CSX_EXPD_FDX_NSC_UPS_ 09C58B0A-01DA-4B4D-A0DE-3B2AA26A438E Fri, 2 Jan 2009 11:56:06 -0500 Total Week 52 Rail vols declined 24.2% y/y, down further from -18.1% and -11.6% the prior 2 weeks. The Week 52 data include Christmas in both this week and the year-ago period. Total AAR Rail vols were down 8.8% in 4Q vs. -3.6% in 3Q and -3.8% for full year 2008 (the weakest year since 1985). We expect vols to remain very weak through early '09 into weather issues across the country and extended production shutdowns. http://wolferesearch.com/email/20081230_Week_52_Rail_Volumes_End_The_Year_Poorly.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 6344BBA9-4187-4454-9E7F-4A09AAEAC3CC Tue, 30 Dec 2008 13:19:16 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081226_FridayFreight.pdf _CNI_FDX_ODFL_UPS_YRCW_ 0F6FB497-5F2D-4D44-88BF-1D33A4B119AB Fri, 26 Dec 2008 11:17:35 -0500 YRCW suspended its previously announced and amended $150M tender offer which expired last night. While our sense is that the deal clearly lacked demand, Mgmt has cited renewed talks with its banks about amending its covenants and liquidity, which could provide a better long term result, with the ability to re-issue the tender offer later if new talks fail. http://wolferesearch.com/email/20081224_YRCW_TenderOfferSuspended_SaleLeaseback.pdf _YRCW_ 51346C01-5035-42C1-99FE-A135B12D20F2 Wed, 24 Dec 2008 12:54:14 -0500 Total Week 51 Rail vols declined 18.1% y/y, down further from -11.6% and -9.6% the prior 2 weeks. Total Rail vols are now down 7.9% QTD vs. -3.6% last qtr. Rail vols continued to plummet with the economy seemingly reaching a stand-still as we approach year-end. We expect even worse vols next week into weather issues across the country and extended production shutdowns. http://wolferesearch.com/email/20081223_Week_51_Rail_Volumes_Plummet_Further.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ D3791886-89DF-4CD8-A167-63912F1C641F Tue, 23 Dec 2008 07:02:07 -0500 ODFL revised its 4Q:08 guidance to a range of $0.18-$0.21 from prior guidance of $0.35-$0.40, and relative to our prior deep recession estimate of $0.15 and prior Cons. $0.31. ODFL now expects tonnage declines of 6%-7% in 4Q compared to the -3% we had expected and +5.7% y/y tonnage growth in 3Q, with an implication that Dec. tonnage is trending down around double digits. Yields gross of fuel are also now supposed to be down slightly y/y compared to +7.2% during 3Q:08. http://wolferesearch.com/email/20081223_ODFL_4Q_Pre_Report.pdf _ODFL_ 50C9227C-160F-4D87-90AC-5F9E5DED3195 Tue, 23 Dec 2008 10:49:30 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081219_FridayFreight.pdf _BNI_CNI_CLDN_CNW_CSX_FDX_HUBG_JBHT_KSU_KNX_NSC_R_TNT_YRCW_ 1F4ADBE7-FB7B-4F70-928E-F74F7A531331 Fri, 19 Dec 2008 11:44:39 -0500 Total Week 50 Rail vols declined 11.6% y/y, down further from -9.8% on avg. over the past 6 weeks. Total Rail vols are now down 6.9% QTD vs. -3.6% last qtr. Despite easier comps, rail vols continue to deteriorate as the economy is clearly weakening further. http://wolferesearch.com/email/20081219_Week_50_Rail_Volumes_Weakening_Economy_Overcomes_Easy_Comps.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 4ED2AAE2-6C61-4B59-882D-8E413A1FC9A7 Fri, 19 Dec 2008 07:40:40 -0500 Rev, EBIT and EPS grew 1%, 0% and 3% driven by an estimated roughly $0.50 y/y EPS fuel benefit vs. a 23% EPS decline in F1Q including a $0.18 tailwind from fuel. http://wolferesearch.com/email/20081219_FDX_F2Q09_Earnings.pdf _FDX_ 4B3B5EBF-C66A-4F03-BF56-EBEB30ECD5DC Fri, 19 Dec 2008 07:40:39 -0500 R announced 4Q EPS at the low end of its prior $1.03-$1.13 EPS guidance range relative to our prior $1.06 and Cons. $1.08. Mgmt noted general economic softness, likely mostly negatively impacting margins in its short term Rental and auto logistics businesses. http://wolferesearch.com/email/20081218_R_Pre_Report_Restructuring.pdf _R_ 4670730A-6B80-4CC5-9689-A1D0EFC4B2D3 Thu, 18 Dec 2008 07:24:51 -0500 HUBG pre-reported that its 4Q:08 EPS would fall in a range of $0.36-$0.41, down from prior guidance of $0.45-$0.50 and vs. prior Cons. of $0.43. This is inline with our recently reduced, low-end deep recession estimate of $0.37. HUBG's guidance implies an 18% y/y EPS decline in 4Q, down sharply from +7% and +15% the prior 2 qtrs. http://wolferesearch.com/email/20081218_HUBG_4Q_Pre_Report.pdf _HUBG_ 7E0D7A39-690B-4A3E-BF53-74AF8015D13C Thu, 18 Dec 2008 07:24:50 -0500 KSU announced that it priced $190M of 13% 5-year notes at an effective yield of 16.5%. This was in-line with our expectations and should reduce annual EPS by about $0.10-$0.11 (already in our model). KSU will use the $164M of net proceeds to pay down its $200M of 7.5% notes due next year, at which point the company's $400M of bank debt will automatically extend out to 2011-2013. http://wolferesearch.com/email/20081216_InsideFreight_KSU_Debt_Cass_KNX_JBHT_Singapore_Madoff_CLDN_BNI_CNW_YRCW_FDX_PortVols_CNI_USDA_TNT.pdf _BNI_CNI_CLDN_CNW_CSX_EXPD_FDX_JBHT_KSU_KNX_NSC_TNT_UNP_YRCW_ 08B6EECC-7005-44AD-B135-32444B4ECA04 Wed, 17 Dec 2008 07:06:52 -0500 KSU pre-reported that it expects 4Q:08 Rev. to decline by 5% y/y and an Operating Ratio of 79%. This implies about a 15% EBIT decline y/y, down from +13% during 3Q and our prior expectations of +6%. We also expect a roughly $0.20/shr non-cash currency drag from the weakened peso. All in, KSU's pre-report implies 4Q:08 EPS around $0.25/shr (-55% y/y), well below prior Cons. of $0.50. http://wolferesearch.com/email/20081215_KSU_3Q_PreReport.pdf _KSU_ DE63CF30-76D2-412C-9529-EE003B2E7C27 Mon, 15 Dec 2008 12:32:40 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081212_FridayFreight.pdf _CNW_EXPD_FDX_GWR_LSTR_SAIA_UNP_UTIW_ 913BDEF9-49CB-42EF-9D9F-1CACA39E23E0 Fri, 12 Dec 2008 13:04:51 -0500 Total Week 49 Rail vols declined 9.6% y/y, vs. down 10.0% on avg. over the past 2 weeks and -8.9% over the past 6 weeks. Total Rail vols are down 6.5% QTD vs. -3.6% in 3Q. While demand is clearly weakening, we note that comps become much easier the final 3 weeks of the year. http://wolferesearch.com/email/20081212_Week_49_Rail_Volumes_Continue_To_Slide.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ D4216C88-262A-4346-8EC1-DE4E47D8F61A Fri, 12 Dec 2008 10:43:50 -0500 Given rapidly deteriorating freight and broader economic demand as evidenced among other things by FDX's, CNW's and LSTR's recent pre-reports, we are further reducing our underlying macro assumptions in our models to reflect an even deeper global recession. We are now assuming -5% GDP in 4Q:08 and 1Q:09 (down from -3% and -2%) as well as oil bottoming in 1Q:09 at $40/barrel on avg. (down from $55). http://wolferesearch.com/email/20081211_InsideFreight_Moving_to_Deep_Recession_Estimates.pdf _ABFS_CNI_CLDN_CSX_EXPD_FDX_GWR_HTLD_HUBG_KSU_NSC_PACR_SAIA_TNT_UNP_UPS_UTIW_WERN_YRCW_ E60E5BAF-E387-46A8-8CFA-A3251525FD62 Thu, 11 Dec 2008 09:35:07 -0500 GWR's stock remains up 35% YTD, nearly 20pp better than the next best transport stock we cover this year (ABFS, +15%) and vs. the S&P 500, down 39%. This also compares with our Large-Cap Rail Index, down 21% YTD. Based on GWR's significant outperformance and current valuation relative to the other public rails, we are reducing our rating. http://wolferesearch.com/email/20081211_GWR_Downgrade_to_PeerPerform.pdf _GWR_ 2B297977-8F4D-4AA6-BAF9-87529227C998 Thu, 11 Dec 2008 09:35:06 -0500 In conjunction with our estimate reductions across the transport sector today to reflect a deepening recession, we are lowering our rating on SAIA to Underperform from Peer Perform. We believe valuation is stretched based on our lower EPS estimates and the stock's recent impressive resilience. http://wolferesearch.com/email/20081211_SAIA_Downgrade_to_Under.pdf _SAIA_ A2EDB64F-FD22-432A-90F5-58A9F0FDE183 Thu, 11 Dec 2008 09:35:06 -0500 FedEx pre-reported F2Q EPS of $1.58, up 3% y/y, due to a sizeable net fuel tailwind (we estimate around $0.50). This compares to prior guidance of $1.40-$1.60, our estimate and prior consensus of $1.50 and $1.54, and $1.54 a year ago. FedEx is scheduled to report F2Q earnings on Dec. 18th. http://wolferesearch.com/email/20081208_FDX_Pre_Report.pdf _FDX_ 075B6AAE-43A6-48C3-A9C0-9CCEE6649BE1 Tue, 9 Dec 2008 08:16:09 -0500 CNW lowered its 4Q guidance from $0.33-$0.53 to ($0.07)-$0.08 vs prior Cons $0.41 and $0.84 in 4Q:07 prior to restructuring costs for an announced 5% headcount reduction, about 1,450 layoffs which occurred 12/5 in addition to the 400 layoffs (1.5%) associated with CNW's network re-engineering in mid-Nov. http://wolferesearch.com/email/20081208_CNW_Pre_Report.pdf _CNW_ A253D9C1-9BD3-4C4A-ABE5-9EC0894753E9 Tue, 9 Dec 2008 08:16:08 -0500 On Friday afternoon, LSTR issued its scheduled 4Q mid qtr. update. Not surprisingly demand has decelerated sequentially since Sept., with y/y Gross Rev. growth reported at +5% for Oct., flat for Nov. and expected down more than 5% for Dec. compared to prior guidance of 0% to +10% Gross Rev. growth and +11.5% y/y in 3Q (excluding FAA/FEMA). LSTR eliminates most fuel surcharge out of Gross Rev. http://wolferesearch.com/email/20081208_LSTR_Mid_4Q_Update.pdf _LSTR_ 8315B50E-EB17-45B6-B31C-16DB8CD1BE60 Mon, 8 Dec 2008 07:45:19 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081205_FridayFreight.pdf _CNI_EXPD_FDX_LSTR_TNT_UNP_UPS_UTIW_YRCW_ BA660A34-0265-46E3-A8BD-7B57C6380A3B Fri, 5 Dec 2008 09:27:42 -0500 Total Week 48 Rail vols declined 21.8% y/y, vs. +3.6% and -9.6% the past 2 weeks. As expected, vols declined sharply on a very tough comp that included Thanksgiving this year but not in the year-ago period. Normalizing for the past 2 weeks, total Rail vols declined 10.0%, down further from -8.0% the past 6 weeks and -6.1% QTD. It is clear that demand is weakening, although easing y/y comps should help offset some of the pain the final 3-4 weeks of the year. http://wolferesearch.com/email/20081205_Week_48_Rail_Volumes_Decline_Sharply_Any_Way_You_Slice_It.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 55E17CEB-12DC-4BC2-A00A-619A45A5D72E Fri, 5 Dec 2008 07:42:53 -0500 TNT hosted its Analyst Meeting in London where Management provided an update of its cost-side activities in light of the deteriorating demand picture at Express, particularly across Europe. http://wolferesearch.com/email/20081205_TNT_Analyst_Meeting.pdf _TNT_ 084D35A5-ACA1-4A82-A1DC-24275C1527A3 Fri, 5 Dec 2008 07:42:52 -0500 UTIW reported a strong upside F3Q:09 (Oct.) report driven by less than expected Gross and Net Rev. Growth but better than expected operating margins, particularly in Contract Logistics (CL). Net Rev, EBIT and EPS grew y/y by 5%, 11% and 11% y/y compared to 14%, 1% and 3% y/y in F2Q. http://wolferesearch.com/email/20081205_UTIW_F3Q09_Earnings.pdf _UTIW_ 89045945-EE3D-486B-B9C0-597B74D7D243 Fri, 5 Dec 2008 07:42:51 -0500 Recently we conducted a short survey of over 60 medium to large shippers who have been material users of DHL for at least part of 2008. Our survey was conducted over the 2 week period following DHL's Nov. 10th announcement that it will exit the U.S. domestic package business by the end of Jan. while intending to maintain its U.S. import/export business. http://wolferesearch.com/email/20081204_DHL_Survey_Results.pdf _FDX_UPS_ FB855CA3-647A-4FAA-B68D-89D243E5CB91 Thu, 4 Dec 2008 08:29:20 -0500 Teamster leaders will meet with local union leaders today to discuss last week's tentative wage agreement with YRCW, and we expect more details to be released sometime after 5pm ET. We expect wage concessions in the 10%-15% range, which if approved could save YRCW $220M-$330M ($2.36-$3.55) annually, prior to future offsets such as profit sharing, claw backs or equity grants. ABFS is attempting to match the discount in Teamster wages, but we don't expect the Teamsters to permit it. http://wolferesearch.com/email/20081203_Inside_Freight_Teamsters_and_YRCW_BNI_USPS_CanadianGrain_TruckOrders_STB_CentralStates.pdf _ABFS_BNI_CNI_CP_CSX_FDX_NSC_SAIA_TNT_UNP_UPS_YRCW_ DFF09B0B-138D-47F9-A365-79B30C311D85 Wed, 3 Dec 2008 08:06:45 -0500 The Wolfe Monthly Macro Watch summarizes the most recently available Air, Ocean, Rail & Truck freight statistics. Each month, we track 11 series of domestic and international freight data. http://wolferesearch.com/email/20081201_Monthly_Macro_Watch_Nov.pdf _ABFS_BNI_CHRW_CNW_CSX_EXPD_FDX_HTLD_JBHT_KNX_LSTR_NSC_ODFL_R_TNT_UNP_UPS_UTIW_WERN_YRCW_ 2D7F3F1A-BAD8-4D8F-B817-F2920189B7ED Mon, 1 Dec 2008 09:07:18 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081128_FridayFreight.pdf _CSX_FDX_NSC_TNT_UPS_UTIW_YRCW_ 4EA498E6-44EC-49AA-98AB-FD4C589CE2E1 Fri, 28 Nov 2008 08:42:06 -0500 Total Week 47 Rail vols increased 3.6% y/y, up from -9.6% and -8.1% the past 2 weeks and -4.1% QTD. We believe the y/y improvement was driven entirely by a very easy comp that included Thanksgiving in the year-ago period. Next week's data should be materially worse including Thanksgiving this year and a 2-week analysis will be more balanced. Looking forward, the rails should benefit from easier comps the final 3 weeks of the year. http://wolferesearch.com/email/20081128_Week_47_Rail_Volumes_Benefit_From_Easy_Thanksgiving_Comp.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ A775442F-BD7A-4E2C-B4FF-CD63F671A259 Fri, 28 Nov 2008 08:42:05 -0500 The U.S. auto industry is hanging on for dear life, and we believe the transports would be negatively impacted beyond the market if the auto bailout does not occur. In this note, we discuss total Auto Rev. exposure for each of our 31 companies under coverage. Generally, the transports have been diversifying away from autos and the Big 3 automakers over the past several years. http://wolferesearch.com/email/20081125_InsideFreight_Autos.pdf _CNI_CP_CNW_CSX_EXPD_FDX_HTLD_HUBG_KSU_LSTR_NSC_PACR_R_TNT_UNP_UPS_UACL_UTIW_ F24ED134-F231-4DA6-90EE-1A66BFF3311D Tue, 25 Nov 2008 08:30:22 -0500 YRCW announced a tender offer to purchase up to $100M of its 5% and 3.375% Contingent Convertible (CoCo) Senior Notes, with $387M total outstanding and its 8.5% USF Senior Notes, with $150M outstanding. YRCW expects to purchase about $230M face value of the bonds, implying an avg. purchase price of $0.435 on the dollar. http://wolferesearch.com/email/20081125_YRCW_Tender_Offer.pdf _YRCW_ A9291D56-A639-422E-8DF8-E8988348152B Tue, 25 Nov 2008 08:30:22 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081121_FridayFreight.pdf _CHRW_CSX_FDX_GWR_NSC_ODFL_TNT_YRCW_ F267A9CE-BDFD-4066-9D2F-3E057BF7F2A3 Fri, 21 Nov 2008 12:02:20 -0500 Total Week 46 Rail vols declined 9.6% y/y, down vs. -8.1% and -6.2% the past 2 weeks. This marks the worst y/y week for rail vols since 1Q:02. Vols are now down 5.1% QTD, sharply worse than -2.6% last qtr. All segments deteriorated y/y vs. recent trends, led by material drop-offs in intermodal and metals vols. Y/y comps remain tough for the next couple of weeks before easing the final 3 weeks of the year. http://wolferesearch.com/email/20081121_Worst_Week_For_Rail_Volumes_Since_2002.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ AC6D2CB9-3D26-4C55-ABA8-AE1C6FE34F33 Fri, 21 Nov 2008 07:46:06 -0500 Our sense is that investors are not only deleveraging out of the rails but also increasingly shorting the group as the rails have held up much better YTD than commodity stocks such as coal and steel, which the rails move. All transports would likely be negatively impacted beyond the market if the auto industry bailout does not occur. http://wolferesearch.com/email/20081120_Inside_Freight_Rails.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP 7527B760-48D8-4946-9EEB-4EB1F6928CF4 Thu, 20 Nov 2008 07:36:20 -0500 YRCW ended 3Q:08 at 3.2x debt/EBITDA, dangerously close to its year-end credit covenant level of 3.5x, and economic trends have since deteriorated. We believe that YRCW is likely to take further action in the near term to reduce debt and avoid a covenant breach. http://wolferesearch.com/email/20081119_YRCW_Liquidity_Update.pdf _YRCW_ 4B83328E-9832-4F0B-BA38-520F3FBDB46D Wed, 19 Nov 2008 09:13:31 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081114_FridayFreight.pdf _BNI_CP_FDX_GWR_NSC_TNT_UNP_UPS_ EDE75907-317F-48F8-85E7-C9830EBFE9C6 Fri, 14 Nov 2008 08:21:20 -0500 Total Week 45 Rail vols declined 8.1% y/y, down vs. -6.2% and -4.5% the past 2 weeks. Rail vols are now down 4.3% QTD, worse than -2.6% last qtr. This week's further deterioration was driven primarily by tougher comps and weakened intermodal vols into a slowing economy. Comps will remain tough for the next several weeks before easing materially the final 3 weeks of the year. http://wolferesearch.com/email/20081114_Week_45_Rail_Volumes_Continue_To_Slide.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 88F79241-5231-4322-9D70-7B024C49E97B Fri, 14 Nov 2008 08:21:20 -0500 CP hosted its 7th annual investor workshop yesterday in Toronto. The meetings focused mostly on the long-term value of CP's bulk franchise and more near-term opportunities to reduce costs as the economy remains weak. http://wolferesearch.com/email/20081114_CP_Analyst_Day.pdf _CP_ 1AF92CF1-E9EE-49D0-8542-F0F178B0C296 Fri, 14 Nov 2008 08:21:19 -0500 YRCW's stock was down 16% yesterday after Moody's lowered its corporate credit rating from Ba2 to B1 with a negative outlook. While Moody's rating alone does not cause a "trigger event" under YRCW's credit agreement, this is below the level which would cause such an event, which increases the facility's collateralization to include rolling stock (trucks and trailers) and all remaining real estate. However, the additional requirement for a trigger event is a rating of BB- or lower by S&P, which currently rates YRCW BB and is on negative watch. YRCW's interest costs under the credit facility are also linked to its debt ratings and would rise about 20-30bp as a result. http://wolferesearch.com/email/20081113_Inside_Freight_YRCW_Rating_Downgrade_WERN_Special_Dividend_Rail_Class_Action_Lawsuit.pdf _BNI_CNI_CSX_EXPD_GWR_NSC_TNT_UNP_WERN_YRCW_ 92384C48-6683-4DA2-84A2-C9313319FC7E Thu, 13 Nov 2008 08:21:19 -0500 Last week we hosted meetings in NY with FDX's VP of IR Mickey Foster. Generally, he was upbeat despite the current economic and financial challenges. He noted FDX's expectations for share gains from DHL, and YRCW, a big tailwind from fuel, recent withdrawal by the IRS of its $319M tentative assessment against FDX related to its Ground contractors, and hope for further awarded USPS business over the next 6 months. http://wolferesearch.com/email/20081111_FedEx_Mgmt_Meetings&DHL_Withdrawal.pdf _FDX_ D1FBBAA7-5F95-4D2D-A7A6-F5B394D6B0FE Tue, 11 Nov 2008 08:21:19 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081107_FridayFreight.pdf _CP_CNW_EXPD_GWR_TNT_WERN_ CF1C02FF-ECBB-48A2-8595-AAD9699D3608 Fri, 7 Nov 2008 07:48:52 -0500 Total Week 44 Rail vols declined 6.2% y/y vs. -4.5% and -4.3% the past 2 weeks. Rail vols are now down 3.6% QTD, worse than -2.6% last qtr. This week's further deterioration was driven mostly by tougher comps and weakened intermodal vols into a slowing economy. Note that y/y comps will remain tough for the next several weeks before easing in last 3 weeks of the year. http://wolferesearch.com/email/20081107_Week_44_Rail_Volumes_Take_Another_Step_Down.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 6DD4732A-8B92-4C94-8B85-107D647A7FB7 Fri, 7 Nov 2008 07:47:41 -0500 EXPD reported about 5% above Cons. expectations. Net Rev., EBIT and EPS grew by 12%, 13% and 17% accelerated from 12%, 11% and 9% y/y in 2Q. The $0.03 upside to our number was driven by $0.02 better Operating Margin (strong cost control and fewer legal fees we suspect) and $0.01 better than expected below the operating line. http://wolferesearch.com/email/20081105_EXPD_3Q_Earnings.pdf _EXPD_ E786BFE7-7FB7-44C0-993F-84809B2B81CB Wed, 5 Nov 2008 07:43:15 -0500 CNW announced major network re-engineering to reduce its terminal count from 343 to 303 and remove 124K miles per day from its system (about 5%). CNW is proactively seeking to reduce geographic overlap and generate operating improvement through cost reduction in a likely protracted weak tonnage env't. http://wolferesearch.com/email/20081104_CNW_Restructuring.pdf _CNW_ 01833D81-3216-408D-BFE9-A058D834CDF8 Fri, 7 Nov 2008 07:43:14 -0500 GWR reported $0.55, solidly above Cons. of $0.47 and our estimate of $0.46. GWR beat us on better than expected Rev. and margins, but also benefited by $0.02 from gains on asset sales and $0.01 from a tax benefit. As reported, Rev., EBIT and EPS grew by 21%, 38% and 37%, materially accelerated from 22%, 30% and 15% growth during 2Q. http://wolferesearch.com/email/20081104_GWR_3Q_Earnings.pdf _GWR_ 335839BD-9E3D-4FC9-8137-220DE7E26A21 Tue, 4 Nov 2008 07:43:14 -0500 The Wolfe Monthly Macro Watch summarizes the most recently available Air, Ocean, Rail & Truck freight statistics. Each month, we track 12 series of domestic and international freight data. http://wolferesearch.com/email/20081103_Monthly_Macro_Watch_Oct.pdf _BNI_CHRW_CNI_CSX_EXPD_GWR_HUBG_NSC_TNT_UNP_UPS_ B9A06294-A06D-4E50-A4BC-EFA29C30CB89 Mon, 3 Nov 2008 12:19:45 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081031_FridayFreight.pdf _CP_CNW_EXPD_GWR_KSU_PACR_SAIA_UNP_UTIW_ 48BB624C-B444-4381-AF86-B8617F7E2FDC Fri, 31 Oct 2008 09:49:55 -0400 Total Week 43 Rail vols declined 4.5% y/y, down vs. -4.3% and -1.7% the past 2 weeks. This marks another step down from -3.9% over the past 6 weeks and -2.3% YTD. The weakening overall economy and persistently weak grain vols continue to work against the rails. http://wolferesearch.com/email/20081031_Week_43_Rail_Volumes_Worsen.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ EE7291DE-CBA2-40B3-80E3-0A977C27BBD8 Fri, 31 Oct 2008 09:20:34 -0400 In this note, we begin with a look at historical transport stock performance under the past 7 presidential terms dating back to 1980. We also look at the major transportation/infrastructure issues facing the next President, including highway reauthorization, rail re-regulation vs. infrastructure investment, clean coal regulations, NAFTA and labor-related issues. We also discuss what we know about the two Presidential candidates' transportation records and platforms. http://wolferesearch.com/email/20081031_Inside_Freight_2008_Presidential_Campaign.pdf _ABFS_BNI_CNW_CSX_FDX_HUBG_KSU_KNX_NSC_ODFL_SAIA_UNP_UACL_YRCW_ 95FECD94-4C91-47DE-A7D3-2066CD44C477 Fri, 31 Oct 2008 09:17:12 -0400 KSU reported 3Q EPS of $0.52, well below Cons. of $0.60 and our recently reduced $0.59. KSU was hurt in the quarter by $0.05 from foreign exchange losses (not in our model) and $0.07 from Hurricanes Ike and Gustav. Rev., EBIT and EPS grew by 11%, 13% and 9%, each below our expectations and decelerated from 14%, 26% and 50% y/y growth during 2Q. http://wolferesearch.com/email/20081029_KSU_3Q_Earnings.pdf _KSU_ 95789EA7-2125-4529-94E3-490E45CCB6A9 Wed, 29 Oct 2008 09:15:50 -0400 CP reported ongoing 3Q EPS of $1.16, solidly above Cons. $1.04 and our $1.07. Rev., EBIT and EPS changed by +6.5%, -6% and -2% (CAD), each materially improved from +0%, -18% and -13% y/y during 2Q. This was also above our expectations of +6%, -12% and -9%. Note that this excludes +$0.04 from FX gains on L/T debt and ($0.12) of write-downs on asset-backed commercial paper. http://wolferesearch.com/email/20081029_CP_3Q_Earnings.pdf _CP_ B794A942-3F76-4302-8BE2-E7F623ACC7A1 Wed, 29 Oct 2008 09:14:37 -0400 PACR reported ongoing EPS of $0.49 compared to Cons. $0.42 and our $0.44. Gross Rev., EBIT and EPS grew by 14%, 12% and 15%, accelerated from 9%, 8% and 15% y/y growth in 2Q. We suspect a material y/y net fuel benefit was the driver of the upside report, but mgmt gave little guidance on fuel other than it would become a major relative headwind in 4Q. Cash flow remained solid. http://wolferesearch.com/email/20081029_PACR_3Q_Earnings.pdf _PACR_ 3542BD71-B9DB-4B90-A80A-FD3AB3C00796 Wed, 29 Oct 2008 09:11:57 -0400 TNT reported 3Q EPS of €0.31 compared with Cons. Euro 0.42 and our Euro 0.38. TNT had previously reported on Oct. 16th that European Express trends had materially weakened in Sept and Oct., w/o providing an earnings range at that time. Rev., EBIT and EPS changed y/y by +1%, -18% and -27% in 3Q decelerated from +4%, -2% and -7% y/y in 2Q. http://wolferesearch.com/email/20081028_TNT_3QEarnings.pdf _TNT_ 5AACD221-30C3-4361-8C1B-0384B1FFAD9B Tue, 28 Oct 2008 09:09:56 -0400 SAIA reported $0.21 3Q EPS vs Cons $0.19 and our $0.22. Rev., EBIT and EPS changed +11%, -31% and -41% compared to +9%, -25% and -30% y/y during 2Q. Relative to our high end estimate Rev. growth driven by fuel surcharge was higher while margin slightly worse than our projection. http://wolferesearch.com/email/20081027_SAIA_3Q_Earnings.pdf _SAIA_ 0E78E6C1-7B08-4104-BE75-787C9EE08E37 Mon, 27 Oct 2008 09:08:22 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081024_FridayFreight.pdf _ABFS_BNI_CHRW_CNI_CP_CLDN_CNW_FDX_FWRD_GWR_HTLD_HUBG_KNX_NSC_ODFL_R_TNT_UNP_UPS_UACL_YRCW_ E2E3D96C-1E73-4A6F-8FC0-8ECEDF3E7AD5 Fri, 24 Oct 2008 10:12:01 -0400 Total Week 42 Rail vols declined 4.3% y/y, down vs. -1.7% and -1.2% the past 2 weeks and -3.9% the past 6 weeks. On top of a weakening economy and continued weak grain vols, this week's data was hurt by the timing of the Canadian Thanksgiving. Canadian rail vols deteriorated sharply and were down 9.7% vs. -3.3% the past 6 weeks. http://wolferesearch.com/email/20081024_Week_42_Rail_Volumes_Decline_Sharply_On_Tough_Holiday_Comp_In_Canada.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ C0D3DC92-AB22-46D3-863A-B182EA45B04C Fri, 24 Oct 2008 12:13:19 -0400 UPS reported $0.96 vs. our $0.87 and Cons. $0.89. This represented y/y Rev., EBIT and EPS changes of +7%, -7% and -9% y/y, improved from 2Q. Upside relative to our expectation was driven $0.08 from Dom. Package, and $0.01 from Int'l Package, while SCS was in line. We estimate UPS benefited by about $0.11 y/y from net fuel impact. http://wolferesearch.com/email/20081024_UPS_3Q_Earnings.pdf _UPS_ 7DAF726A-6A2D-4E2D-85EF-F0EAE346293D Fri, 24 Oct 2008 12:13:18 -0400 Thursday night, BNI reported ongoing 3Q EPS of $1.91, materially beating Cons. of $1.69 and our estimate of $1.66. Rev., EBIT and EPS grew 21%, 21% and 29%, each up materially from 17%, 7% and 11% growth during 2Q. Relative to our model, BNI beat by $0.08 from higher Rev., $0.15 from better margin and $0.02 from lower int. expense and tax rate. http://wolferesearch.com/email/20081024_BNI_3Q_Earnings.pdf _BNI_ 8AF11256-9C3C-4FAD-A5DE-B7A09F2F4D7A Fri, 24 Oct 2008 12:13:17 -0400 UNP posted 3Q results 6% above both us and Cons. and modestly above its prior pre-report range. Rev., EBIT and EPS grew 16%, 27% and 38%, each accelerated from +13%, +18% and +20% last qtr. The quality of the beat was mixed as UNP benefited by $0.05 vs. our model from a lower tax rate and share count. The $0.08 impact from hurricanes was $0.02 less than expected. http://wolferesearch.com/email/20081024_UNP_3Q_Earnings.pdf _UNP_ 088AF2C1-9A8E-47AE-9FBE-B90E30A980AB Fri, 24 Oct 2008 12:13:17 -0400 YRCW reported what we consider on an on-going basis a loss of ($0.21) compared to our ($0.10) and Cons. ($0.03). If we exclude $8.2M of net gains on sales and settlements broken out at each division (which were heavier than normal) arguably the on-going loss was more like ($0.32). Rev, EBIT and EPS were down 3%, 111% and 130% y/y, despite easy comps and our rough estimate of a $0.35 y/y fuel benefit. http://wolferesearch.com/email/20081023_YRCW_3Q_Earnings.pdf _YRCW_ 27B7B767-61D8-41C6-8FBD-B00F11BDD6B6 Fri, 24 Oct 2008 12:13:16 -0400 Thursday before the market, ODFL reported 3Q EPS $0.63 vs our $0.48 and Cons $0.54. Rev., EBIT and EPS grew 15%, 25% and 17% vs our +14%, -3%, and -10% ests and +17%, +11% and +12% in 2Q:08. ODFL is operating well in a continued difficult pricing environment, but we believe fuel is primarily responsible for the upside. http://wolferesearch.com/email/20081023_ODFL_3Q_Earnings.pdf _ODFL_ CAC447FE-8018-48BE-B0CF-D9EFD53ED342 Fri, 24 Oct 2008 12:13:15 -0400 UACL reported 3Q EPS of $0.34 in-line with Cons. but well above our estimate of $0.28. Rev, EBIT, and EPS grew by 24%, 7%, and 5%, all above 2Q growth of 12%, 3%, and 0.5%.. The upside to our expectation was mostly ($0.04/share) driven by higher than expected Rev. growth (24% vs. 9%) driven by Brokerage, as well as modestly better OR ($0.01/share) than our assumption. UACL also benefitted from y/y fuel benefit. http://wolferesearch.com/email/200081023_UACL_3Q_Earnings.pdf _UACL_ 4D8F74B7-3DBA-4462-8D5A-9FCA2D3B9E45 Fri, 24 Oct 2008 10:12:42 -0400 R reported $1.22 EPS compared to our $1.23 and Cons. $1.27. Rev, EBIT and EPS grew by -1% (+3% on-going), 5% and 7% decelerated from 0% (+2% on-going), 14% and 14% during 2Q. Reported Pretax was in-line with our forecast with the $0.01 downside from a higher share count as Mgmt has suspended its repurchase plan. http://wolferesearch.com/email/20081023_R_3Q_Earnings.pdf _R_ CD921A33-B1DE-4BC9-BCA4-B432CA7C0076 Thu, 23 Oct 2008 10:12:41 -0400 CNW reported $0.81 EPS vs our $0.64 and Cons. $0.66. Rev, EBIT and EPS grew by +23%, +6% and -7% accelerated from +25%, +11% and -5% y/y change in 2Q. CNW benefited by about $0.04 from a lower than expected tax rate and about $0.02 from lower employee expenses, so on-going it was more like $0.75, still solid upside to recently lowered forecasts. http://wolferesearch.com/email/20081023_CNW_3Q_Earnings.pdf _CNW_ CBB0673D-43DA-4087-8A4C-A3D9A04C2229 Thu, 23 Oct 2008 10:12:40 -0400 ABFS Reported 3Q EPS of $0.61 vs. our $0.47 and Cons. $0.64. Rev., EBIT and EPS changed +2%,-10% and -19%, a deceleration from +9%,-15% and -8% y/y changes in 2Q. On and operating basis EPS was arguably about $0.05 better than our low end estimate. http://wolferesearch.com/email/20081023_ABFS_3Q_Earnings.pdf _ABFS_ 5782CE93-0B57-4D3D-9D9C-F24783BC708C Thu, 23 Oct 2008 10:12:40 -0400 KNX reported $0.19 EPS compared to Cons and our $0.16 expectations. Rev, EBIT and EPS grew y/y by 16% (3% net of fuel), 12% and 12% compared to +14% (+1% net of fuel), -29% and -29% y/y during 2Q:08. A better than expected net fuel and insurance claim impact drove most of the upside relative to our expectation, in addition to improved operating performance (utilization and deadhead). http://wolferesearch.com/email/20081023_KNX_3Q_Earnings.pdf _KNX_ 5D188E0D-F968-4313-A07D-CC2B36B63396 Thu, 23 Oct 2008 10:12:39 -0400 HUBG posted 3Q earnings of $0.45, in line with Cons. but $0.02 below our high-end estimate. Net Rev., EBIT and EPS grew 10%, 10% and 7% (15% EPS growth ex. tax benefit a year-ago), vs. +4%, +9% and +15% during 2Q. Stronger Gross Rev. added $0.02 relative to our model, while gross yields, OR and share count missed our expectations by about $0.04 combined. http://wolferesearch.com/email/20081023_HUBG_3Q_Earnings.pdf _HUBG_ 179F417A-1D0A-41F1-9955-C66D046D2CC3 Thu, 23 Oct 2008 10:12:39 -0400 We believe DHL is close to a major withdrawal from the former Airborne, U.S. Dom. Package business, beyond its prior May announcement. Within weeks we expect DHL could begin exiting the U.S. ground business entirely and possibly also the Dom. Air Express business, leaving itself with basically only import/export express rev., as it was prior to Airborne in C02. http://wolferesearch.com/email/20081022_FDX_Upgrade_to_Outperform.pdf _FDX_ 44A34E1A-DDEB-4318-8332-04288D4B5222 Wed, 22 Oct 2008 10:12:39 -0400 CHRW reported $0.54 EPS compared to Cons. $0.53 and our $0.52. Net Rev., EBIT and EPS improved 12%, 13% and 12%, each modestly accelerated from 2Q. The $0.02 upside relative to our expectation was from higher Gross Rev. partially offset by worse Net Operating Margin and better Other Income, which should be on-going. http://wolferesearch.com/email/20081022_CHRW_3Q_Earnings.pdf _CHRW_ 9F11C64F-2D36-41DA-BA57-595C89CDB5DA Wed, 22 Oct 2008 10:12:38 -0400 NSC posted $1.37/shr., solidly above our high-end $1.25 and Cons. of $1.21. Rev., EBIT and EPS grew by 23%, 31% and 34%, each materially accelerated from 16%, 16% and 21% y/y growth in 2Q. NSC also generated $600M ($1.58/shr) of free cash flow in the qtr. http://wolferesearch.com/email/20081022_NSC_3Q_Earnings.pdf _NSC_ D9F8A4FA-C1D5-4DE8-B342-4FF5E7817FE5 Wed, 22 Oct 2008 10:12:38 -0400 CNI reported 3Q EPS of $1.03, solidly above Cons. $0.95 and our $0.97. Rev., EBIT and EPS grew by 12%, 10% and 15% (CAD), each materially accelerated from +4%, -13% and -5% y/y during 2Q. The quality of the report was even better than reported as CNI beat our estimate by about $0.10 on an operating basis. http://wolferesearch.com/email/20081022_CNI_3Q_Earnings.pdf _CNI_ A8CD1A8A-1E55-441D-8402-625482BE72E6 Wed, 22 Oct 2008 10:12:38 -0400 CLDN reported EPS of $0.13, vs. our and Cons. $0.12. Rev, EBIT, and EPS grew 10% (-4% net fuel), 17%, and 22%, improved sequentially from +17% (+3.5% net fuel), -43% and -54% in 2Q. Arguably the qtr was even a penny or two better as its volatile tax rate was higher than we expected. http://wolferesearch.com/email/20081022_CLDN_3Q_Earnings.pdf _CLDN_ 93CA8716-A1BD-4EBE-A435-C6B0F38951A2 Wed, 22 Oct 2008 10:12:37 -0400 FWRD reported 3Q:08 EPS of $0.42, vs. our $0.36 and Cons $0.43. Rev, EBIT, and EPS, aided by acquisitions, grew 24%, 14% and 15% y/y during 3Q, accelerated from 31%, 11%, and 9% in 2Q:08. The $0.06 EPS beat to our low end expectation resulted from roughly $0.01 better than expected Rev. growth, $0.04 from better OR and $0.01 from a lower tax rate. http://wolferesearch.com/email/20081021_FWRD_3Q_Earnings.pdf _FWRD_ 211FC9EE-E9BA-4C39-83C8-5894122D98B3 Tue, 21 Oct 2008 10:12:37 -0400 HTLD reported 3Q EPS $0.19 vs. our $0.17 and Cons. $0.17. Rev., EBIT and EPS grew 16% (+3% estimated net of fuel), 8% and 11% material acceleration from +10% (-1% estimated net of fuel), -26% and -21% y/y change in 2Q. http://wolferesearch.com/email/20081021_HTLD_3Q_Earnings.pdf _HTLD_ AADAC263-A1F4-4199-AF05-2904A345679D Tue, 21 Oct 2008 10:12:36 -0400 UPS announced a 5.9% Ground list increase for C09, above its proposed 4.9% increase for C08 and the 3.9% average proposed since C01. Over the last few years UPS has announced larger than historical Ground list increases, but maintained less than 50% asked for (net of fuel). http://wolferesearch.com/email/20081020_UPS_List_Rate_Increases_YRCW_Gainey_Truck_Bankruptcy_West_Coast_Port_Volumes_And_More.pdf _BNI_CNW_CSX_EXPD_FDX_KSU_NSC_UNP_UPS_YRCW_ 0B93DC73-C317-450C-969E-23E52749BEF3 Mon, 20 Oct 2008 10:12:36 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081017_FridayFreight.pdf _BNI_CP_CNW_CSX_GWR_JBHT_LSTR_NSC_TNT_WERN_YRCW_ 3F1DF61E-70FD-44DC-AEBD-A672763B9CBA Fri, 17 Oct 2008 12:58:07 -0400 Total Week 41 Rail vols declined 1.7% y/y, vs. -1.2% and -3.6% the past 2 weeks and -4.0% the prior 6 weeks. Our sense is that the drags from the hurricane are largely behind the rails, and vols are holding up relatively well into easy comps but a clearly weakening economy. http://wolferesearch.com/email/20081017_Week_41_Total_Rail_Volumes_Negative_But_4_of_6_Rails_Improve.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 7771B1E1-2FC0-4356-818D-CB44F90F1DB5 Fri, 17 Oct 2008 12:58:06 -0400 Before the market yesterday, WERN reported $0.31 EPS vs. our $0.29 and Cons. $0.26. Rev, EBIT and EPS grew y/y by +14.5%, 3% and 5% improved from +9%, -20% and -15% y/y in 2Q:08. Higher than expected gains on sales added a $0.01, which was offset by a higher share count which dragged EPS by $0.01 relative to our expectations. http://wolferesearch.com/email/20081017_WERN_3Q_Earnings.pdf _WERN_ E333A1F0-C885-4D5B-83E7-54A2788C9542 Fri, 17 Oct 2008 12:58:06 -0400 LSTR reported $0.62 EPS well above our $0.55 and Cons. $0.59. The $0.62 included $0.03 of hurricane bus relief rev. as well as $0.03 of a drag as expected from higher employee bonus accruals. The $0.07 upside to our estimate resulted roughly $0.04 from better OR and $0.03 from better than projected Rev. Both its BCO and Brokerage businesses outperformed our expectations. http://wolferesearch.com/email/20081016_LSTR_3QEarnings.pdf _LSTR_ 8FE45D9B-006D-4CF1-8D99-09E8B34DEB68 Thu, 16 Oct 2008 12:58:05 -0400 Yesterday evening, CSX reported 3Q EPS of $0.94, $0.01 above Cons. and $0.04 above our GAAP estimate. This includes about a $0.07 drag from Hurricanes Ike and Gustav. As reported, Rev., EBIT and EPS grew by 18%, 32% and 40%, each accelerated from 15%, 17% and 25% growth during 2Q. Cash flow was excellent. http://wolferesearch.com/email/20081015_CSX_3Q_Earnings.pdf _CSX_ 85F235F1-EE78-4322-8B4A-AA6179A41E98 Wed, 15 Oct 2008 12:58:05 -0400 JBHT reported 3Q:08 EPS of $0.47 compared to our $0.40 forecast and Consensus of $0.42. The $0.07 EPS upside to our expectation resulted roughly $0.04 from Intermodal, $0.02 from Dedicated and $0.01 from a lower tax rate. Truck was in line with our low expectations. http://wolferesearch.com/email/20081015_JBHT_3Q_Earnings.pdf _JBHT_ C0CA85CB-C277-4361-B199-F61E4F281BD6 Wed, 15 Oct 2008 12:58:04 -0400 Even after Monday's record market rally, 14 of our 31 transport stocks are currently trading below their 10-year avg. valuations on our materially reduced estimates. Our sense is that the stocks are discounting a deep recession in C09 and that soon the market will stop focusing on credit issues and instead look towards which companies can outperform into sustained depressed demand. http://wolferesearch.com/email/20081014_InsideFreight_Positioning_Transports_Recession.pdf _CHRW_CNI_GWR_LSTR_NSC_TNT_UNP_UPS_UACL_ 69E5967D-FB80-491A-A578-F38AF0B4957B Tue, 14 Oct 2008 13:00:32 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081010_FridayFreight.pdf _CHRW_CP_CNW_FDX_GWR_TNT_YRCW_ A0C268C8-9195-41F0-A133-18ED6A9488D9 Fri, 10 Oct 2008 09:47:57 -0400 The stock closed last night 13% below our downside year-end C08 target price of $77. While we believe EPS numbers need to come down for virtually all transports including FDX into a global recession, we believe FDX's stock now discounts a recession for 2009. http://wolferesearch.com/email/20081010_FDX_Upgrade.pdf _FDX_ FBB9A5ED-CF4B-423B-9B0E-40FC61F96EAA Fri, 10 Oct 2008 09:47:57 -0400 Total Week 40 Rail vols declined 1.2% y/y, less worse than -3.6% and -8.3% the past 2 weeks. Our sense is that most of the hurricane-related weakness the past 6 weeks has subsided, but weakened overall demand continues to weigh down vols despite easy comps. http://wolferesearch.com/email/20081010_Week_40_Rails_Volumes_Considerably_Less_Worse_As_Hurricane_Impacts_Subside.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 0F515A4A-022C-4219-A769-93999BF4E4EB Fri, 10 Oct 2008 09:47:56 -0400 Last week, UNP priced $750M of 7.875% notes due Jan. 2019. The 7.875% interest rate is up from the 6.2% avg. for the past 5 large-cap rail debt issuances this year. Still, the deal was oversubscribed which is likely a good sign for the rails' ability to access the debt markets. Yesterday, S&P assigned a BBB rating to the notes, in line with UNP's corporate credit rating. http://wolferesearch.com/email/20081007_InsideFreight_UNP_CVTI&YRCWFinancing_R&GWR_Acquisitions_STB_TruckOrders_DM&E_UNP_CSX.pdf _CP_CVTI_CSX_GWR_NSC_R_UNP_YRCW_ CF355CDA-82A2-45FC-9FB2-D84074A72DAC Tue, 7 Oct 2008 09:47:56 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20081003_FridayFreight.pdf _CHRW_CNI_CP_CNW_GWR_JBHT_KSU_ODFL_UTIW_YRCW_ 32686994-195D-4B3D-B5ED-04EF1E211A16 Fri, 3 Oct 2008 09:37:20 -0400 Total Week 39 Rail vols declined 3.6% y/y, less worse than -8.3% and -4.1% the prior 2 weeks. The rails have started to rebound from Hurricane Ike as chemicals and grain vols increased 20% and 10% sequentially vs. last week. Vols finished 3Q down 2.6% y/y, deteriorated slightly from -2.4% in 2Q. http://wolferesearch.com/email/20081003_Week_39_Worst_Of_Hurricane_Volumes_Likely_Behind_Us.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ E85E942F-F644-4725-BB4E-E4ACFE56A85E Fri, 3 Oct 2008 09:37:19 -0400 We are upgrading CHRW to Outperform and establishing a $60 year-end C09 target (15 month target price). We believe CHRW's recent pullback with the market offers investors a rare opportunity to own one of the highest quality companies and business models across any industry, at well below historical valuations. http://wolferesearch.com/email/20081003_CHRW_Upgrade.pdf _CHRW_ D43F8C87-2FE4-4E9D-AB23-A4A5360AFF19 Fri, 3 Oct 2008 09:37:19 -0400 We lowered our 3Q EPS estimate on KSU due to lost Rev. following Hurricane Ike. We also kept our Peer Perform rating on the stock... "remaining patiently on the sidelines" for a better entry point. It turns out, we didn't have to wait long: Following yesterday's 18% decline in the stock, we now strongly recommend buying KSU for its unique growth opportunities that should drive solid EPS gains the next 3-5 years regardless of the economy. http://wolferesearch.com/email/20081003_KSU_Upgrade.pdf _KSU_ 1C3ACDBE-C157-4ACD-9442-3D2AD8A1F500 Fri, 3 Oct 2008 09:37:18 -0400 JBHT's stock was down 13% yesterday into a day of transport stock carnage sparked by CNW's downside pre-report and clear evidence of a weakened domestic economy. JBHT and the transports also suffered from continued investor selling pressure (see more below). JBHT is now down 28% from recent highs, and closed yesterday 3% below our former year-end C08 downside target price of $30. http://wolferesearch.com/email/20081003_JBHT_Upgrade.pdf _JBHT_ 0FF4D8B3-36C2-45E4-A462-FCA59D099F02 Fri, 3 Oct 2008 09:37:18 -0400 We are upgrading shares of ODFL to Peer Perform from Underperform as the stock closed 17% below our prior $29 year-end 08 target price yesterday. The 15% drop in ODFL's stock yesterday followed CNW's 29% reduction in 2H:08 guidance into a very tumultuous market. http://wolferesearch.com/email/20081003_ODFL_Upgrade.pdf _ODFL_ C92B8377-A4F1-4A17-AFAC-023445789EF8 Fri, 3 Oct 2008 09:37:18 -0400 We are upgrading shares of CNW to Peer Perform from Underperform as the stock closed 24% below our prior $45 year-end 08 target price yesterday. The 20% drop in CNW's stock yesterday followed a 29% reduction in 2H:08 guidance and a slew of analyst downgrades, which seems like an overreaction to us. We believe a lot of bad news is now discounted in the stock. http://wolferesearch.com/email/20081003_CNW_Upgrade.pdf _CNW_ 27F3D735-153F-43E3-9986-6932653F5A27 Fri, 3 Oct 2008 09:37:17 -0400 CNW provided revised C08 guidance 16% lower than prior full year guidance, implying expectations 29% below prior Cons for 2H:08. Mgmt noted that Sept LTL tonnage was worse than July and Aug for the first time in memory. TL ops are also below plan but should see a bigger near term fuel benefit. Menlo Logistics is also below plan as a result of issues with integration in China. http://wolferesearch.com/email/20081002_InsideFreight_CNW_Pre-report.pdf _ABFS_CNW_ODFL_SAIA_YRCW_ DF2FF7A4-A4CC-4600-9AB8-F816B9582B67 Thu, 2 Oct 2008 09:37:17 -0400 We recently hosted meetings with KSU and while mgmt was cautious on near-term results following Hurricane Ike, the long-term outlook remains very positive regardless of the macro economy. KSU's vols were tracking strongly positive y/y in 3Q prior to the hurricane (vs. the large-cap rails whose vols are down 2.5% QTD), driven largely by ramping business out of Lazaro Cardenas and a new chemicals contract w/ XOM. http://wolferesearch.com/email/20081002_KSU_Mgmt_Mtgs.pdf _KSU_ DA876E99-5B16-48C6-A5A6-2CCC1DC95147 Thu, 2 Oct 2008 09:37:16 -0400 Our sense is that F3Q is moving forward with few surprises despite decelerating global demand. Mgmt's guidance had provided for a slow down in demand, solid air and ocean gross yield improvement, and operating margin improvement driven by its cost savings initiatives. Our sense is there is nothing yet surprising and plans remain on track. http://wolferesearch.com/email/20080930_UTIW_ManagementMeetings.pdf _UTIW_ 771D1361-1951-401B-879C-084E745A1510 Tue, 30 Sep 2008 09:37:16 -0400 The Wolfe Monthly Macro Watch summarizes the most recently available Air, Ocean, Rail & Truck freight statistics. Each month, we track 14 series of domestic and international freight data. http://wolferesearch.com/email/20080929_Monthly_Macro_Watch.pdf _CSX_EXPD_GWR_HUBG_NSC_R_UNP_UPS_ BE682DB3-AE53-4CAD-9943-42AEFC563F9B Mon, 29 Sep 2008 16:54:14 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20080926_FridayFreight.pdf _CNW_CSX_GWR_HUBG_LSTR_NSC_UNP_WERN_YRCW_ 0E2101C3-B490-4F14-AC1B-6A8DFC79DCE8 Fri, 26 Sep 2008 07:58:34 -0400 Total Week 38 Rail vols declined 8.3% y/y, down materially from -4.1% the past 2 weeks. This is the worst week of y/y vols for the rails since the West Coast port shutdowns in the Fall of 2002. Vols are now down 2.5% QTD, vs. -2.4% in 2Q. Vols have deteriorated sharply following the hurricanes, with the biggest impact on UNP and KSU followed by BNI and CSX. http://wolferesearch.com/email/20080926_Week_38_Worst_Week_For_Rail_Volumes_Since_2002.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ E6CC17E0-B96A-4BED-A2BC-EEF9D310C965 Fri, 26 Sep 2008 07:58:30 -0400 NSC's vols are tracking down about 1% in 3Q, improved from -2.1% last qtr. and -3.3% on avg. the past 7 qtrs. Excluding a 31% drop in lower-margin auto vols, NSC's vols would be trending up 1% in 3Q. NSC's vols were the 1st to turn negative in the U.S. and we expect them to be 1st to turn positive. http://wolferesearch.com/email/20080925_NSC_Update.pdf _NSC_ 92636A2E-A35A-4559-ABE4-B5B905F12ABC Thu, 25 Sep 2008 07:58:30 -0400 Despite signs of another step down recently in freight demand and flat pricing, HUBG mgmt seemed confident to us, as it continues to benefit from new account signings in 1Q, a revamped sales force, improved productivity and a strong balance sheet. We have conviction in our 7% and 9% above Cons. 3Q:08 and C09 EPS forecasts. http://wolferesearch.com/email/20080924_HUBG_Mgmt_Mtgs.pdf _HUBG_ 5E8ADF61-DFDF-471B-A1EC-E3A73EE508AC Wed, 24 Sep 2008 07:58:30 -0400 Yesterday evening, CSX announced that the combined impact of Hurricanes Ike and Gustav would reduce 3Q EPS by $0.06-$0.08. This includes a non-cash write down for damaged track in the Gulf, as well as lost chemicals business out of Houston and some re-rerouting and clean-up costs. The impact from the hurricanes was bigger than expected as CSX did not anticipate lost chemicals business out of Houston following Ike. http://wolferesearch.com/email/20080924_CSX_Pre_Report.pdf _CSX_ CCC7E29E-044F-48E5-A197-9EE5141642D8 Wed, 24 Sep 2008 07:58:29 -0400 Last night, UNP pre-reported 3Q EPS in a range of $1.28-$1.33, well above prior guidance of $1.10-$1.20 and prior Cons. of $1.21. UNP will benefit by about $0.10 from declining fuel prices in 3Q, offset by a $0.10 reduction related to Hurricanes Ike and Gustav. Core earnings also continue to benefit from ongoing efficiency gains and a favorable business mix. http://wolferesearch.com/email/20080923_UNP_Mgmt_Mtgs.pdf _UNP_ 0D933016-E9FA-4C2A-B1B4-5D10DDF53965 Tue, 23 Sep 2008 07:58:29 -0400 Last week we met with senior mgmt at WERN, a high-quality TL and increasingly logistics' provider. The truck vol. and pricing environment has softened during 3Q compared to the end of 2Q, but WERN remains well positioned with a reduced fleet, tight cost control and increased focus on its intermodal, brokerage, forwarding and Dedicated businesses. http://wolferesearch.com/email/20080923_WERN_Mgmt_Mtgs.pdf _WERN_ 95C5FB25-7B9E-40F7-B838-5FB0C031347A Tue, 23 Sep 2008 07:58:29 -0400 Generally we see little direct material exposure to the transport sector from failed financial institutions or increasingly tight or expensive financing. Overall the balance sheets of the 31 public transport companies that we cover are solid, and they have long-lived, but relatively liquid assets (railcars, trucks and planes) that can serve to collateralize funding, if necessary. http://wolferesearch.com/email/20080922_InsideFreight_Credit_Crunch.pdf _ABFS_CHRW_CNI_CVTI_CSX_EXPD_FDX_GWR_HTLD_KSU_R_SAIA_TNT_UPS_UTIW_YRCW_ 1820AED7-5ADC-4753-9B91-D1054536E07C Mon, 22 Sep 2008 07:58:28 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20080919_FridayFreight.pdf _CNW_FDX_GWR_LSTR_UNP_UTIW_YRCW_ 3B8FDD0D-A859-433F-BB8C-9C30658DE0BB Fri, 19 Sep 2008 09:09:23 -0400 Total Week 37 Rail vols declined 4.1% y/y compared to -4.1% and -2.5% the past 2 weeks. Vols are now down 1.9% QTD (vs. -2.4% in 2Q). Vols remain weak into continued soft import/consumer demand and more recently, weak grain into tough comps and low stockpiles. We believe most of the deterioration the past 2 weeks was related to recent hurricanes. http://wolferesearch.com/email/20080919_Week_37_Rail_Volumes_Remain_Weakened_Into_Hurricanes'_Impact,_Slowed_Economy.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ F87F3C24-1DBB-47C0-9042-FB7A42FFCD9A Fri, 19 Sep 2008 09:09:23 -0400 FDX reported F1Q (Aug. qtr.) EPS of $1.23 in-line with its pre-report. Rev, EBIT and Continuing EPS in F1Q changed 8%, -22% and -22% y/y (including an estimated $0.18 benefit y/y from fuel). On an operating basis vs. our expectations, Ground provided $0.07 upside, Freight (LTL) $0.01 upside, Express $0.09 downside. FDX had one fewer operating day y/y in the qtr. http://wolferesearch.com/email/20080919_FDX_F1Q09_Earnings.pdf _FDX_ 3B3DEE81-BE86-485C-9209-7E9DF59A4706 Fri, 19 Sep 2008 09:09:23 -0400 Yesterday, CSX announced that it would immediately seat the remaining 2 TCI/3G nominees - Chris Hohn and Tim O'Toole - to the Board. This follows a Court decision on Monday not to block any of the TCI/3G shares from the proxy vote. The proxy battle has now concluded with 4 of 5 TCI/3G nominees added to the Board, which is scheduled to meet shortly. http://wolferesearch.com/email/20080917_InsideFreight_CSX_TruckOrders_Ocean&AirData_GWR_UNP_USDA_FDX_CP_PACR_HTLD_UPS_LSTR.pdf _CSX_GWR_UNP_BNI_NSC_UPS_FDX_PACR_HTLD_LSTR_ 5DB865E2-ED39-49F1-A663-2097963C9E9A Wed, 17 Sep 2008 09:09:22 -0400 We spoke with mostly all of our companies and several shippers yesterday to get an early sense of the impact from the storms. While there was less infrastructure damage as compared with Hurricanes Katrina and Rita, power remains out and chemical production remains shut across much of the TX Gulf. We expect the greatest impact to operations/vols for the Rails followed by the LTL's and then TL's. LSTR should again benefit from relief support as they did with Hurricane Gustav. http://wolferesearch.com/email/20080916_InsideFreight_Hurricane_Ike.pdf _ABFS_BNI_CNW_CSX_FDX_JBHT_KSU_LSTR_NSC_ODFL_R_SAIA_UNP_UPS_UACL_UTIW_YRCW_ E7297FC0-D875-4AFB-9587-9629086F82A3 Tue, 16 Sep 2008 09:09:22 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20080912_FridayFreight.pdf _ABFS_CHRW_CSX_FDX_GWR_HUBG_KSU_LSTR_NSC_PACR_R_UTIW_YRCW_ B5863E8D-74C6-4046-91E6-F2AB71DBC6C2 Fri, 12 Sep 2008 09:07:42 -0400 Yesterday morning, CSX raised its C08 guidance from $3.60 to $3.70-$3.75, solidly above prior Cons. of $3.57 and in-line with our prior high-end estimate of $3.73. CSX also increased its capex budget by $150M to $1.75B to account for increased coal car orders and repair costs following Hurricane Gustav. http://wolferesearch.com/email/20080912_CSX_Raises_Guidance.pdf _CSX_ 3CFA2618-A7A5-4759-90BB-D7A74D0BDF18 Fri, 12 Sep 2008 09:07:41 -0400 Total Week 36 Rail vols declined 4.1% y/y, worse than -2.5% and -1.6% the past 2 weeks. Vols are now down 1.7% QTD, still improved vs. -2.4% in 2Q. Rail vols remain muted into continued soft import/consumer demand and more recently, weak grain into tough comps and low stockpiles. We believe most of the deterioration this week is related to recent hurricanes. There may also be some volatility around the Labor Day holiday. http://wolferesearch.com/email/20080912_Week_36_Rail_Volumes_Weaken_Further.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 031C6C06-8380-426D-885B-4959C394A013 Fri, 12 Sep 2008 09:07:30 -0400 Last night, FDX announced it expects to generate $1.23 EPS during F1Q:09 (August) compared to our $1.08, Cons. $0.98 and prior guidance of $0.80-$1.00. This equates to a 22% y/y decline in EPS similar to last qtr's y/y decline of 24%, despite the big swing in net fuel impact sequentially. http://wolferesearch.com/email/20080910_FDX_Prereport.pdf _FDX_ AE215385-5D2A-44AD-BC37-929B08D8607B Wed, 10 Sep 2008 09:07:29 -0400 The Big 4 U.S. Rail stocks were down 6.8% yesterday vs. the S&P 500 down 3.4%. The group is now down 11.5% over the past 5 trading days vs. the S&P down 4%. http://wolferesearch.com/email/20080910_Rail_Update.pdf _BNI_CNI_CP_CSX_NSC_UNP_ 27A28F7F-2342-4AF3-B82B-505915D48FD1 Wed, 10 Sep 2008 09:07:29 -0400 YRCW reduced its 3Q on-going profitability expectation to a slight EPS loss from core operations, prior to $0.06-$0.08 from its latest severance charges which we treat as ongoing given recent 5 year history. This is down from guidance of +$0.35-$0.45 issued just 6 weeks ago. http://wolferesearch.com/email/20080909_YRCW_3Q_Pre-report.pdf _YRCW_ 6A686E46-2C1E-4C1F-A2B9-D28616380136 Tue, 9 Sep 2008 09:07:29 -0400 We recently travelled with R's Mgmt and have strong conviction that R's revamped long term processes installed over the past 7-8 years and proactive measures in reducing its CR fleet and number of non-rev. generating trucks for sale, position it well going forward. http://wolferesearch.com/email/20080908_R_Update.pdf _R_ F6A2F85B-530A-4391-ABD4-352F5BE81C5F Mon, 8 Sep 2008 09:07:28 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20080905_FridayFreight.pdf _CNI_CP_CNW_CSX_FDX_FWRD_GWR_HUBG_KSU_LSTR_UPS_UTIW_YRCW_ 18043607-5E52-4E67-B6E9-ABB22D4E8C48 Fri, 5 Sep 2008 11:41:43 -0400 Relative to our expectations, UTIW reported in-line Gross Rev. growth (20%) but better than expected Net Rev. growth (14%, compared to our 10.5% expectation) driven by 80bp better Gross Yield offset by 30bp worse Net OR. http://wolferesearch.com/email/20080905_UTIW_F2Q09_Earnings.pdf _UTIW_ D0573354-2842-4E77-934D-1700B3484605 Fri, 5 Sep 2008 11:39:56 -0400 Total Week 35 Rail vols declined 2.5% y/y, down from -1.6% and -0.8% the past 2 weeks. Vols are now down 1.5% QTD, improved vs. -2.4% in 2Q. Still, rail vols remain muted into continued soft import/consumer demand and more recently, weak grain. We believe some of the deterioration this week was likely related to hurricane preparations as the rails were positioning equipment out of the Gulf region. There may also have been some volatility ahead of the Labor Day holiday. http://wolferesearch.com/email/20080905_Week_35_Rail_Volumes_Deteriorate_Ahead_of_Hurricane.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 92696911-DC49-4E04-8A86-66D2FAF0503E Fri, 5 Sep 2008 11:38:07 -0400 We attended the NITL's Rail Committee meetings last week in Toledo, OH and met with 60+ shippers. Our sense is that shippers remain frustrated with continued strong rail rate increases despite weak volumes. Fuel also continues to be a major focus. The NITL's Rail Compromise Proposal with the railroads remains in limbo. http://wolferesearch.com/email/20080902_InsideFreight_FWRD&YRCWAcq_DHLAgreement_FDX_NITL_CNW_CSX_CNI_STB.pdf _CNI_CNW_CSX_FDX_FWRD_UPS_YRCW_ 4C7F5B33-F5E1-4BA1-B7A8-97E4775276AE Wed, 3 Sep 2008 11:36:14 -0400 The Wolfe Monthly Macro Watch summarizes the most recently available Air, Ocean, Rail & Truck freight statistics. Each month, we track 13 series of domestic and international freight data. http://wolferesearch.com/email/20080902_Monthly_Macro_Watch.pdf _BNI_CHRW_EXPD_FDX_HUBG_R_UNP_UPS_ 929315C7-AA1C-4CC5-B4DA-D9F15E7F104F Tue, 2 Sep 2008 16:55:46 -0500 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20080829_FridayFreight.pdf _EXPD_FDX_GWR_HUBG_KSU_KNX_LSTR_UTIW_ 05F74CD9-D9B7-401E-95B1-25C2D513020F Fri, 29 Aug 2008 09:21:42 -0400 Total Week 34 Rail vols declined 1.6% y/y, in-line with the average of the past two weeks which were -0.8% and -2.3%. Vols are now down 1.3% QTD, improved vs. -2.4% in 2Q. Still, rail vols remain muted into continued soft import/consumer demand and more recently, weak grain into tough comps and low stockpiles. http://wolferesearch.com/email/20080829_Week_34_Rail_Volumes_Remain_Negative.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 2D1B748E-ABFF-44E8-ACB4-429CA45DD3FB Fri, 29 Aug 2008 09:21:37 -0400 LSTR hosted its scheduled mid-qtr update cc yesterday. Revs have tracked up double digits y/y despite modestly decreased total loads. Pricing and fuel remained strong y/y accounting for the difference. Mgmt guided to 3Q rev growth of 10-13% (arguably up from previous guidance of high single to low double digits growth) following 10% y/y growth in 2Q:08, but below our prior high-end 3Q estimate of 16%. http://wolferesearch.com/email/20080826_LSTR_Mid_3Q_Update.pdf _LSTR_ F9805AA8-F825-4AEC-A92D-FEA5AD4B57FC Tue, 26 Aug 2008 09:21:36 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20080822_FridayFreight.pdf _CSX_FDX_GWR_HUBG_KSU_LSTR_UNP_UTIW_YRCW_ 882954D0-2A1B-48D5-8820-4A1318F38F76 Fri, 22 Aug 2008 12:54:08 -0400 Total Week 33 Rail vols declined 0.8% y/y, relatively improved vs. -2.3% and -2.2% in the prior 2 weeks. Vols are now down 1.3% QTD vs. -2.4% in 2Q. Still, rail vols remain muted into continued soft import/consumer demand and more recently, weak grain into tough comps and low stockpiles. http://wolferesearch.com/email/20080822_Week_33_Rail_Volumes_Less_Worse.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ D0719022-F045-43EC-BA26-390E319FAE5D Fri, 22 Aug 2008 12:51:38 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20080815_FridayFreight.pdf _CNI_EXPD_UNP_ C84F144C-DD3E-42C9-9884-5FEF3437F83E Fri, 15 Aug 2008 13:53:00 -0400 Total Week 32 vols declined 2.3% y/y, vs. -2.2% and -3.3% in the prior 2 weeks. Vols are now down 1.4% QTD vs. -2.4% in 2Q. Rail vols remain weak into continued soft import/consumer demand and more recently, weak grain into tough comps and low stockpiles. http://wolferesearch.com/email/20080815_Week_32_Rail_Volumes_Remain_Weak.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ CBB49E81-0FB9-48B8-8F4F-F178D6B2903F Fri, 15 Aug 2008 13:50:04 -0400 CNW announced it had hired Steve Bruffett as CFO. We believe the addition of Bruffett strengthens CNW's mgmt team. Conversely, we view Bruffet's move from YRCW with caution given our concerns with YRCW's charge-riddled income statements the past several years and its second CFO departure in less than a year. YRCW's Corp, Controller and Chief Accounting Officer, Paul Liljegren, was appointed interim CFO. http://wolferesearch.com/email/20080815_InsideFreight_YRCW&CNW_EXPD10-Q_WCPortVols_USDA.pdf _BNI_CSX_EXPD_NSC_UNP_YRCW_ B94070BF-D6CC-4E74-9079-A48FAB07A475 Fri, 15 Aug 2008 13:47:26 -0400 We believe EXPD's long-term growth, cash flow and high-return model remains intact and that recent concerns about a slowing global economy are more than in the stock. We also believe its non-asset model is well positioned to relatively outperform, like past downturns, into weaker global vols, offset to some degree by likely improving Ocean and, to a lesser extent, Air Gross Yields. http://wolferesearch.com/email/20080814_EXPD_Upgrade.pdf _EXPD_ B4F0A554-6AC8-4860-8CEB-C5254C21FAA3 Thu, 14 Aug 2008 13:41:54 -0400 The large-cap rail stocks have pulled back 6% on avg. over the past 2 days vs. the S&P 500 down 0.5%. The U.S. rails have fared worst, down 7% vs. the Canadian rails down only 3%. Still, our Large Cap Rail index remains up 19% YTD including the U.S. rails up 27% (vs. the S&P down 12%). http://wolferesearch.com/email/20080813_Inside%20Freight_RailsPullBackonMarketJitters.pdf _BNI_CNI_CP_CSX_NSC_UNP_ F0BEF048-EB51-4214-93AE-267898B77EF8 Wed, 13 Aug 2008 12:42:17 -0400 The Sunday Telegraph reported that UPS has informally approached TNT about purchasing it for about Euro10B ($15B) compared to Friday's closing EV of Euro11B ($17B). Recently, there has been increased press speculation about first FDX and now UPS purchasing all of TNT or its Express division. We have provided an informal merger model below, but believe at this point there remains little evidence of such a deal occurring. http://wolferesearch.com/email/20080811_InsideFreight_UPSTNT_CHRW&%20RAcq_ILWU_DHLDeal_UNP_BNI_CSX_CNI.pdf _BNI_CHRW_CNI_CSX_EXPD_FDX_R_TNT_UNP_UPS_ 91612851-AC94-4A36-B203-FDAAE0E9F19C Mon, 11 Aug 2008 12:38:57 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20080808_FridayFreight.pdf _BNI_HUBG_KSU_R_ 7200773F-EC4A-4B9E-8F8E-9FAE90CF783E Fri, 8 Aug 2008 13:02:39 -0400 Total Week 31 vols declined 2.2% y/y, less worse than -3.3% last week, but weaker than -0.8% 2 weeks ago. Vols are now down 1.2% QTD vs. -2.4% in 2Q. Our sense is that recent make-up vols related to the Midwest floods are now behind the rails, who continue to feel pressure from weak consumer demand. http://mail.wolferesearch.com/exchweb/bin/redir.asp?URL=http://wolferesearch.com/email/20080808_Week_31_Rail_Volumes_Continue_Decline.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 84C5F530-5B23-4EC2-BE66-7CC16A30C9D2 Fri, 8 Aug 2008 13:01:29 -0400 Slides from our 2Q Postview conference call, reviewing 2Q trends for volumes, yields, expenses and margins for Trucks, Rails and Airfreight & Logistics as well as our expectations and thesis for owning transports stocks in 2H:08. In addition, we updated valuations and where the different transport sub-sectors are currently compared to past economic and Fed cycles. http://wolferesearch.com/email/20080829_Week_34_Rail_Volumes_Remain_Negative.pdf 11F48D54-643F-47ED-B042-27603C814C7C Thu, 7 Aug 2008 12:56:30 -0400 PACR reported 2Q EPS of $0.40, 11% above Cons. but below our high-end estimate of $0.45. Net Rev., EBIT and EPS grew 4%, 8% and 15% y/y, each materially decelerated from 8%, 52% and 71% growth during 1Q. http://wolferesearch.com/email/20080806_PACR_2Q_Earnings.pdf _PACR_ 17106BDB-59FD-46E4-8FB7-20E64F4AA1BE Wed, 6 Aug 2008 12:55:02 -0400 EXPD reported 6% below Cons. before the market yesterday. Net rev., EBIT and EPS grew by 12%, 11% and 9% modestly decelerated from 12%, 12% and 13% y/y during 1Q. Relative to our below Cons. estimate the $0.01 miss was related to costs resulting from higher than expected legal and related costs, which should be on-going for the foreseeable future. http://wolferesearch.com/email/20080806_EXPD_2Q_Earnings.pdf _EXPD_ 5DB92696-1CA6-4047-B947-327016A1E09B Wed, 6 Aug 2008 12:53:41 -0400 GWR reported $0.44, in line with our estimate and a penny below Cons. This was below GWR's prior guidance of $0.45-$0.50, driven by a $0.04 headwind from fuel and $0.02 from missed coal vols following the Midwest floods. As reported, Rev., EBIT and EPS grew by 22%, 30% and 15%, each materially accelerated from 12%, -11% and -19% during 2Q. http://wolferesearch.com/email/20080805_GWR_2Q_Earnings.pdf _GWR_ 59ABFE7B-B25E-4AF3-9D43-3F49635F4911 Tue, 5 Aug 2008 12:52:20 -0400 CLDN reported F4Q:08 EPS of $0.10, vs. our $0.04 est and Cons $0.07. Rev, EBIT, and EPS changed +17% (3.5% net fuel), -43%, and -54% which was improved sequentially from +15% (+6.9% net fuel), -70% and -96% in a seasonally weak 1Q. http://wolferesearch.com/email/20080804_CLDN_2Q_Earnings.pdf _CLDN_ 3A095C31-260B-4A7A-BCC6-2D9932CF52E0 Tue, 5 Aug 2008 12:50:12 -0400 We brought clients to meet with CHRW senior mgmt at their HQ in Eden Prairie and we toured a branch office. Our discussions revolved around learning more about CHRW's model, its history and evolution, as well as recent gross yield pressure, and how the current truck cycle feels compared to historical cycles. http://wolferesearch.com/email/20080804_CHRW_Management_Meetings.pdf _CHRW_ 8AFB2EED-CEB8-4B44-9B91-C5A2D7301EF3 Mon, 4 Aug 2008 12:48:52 -0400 The Rail Safety Bill (S. 1889) was passed in the Senate by a unanimous voice vote. The bill would revise hours of service rules, reduce limbo time, establish training standards for all rail workers and implement positive train control regulations. While not draconian, we believe this bill will likely increase hiring needs for the rails and limit some future productivity gains. http://wolferesearch.com/email/20080804_Inside_Freight_Rail_Safety_Bill.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_UNP_ 191E5D6C-3FD5-4A76-8930-CAE0086C6794 Mon, 4 Aug 2008 12:23:29 -0400 This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel. http://wolferesearch.com/email/20080801_FridayFreight.pdf _HUBG_R_UPS_YRCW_ 2BE2A044-DAC6-4C8B-A589-EF8D52209E70 Fri, 1 Aug 2008 12:52:12 -0400 Total Week 30 vols declined 3.3% y/y, worse than -0.8% and -0.1% the past 2 weeks. This is also weaker than -0.9% QTD and -2.4% in 2Q. Our sense is that recent make-up vols related to the Midwest floods are likely now behind the rails. This week's drop-off was driven by a 3.2% decline in total carloads ex. intermodal (vs. +3.3% on avg. the past 3 weeks). http://wolferesearch.com/email/20080801_Week_30_Volumes_Decline_Further.pdf _BNI_CNI_CP_CSX_GWR_KSU_NSC_PACR_UNP_ 56B6EF27-7339-464D-A209-FADFC90C3375 Fri, 1 Aug 2008 12:50:47 -0400 KSU reported 2Q EPS of $0.54, a nickel above our high-end estimate and 23% above Cons., excluding +$0.06 of insurance settlements and -$0.04 for debt retirement costs. Rev., EBIT and EPS grew by 14%, 26% and 50%, generally well above our estimates of 14%, 22% and 37%. This also compares with 10%, 15% and 81% y/y growth during 1Q. http://wolferesearch.com/email/20080801_KSU_2Q_Earnings.pdf _KSU_ 3963E821-80A4-4F43-8806-CD674AE5F240 Fri, 1 Aug 2008 12:48:17 -0400 This monthly report summarizes the most recently available Air, Ocean, Rail & Truck freight statistics. Each month, we track 13 series of domestic and international freight data. http://wolferesearch.com/email/20080731_Monthly_Macro_Watch.pdf _CHRW_CNW_EXPD_FDX_GWR_HTLD_HUBG_NSC_ODFL_R_TNT_UNP_UPS_WERN_YRCW_ E432D383-94B3-46B1-8DF7-70E834A78E41 Thu, 31 Jul 2008 16:56:56 -0500 CVTI reported ($0.17) EPS loss in 2Q:08, ahead of our ($0.20) est and Cons ($0.33). Arguably the loss was more like ($0.12) on an operating basis adjusting for $0.06 tax benefits not realized, offset by $0.01 lower net interest expense. Rev. grew 6% (18% incl fuel), up from 3.5% in 1Q:08 (9% incl fuel) and the EBIT and EPS losses shrunk by 98% and 79% y/y, following larger EBIT and EPS losses in 1Q:08. http://wolferesearch.com/email/20080730_CVTI_2Q_Earnings.pdf _CVTI_ C0DDBBDE-AF9C-456A-8202-66A8AA2A3EE5 Wed, 30 Jul 2008 12:47:21 -0400 TNT reported a clean 2Q EPS of Euro0.56 ($0.87) vs. Cons. Euro0.61 and our Euro0.60 ($0.94), including modest drags from fx and fuel of about (Euro14M pretax or Euro0.03) combined. Revenue, EBIT and EPS changed +4%, -2% and -7% modestly better than +2%, -12% and -12% y/y in 1Q, but with the benefit of 3 extra operating days y/y in Express during 2Q. http://wolferesearch.com/email/20080729_TNT_2QEarnings.pdf _TNT_ 52BFC140-276C-4EE7-82E6-7C77C6D3B266 Tue, 29 Jul 2008 12:45:40 -0400 UACL reported 2Q EPS of $0.29 vs our $0.27 and Cons. $0.30. Reported GAAP EPS of $0.22 included a charge for the write-down of financial sector investments of $0