Transportation Industry

North America Equity Research
12 January 2022
Transportation & Logistics

4Q21 Earnings Preview: Stuck in Neutral After Rapid
Sector Rise, Too Early to Play "De-Congestion"
We are approaching 4Q21 earnings and 2022 guidance season with a neutral stance Airfreight & Surface
after the sector’s inflation protection attributes helped fuel the bounce from early Transportation
October which largely overshot the pace of fundamental improvement. Rising interest Brian P. Ossenbeck, CFA AC
rates were a key risk from our 2022 Outlook and recently weighed on the stocks, but (1-212) 622-1023
not to the extent that merits any ratings changes considering 2022 is a year where brian.p.ossenbeck@jpmorgan.com
performance is earned through execution and not multiple re-rating. We anticipate Bloomberg JPMA OSSENBECK <GO>
management teams will give uniformly positive guidance on the year ahead with the J.P. Morgan Securities LLC
expectation that supply chain congestion will hit a peak sometime in 2H22 after a Kellen J Curry
period of inventory re-stocking. It’s still too early to play the “de-congestion” theme (1-212) 622-0717
kellen.j.curry@jpmchase.com
broadly across the sector, but we still believe the risk is that it happens sooner than
J.P. Morgan Securities LLC
expected based on our updated analysis of the Logistics Manager's Index and
inventory to sale ratios. For single stock ideas in 4Q21, we like CSX for strengthening Piyush Khaitan
+91-22 61251053
coal tailwinds and with the best positioning for growth while the YoY operating ratio
piyush.khaitan@jpmchase.com
deterioration is well known. NSC has a similar coal kicker and has been staffing up to J.P. Morgan India Private Limited
improve service and the core operating ratio. This quarter we would avoid two stocks
we like for the full year. In a sign of just how quickly the transports bounced, UNP
was +10%/+12% points vs. the S&P 500 and broader industrials since early October;
we see a slower start to the year as “de-congestion” tailwinds gradually ramp up. UPS
has pushed through concerns of Amazon and a 2023 labor negotiation but we would
avoid it as the only large cap in our coverage facing a YoY decline in 1H22 EPS on
tough comps. We’d also avoid CHRW after its impressive run given the NAST margin
inflection is highly anticipated, but unlikely to happen in 4Q21. See page 6 for our
view of sentiment and positioning, FAQs, and key debates in 4Q21 and page 10 for a
synopsis of expected 2022 guidance and management commentary.
 Supply chain slog continues but at least it's not getting noticeably worse. We
might have to revise that view if the zero tolerance COVID-19 policies create more
bottlenecks at key Asia Pacific ports and manufacturing hubs. But so far the Global
Manufacturing PMI output price and delivery time components are moving in the
right direct, led by Asia. We aren’t seeing much improvement in our Supply Chain
Congestion Monitor, we're more focused on chassis as the physical link between the
ports and warehouses along with consumer demand which exacerbated the net
import imbalance. These two drivers will likely lead the number of vessels floating
off the West Coast which is the most widely followed congestion indicator.
 Growing risk that inventory re-stocking ends earlier than expected. We

expanded our recent work with the Logistics Manager's Index (LMI) to include
future expectations and upstream/downstream components. Tighter warehousing
conditions are driving LMI expectations (Future LMI) higher while freight
indicators point to a softer market. Spot truckload rates have a 0.93 correlation with
Future LMI and are at risk of declining if these trends continue. Inventory
expectations are also significantly higher than current conditions with upstream
levels well above downstream, suggesting a re-stocking event is already underway.
Inventory to sales ratios in real terms are also showing signs of re-stocking with
general merchandise and furniture/electronics within 10% of 2019 levels.
See page 76 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan 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 this report. Investors should consider this report as only a single
factor in making their investment decision.
www.jpmorganmarkets.com
Brian P. Ossenbeck, CFA North America Equity Research
(1-212) 622-1023 12 January 2022
brian.p.ossenbeck@jpmorgan.com
 Rising interest rates already starting to take its toll. This risk was a key reason
we didn’t have much valuation upside in our 2022 Outlook last month, we thought
rising interest rates limited our margin of safety. We utilize the spread between
earnings yields and the 10 year to assess how each group trades during different rate
environments, including when the Fed raises rates and spreads compress. The full
analysis is presented on page 27. Parcels historically have the best track record of
beating the market in this environment and Truckers fare better on a twelve month
view. Rails and LTL/Logistics modestly outperform despite starting with higher
valuations which we believe is attributable to the strong inflation+ pricing models.
 Highlighting FDX and a few battleground stocks ahead of the 2022 outlooks.
We expect 2022 guidance will be uniformly positive with forecasts of strong freight
rates and improving labor availability continuing in 1H22. It will be too early to
bank on differences between the companies as that largely depends on supply chain
“de-congestion” which consensus views as a 2H22 event. The timing and impact on
each company is a frequent source of debate, including JBHT which likely benefits
from "de-congestion" before it turns into a pricing headwind. There is always a
debate around FDX which likely continues into the June investor day, in the near
term we view the recent service alerts as noise and not a cause for concern.
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(1-212) 622-1023 12 January 2022
Figure 1: Summary of JPM earnings estimates and variance versus consensus

JPM Dec '22 Implied JPM EPS Prior JPM EPS vs. Consensus
Company Rating Target Return 4Q21E 21E 22E 4Q21E 21E 22E 4Q21E 21E 22E
Railroads
CSX Corp N $39.00 7.4% $0.42 $1.56 $1.76 $0.43 $1.56 $1.85 3.2% 1.2% 3.6%
Norfolk Southern OW $318.00 11.0% $3.10 $12.09 $13.34 $3.09 $12.08 $13.99 1.3% 1.0% 1.9%
Union Pacific Corp OW $264.00 7.1% $2.76 $9.92 $11.37 $2.56 $9.72 $11.44 -2.9% -1.9% 0.7%
Truckload Carriers and Brokers
C.H. Robinson N $102.00 (5.5%) $1.69 $6.25 $6.00 $1.87 $6.42 $6.30 2.2% 0.6% 0.7%
Heartland Express OW $18.00 10.4% $0.27 $1.00 $1.06 $0.25 $0.99 $0.98 -2.6% -0.7% -1.8%
Knight-Swift UW $54.00 (6.5%) $1.40 $4.51 $4.65 $1.46 $4.56 $4.95 2.0% 0.3% -1.5%
Schneider UW $26.00 (0.6%) $0.65 $2.10 $2.15 $0.65 $2.10 $2.35 -0.1% -3.4% 2.7%
U.S. Xpress N $7.00 31.8% $0.17 $0.38 $0.93 $0.07 $0.27 $0.69 -29.3% -8.9% -4.9%
Werner Enterprises UW $44.00 (4.2%) $0.86 $3.18 $3.50 $0.97 $3.29 $3.65 1.7% 0.0% -1.5%
Freight Tech
TuSimple OW $58.00 108.8% -$0.52 -$3.44 -$2.49 -$0.52 -$3.44 -$2.49 3.7% 27.6% 12.6%
Logistics
Ryder System, Inc. N $85.00 8.8% $2.56 $8.60 $9.25 $2.56 $8.60 $9.70 4.3% 0.6% 8.1%
XPO Logistics OW $92.00 30.2% $0.98 $4.10 $4.60 $0.97 $4.09 $4.74 -0.7% -4.6% -0.4%
TFI International OW $130.00 29.7% $1.23 $4.89 $5.96 $1.20 $4.87 $5.75 2.3% 3.8% -1.7%
GXO Logistics OW $107.00 23.1% $0.63 $1.94 $2.75 $0.63 $1.94 $2.75 23.9% 8.5% 7.4%
Intermodal
J.B. Hunt UW $171.00 (14.1%) $2.00 $6.86 $8.30 $2.05 $6.91 $8.30 1.9% 0.8% -0.1%
Hub Group N $87.00 9.5% $1.49 $4.06 $5.20 $1.50 $4.07 $5.20 4.9% 1.9% 2.6%
Parcels
United Parcel Service OW $243.00 15.0% $3.02 $11.57 $12.05 $3.17 $11.72 $12.28 2.8% 0.9% 1.3%
Source: Bloomberg Finance L.P., J.P. Morgan estimates
Figure 2: North America Transportation and Logistics Comp Sheet

JPM Mkt Cap Price Dec '22 Implied %∆ %∆ Consensus P/E and EPS 2 Year JPM EPS EV/EBITDA Net Debt
Company Ticker Rating (Bn) 1/11 Target Return YTD QTD 21E 22E 23E 21E 22E 23E PEG 21E 22E 23E 21E 22E 23E to EBITDA
Parcels
FedEx FDX OW $67.7 $255.54 $312.00 22.1% (1.2%) (1.2%) 14.1x 12.3x 11.1x $18.16 $20.74 $23.04 1.1x $18.04 $20.75 $23.99 8.4x 7.3x 6.6x 3.1x
UPS UPS OW $183.6 $211.27 $243.00 15.0% (1.4%) (1.4%) 18.2x 17.4x 16.3x $11.61 $12.12 $12.98 3.2x $11.72 $12.28 $13.49 12.6x 11.9x 11.2x 1.0x
Railroads
Canadian National Railway CNR CN NR $108.4 $153.81 N/A (1.0%) (1.0%) 26.7x 22.3x 19.9x $5.76 $6.91 $7.73 1.7x 16.7x 14.9x 14.0x 1.6x
Canadian Pacific Railway CP CN NR $87.5 $94.08 N/A 3.4% 3.4% 24.7x 22.9x 19.6x $3.82 $4.12 $4.79 2.0x 24.3x 22.0x 17.4x 2.4x
CSX Corp CSX N $80.5 $36.30 $39.00 7.4% (3.5%) (3.5%) 23.5x 20.4x 18.7x $1.55 $1.78 $1.95 1.9x $1.56 $1.85 $2.01 14.0x 13.1x 12.7x 2.1x
Norfolk Southern Corp NSC OW $69.7 $286.42 $318.00 11.0% (3.8%) (3.8%) 23.9x 20.9x 18.9x $11.98 $13.73 $15.18 1.9x $12.08 $13.99 $15.51 14.7x 13.6x 12.9x 2.3x
Union Pacific Corp UNP OW $158.4 $246.42 $264.00 7.1% (2.2%) (2.2%) 24.9x 21.7x 19.5x $9.91 $11.36 $12.62 1.9x $9.72 $11.44 $13.19 16.2x 15.0x 14.2x 2.6x
Truckload Carriers & Brokers
C.H. Robinson Worldwide CHRW N $14.0 $107.98 $102.00 (5.5%) 0.3% 0.3% 16.9x 17.3x 18.8x $6.39 $6.26 $5.74 -3.2x $6.42 $6.30 $5.35 12.7x 12.8x 13.6x 1.6x
Heartland Express HTLD OW $1.3 $16.30 $18.00 10.4% (3.1%) (3.1%) 16.3x 16.3x 16.2x $1.00 $1.00 $1.01 46.7x $0.99 $0.98 $0.95 5.4x 5.1x 4.7x -0.9x
Knight-Swift KNX UW $9.6 $57.78 $54.00 (6.5%) (5.2%) (5.2%) 12.8x 11.5x 12.4x $4.53 $5.02 $4.66 9.2x $4.56 $4.95 $4.55 7.4x 6.2x 6.0x 1.4x
Schneider National SNDR UW $4.6 $26.17 $26.00 (0.6%) (2.7%) (2.7%) 12.1x 11.4x 12.4x $2.16 $2.29 $2.12 -12.4x $2.10 $2.35 $1.95 5.3x 4.5x 4.4x -0.3x
U.S. Xpress USX N $0.3 $5.31 $7.00 31.8% (9.5%) (9.5%) 17.7x 7.3x 6.2x $0.30 $0.73 $0.85 0.3x $0.27 $0.69 $0.83 4.8x 3.4x 2.9x 1.5x
Werner Enterprises WERN UW $3.1 $45.92 $44.00 (4.2%) (3.7%) (3.7%) 14.0x 12.4x 12.3x $3.28 $3.71 $3.74 2.1x $3.29 $3.65 $3.45 5.7x 5.1x 5.0x 0.6x
Freight Tech
TuSimple TSP OW $5.9 $27.78 $58.00 108.8% (30.6%) (22.5%) -10.3x -12.6x -10.2x -$2.69 -$2.21 -$2.72 N/A -$3.44 -$2.49 -$3.32 N/A N/A N/A 5.3x
Logistics & LTL
Ryder System R N $4.2 $78.10 $85.00 8.8% (5.3%) (5.3%) 9.1x 8.7x 9.3x $8.54 $8.98 $8.42 -12.7x $8.60 $9.70 $8.55 3.6x 3.7x 3.7x 2.4x
XPO Logistics XPO OW $8.1 $70.68 $92.00 30.2% (8.7%) (8.7%) 16.5x 14.9x 13.0x $4.29 $4.76 $5.44 1.3x $4.09 $4.74 $5.26 9.5x 8.5x 7.8x 2.6x
TFI International TFII US OW $9.3 $100.26 $130.00 29.7% (10.6%) (10.6%) 21.4x 17.2x 14.8x $4.69 $5.84 $6.76 1.1x $4.87 $5.75 $6.85 11.1x 8.8x 7.9x 1.8x
GXO Logistics GXO OW $10.0 $86.90 $107.00 23.1% 49.8% (4.3%) 18.5x 34.0x 28.7x $4.69 $2.56 $3.03 -2.5x $1.94 $2.75 $3.11 17.3x 14.5x 12.5x 1.1x
Intermodal
J.B. Hunt JBHT UW $20.9 $199.05 $171.00 (14.1%) (2.6%) (2.6%) 29.0x 24.0x 21.9x $6.86 $8.31 $9.10 1.9x $6.91 $8.30 $8.75 13.9x 12.2x 11.4x 0.5x
Hub Group HUBG N $2.8 $79.48 $87.00 9.5% (5.7%) (5.7%) 19.9x 15.7x 16.1x $4.00 $5.07 $4.93 1.8x $4.07 $5.20 $4.99 9.2x 7.2x 7.1x 0.3x
Group Average 15.8% (2.4%) (4.7%) 17.5x 15.8x 14.8x 2.5x 11.2x 10.0x 9.3x
S&P 500 11.2% (1.1%) (1.1%) 21.4x 19.5x 17.7x 1.7x
Industrials ETF 0.1% 0.1%
DJ Transports 9.5% (3.0%) (3.0%) 16.8x 15.5x 14.5x 1.9x
Parcels 18.6% (1.3%) (1.3%) 16.1x 14.9x 13.7x 10.5x 9.6x 8.9x
Rails 8.5% (1.4%) (1.4%) 24.7x 21.6x 19.3x 17.2x 15.7x 14.2x
Truckload 4.2% (4.0%) (4.0%) 15.0x 12.7x 13.1x 6.9x 6.2x 6.1x
Logistics & LTL 22.9% 6.3% (7.2%) 16.4x 18.7x 16.4x 10.4x 8.9x 8.0x
Intermodal (2.3%) (4.1%) (4.1%) 24.5x 19.8x 19.0x 11.6x 9.7x 9.2x
Source: Bloomberg Finance L.P., J.P. Morgan estimates
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(1-212) 622-1023 12 January 2022
Equity Ratings and Price Targets

Mkt Cap Rating Price Target
Company Ticker ($ mn) Price ($) Cur Prev Cur End Prev End
Date Date
C.H. Robinson CHRW US 14,408.42 107.98 N n/c 102.00 Dec-22 92.00 n/c
CSX CSX US 81,384.60 36.30 N n/c 39.00 Dec-22 36.00 n/c
GXO Logistics GXO US 10,080.40 86.90 OW n/c 107.00 Dec-22 n/c n/c
Heartland Express HTLD US 1,293.63 16.30 OW n/c 18.00 Dec-22 19.00 n/c
Hub Group HUBG US 2,692.23 79.48 N n/c 87.00 Dec-22 84.00 n/c
J.B. Hunt JBHT US 21,186.09 199.05 UW n/c 171.00 Dec-22 162.00 n/c
Knight-Swift KNX US 9,589.52 57.78 UW n/c 54.00 Dec-22 51.00 n/c
Norfolk Southern NSC US 70,573.89 286.42 OW n/c 318.00 Dec-22 313.00 n/c
Ryder System, Inc. R US 4,161.97 78.10 N n/c 85.00 Dec-22 84.00 n/c
Schneider SNDR US 4,655.64 26.17 UW n/c 26.00 Dec-22 n/c n/c
TFI International TFII US 9,547.18 100.26 OW n/c 130.00 Dec-22 132.00 n/c
TuSimple TSP US 5,066.59 27.78 OW n/c 58.00 Dec-22 72.00 n/c
U.S. Xpress USX US 268.49 5.31 N n/c 7.00 Dec-22 10.00 n/c
Union Pacific UNP US 160,246.90 246.42 OW n/c 264.00 Dec-22 256.00 n/c
United Parcel Service UPS US 185,495.10 211.27 OW n/c 243.00 Dec-22 240.00 n/c
Werner Enterprises WERN US 3,114.94 45.92 UW n/c 44.00 Dec-22 42.00 n/c
XPO Logistics XPO US 8,198.88 70.68 OW n/c 92.00 Dec-22 105.00 n/c
Source: Company data, Bloomberg Finance L.P., J.P. Morgan estimates. n/c = no change. All prices as of 11 Jan 22.
Adj. EPS Estimate Changes

$ 4Q21E FY21E FY22E
Company BBG Ticker Prev Cur ∆ Prev Cur ∆ Cons Prev Cur ∆ Cons
C.H. Robinson CHRW US 1.69 1.87 0.17 6.25 6.42 0.17 6.38 6.00 6.30 0.30 6.22
CSX CSX US 0.42 0.43 0.01 1.56 1.57 0.01 1.55 1.76 1.85 0.10 1.78
GXO Logistics GXO US 0.63 0.63 - 1.94 1.94 - 1.79 2.75 2.75 - 2.56
Heartland Express HTLD US 0.27 0.25 (0.01) 1.00 0.99 (0.01) 1.00 1.06 0.98 (0.08) 1.00
Hub Group HUBG US 1.49 1.50 0.01 4.06 4.07 0.01 4.00 5.20 5.20 0.00 5.06
J.B. Hunt JBHT US 2.00 2.05 0.04 6.86 6.91 0.04 6.86 8.30 8.30 - 8.27
Knight-Swift KNX US 1.40 1.46 0.05 4.51 4.56 0.05 4.53 4.65 4.95 0.29 5.02
Norfolk Southern NSC US 3.10 3.09 (0.01) 12.09 12.08 (0.01) 11.98 13.34 13.99 0.64 13.73
Ryder System, Inc. R US 2.56 2.56 - 8.60 8.60 - 8.54 9.25 9.70 0.45 8.98
Schneider SNDR US 0.65 0.65 - 2.10 2.10 - 2.16 2.15 2.35 0.20 2.29
TFI International TFII US 1.23 1.20 (0.02) 4.89 4.87 (0.02) 3.91 5.96 5.74 (0.22) 5.04
TuSimple TSP US (0.52) (0.52) - (3.44) (3.44) - (2.56) (2.49) (2.49) - (2.20)
U.S. Xpress USX US 0.17 0.07 (0.10) 0.38 0.27 (0.10) 0.30 0.93 0.69 (0.24) 0.73
Union Pacific UNP US 2.76 2.56 (0.20) 9.92 9.72 (0.20) 9.92 11.37 11.46 0.09 11.36
United Parcel Service UPS US 3.02 3.17 0.15 11.57 11.72 0.15 11.61 12.05 12.28 0.23 12.12
Werner Enterprises WERN US 0.86 0.97 0.11 3.18 3.29 0.11 3.28 3.50 3.65 0.15 3.71
XPO Logistics XPO US 0.98 0.97 (0.01) 4.10 4.09 (0.01) 4.28 4.60 4.74 0.14 4.76
Source: Bloomberg Finance L.P., J.P. Morgan estimates.
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Table of Contents
Focus Topics for 4Q21 Earnings.............................................6
Summary of Sentiment, Positioning and Stock Picks................................................6
Expectations for 2022 Outlooks and Guidance.......................................................10
Supply Chain Congestion Update – The Slog Continues ........................................12
Risk Skewed to Inventory Re-Stocking Ending Early.............................................24
Impact of Rising Interest Rates on Transports ........................................................27
Updated Group Views and Analysis for 4Q21........................................................28
Investment Thesis, Valuation and Risks ..............................46
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Focus Topics for 4Q21 Earnings

Summary of Sentiment, Positioning and Stock Picks
Buckled up for the ride and a lot of twists and turns in 2022
The start of the year has investors working to identify and position around major
themes per usual, but with the understanding they can change quickly but also remain
in place for longer than expected if 2021 is any guide. Supply chain congestion is the
key topic for 2022 considering all transports are overearning to some degree and will
have to fill that gap with more volume, acquired revenue streams, or re-opening
activity that dropped during COVID-19 and congestion. While we all watch and wait
for signs and pace of “de-congestion”, it appears sentiment is increasingly focused on
the path of least resistance which assumes the status quo (i.e.: 3Q21 results) holds for
now. We agree it’s too early to expect the “de-congestion” plays to start working
although it will factor in management's commentary on 2022 outlooks. There will
likely be some debate as to which company benefits and for how long when supply
chain pain hits a peak. However, we don’t expect recent efforts to diversify and
acquire growth will change how truckload carriers and logistics providers are viewed
in the early stages of a truckload rate cycle contraction. The other major themes,
rising interest rates and inflation, were also analyzed as part of our 2022 Outlook
with the former gaining more attention to start the year – see page 27.
Snapshot of sentiment/positioning and investor FAQs

Our updated view on sentiment and positioning into the quarter is shown in Figure 4,
common themes from our recent conversations include:
 No single metric to “rule them all” and call the peak of supply chain pain:
There is a growing sense of fatigue watching the various metrics, surveys, and
sentiment gauges to call the peak in supply chain pain after several head fakes
over the last year. Shutdowns similar to last year are just a few COVID-19 flare-
ups away with China’s zero tolerance policy already cutting back at Ningbo last
week. Despite the fatigue, there is a growing sense that the disruptions are at or
near peak supply chain pain and the question is finding the best metric to lead
that realization and the market's recognition. We offer some additional thoughts
and analysis starting on page 12 and will focus more on chassis turn times on the
equipment side and inventory levels on the demand side as our key indicators.
 Identifying and sequencing the “de-congestion” plays could be tricky: We've
found there is some debate as to which stocks are “de-congestion" winners or
losers, our take on this spectrum is shown in Figure 3. Timing this unwind is the
primary issue but there is also some uncertainty on whether or not this event
coincides with a more contained COVID-19 impact on the workforce. The level
of demand on the other side of congestion is also a key consideration and we
don’t think it’s a given that there will be a clean hand-off to fluid supply chains
and robust consumer demand. Inventory to sales levels are an area we've
analyzed by category and on real terms and there are some signs that re-stocking
has already started in several areas that were the first "work from home"
purchases; see page 24 for details.
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Figure 3: The playbook for supply chain de-congestion should look a lot like 2020/2021 in reverse
Relative Winners Supply Chain De-Congestion Relative Losers
Brokers Rails Logistics Parcels Intermodal LTL Truckload
Key variables to determine the pace of de-congestion

 Response in Asia Pacific supply chains from COVID-19 flare ups
 Inventory levels and the extent of how much freight was pre-ordered
 Capacity demands based on the pace of industrial production growth
 Characteristics of future COVID-19 variants
 Outcome of court cases around vaccination mandates
Source: J.P. Morgan research
 Parcel carriers falling back out of favor: The group has enjoyed a decent rally
after the FedEx results in mid-December but the whole sector has largely been
along for the ride. We usually get the most pushback on this group ranging from
additional competition from Amazon and regional carriers, labor issues, declining
e-commerce growth, and peak airfreight rates. We believe the high delivery
reliability percentages during peak season are indicative of the carriers earning
their rates and competitors should not be a near term threat if the industry remains
disciplined. Our bigger concern is the underlying margin profile of the U.S.
Domestic operations in a more "normalized" environment, UPS is on its way to
improving its profitability already while FedEx has the opportunity to outline a
similar course at the upcoming investor day in June 2022.
Figure 4: J.P. Morgan view by group into 4Q21 earnings and estimated market positioning and current sentiment
Summary of relative stock views and group preferences into earnings
Group JPM View Sentiment ← Estimated market positioning from most crowded to highest shorted →
Parcels Neutral Negative FDX UPS
Rails Positive Mixed CSX NSC UNP
Intermodal Neutral Positive HUBG JBHT
Truckload Neutral Mixed KNX SNDR WERN HTLD USX
Brokers Negative Negative CHRW
Freight Tech Neutral Negative TSP
Logistics/LTL Neutral Mixed XPO TFII GXO R
Source: J.P. Morgan estimates
Note: CP and CNR excluded based on current restrictions
A summary of the stocks we'd prefer to avoid and the favored longs into the quarter
are included below; we also included commentary on other key debates and
questions which are more open ended or contentious. We provide further details and
supporting analysis for each of the groups within transports in the following sections.
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Favored longs
 CSX: The stock is reasonably crowded already and management's guide will
likely imply deteriorating OR YoY, but we still see upside from stronger coal
pricing to the 4Q21 guide. Labor availability as noted on page 33 has not been as
challenging for CSX as for peers so we expect a more constructive growth
outlook to start the year. CSX has also been more focused on growth for longer
than NSC and UNP which should bode well for additional opportunities coming
to fruition that are specific to the network. Consensus expectations already embed
YoY deterioration in OR, which we could see hold flat on strong core pricing and
tailwinds from coal markets. Our rating for CSX is Neutral.
 NSC: Management will need to convince skeptics that it is on the right track with
its staffing strategy after labor availability issues caused network congestion in
4Q21. We expect a modest beat in the quarter from stronger coal pricing and
continued accessorial and demurrage fees which will support margins into 1H22.
A sub-59% OR looks attainable in 2022 (+150bps gain) but will require a smooth
transition from coal and accessorial tailwinds to better operations and volume
growth opportunities. We believe NS ramped up its hiring efforts to avoid further
service disruptions which should help drive operating leverage beyond 1Q22.
Our rating for NSC is Overweight.
Ones to avoid
 UPS: We are still constructive on the full year outlook in 2022 and 2023 but
recognize there are only two companies where we expect 1H22 earnings will be
down YoY (UPS and XPO). The beginning of the year is usually the time to
underwrite a typical "back half recovery" but the lack of catalysts in the near term
will leave UPS subject to concerns over Amazon competition and the 2023 union
negotiation. The relative valuation gap with FDX remains at nearly an all-time
high and we believe expectations are still low for FedEx after F2Q22 results. We
also believe UPS management has earned credibility for the market to underwrite
a heavier weighting to 2H22 after managing then beating expectations throughout
most of their time at the helm of the company. Our rating for UPS is Overweight.
 UNP: Similar to UPS, we are constructive on the full year outlook and 2023 but
expect UNP to have a comparatively slower start than CSX and NSC without the
benefit of export coal tailwinds to start the year. Autos have shown some signs of
improving which would be meaningful for UNP at 15% of revenue tied to autos
but the pace of the recovery will likely be somewhat measured. Intermodal
strength from the Knight-Swift transition will add +100bps to full year volume
growth and up to +400bps for intermodal which continues into 2023. Given the
run of the stock since early October (+17% vs. +5% for broader industrials) we
would rather revisit the UNP story after earnings which we forecast could fall
short of expectations as rising headcount meets weaker volumes into year end.
Our rating for UNP is Overweight.
 CHRW: Considering the run in the stock to a new record, we aren’t convinced
another big beat in Global Forwarding will be enough to sustain these levels if
NAST margins and volumes don’t start to pick up the pace of improvement. As
noted on page 42, the spot/contract spread tightened throughout the quarter and
spot finished at a premium during 4Q21 which is a negative for margins. We
recognize NAST is getting closer to a margin inflection when the truckload rate
cycle turns but the stock appears to already reflect this long awaited event. After
8
(1-212) 622-1023 12 January 2022
taking a positive view on the last two quarters we’d prefer to sit this one out. Our
rating for CHRW is Neutral.
Battleground stocks in 4Q21

 FDX: While there won’t be any specific commentary from FedEx during the
quarter, the stock has been a contentious story since the F2Q22 earnings beat was
characterized as low quality. We don't disagree but it was more about re-
establishing credibility with the guidance and management's ability to get ahead
of the hiring challenges plaguing its operations over the last two quarters. The
combination of fewer headwinds from labor costs and the potential to address key
issues at the June 2022 investor day represent a unique combination of improving
earnings momentum with a more investor-friendly narrative. We view the recent
service alerts and COVID-19 flare ups as noise at this point in time; see page 28.
 JBHT: After going out on a limb with our downgrade in early October, we've
seen more investors look at the risk/reward balance at JBHT with an increasingly
negative view. The stock is reflecting $10 of EPS in 2023 with a 20x multiple
which limits the margin of safety if the "de-congestion" handoff to strong demand
and a still tight truckload market doesn't happen cleanly. Timing is the key as we
outline in more detail in the Group section on page 35. The bull case relies on
significant upside from the 360 platform, momentum in dedicated and JBI
margins above at the high end of the new range in 2022.
 XPO: The stock has been unable to get any momentum after the GXO spin off
and is the only LTL-focused stock we cover that is actually below the early
October trough. While the bulls argue that XPO is past the worst of the LTL
operational challenges, the bears point out that Brad Jacobs selling 20% of his
stake in XPO and GXO suggests otherwise. We’ve always expected Jacobs
would divest and move on to something else (he’s said that much as well) and at
some point the divestiture will be a catalyst as it approaches completion. The
recently announced departure of Troy Cooper as XPO’s President added to the
overhang for some in the market, we disagreed (details here) as XPO was too top
heavy after the spin. But the bears were quick to point out that there is “always
something” with XPO that merits a discount. At this point, both sides agree that
XPO’s hiring of a new head of LTL and near term performance are the key
determinants of the stock and path to getting more credit in brokerage as well.
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(1-212) 622-1023 12 January 2022
Expectations for 2022 Outlooks and Guidance

Focus on strong 2022 with groups navigating “de-congestion” differently
Giving detailed guidance hasn’t been easy over the last two years, we expect 2022
will represent a return to normal with management teams striking an optimistic
outlook for the year. Over the next four weeks we expect to hear about inventory re-
stocking and strong freight rates through 1H22 with improving labor availability and
economic activity. Assuming “de-congestion” starts sometime during 2022, we'd
expect to see more mid-cycle behavior across the sector and pressure early cycle
truckers before moving on to IMCs. Overall, it's simply too early for management
teams not to be optimistic on the full year ahead with several companies outlining
turnaround efforts and newly acquired assets. In the following bullets we
consolidated our thoughts and messages from management teams to outline key
highlights from expected 2022 guidance
 Parcels – It's still a little early to think about expectations for the FDX investor
day in June, but not by much since it’s the first one in ten years. As noted in the
prior section with our stock calls, we believe UPS will be more heavily weighted
to 2H22 but will remain on the trajectory established at the June investor day at
least in terms of margins expected to reach 12.7-13.7% in 2023. The company is
on track to exceed the prior topline target but we believe management would
rather keep and beat the current guidance rather than adjust it after six months.
 Railroads – We expect the high level rail outlooks will be fairly uniform with
high-single digit revenue growth and mid-single digit volume setting up for mid-
to high-teens EPS growth for UNP, CSX and NSC in 2022. We expect the
qualitative components of the guides will differ with CSX sounding the strongest
out of the gate with supply chain normalization and a solid macro outlook
boosted by potential upside from coal. CSX is in the best position of the three for
labor which will help on cost inflation but given the moving pieces impacting OR
we expect management will guide to specific headwinds like other revenue and
land sales similar to 4Q19. NSC has more work to do on hiring which adds some
risk to the volume outlook compared to CSX. We still think NS can guide to at
least +150bps of OR improvement (sub-59%) given the ability to cut back office
headcount and generate strong incremental margins on growth after a challenging
year. Coal is also a nice export and utility kicker for NS in 2021. UNP will stick
with its 55.x OR target with fuel economy gains and lost productivity
opportunities continuing into 2022 although the volume outlook won’t benefit
from coal and will take longer to materialize throughout the year.
 Truckers – We don’t have too many divergent views on truckload earnings in
2022 and take a Neutral view on the group (see page 39). It is the rate of change
in the spot market and the disconnect with the recent price action that merits a
more cautious view throughout 2022 with gain on sales decelerating, M&A
activity slowing, and double-digit contract renewals already expected.
 Brokers – C.H. Robinson is not one to provide too much in the way of
guidance, but we expect incentive comp will be a YoY tailwind for G&A, offset
by headcount growth. Productivity measures will be a focal point but have been
difficult to translate into operating leverage. Global Forward is likely to remain
stronger for longer but we don't expect management will quantify the range in
2022 other than to reiterate it will normalize at a level higher than pre-pandemic.
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(1-212) 622-1023 12 January 2022
 Intermodal – J.B. Hunt’s outlook will be fairly sparse as usual with elevated
capex already anticipated and limited commentary on rates as costs continue to
rise on tight labor and poor rail service. Expectations are already above consensus
for 2022, approaching $9 per share in the bull case. Hub Group has a high bar as
well in 2022 and we wouldn't be surprised if the range leaves consensus of $5 at
the high end given the company typically starts off with a conservative view.
 Logistics – GXO already rolled out 2022 guidance as part of the spin-off from
XPO last year and we don’t expect any changes to the outlook, other incremental
flow-through from any beats throughout the year. Ryder is much harder to
forecast considering the operating leverage to used truck prices which have
soared to record levels over the past year. We are a fair amount above consensus
on 2022 EPS (+8% at $9.70) after including accretion from the recent
acquisitions but as shown on page 43 the stock has already stopped going up with
used truck prices which are expected to come down in 2H22. As such, 2022
guidance might not matter as much for Ryder as it should for other stocks.
 LTL – XPO has one of the widest potential ranges of outcomes considering the
core LTL operation is in turnaround mode and the brokerage operation could be
set for another banner year if the spot market remains volatile. As such, we
expect our forecast for an adjusted EBITDA guide of ~9% growth with LTL OR
improvement ex-land sales of ~40bps represent a reasonable starting point for
2022 but might be at the lower end. TFI already tamped down expectations on
the 3Q21 earnings call after an impressive string of beats tied to the
transformational UPS Freight acquisition. With P&C leaning back into growth
and U.S. Conventional truckload digesting the UPS Dedicated acquisition with
fewer new trucks, we agree with management that $6 per share of earnings in
2022 could be a bit of a stretch – at least to start the year with.
 Freight Tech – We expect TuSimple’s outlook will not differ too much from the
initial view from the IPO last year and to a large extent the forecast won't matter
as the key catalysts are centered on the ongoing driver-out program and
resolution of the CIFIUS investigation. There is no definitive timeline for an
update on the latter, but we don't expect it to be a part of the 4Q21 earnings call.
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(1-212) 622-1023 12 January 2022
Supply Chain Congestion Update – The Slog Continues

Same problems, different year
It has been a month and a half since the West Coast ports implemented a new
queuing system and the total number of ships remains near an all-time high. The
incentives to keep the ships coming remains in place with Eastbound spot rates from
China to the West Coast 16x more than the reverse trip, prior to 2020 this ratio
averaged ~3x. This dynamic is adding to the number of empty containers piling up in
the region as carriers want to turn the ships quickly to re-load and make another run
back to the West Coast. Port of L.A. officials are attempting to address this backlog
with a recently announced $100 per container per day fee for empties dwelling nine
days or longer with an additional $100 per day of dwell beyond nine days. While this
could have the intended effect of reducing empties, loading the containers would eat
up time at berth and they are often stacked with the oldest on the bottom of the pile,
adding to the logistical challenge.
Last week the White House declared the supply chain was improving after holding
together through the peak holiday season. However, we have yet to see any material
improvement in the number of ships offshore while recent gains in container dwell
times have moderated. Investors are understandably fatigued watching and waiting
for the supply chain peak and are increasingly asking for one or two metrics to
monitor. While there is no one indicator to rule them all, chassis dwell time sheds
some light on supply chain throughput. This equipment represents the physical link
between the ports and the downstream participants including warehouses and
customer locations where visibility is more limited. Demand strength is the other
variable worth watching considering the previously noted imbalance is a significant
factor in congestion, we cover this in more detail as part of the Chase Card spending
trends and in the next section on inventory to sales ratios and LMI surveys.
We recently published a comprehensive update in our Supply Chain Congestion

Monitor (full report here), over the next several pages we provide a summary of each
key area from the ports to the terminals. The latest updates from our unique high
frequency data set suggests the slog is continuing to start 2022.
12
(1-212) 622-1023 12 January 2022
Initiatives to boost supply chain fluidity continue to make headlines

We still don’t believe there is a silver bullet to fix the congestion issues but the
cumulative impact of announced actions are worth monitoring, a snapshot of some of
the most recent are outlined below:
 December 30, 2021: LA to levy fee on long-dwelling empty containers.

This is similar to the container dwell fee and is set to begin on January 30.
Ocean carriers will be charged $100 for an empty container dwelling for
nine days, increasing in $100 increments per container per day until the
container leaves the terminal
 January 4, 2022: LA-LB brace for COVID-related labor shortage.

Employers and the ILWU fear that the recent spike in COVID-19 cases in
the LA area could worsen the historic vessel congestion
 January 4, 2022: Stoughton expanding chassis production to Texas.

The chassis and trailer manufacturer already has plants in Evansville and
Stoughton, Wisconsin, but adding a third location is critical to increasing its
annual output from 10,000 to 25,000 chassis. For context, the reported
number of chasses in the Pool of Pools is 56,000
 January 5, 2022: Ningbo ports in lockdown after COVID outbreak.

Operations at the Port of Ningbo have been impacted as shippers struggle to
find trucking solutions amid the government’s gate-in/gate-out restrictions
on domestic carriers
 January 9, 2022: NY/NJ port struggling amid labor concerns.

The Port of New York and New Jersey is working to clear a small but rare
bottleneck of container ships anchored off the coast of Long Island as
COVID-19 cases among dockworkers collide with a pandemic-fueled surge
in cargo volumes.
Congestion at the ports isn’t getting worse, but it also isn’t getting much better
The ratio of empty exports to loaded imports is our preferred measure of trade
balance at the West Coast ports and the activity is still one-way traffic of imports.
The metrics improved over the last few weeks but the incentive to reload ships with
empties and to return to China and restart the process again remains firmly in place
with the China-West Coast container rate still 16x greater than the return trip from
the West Coast to China. We view these as more coincident indicators of congestion
but will likely be more of a leading indicator than the number of ships in queue.
 Adjusting for the number of ships waiting outside the historical anchoring zone
(the Safety and Air Quality Area) shows that the comparable count is actually
larger since the new queuing system was implemented (Figure 5)
 Imbalanced freight flows are compounding the situation more empty exports are
re-loaded as full imports, these ratios at L.A. and L.B. are near record levels
(Figure 6 and Figure 7)
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(1-212) 622-1023 12 January 2022
Figure 5: Total ships at anchor and en-route to L.A. and L.B. remain elevated
Containerships
120
100
80
60
40
20
0
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22
Source: Marine Data Exchange
Figure 6: The traffic flow at the Port of L.A. remain unbalanced with near-record empty exports
Empty exports/Loaded imports
80%
75%
70%
65%
60%
55%
50%
45%
40%
Feb-17
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
Feb-19
May-19
Aug-19
Nov-19
Feb-20
May-20
Aug-20
Nov-20
Feb-21
May-21
Aug-21
Source: Wabtec Port Optimizer
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(1-212) 622-1023 12 January 2022
Figure 7: The traffic flow at the Port of L.B. is also heavily skewed to imports
Empty exports/Loaded imports
100%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
3/7/2021 4/18/2021 5/30/2021 7/11/2021 08/22/2021 10/03/2021 11/14/2021
Source: Port of Long Beach
Figure 8: The ratio of container rates from China to the West Coast is keeping flows unbalanced
China ↔ West Coast head-haul vs back-haul spot rate ratio
25x
20x
15x
10x
5x
0x
Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Source: Bloomberg Finance LP
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(1-212) 622-1023 12 January 2022
Terminal throughput and container dwell time holding steady

 Terminal wait times for truckers has recently peaked at L.A. after rising since
July while the volume of truck loads has declined, lowering overall throughput
 The turnaround of containers from vessel discharge to terminal outgate over the
last 30 days is still ahead (faster) of the trailing twelve month average at PoLA as
truck fluidity also improving MoM during December (Figure 9)
 Railroads have driven the majority of the improvement at L.A. since May 2021
and have held on to those gains through December
 Container dwell times have remained constant since the last week of November at
both L.A. and Long Beach after the initial threat of emergency dwell fees. There
has been some expected volatility around year end and the holiday season (Figure
10 and Figure 11)
Figure 9: The average terminal gate turn-time for the day and night shifts have stabilized at LB
Average terminal gate turn-time (minutes)
90
85
80
75
70
65
60
55
50
45
40
Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21
Day Shift Total Night Shift Total
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(1-212) 622-1023 12 January 2022
Figure 10: Dwell by day at Long Beach fairly steady in December after a volatile year end
Containers
30,000
25,000
20,000
15,000
10,000
5,000
0
12/1/2021 12/7/2021 12/13/2021 12/19/2021 12/25/2021 12/31/2021 1/6/2022
Total 0-3 Days Total 4-8 Days Total 9-12 Days Total 13+ Days
Figure 11: Dwell by day at L.A. improved since November and has held steady in December
Containers
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
10/24/2021 11/5/2021 11/17/2021 11/29/2021 12/11/2021 12/23/2021 1/4/2022
0-4 Days 5-8 Days 9+ Days All import containers
Source: Port of Los Angeles
Equipment availability for marine container chassis tight after a holiday break
 The Pool of Pools represents an agreement of three marine container chassis
pools that represents over 56k chassis across 11 terminals and 4 rail facilities in
the L.A. and Long Beach area
 PoP chassis utilization is running at elevated levels but has shown some recent
signs of improvement after maxing out during 2021 peak season (Figure 12)
 Chassis dwell times within the terminals are also running at levels equal to or
greater than the first major port disruption in March 2021
 After a brief reprieve at year end, the percentage of chassis with street dwell time
over 7 days is back to near-record levels (Figure 15 and Figure 16)
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(1-212) 622-1023 12 January 2022
Figure 12: Pool of Pool chassis utilization has improved modestly in recent weeks
% utilized by week in 2021
100%
90%
80%
70%
60%
50%
40%
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
20ft Total 40/45 ft
Source: Pool of Pools
Figure 13: The average dwell time of 20’ chassis in the LA/LB area is still elevated
# of 20’ chassis at the terminals
1,400
1,200
1,000
800
600
400
200
0
Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21
30+ days 15-29 days 8-14 days
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(1-212) 622-1023 12 January 2022
Figure 14: A record number of 40' chassis are dwelling more than 30 days
# of 40’ chassis at the terminals
1,200
1,000
800
600
400
200
0
30+ days 15-29 days 8-14 days
Figure 15: Chassis are still experiencing elevated street dwell times
% of 20’ chassis with street dwell time over 7 days
70%
65%
60%
55%
50%
45%
40%
35%
30%
25%
20%
% of Total Street
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(1-212) 622-1023 12 January 2022
Figure 16: More than half of 40’ chassis are dwelling 7+ days on the street
% of 40’ chassis with street dwell time over 7 days
65%
60%
55%
50%
45%
40%
35%
30%
25%
Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21
% of Total Street
Truck wait times and spot rates for key lanes are flashing mixed signals
 Dwell times at major rail ramps are following service performance
 Truck wait times are worth monitoring for trends at large inland distribution
centers such as Phoenix and Stockton
 Port wait times for truckers are elevated everywhere since 1Q20 when the
inbound crush of imports began in the U.S
 Fluidity at some major ports improved during 4Q21, even dropping below 2020
levels, but it is too early to call a trend
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(1-212) 622-1023 12 January 2022
Figure 17: Chicago Rail Ramp Dwell Times

Minutes
145
135
125
115
105
95
85
75
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019 2020 2021
Source: SONAR
Figure 18: Phoenix Truckload Wait Times

Minutes
175
165
155
145
135
125
115
105
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
2018 2019 2020 2021
Source: SONAR
21
(1-212) 622-1023 12 January 2022
Figure 19: Port of New York/New Jersey Wait Time

Minutes
160
120
80
40
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
2018 2019 2020 2021
Source: SONAR
Consumer demand hitting the brakes a bit after the holidays and with Omicron
After two months of services spending outpacing goods, the trend recently reversed.
It does not come as a surprise following growing concerns of the Omicron variant
and recent surges in COVID-19 cases. Discretionary spending is falling faster than
non-discretionary with a seasonal post-holiday decline apparent in recent data.
 The two year stacked growth rate of discretionary spending has fallen with the
surge in Omicron and is running below the non-discretionary spending rate
 Discretionary and non-discretionary spending levels remain well above the 2019
reference point although both are impacted by negative holiday seasonality
 Spending on goods has largely moved sideways after the stimulus fueled benefits
in 1Q21 but demonstrated the normal seasonal ramp up and decline in 4Q21
 Services spending will likely stay volatile and heavily dependent on return to
office, vaccine mandates and COVID-19 variants
22
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Figure 20: Discretionary spending dipped below non-discretionary again on Omicron variant
Two year stacked % ∆ YoY in the index
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21
Discretionary Nondiscretionary
Source: J.P. Morgan Chase consumer card data, J.P. Morgan Equity Research, Bloomberg Finance L.P.
https://www.jpmm.com/research/open/latest/publication/9002054
Figure 21: Spot TL rates track absolute spending activity in goods and should drop in early 2022
Indexed to 100 at Jan 2019 Rate per mile
250
$3.00
200 $2.75
$2.50
150
$2.25
100 $2.00
$1.75
50
$1.50
0 $1.25
Jan 20 Mar 20 May 20 Jul 20 Sep 20 Nov 20 Jan 21 Mar 21 May 21 Jul 21 Sep 21 Nov 21
Healthcare Supermarkets Restaurants Wholesale Clubs Other Retail Spot Rates (RHS)
Source: J.P. Morgan Chase consumer card data, J.P. Morgan Equity Research, Bloomberg Finance L.P.
https://www.jpmm.com/research/open/latest/publication/9002054
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Risk Skewed to Inventory Re-Stocking Ending Early

Survey of logistics managers shows inventory build already anticipated
The Logistics Manager’s Index (LMI) is a composite of supply chain expectations
for warehousing, capacity, and freight rates which has been published monthly since
September 2018. As part of our 2022 Outlook, we outlined our thesis that inventories
were pulled ahead of the holiday peak which is a risk to consensus expectations for
re-stocking to continue through 1H22 and possibly all of 2022. The latest LMI
update for December validates our concern, as shown in the following figure the
expectation for future inventory levels is now considerably higher after the holiday
peak. In fact the spread between current and future inventory levels is the highest
since September 2021 which was just prior to the peak season. The gap is also
evident in the significantly higher component of inventories held upstream by 3PLs
and in warehousing/distribution channels compared to retailers downstream. Overall,
we believe there is a risk that enough inventory is already in the broader supply chain
that re-stocking could fall short of expectations.
Figure 22: The gap between the LMI current and future inventories is at a record-wide spread
Index Level
85
80
75
70
65
60
55
50
45
40
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Inventory Levels Future Inventory Levels
Source: Logistics Manager’s Index
Composite LMI is signaling truckload rates are approaching a peak

We’ve looked at the broader LMI for a number of years as a component of our
mosaic to gauge the direction of spot truckload rates in our Weekly Fast Track. The
composite LMI has a high correlation with spot TL rates on a coincident basis (0.93)
as it reflects current supply chain conditions. The indication from the survey of
conditions in the next twelve months (Future LMI) is also high on a coincident basis
at 0.90. Interestingly, the two series diverged at the end of 2021 (see Figure 23)
which is driven by expectations of higher Warehousing and Inventory components
(costs & utilization) in the Future LMI reading, offset in part by projections for lower
Transportation Utilization and Prices. Given the composition of the relative strength
in Future LMI is concentrated on non-transportation parts of the supply chain, we
view this disconnect with the current LMI as another sign that TL rates are
approaching a peak and will continue monitoring this divergence.
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(1-212) 622-1023 12 January 2022
Figure 23: Current LMI deviated from the Future on higher warehousing prices and utilization
Spot truckload rate/mile Index Level
$3.10 80
$2.90
75
$2.70
70
$2.50
$2.30 65
$2.10
60
$1.90
55
$1.70
$1.50 50
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
TL Spot Future LMI LMI
Source: Logistics Manager’s Index
Inventory to sales ratios worth looking under the hood at what is real or not
Consensus expectations assume retail inventory re-stocking will continue through
2Q22 or beyond, even after demand cools. As shown on page 23 in our Chase Card
data tracking, the demand side remains choppy with COVID-19 variants but even if
it bounces back, we are increasingly cautious on how much inventory is already in
place or upstream. We prefer to look at the widely cited inventory to sales ratio in
real terms to control for the impact of timing and inflation. This is especially
noticeable in the current environment where we believe the nominal ratio overstates
the drop in real terms (see Figure 24), which is compounded by the significant drop
in Motor Vehicle and Parts Dealer inventory. We prefer to focus on specific
categories including Other General Merchandise and Furniture/Electronics in real
terms to adjust for some of this volatility. These two categories are showing some
signs of re-stocking already and are within 5% and 11% of the 2019 average
respectively (see Figure 25). Department stores have also contributed in the nominal
headline (see Figure 26) and the re-stocking needs of this channel are unclear under
the emerging omni-channel model.
Figure 24: Retail inventory/sales declined by ~600bps more in nominal than in real terms vs. 2019
Ratio
1.6x
1.5x
1.4x
1.3x
1.2x
1.1x
1.0x
Retail trade industries - Nominal Retail trade industries - Real

Source: Bureau of Economic Analysis
25
(1-212) 622-1023 12 January 2022
Figure 25: Some categories are showing signs of re-stocking already ahead of the holiday peak
Ratio
1.3x
1.2x
1.1x
1.0x
0.9x
0.8x
0.7x
0.6x
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Furniture, furnishings, electronics, and appliance stores
Other general merchandise stores
Figure 26: Department store inventory to sales are down significantly in an omni-channel world
Ratio
2.9x
2.7x
2.5x
2.3x
2.1x
1.9x
1.7x
1.5x
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Department stores
26
(1-212) 622-1023 12 January 2022
Impact of Rising Interest Rates on Transports

Background on our interest rate risk framework
We utilize the spread between earnings yields (E/P) and the 10 year in our
framework to determine how each group performs during periods of spread
compression, similar to a Fed tightening cycle. Rather than focus on just the periods
of time when the Fed is hiking rates, we prefer the broader spread analysis as it also
accounts for other factors. First, the starting point matters as a group could be
expensive or cheap relative to its long term average. Second, the companies’ ability
to generate earnings is also factored in when using the earnings yield as part of the
analysis. Finally, we can have a much more granular view of group performance
versus the broader market considering the conditions across each group are not
uniform during historical periods where spreads were narrowing.
Rising U.S. interest rates hinder the sector’s ability to outperform

In Figure 27, we show the historical performance for groups when they are trading
with yield spreads (earnings less the 10 year) above their respective long term
average during periods of spread compression. Groups that currently fit this screen
include the Parcels, Truckers, Brokers and Intermodal, of which the Parcels rank the
best relative to the S&P 500 for historical outperformance and positive hit rate.
Truckers in this scenario have already de-rated which is why the performance 12
months forward is fairly strong.
Figure 27: Groups currently trading with above average yield spreads have mixed performance when spreads are narrowing
Average total return vs. S&P 500 and outperformance hit rate
Rails Parcels Truckers Brokers LTL & Logistics Intermodal
vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate
3 months forward 4.4% 71.1% 3.7% 45.5% 0.1% 50.0% 0.9% 47.4% 10.3% 73.9% 2.0% 52.8%
6 months forward 7.2% 81.6% 4.4% 42.4% -1.9% 40.0% -3.4% 23.7% 16.1% 87.0% -1.2% 47.2%
9 months forward 12.2% 89.5% 5.7% 51.5% 3.2% 50.0% -5.5% 23.7% 17.7% 87.0% -0.6% 50.0%
12 months forward 16.5% 89.5% 13.2% 60.6% 12.6% 53.3% -6.2% 34.2% 29.4% 91.3% -1.2% 41.7%
Source: Bloomberg Finance L.P.
Note: Groups shaded in gray are currently trading below their respective average yield spread
Figure 28 shows the groups historical performance when their yield spreads are
below average and narrowing. Currently the Rails and LTL & Logistics are in this
category and are historically able to outperform the market but not by a wide amount
at least in the 3-6 months following the start of spread compression. We believe part
of the outperformance is related to the strong inflation+ pricing models within each
industry that provide an offset to the valuation headwinds from rising rates.
Figure 28: Rails and LTL & Logistics face a valuation headwind with yield spreads already below average
Average total return vs. S&P 500 and outperformance hit rate
Rails Parcels Truckers Brokers LTL & Logistics Intermodal
vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate vs. S&P 500 Hit Rate
3 months forward 1.2% 58.8% -1.8% 38.3% 1.4% 54.8% -1.9% 39.3% 2.1% 56.2% -0.4% 48.4%
6 months forward 0.9% 52.9% -3.9% 28.3% -0.6% 40.3% -1.7% 41.0% 3.2% 58.9% -1.7% 45.3%
9 months forward 3.4% 60.3% -3.7% 35.0% -0.4% 43.5% -1.7% 54.1% 7.8% 61.6% -0.5% 39.1%
12 months forward 5.7% 63.2% -6.0% 35.0% -0.8% 54.8% 1.5% 49.2% 11.5% 60.3% 0.6% 48.4%
Note: Groups shaded in gray are currently trading above their respective average yield spread
27
(1-212) 622-1023 12 January 2022
Updated Group Views and Analysis for 4Q21

Parcels = Neutral stance on the group
 Labor availability is less of a concern with vaccine mandates on hold. Post-
peak season retention is the last hurdle for parcel carriers who performed well
during the holidays with a high 90% on time delivery based on our discussions
with parcel consultants. Both the OSHA and Federal contractor vaccine mandates
face legal challenges which should help alleviate retention challenges with early
indications suggesting a 10%+ increase in returns this year. FedEx was able to
get ahead of the tough labor market during its F2Q22 results (details here) and we
expect UPS performed even better given its unionized labor structure. The trends
in our online U.S. job tracker which continues to show fewer job openings after
peak season for UPS which has outperformed FedEx based on this proxy for
hiring and retention.
Figure 29: FDX job openings down -50% since early November Figure 30: UPS job openings down -82% since mid-November
U.S. online job postings U.S. online job postings
10,800
11,500
10,300
9,800 9,500
9,300
7,500
8,800
8,300 5,500
7,800
3,500
7,300
6,800 1,500
10/13 10/22 11/2 11/11 11/22 12/2 12/13 12/22 12/29 1/5 10/13 10/22 11/2 11/11 11/22 12/2 12/13 12/22 12/29 1/5
Source: Company website Source: Company website
 Weather and Omicron look like more noise for now for FedEx. The company
has sent out a number of service updates within the last month, several appear to
be transitory involving the fires in Colorado and tornadoes in Kentucky.
However, the one that first caught our attention was on January 5, citing potential
issues at the Memphis hub related to adverse weather conditions. This update also
cited labor availability issues related to COVID-19 as a reason for delays and
pausing the pickup for Deferred and Premium Express Freight while also
suspending International Priority Direct inbound to the U.S. until January 10. A
subsequent update on January 7 noted the “explosive surge” of the Omicron
variant caused temporary crew and operational staff shortages in the Express air
network. International Priority is resuming pickup as planned while Deferred and
Premium Domestic and International Economy pickup are restarting on January
13. Given that Express already suspended its service guarantees on November 1,
2021 through January 16, 2022 we don’t expect a material uptick of labor costs at
this time so long as COVID-19 availability doesn’t impact Ground.
These events are always difficult to quantify but are worth watching given the
YoY weather tailwind in F2H22. So far we have not seen any impact on service
and the FY21 events were significantly more disruptive and long lasting and the
current regional disruptions appear within the realm of “normal” weather events.
28
(1-212) 622-1023 12 January 2022
 Positive B2B mix ahead with U.S. retail. The re-opening benefits for parcel
carriers has been difficult to see in the numbers, in part because of continued
network investments and tougher volume comps. But with FedEx calling out
+9% commercial ground volume in F2Q22 we believe there is more of a
domestic re-opening ahead. As we noted in our FedEx F2Q22 preview, the
market was too fixated on weaker e-comm volume indicators for certain peak
days but didn't account for a stronger re-opening with in person retail. Omicron
will likely disrupt this trend somewhat in 1Q22 but as noted in the following
figure, U.S. retail sales continued climbing in 2021 as e-commerce share fell
from the pandemic peak which is a good sign of a B2B mix tailwind ahead.
Figure 31: Retail spending on the uptick, as e-commerce accounts for less in recent quarters
E-commerce % of retail sales $ in mm
18% $1,800,000
16% $1,600,000
14% $1,400,000
12% $1,200,000
10% $1,000,000
8% $800,000
6% $600,000
4% $400,000
2% $200,000
0% $0
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21
Total Retail Trade Motor vehicle Clothing and All other Total Store and
and parts general merchandise Non-store
Sales
Source: U.S. Census Bureau
 UPS results in 1H22 could be weaker than expected... The company posted
one of the best consolidated margins in years during 1Q21 on the strength of a
better controlled ramp down from peak season and positive mix shift from SMB.
Revenue per piece was also up the most in 19 years while casualty and self-
insurance costs were also tailwinds relative to expectations. We expect the
combination of tougher comps from mix and price will more than offset
improving B2B activity and forecast a below consensus 1Q22, the following
figure of the revenue/cost per piece gap in the U.S. Domestic operations is the
best way to visualize the challenge ahead.
29
(1-212) 622-1023 12 January 2022
Figure 32: UPS faces the toughest profitability comp in the U.S. Domestic business during 1Q22
YoY ∆ in U.S. Domestic yield/cost spread per piece (ex-D&A benefits)
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
($0.20)
($0.40)
($0.60)
($0.80)
1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20 1Q21 1Q22E
Source: Company reports, J.P. Morgan estimates
 …but expect a more back-half weighted guide in 2022. Expectations have

been a challenge to rein in on UPS at times over the last 18 months, most recently
after 2Q21 earnings when management tempered the 2H21 outlook. We
anticipate a similar scenario in 2022 with accelerating earnings growth in the
back-half of the year after lapping the UPS Freight divestiture, increasing
productivity measures, gradual re-opening (B2B) and re-pricing measures.
 Increasing price target and estimates but not including a pension impact.
Unlike prior years we are not modeling any impact from pensions for UPS after
two re-measurements in 2021 around the ARPA relief and the Freight divestiture.
The historical interest rate sensitivities no longer apply after these significant
changes and UPS has not disclosed the updated metrics based on third-party
studies. Moreover, the discount rate looks relatively unchanged as well from the
end of June to the end of December last year. We are modestly boosting our EPS
outlook for a stronger international market demonstrated in the recent FedEx
results as well as higher fuel surcharges. Our 2022/2023 estimates rise to
$12.28/$13.49 from $12.05/$13.35 while our price target increases to $243 from
$240. We also expect a beat in 4Q21 at $3.17 (previously $3.02) based on
stronger international rates and solid on-time deliveries in peak season.
Railroads = Positive stance on the group

 It is too early to be worried about the roll-off of demurrage and accessorials.
There natural consequence of “de-congestion” will be a decline in fees the rails
charged for container storage and other demurrage and accessorial fees. The jump
in 3Q21 was substantial, up +76% QoQ for CSX to 6.2% of revenue. Operating
ratios also benefited from this tailwind by an undisclosed amount but we have a
rough idea as shown in Figure 33 - Figure 35. We are modeling declines in all our
other revenue estimates or equivalent line items which will pressure OR in 2Q22
at the earliest, we expect a similar timeline for JBHT as noted on page 36.
30
(1-212) 622-1023 12 January 2022
Figure 33: UP also benefitted from fee revenue to keep “double nickels” OR within sight
OR, % ∆ YoY
+4%
+2%
+0%
(2%)
3Q21
(4%)
(6%)
(8%)
2Q21
Fees, (10%)
% ∆ YoY (12%)
(40%) (20%) +0% +20% +40% +60% +80% +100% +120% +140%
Figure 34: CSX fees led the group up +220% YoY in 3Q21
OR, % ∆ YoY
+15%
+10% 3Q21 includes

adjusted OR of
+5% 53.9% due to QC
acquisiton
+0%
3Q21
(5%)
(10%)
Fees, 2Q21
% ∆ YoY (15%)
(100%) (50%) +0% +50% +100% +150% +200% +250%
Figure 35: NS set a record OR in 2Q21 with the help of accessorial and demurrage
OR, % ∆ YoY
+15%
+10%
+5%
+0%
3Q21
(5%)
(10%)
(15%) 2Q21
Fees,
% ∆ YoY (20%)
(40%) (20%) +0% +20% +40% +60% +80% +100% +120%
31
(1-212) 622-1023 12 January 2022
 Mix and coal should provide a decent cushion in 1H22... Strong export prices
should boost an already robust coal revenue per carload from 3Q21 that easily
beat expectations for CSX and NS. The explosion and shutdown at CSX's
Baltimore terminal could push some of the coal into next quarter (where rates
would be even higher for met coal) so we don’t expect there to be any long term
impact at this point with the limited available information. While natural gas is
well off the recent peak of $6/MMBtu from the late summer, inventory levels are
near record lows across the country which bodes well for a re-stocking in 2022.
Mix should also be a tailwind in 1H22 considering industry original intermodal
volumes were up +16% YoY in 1H21, see Figure 36 for details of our favored
mix proxy which is the YoY change in RTM/carload.
Figure 36: The significant jump in intermodal volume during 1H21 will make for easier mix comps during the first half of 2022
YoY ∆ % in RTM/carload
40%
30%
20%
10%
0%
(10%)
(20%)
(30%)
(40%)
1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21 3Q21
CP CNR CSX KSU NSC UNP

Source: Company reports, AAR, J.P. Morgan estimates
 …with de-congestion adding volume to help balance out the network. Lost
fees should be partially offset by increasing intermodal and auto volume that can
help restore growth to parts of the network which haven’t seen that since prior to
the pandemic. Autos make up 15% of UNP’s revenue which will be a significant
tailwind at some point while a more balanced intermodal network should help
negative some of the heavier than normal East/West challenges which recently
spilled over into the coal network for UNP. On the other side, this volume will be
mix negative on top of what is already a tougher 2H22 set of comps. Increasing
train lengths and density with a more diverse volume footprint could help offset
some of the mix and accessorial headwinds but it is difficult to estimate how
much of a benefit this will generate for the rails.
 Headcount additions are a good thing at this point. We took this view several
months ago and continue to look for additions in key areas across the labor
workforce as employees are the long lead time items in short supply. As noted in
our most recent headcount note (details here), UNP showed the most progress in
November on T&E hires and we expect there will be some relief ahead now that
the federal contractor vaccine mandate was stayed by an appeals court. Average
comp per employee will likely increase at a faster rate in 2022 with CSX
potentially experiencing less of a cost creep after starting this process earlier than
peers. However, in a response to a criticism from the STB Chairman on service
levels CSX management outlined a host of initiatives in its hiring and retention
practices including cash and stock awards and truck giveaways so we aren't
32
(1-212) 622-1023 12 January 2022
entirely convinced that their labor inflation will be materially lower than peers.
Issues with crew availability at year end aren’t uncommon as holidays approach
so we don’t necessarily view the performance in the following figures as a
negative indication of hiring issues into 2022 although we do expect flare-ups
from Omicron will be a concern for the entire sector.
Figure 37: Year-end crew performance is historically volatile at BNSF Figure 38: UP crew delays remain above seasonality for most of 2021
WoW % Δ in Weekly Average Number of Trains Holding Per Day Caused by Crew WoW % Δ in Weekly Average Number of Trains Holding Per Day Caused by Crew
140 100
120
80
100
80 60
60 40
40
20
20
0 0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
4 Year Range 2019 2020 2021 4 Year Range 2019 2020 2021
Source: Company reports, J.P. Morgan estimates Source: Company reports, J.P. Morgan estimates
Figure 39: CSX crew is steady but spikes typically emerge at YE Figure 40: NS fluidity has stalled recently but is well below 2018 levels
WoW % Δ in Weekly Average Number of Trains Holding Per Day Caused by Crew WoW % Δ in Weekly Average Number of Trains Holding Per Day Caused by Crew
30 40
35
25
30
20 25
15 20
15
10
10
5 5
0 0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
4 Year Range 2019 2020 2021 4 Year Range 2019 2020 2021
Source: Company reports, J.P. Morgan estimates Source: Company reports, J.P. Morgan estimates
 STB agenda likely to get more attention especially if service lags. The primary
economic rail regulator has a busy agenda ahead even aside from M&A in 2022.
We outline the key issues, timelines and our view of each topic below that we
expect will be on the agenda in 2022. Our views are formed by our historical
experience with these issues (reciprocal switching isn't new) and recent
conversations with rail shipper lawyers. The STB Chairman was rather active in
2021 with some commentary that suggested rails weren't meeting their common
carrier obligations and were losing share to truck, thereby allowing for greater
emissions into the environment. The Board is now 3-2 Democrat which will give
the Chairman more control over the agenda and likely an additional vote in more
situations than the previous Republican. We believe most of the key topics will
be manageable for the railroads, our biggest concern is poor service increases the
scrutiny on the industry and amps up the regulatory oversight. The one wildcard
not on this list relates to the Sanimax case in which the STB allowed for a
commodity exemption to be revoked in order to hear the merits of the case which
has flown under the radar but could set an interesting precedent.
33
(1-212) 622-1023 12 January 2022
Figure 41: A comprehensive STB agenda will likely create negative headlines at times but should be manageable by the industry in 2022
Topic Background Key Issue Potential Timeline JPM View
⦁ T he Board seeks to enhance ⦁ For smaller disputes, the ⦁ Comments are due by ⦁ Positive, rails have indicated a
access to the rate reasonableness litigation costs required to bring January 14, 2022 preference for voluntary arbitration
process with two proposed rules: a case under the Board’s ⦁ Reply comments are due by which the Board seems inclined to
Rate Relief -- establish a voluntary arbitration existing process can quickly March 15, 2022 and would likely be a better outcome
Expansion program for small rate disputes exceed the value of the case ⦁ Docket Numbers: EP 665-2, than potential rulemaking. A relief cap
-- establish a Final Offer Rate ⦁ T he Board maintains a 2 year/ 755 & 765 is also anticipated under the FORR
Review (FORR) procedure $4mm cap in the proposed framework
FORR
⦁ Reciprocal switching rulemaking ⦁ Reciprocal switching permits ⦁ T he Chairman anticipates ⦁ Neutral, we believe an ultimate
process dates back to 2016 and a captive shipper to have its having a concrete proposal for resolution will be pro-shipper given the
are not yet implemented freight transferred to another Board consideration by EO and M&A backdrop but don’t
Reciprocal ⦁ T he issue gained headline news railroad via an interchange December 31, 2021 anticipate final rule making to be a
Switching with the Biden Administration's EO ⦁ T he Board seeks a reciprocal ⦁ T he Board will hold a public near term event thus giving the rails
targeting freight rates in August and switching rule to provide hearing on March 15-16, 2022 more time to lobby their interest and
the on-going ST B review of the competitive rail service ⦁ Docket Number: EP 711-1 potentially soften the impact
CPKC merger application
⦁ Revenue adequacy is used to ⦁ T he metric is impactful ⦁ T his issue remains in the ⦁ Neutral, given the long standing
help the Board determine rate particularly for captive shippers pre-rule stage and is pending debate and unclear timeline we don't
Revenue reasonableness and has been a seeking rate relief as the ST B further STB regulatory view the issue as a near term risk to
Adequacy source of contention since the uses revenue adequacy as a proceedings rails
1980 Staggers Act constraint on captive rail rates ⦁ Docket Number: EP 722
Topic Background Key Issue Potential Timeline JPM View

⦁ In July 2021 a cohort of shippers ⦁ T he group seeks ST B ⦁ Procedures for further ⦁ Negative, the equivalent of a
petitioned the STB to modernize authorization to allow private public comment have not reverse demurrage mechanism is a
regulations of Class I railroads use of railcar providers to assess a yet been established clear risk. However, rails appear
Private Car
private cars which account for 72% “private railcar delay charge” ⦁ Docket Number: EP 768 poised to challenge the legality of
Charges
of all railcars in the U.S. when a private freight car does the potential framework
not move for more than 72
consecutive hours
⦁ In September 2021 the ST B invited ⦁ T he ST B seeks to address ⦁ Comments are due by ⦁ Negative, additional data
First Mile comments from the shipping the design of potential relevant December 17, 2021 transparency will not be costly but it
Last Mile community regarding first and last metrics from Class I rails to ⦁ Reply comments are does provide another platform for
Service mile railcar service in response to measure first mile and last due by February 17, 2022 scrutiny at a time when poor service
shipper complaints of poor service mile service ⦁ Docket Number: EP 767 is widely panned
⦁ Karen J. Hedlund's nomination was ⦁ Hedlund gives Chairman ⦁ N/A ⦁ Neutral, we don't view the in
confirmed by the Senate on Oberman a 3 -2 Democratic coming board member as hostile to
December 16, 2021. She replaces majority and will make freight rail interests considering our
STB Republican Ann D. Begeman, a regulations more of a focal channel checks confirm Hedlund to
Nominee second-term ST B member serving in point in 2022 be a knowledgeable, well
a holdover year credentialed and widely respected
transport professional
Source: STB, J.P. Morgan estimates
Intermodal = Neutral stance on the group

34
(1-212) 622-1023 12 January 2022
 Intermodal likely a “de-congestion" winner before becoming a loser. As

noted in the previous figure on “de-congestion” shown on page 7, we view the
intermodal providers as neutral on the spectrum considering they will benefit
from better rail fluidity and pent up containers off the West Coast. The following
two figures illustrate the challenges with poor rail fluidity hurting volume but
also boosting rates, which is the typical situation for IMCs during strong markets.
Figure 42: Transcon volume growth lagged BNSF in 2021 after outpacing it in 2020
% Δ YoY
40%
30%
20%
10%
0%
(10%)
(20%)
1Q11 4Q12 3Q14 2Q16 1Q18 4Q19 3Q21
JBHT Transcon Loads Y/Y BNSF Intermodal Loads Y/Y
Figure 43: JBI will have a hard time growing Eastern loads based on current performance
% Δ YoY
40%
30%
20%
10%
0%
(10%)
(20%)
1Q11 4Q12 3Q14 2Q16 1Q18 4Q19 3Q21
JBHT Eastern Loads Y/Y NSC Intermodal Loads Y/Y
When “de-congestion” sets in, we expect improving box turns will re-invigorate
the volume outlook at a time when pricing is still strong. However, demand needs
to remain elevated considering the industry is adding ~6% to capacity and better
rail fluidity also increases effective capacity of the existing assets. Truckload
rates will also need to remain supportive throughout 2022 considering the
intermodal rate per load at both JBI and Hub Group had outstripped the recent
industry trends as shown in the following figures. Intermodal rates typically lag
35
(1-212) 622-1023 12 January 2022
trucking given the contract structure and trade down to the lower cost capacity
provider during rising rate environments. There is still a substantial gap between
truckload and intermodal lanes (see our 2022 Outlook for details on page 23) but
a similar gap existed in 2017 across different lengths of haul and the YoY change
in rate per load did not materially deviate between the two modes.
Figure 44: JBI intermodal rate per load historically has a tight correlation with truckload markets
% Δ YoY
30%
20%
10%
0%
(10%)
(20%)
(30%)
2002 2004 2006 2008 2010 2013 2015 2017 2019 2021
JBHT Intermodal Rate per Load ATA Revenue per Load
Figure 45: Hub Group’s intermodal rate per load recently topped the TL market on accessorials
% Δ YoY
30%
20%
10%
0%
(10%)
(20%)
2007 2008 2010 2011 2013 2015 2016 2018 2019 2021
HUBG Intermodal Rate per Load ATA Revenue per Load

36
(1-212) 622-1023 12 January 2022
 Waiting for accessorials to reset but it won’t be this quarter. A significant

driver of the rate per load disconnect shown in the prior figures stems from the
accessorials that went into effect in full force during 3Q21. We don’t expect any
different outcome this quarter as fluidity remains challenged across the supply
chain, but it doesn't appear to be getting much worse at least. The impact on JBI's
profitability was significant and estimated to add 500 to 800bps of price to 3Q21
assuming 85% of the book re-priced at +12-15% YoY. These accessorial fees
will roll off as network fluidity returns, margins will decline but JBI expects to
make up for the lost EBIT $ with sustained demand and additional containers. All
transports are over-earning to some degree but the risk with JBI appears more
pronounced as there are risks to weaker spot truckload rates and stronger demand
is needed just to keep up with additional capacity. At the very least, JBI faces
tougher comps in 2H22 and the magnitude will become apparent when the
accessorial tailwind starts fading potentially as early as 1Q22.
Figure 46: Significant accessorials levied in 3Q21 drove a significant gap in profitability per turn compared to revenue per turn
% Δ YoY
100%
80%
60%
40%
20%
0%
(20%)
(40%)
1Q03 3Q04 1Q06 3Q07 1Q09 3Q10 1Q12 3Q13 1Q15 3Q16 1Q18 3Q19 1Q21
Revenue/Container Turn Operating Profit/Container Turn
 Relative valuation gaps also continue to widen. Expectations are fairly high
already for JBHT in 2022 with the buyside bar approaching $9 which limits the
upside to current consensus estimates. Separately, the stock continues to trade at a
record premium to its truckload peers (Figure 47) while both JBHT and HUBG
have begun to drift away the historical tendency to follow the direction of spot
rates. As shown in Figure 48 & Figure 49, this has happen in the past but the
dislocation does not last very long and the two have a high correlation of tracking
in the same direction. In this case, we would argue that JBHT and HUBG (along
with several TL stocks) are implying a re-acceleration in spot rate momentum
which seems unlikely. Our analysis from the 2022 Outlook shows that JBHT and
HUBG have an 80-90% correlation with spot rates on a coincident basis.
37
(1-212) 622-1023 12 January 2022
Figure 47: JBHT continues to trade at a record premium to truckload stocks

JBHT P/E – TL Avg P/E
14x
12x
10x
8x
6x
4x
2x
0x
Jan-14 Aug-15 Mar-17 Oct-18 May-20 Dec-21
JBHT P/E - Truck Avg P/E +2 Std Deviations
Note: TL group includes KNX, WERN and SNDR
Figure 48: JBHT outperformed spot TL rate momentum by a wider range than seen historically
% Δ YoY (3M MA)
65%
45%
25%
5%
(15%)
(35%)
Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
Spot Van Rates JBHT
38
(1-212) 622-1023 12 January 2022
Figure 49: HUBG has also deviated from the historical correlation with spot TL rate momentum
% Δ YoY (3M MA)
60%
40%
20%
0%
(20%)
(40%)
Spot Van Rates HUBG
Truckload = Neutral stance on the group

 The stocks are starting to de-couple from historical trends in TL rates. We
first noted this trend in our 2022 Outlook and it keeps us more balanced in the
near term as the valuation is not particularly elevated, but it has disconnected
from established relationships with spot rates. The trend is not as pronounced as
intermodal shown in the previous two graphs, but nonetheless the patterns in
KNX and SNDR seem to indicate that this time is different and the stocks can
outrun the cycle.
Figure 50: KNX has managed to de-couple from the spot rate cycle on recent acquisitions
% Δ YoY (3M MA)
70%
50%
30%
10%
(10%)
(30%)
(50%)
(70%)
Spot Van Rates KNX
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(1-212) 622-1023 12 January 2022
Figure 51: SNDR has a strong historical correlation with spot truckload rates
% Δ YoY (3M MA)
50%
30%
10%
(10%)
(30%)
(50%)
Jun-18 Jun-19 Jun-20 Jun-21
Spot Van Rates SNDR
 Contract tender rejections fading from the peak are a sign of a market reset.
As shown in Figure 52, the percentage of loads tendered under existing contracts
that have been rejected by carriers reached a peak in March 2021 and has slowly
declined during the back half of 2021. We expect this trend will continue in 1Q22
as new awards are effective and implemented at higher contract rates, leading to a
lower frequency of rejections and pulling volume out of the spot market. This
pattern was underway in 1Q21 before stimulus, bad weather and lack of
equipment triggered a capacity squeeze. DAT’s rate forecast reflects this dynamic
and as of our expert call in November 2021, the analytics team expects
decelerating spot dry van rate gains throughout 2022.
Figure 52: The percentage of tenders that were rejected has steadily fallen since mid-2021
% of dry van tenders rejected
30
25
20
15
10
0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
2018 2019 2020 2021 2022
Source: SONAR
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Figure 53: DAT forecasts the rate of change in spot dry van rates will decelerate throughout 2022
Rate per mile ex-fuel surcharge YoY % change
Source: DAT Freight & Analytics
Brokers = Negative stance on the group

 Backdrop for brokers is becoming more constructive in 2022... There are
several tailwinds building in the brokerage group including recent M&A by
strategic and financial sponsors as well as continued expansion by asset-heavy
operators looking to scale up their operations. As noted previously, the brokerage
model is a net beneficiary of supply chain “de-congestion” considering the
decline of peak forwarding earnings is already anticipated and the new normal
could surprise to the upside. Lastly, the eventual turn in the truckload rate cycle
puts the brokers in a good position considering the net revenue margin profile
improves when spot rates decline below contract.
 ...but we are tempering our optimism for 4Q21 given the trend in spreads.
Based on data from DAT, the spot rate spread averaged +$0.04 per mile higher
than contract during the quarter and the spread widened with each month. This
trajectory is not helpful for margins considering brokers are short the spot market
and the stock has rallied on the potential for a margin turn in 1Q22. In 3Q21,
C.H. was unable to generate any operating leverage from modestly improving
spread dynamics although net profitability per load is now back to the five year
average despite negative files. We anticipate a modest +40bps QoQ improvement
in NAST net revenue margins during 4Q21 and 8% volume growth on the second
to last easy comp. The continuation of fewer negative files should also help boost
profitability although this tailwind has been slow to develop since 2020.
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(1-212) 622-1023 12 January 2022
Figure 54: C.H.'s NAST margins likely to drift sideways with a progressively tighter spot/contract spread throughout 4Q21
Gross Margin Dry van rate per mile ex-fuel
18.0% $0.20
$0.10
16.0%
$0.00
14.0%
($0.10)
12.0%
($0.20)
10.0%
($0.30)
8.0%
($0.40)
6.0% ($0.50)
1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21 3Q21
Spot vs. Contract spread (RHS) JBHT ICS Gross Margin (LHS) CHRW NAST Gross Margin (LHS)
Source: Company reports, DAT, J.P. Morgan Research
Logistics and LTL = Neutral stance on the group

 XPO needs to turn the corner quickly in LTL. We don't expect overly exciting
4Q21 results as the LTL network is impacted by embargoes with a modest offset
from yields where the company has already lagged peers in a strong market. The
combination of Chairman Jacobs selling a ~20% stake last month set in motion
the long awaited divestiture that will probably weigh on sentiment until the 90
day window opens again on March 9. The recently announced departure of
President Troy Cooper also weighed on sentiment but the move was also another
transition that is not surprising at this point. Our estimates for Adjusted EBITDA
are modestly below consensus which we anticipate could be the lower end of
guidance, but it is heavily dependent on the turnaround of the LTL operations and
the strategic hire expected in the near future to lead that division.
 GXO stuck trading like a tech stock but could give a LT outlook this year.
The jump in interest rates to start the year has kept pressure on GXO which trades
more like a growth/tech stock than anything else in our coverage aside from TSP.
The level of interest in the story continues increasing as the stock comes down
from the recent highs as a potential supply chain disruption beneficiary, but
valuation remains a sticking point. While we believe our 16x adjusted
EV/EBITDA target is fair given GXO’s growth prospects and the recent
bookings momentum, it is also encouraging to see acquisition comps at this level
with Maersk purchasing Visible Supply Chain Management in August. Maersk’s
acquisition of LF Logistics represents the ongoing interest in this group for large
scale M&A. Separately, we anticipate an investor day later this year which could
be a platform for outlining a high-single, low-double digit long term organic
growth algorithm. We believe underwriting this outlook would be an important
next step in signaling GXO’s confidence in the underlying end market strength
and contract visibility.
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(1-212) 622-1023 12 January 2022
 TFI transformation still in the early innings. The stock was one of the top
performers in 2021 but largely treaded water in the back half of the year as
expectations finally overshot what management was able to accomplish with the
game-changing UPS Freight acquisition. 3Q21 earnings were hampered by P&C
operations that missed out on strong industry growth while management also
tempered expectations for TForce Freight. We believe there is more self-help at
TFI than peers with the key U.S. LTL segment still in the early inning of
operational improvements with the U.S. conventional truckload on a path to
break-even with new systems and integrating UPS Dedicated. However, these
drivers are likely to develop over the course of 1H22 on the path to what we see
as a constructive year.
 Ryder the latest logistics company to add scale in adjacent businesses. We
don’t expect any other company will pull off the feat that TFI did in 2021 when it
acquired an adjacent business that was large enough to make an immediate
impact with a multi-year runway. Knight-Swift, Werner, and Schneider have all
acquired operations adjacent to the core truckload business while Hub continued
a more defined expansion strategy in 2021. Ryder just closed on two businesses
with $615mm of annual gross Supply Chain revenue and will likely continue this
strategy throughout the cycle after recently slowing down the core lease and
rental fleet expansion. Assuming a 5% EBT margin on gross revenue equates to
$31mm or EBT or $0.42 of EPS which is now in our updated estimates.
However, we are somewhat skeptical that the stock can work when used truck
prices begin their descent which will happen from a much higher peak than in the
past. Ryder will likely be able to generate gains through the cycle after significant
write-downs in prior periods but they will likely be materially lower than 2021.
Figure 55: Ryder’s stock has stopped reacting to used truck prices after soaring off the 2020 lows
R monthly price % ∆ YoY
$100 60%
$90 50%
$80
40%
$70
$60 30%
$50 20%
$40 10%
$30
0%
$20
$10 -10%
$0 -20%
May-15
Sep-15
Jan-16
May-16
Sep-16
Jan-17
May-17
Sep-17
Jan-18
May-18
Sep-18
Jan-19
May-19
Sep-19
Jan-20
May-20
Sep-20
Jan-21
May-21
Sep-21
Stock Price US Truck Tractors YoY (3MMA)
Source: Ritchie Brothers, Bloomberg Finance L.P.
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(1-212) 622-1023 12 January 2022
Freight Tech = Neutral stance on the group

 Journey of 1,000 miles begins with a driver-out test. The company recently
completed a successful test run under the "Ghost Rider" program which
represents a series of ongoing driver-out trips with no human intervention. We
believe this is a significant accomplishment for an industry known for missing
deadlines and we expect future demonstrations will increasingly expand the
operating design domain (ODD). Completing even an 80 mile run at night in
normal traffic conditions is a big milestone considering the level of redundancy
and consistency needed to operate under those conditions is a step-function
greater than any previous demonstration. The Ghost Rider program will likely run
through the rest of 1Q22 and we expect further details on the actual run and
additional datapoints upon completion. Expanding the program to different ODDs
and will also differentiate the TSP offering while gathering valuable data, the
complete recap of our take on the driver-out test can be found here.
 Removing perceived China overhang the next positive catalyst. We don't
expect the driver-out program is a one and done event but the initial headline is
now in the rear view mirror. Management will continue working on a commercial
plan for further driver-out applications prior to full scale commercial production
in 2H24 in order to build the business case with partners and provide a roadmap
for investors. We expect the next updates around the CIFIUS review could
provide a positive catalyst for TSP when the current investigation is complete.
The stock would still trade like a tech company but at least then it wouldn't trade
like a Chinese tech company, Figure 56 demonstrates the high correlation
between Didi and TSP with the former making headlines of a potential delisting
on the NYSE. As a Delaware C-corp, we don't see the same risk with TuSimple
although sometimes perception is reality and even post-CIFIUS the company will
have a presence in China. Potential divestment or spin-off of the Chinese
business wouldn't affect the U.S. operations which is where the vast majority of
the L4 upside given the more favorable regulatory environment and business-
friendly rules around owning intellectual property in key areas like mapping.
Figure 56: TSP has a 0.80 correlation with DIDI since it peaked in June 2021
TSP DIDI
$80 $18
$70 $16
$60 $14
$12
$50
$10
$40
$8
$30
$6
$20 $4
$10 $2
$0 $0
Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21
TSP DIDI
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 Reducing Dec-22 target price on rising interest rates. The stock continues to
trade consistent with the broader high tech, pre-revenue sector and is impacted by
the perception of rising interest rates which is becoming more of a reality by the
day. Our updated $58 Dec-22 price target is a reduction from our prior $72 target
as we utilize a higher beta for our DCF methodology (20% weight) and a higher
discount rate for our discounted comparables on 2023 EV/EBITDA with other
network businesses (80% weight).
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(1-212) 622-1023 12 January 2022
Investment Thesis, Valuation and Risks

C.H. Robinson Worldwide, Inc. (Neutral; Price Target: $102.00)
Investment Thesis
C.H. Robinson’s primary North American Surface Transportation segment remains
significantly exposed to the spread between contract and spot truckload rates as well
as the timing of contract negotiations. The company is also investing heavily in
technology to improve productivity and reduce costs in an effort to improve
operating margins through the truckload rate cycle. We expect NAST net revenue
margin expansion in 2022 after the spot/contract spread finally widens out after
supply chain constraints kept spot rates elevated for longer than expected. The
abnormal strength in global forwarding will likely plateau and fade in 2H22 but we
don’t believe the stock was reflecting much of a benefit from the gains in 2021.
Valuation
Our December 2022 price target reflects a 19x multiple applied to our 2023 EPS
forecast. Historically, the stock’s forward P/E has tracked earnings estimates two
years forward with roughly a 1.0x PEG ratio. Our target valuation is consistent with
the stock’s historical average as NAST margins and net revenues finally move higher
but the presence of digital brokers increases, increasing the scrutiny on the long term
margin profile of the overall truckload brokerage business.
Risks to Rating and Price Target

C.H. is a relative “flight to quality” defensive play during downturns due to its ability
to generate earnings growth despite market volatility; if we see weaker than expected
economic or TL cycle growth, CHRW would be likely to outperform our
expectations and peers.
Historically, C.H.’s truckload brokerage has a greater mix of contract exposure than
spot, but if the company pivots away from this tendency during periods of market
tightness, earnings could surpass estimates. Additionally, if spot rates continue to
fetch a premium to contract rates, C.H.’s net revenue margins could expand beyond
market expectations and drive further share outperformance.
C.H. has a history of making acquisitions outside of North America, which can be
difficult to integrate and realize synergies with the core operations, potentially
causing new transactions to underperform expectations.
CSX Corporation (Neutral; Price Target: $39.00)

Investment Thesis
CSX quickly progressed through its precision scheduled railroading (PSR)
implementation, improving network efficiency by reducing headcount and increasing
asset utilization. We expect the re-configured intermodal operations should help
improve the underlying profitability of a large end market and offset the associated
negative mix shift. As service levels improve, CSX should add more balance to the
portfolio by targeting new merchandise markets with increased sales efforts. Export
coal remains a volatile (but smaller) part of the portfolio and could provide some
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(1-212) 622-1023 12 January 2022
cyclical boost to profits at times, but is unlikely to be fully valued. CSX can likely
command a higher multiple over time if successfully converting freight off the
highway results in above average volume growth while still maintaining margins.
The initial steps in the process margin dilutive by -250bps following the acquisition
of Quality Carriers, which could help onboard additional chemical volumes to the
rail network at a better margin profile over time.
Valuation
Our December 2022 price target is based on our 2023 EPS estimate and a target
multiple of 19.5x, which consistent with the stock’s five-year average encompassing
the recent network transformation. We believe CSX could trade at a higher multiple
over time if freight conversion from the highway accelerates and generates an above
average volume growth profile compared to peers while maintaining margins.

Downside risks include: 1) intermodal growth fails to materialize based on poor
service by CSX or competition from other rails and truckload carriers; 2) negative
mix shift pressures margins as lower RPU business grows at a faster pace than
overall volumes; 3) recent Quality Carriers acquisition erodes OR more than
expected
Upside risks include: 1) stronger export coal volumes than expected supporting mix
and margins; 2) a tighter truckload market triggers significant volume conversion in
merchandise markets ahead of expectations; 3) recent Quality Carriers acquisition
leads to stronger conversion opportunities at better than expected incremental
margins.
GXO Logistics (Overweight; Price Target: $107.00)

Investment Thesis
GXO Logistics is the largest pure-play contract logistics provider in the world with a
significant presence in fast growing industry verticals such as e-commerce and
consumer technology, which are utilizing increasing levels of automation. The
company is uniquely positioned to benefit from secular outsourcing tailwinds in
these industries, which correspond with longer and larger duration contracts. Recent
supply chain disruptions and a jump in e-commerce penetration will also support
GXO’s organic topline outlook, which we expect will surpass the market growth rate
as the company leverages it geographic scale and financial strength. The company’s
margin profile could also improve with the continued roll-out of GXO Smart, a
warehouse productivity tool, and an increasing mix of reverse logistics (returns),
which improves a customer’s revenue and margin profile for GXO. Bolt-on
acquisitions represent upside to our forecasts and could supplement organic growth,
which appears well supported by an expanding pipeline of potential new business
opportunities.
Valuation
We utilize a 16x lease-adjusted EBITDA multiple applied to our 2023 forecast to
derive our December 2022 price target. The lease-adjusted multiples control for the
differences between IFRS-16 utilized by peers and U.S. GAAP by GXO. We believe
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(1-212) 622-1023 12 January 2022
GXO should trade at a premium to the smaller pure-play logistics companies in

Europe, which lack the same balance sheet strength and geographic scale. Within the
peer group, Clipper and ID Logistics are more suitable comps than Wincanton, which
is only in the U.K. and Ireland and has experienced materially weaker growth than
peers over the last five years.

GXO is projecting a ~10% organic revenue CAGR through 2022 via a combination
of market share gains and growth with existing customers. A higher than expected
attrition rate or a deceleration of key end market growth could put the guidance at
risk and undercut the secular growth story. Slower growth would not only impact
earnings but it would also affect valuation as the market reassesses the company’s
topline visibility.
The company operates 885 locations and 210mm square feet of warehouses in 27
countries. The largest customer is 4% of revenue and any one location is unlikely to
have a material impact on the financial results. However, execution issues or
improper risk assessment at the onset of a multi-year contract could lead to adverse
financial implications and create a larger concern of weak internal controls.
Large scale acquisitions appear unlikely given GXO’s size and focus on organic
growth, but a large M&A deal could create significant churn in the acquired book of
business if the company looks to upgrade the underlying profitability of an acquired
portfolio. GXO’s technology platform appears well suited to handle customer
onboarding but any dislocations could delay any potential synergies.
Heartland Express, Inc. (Overweight; Price Target: $18.00)

Investment Thesis
Heartland is a best-in-class carrier with industry leading operating margins, in large
part because they have a relatively strict hiring process for experienced drivers. The
company appears set to continue M&A at a smaller scale compared to GTI and IDC,
which expanded Heartland’s geographic reach to the West Coast. The 2019 Millis
acquisition is an example of this strategy. Over the long term, we expect Heartland
will benefit from a continued shift to shorter length of haul freight activity with high
service levels, fueled by e-commerce.
Valuation
Our December 2022 price target is based on an 18x multiple applied to our 2022E
EPS, which represents a trough multiple on peak earnings for this rate cycle. HTLD
has already de-rated below the prior trough valuation which should help limit
downward pressure on the multiple.

Heartland could experience a shorter length of haul and therefore lower revenue per
load e-commerce continues to take share.
Poor execution or weak market conditions may negatively impact the company’s
equity value if management pursues M&A.
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(1-212) 622-1023 12 January 2022
The company’s focus on experienced drivers could limit its ability to hire for growth
as the number of qualified employees remains limited.
Hub Group, Inc. (Neutral; Price Target: $87.00)

Investment Thesis
Hub’s recent expansion into dedicated, logistics, and last-mile operations has helped
diversify the core intermodal business, which has operated well through precision
scheduled railroading transitions. Implementing the new rail operating model should
improve service and re-kindle the potential for market share gains at a measured pace
over the long term. We expect the recent shift to grow volume and the container fleet
will help Hub capitalize on a strong intermodal market where capacity should remain
tight throughout a large part of 2021.
Valuation
Our December 2022 price target is based on our 2023 EPS estimate and a target
multiple of 17.5x, which is consistent with the stock’s long-term average. We expect
decelerating truckload spot rate momentum will impact HUBG’s valuation over time
but the company’s operating leverage has also improved in recent years with
technology investments and process improvements. The recent initiatives to expand
the container fleet should also improve returns when rail network fluidity recovers.

Downside risks to our Neutral rating include: 1) Small fluctuations in transport cost
and pricing have a significant impact on operating income. Rail costs could increase
more meaningfully than expected, which would increase downside risk to our
forecasts and target. 2) Truckload pricing is historically volatile; if truckload rates
regressed sooner than expected, pricing may become pressured, driving downside to
estimates.
Upside risks to our Neutral rating include: 1) Balance sheet leverage to accretive
M&A with solid execution could drive earnings growth above our expectations. 2)
Capacity additions generate robust incremental margins. 3) Realized pricing tailwind
from contract renewals.
J.B. Hunt Transport Services, Inc. (Underweight; Price Target:

$171.00)
Investment Thesis
J.B. Hunt is a structurally advantaged intermodal provider with in-house drayage
capacity and a 100% owned-chassis fleet, but it is subject to swings in the truckload
cycle and rail service levels. This volatility makes it more challenging to pursue
secular growth opportunities by taking share off the highway, and ESG-driven
conversions are slow to develop. Network imbalances have also proven difficult to
offset as volumes surged on the West Coast, driving operating inefficiencies in a
strong freight market that were only recently offset by accessorials. We still expect
JBHT’s valuation will come under pressure as truckload spot rates decline, which
remains elevated versus truckload peers. Dedicated can provide some offset with a
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(1-212) 622-1023 12 January 2022
steady stream of private fleet conversions combined with the recent expansions in
final mile home good delivery services. The smaller brokerage segment is investing
heavily in a digital freight matching platform, which could help expand the
company’s ability to do more for shippers in an asset-light model.
Valuation
Our December 2022 price target reflects our 2023 EPS estimate and a target forward
P/E multiple of 19.5x. Our multiple used for valuation is modestly below JBHT’s
long-term average of 20.5x, primarily to reflect decelerating spot truckload rates
exerting the usual downward pressure on JBHT's valuation despite the addition of the
360 platform. The stock could command a higher multiple over time if intermodal
share gains can reaccelerate after a period of slower growth since 2016 alongside
improvements in rail service.

Downside risks to our Underweight rating include: 1) stronger than expected pricing
leading to better than expected earnings; 2) intermodal capacity additions continue
driving volumes and market share gains above expectations; 3) 360 top-line growth
picks up traction while the intensity of platform investment declines.
Knight-Swift Transportation Holdings, Inc. (Underweight; Price

Target: $54.00)
Investment Thesis
The company remains one of the top operators and the best in class when it comes to
leveraging trends in the spot market throughout the truckload rate cycle. Knight’s
management team successfully brought Swift up to the profitability of legacy Knight
and now operates the largest truckload fleet in North America with the potential to
expand into other areas of the industry. M&A has been the latest move to grow the
business beyond the core truckload operation with an acquisition in LTL, which
could prove to be meaningful if management can expand to a nationwide footprint. In
addition, the ability of Knight-Swift to build a network for smaller carriers to utilize
shared services and assets like trailers could help the company grow through the
cycle in a business that is notoriously tough to scale. Historically, the stock has
underperformed and come under valuation pressure at a time of decelerating
truckload spot rate momentum, which we expect will continue in 2022 as contracts
reset higher, the spot market hits tougher comps, and capacity creeps back into the
market after a disruptive 2020.
Valuation
Our December 2022 price target embeds an 11x target multiple on 2022E EPS,
which we estimate is peak earnings for this cycle and the trough multiple for KNX.
This valuation is above the 2018 trough when the former majority owner faced
margin calls from a holdings structure that was terminated in 3Q20. We expect
truckload stock valuations will come under pressure as the momentum in spot dry
van rates decelerates with additional supply coming to the market with rising Class 8
orders, used truck sales, and driver school utilizations. The recent acquisition of LTL
carrier AAA Cooper should help reduce volatility in headline earnings, which
investors may pay a modestly higher multiple for over time. If the company can grow
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(1-212) 622-1023 12 January 2022
its asset-light offering for smaller carriers this could also help the truckload
operations effectively expand capacity through the cycle compared to prior years.

Knight-Swift can increase realized yields relatively easier in an improving freight
market, where cutting loads and improving profitability can be accomplished while
also maintaining good fleet utilization metrics.
If the Truckload freight market continues its upward trajectory, top line will surprise
to the upside, and multiples could dramatically re-rate.
The growth of new business lines in LTL and asset-light offerings to smaller carriers
could provide faster topline growth that helps the company expand through the cycle.
Norfolk Southern Corporation (Overweight; Price Target: $318.00)

Investment Thesis
We rate Norfolk Southern Overweight as the company uses precision scheduled
railroading as a catalyst for improved operations. PSR improvements that close the
historical gap with CSX could drive additional cost savings from back office, fuel,
and T&E efficiency. Intermodal has been a significant growth driver for NS, which
we expect can continue with the benefit of improving service and new lanes in
addition to higher contractual truckload rates. Met coal export markets can provide
topline and margin support at certain parts of the cycle but is unlikely to be fully
valued in the stock price. Operating momentum has been difficult to maintain during
the significant volatility in volumes but the network has proven more resilient than
expected which has led to better than expected financial results.
Valuation
Our December 2022 price target is based on our 2023 EPS estimate and a 20.5x
target multiple, which is above the 18.5x average over the last five years and
consistent with where the stock has traded during the industry-wide push to adopt
PSR principles. Based on the recent success at NS changing its operating program
and long-term potential as the last Class I rail to adopt these principles, we believe
the stock will trade at a higher multiple over time. A greater focus on offering new
service products and growth initiatives could also support a premium valuation.

Downside risks include: 1) low-priced natural gas continues to threaten utility coal
generation in the Norfolk service network; 2) PSR implementation falters and fails to
deliver cost savings near our estimates; 3) lack of offsets to steeper than expected
contractions in export coal volumes.
Ryder System, Inc. (Neutral; Price Target: $85.00)

Investment Thesis
Ryder’s leasing, dedicated, and supply chain services should benefit as outsourced
transportation solutions for customers dealing with increasingly complex and costly
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(1-212) 622-1023 12 January 2022
supply chains. Ventures into electric vehicles, on-demand maintenance, peer-to-peer

utilization of underutilized trucks, and heavy home good deliveries should all
supplement the secular outsourcing trends. Additionally, we believe the worst is
behind Ryder in regard to its exposure and risk from the used truck market, with
significant residual value write-downs from 3Q19-2Q20 creating built-in gain on sale
for the next few years, especially if the market remains strong.
Valuation
Our December 2022 price target represents a 1.55x multiple on estimated 2022 book
value. We utilize a higher multiple than 1x given the company has written down a
substantial amount of its residual value risk from prior assets, limiting the amount of
value at risk compared to prior cycles.

Faster than expected contract growth in Ryder’s Supply Chain Solutions and
Dedicated Transportation Solutions could drive upside to current estimates.
Higher used vehicle prices or an improving rental market would also drive potential
upside in the core cyclical earnings drivers for the company.
A used truck market that shows incremental signs of weakness could cause the stock
to sell off materially.
Faster than expected adoption from alternative fuel vehicles could undermine the
value of Ryder’s core diesel trucks and trigger further residual value write-downs.
Schneider National Inc (Underweight; Price Target: $26.00)

Investment Thesis
Schneider, the second-largest publicly traded truckload company in North America,
maintains a diversified mix of service offerings, end markets, and customers. We
expect the combination of large scale with a diverse mix will benefit the company’s
topline prospects, especially if asset-light operations become a bigger piece of the
overall business. Additional efforts to improve efficiency and generate new growth
opportunities through increased utilization of technology in brokerage could also
help expand the effect fleet size which has been challenging to maintain in one-way.
Valuation
Our December 2022 price target represents a 11x P/E multiple applied to our 2022
EPS forecast. We expect truckload stock valuations will remain capped as the
momentum in spot dry van rates decelerates and the business models face challenges
maintaining scale and utilization even in a strong freight market. Schneider’s
diversified business model did not support the stock any better than peers in 2018 or
in 2020. However, if management can scale the core truckload business in a more
asset-light approach we expect the stock could command a higher valuation through
the cycle.
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(1-212) 622-1023 12 January 2022

Schneider’s diversified mix and portfolio allows the company to maintain balanced
exposure to spot markets while also leveraging its intermodal service offering when
capacity is tight. This mix could command a higher multiple over time compared to
other truckload peers.
Improving operating metrics at CSX could provide upside to earnings if Schneider

can offer a superior service product where intermodal pricing can withstand the
counter effects of rail inflation.
TFI International (Overweight; Price Target: $130.00)

Investment Thesis
TFI’s diversified portfolio provides a unique mix of transportation and logistics
services across North America through a combination of company assets and third-
party providers. Management’s focus on profitable growth through the cycle was
evident in several segments where margins improved as TFI pared down
underperforming accounts and limited customer concentration. This discipline also
carries over to M&A where TFI is active but selective in acquiring companies that
meet its hurdle rates in a highly fragmented industry. The recent UPS Freight
acquisition is a prime example of this strategy as it presents a significant opportunity
to improve margins and generate synergies with other TFI operations such as last
mile and logistics through greater utilization of the acquired LTL asset base.
Valuation
Our December 2022 price target represents a 19x multiple applied to our 2023 EPS
estimate, which is a 0.5x discount to the peer group weighted by the segment
contribution. We believe the UPS Freight acquisition could merit a premium over
time given the significant upside to OR and potential synergies. However, the next
steps to improve the margin profile are focused on cost reductions, which will be
more challenging to implement successfully than revenue management. Our target
reflects an implied ~7% free cash flow yield based on our 2023 estimates, which is
significantly above peers.

TFI has consistently acquired and integrated companies each year, primarily
targeting smaller bolt-on transactions with strong management teams. However,
larger transactions have proven more challenging in recent years, and another
significant deal could present integration challenges and additional costs, causing
TFI to underperform our expectations.
The company utilizes a mix of employees and third-party contractors, which

generally reduces capital intensity and improves operational flexibility. Labor laws in
the U.S. or Canada could affect how employees are classified in transportation,
which in turn could disrupt TFI’s operations and weigh on earnings relative to our
expectations.
Truckload operations generate a significant portion of the company’s revenue and

earnings power, and TL is inherently more cyclical than other segments based on the
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underlying end markets and fragmented supply. If conditions in specialized trucking

or U.S. conventional TL recover slower than expected, TFI’s financial performance
would likely fall short of our forecasts.
TuSimple Holdings Inc. (Overweight; Price Target: $58.00)

Investment Thesis
TuSimple is a leader in developing the software solutions to power and support a
self-driving truck, which it plans to build at commercial scale with an OEM partner
in 2H24. The company also has strategic partnerships to design an Autonomous
Freight Network for the factory-built truck in order to identify and monetize the
freight routes that are most applicable for L4 technology. Competition is expected to
increase as self-driving passenger car developers cross over into freight, but
TuSimple has a streak of industry-first accomplishments and it appears well suited to
gain first-mover advantages in the U.S. where the regulatory environment is most
conducive for commercial adoption of L4 vehicles. The company’s business model
offers flexible solutions for customers in that they can either purchase an L4 truck
directly from the OEM or they can buy capacity as needed from TuSimple. Either
option will operate on the AFN where it will map customer and company terminals
to build density and support greater economies of scale over time. The company has
made significant progress so far which is evident in a sizeable pre-order book, the
next catalyst is the driver-out demonstration.
Valuation
Our December 2022 price target is based on a blend of a discounted EV/EBITDA
comparable valuation (80% weighting) and a DCF (20% weighting) to reflect a mix
of early development risk and long term commercial potential. Our discounted
EV/EBITDA multiple is 11.5x, and for our DCF through 2027E, we utilize a 10.2%
WACC and a 9.6% long-term growth rate. Valuing TSP will be an exercise in
balancing execution risk, competition, and market sentiment for pre-revenue
companies in the short term with the long-term disruptive potential in a massive
global TAM. Until TuSimple can successfully demonstrate the ability to operate an
L4 truck reliably and safely without the driver, the long-term DCF value will likely
remain a small part of the stock's valuation. We expect TSP can trade at a higher
valuation and lower discount rate if the company can demonstrate technical
advancements and meet its targets and production timelines.

The company’s self-driving technology has shown promise but has yet to be fully
vetted without a driver and will need to deploy an L4 truck at commercial scale in
order to penetrate the total addressable market which is significant in size.
Technically developing and producing a safe and reliable truck represents the largest
potential risk to realizing the value proposition of TSP.
Regulations are currently conducive to the testing and commercial deployment of

self-driving trucks, particularly in the U.S. Any change to the current landscape
either through new regulations, adverse reaction from public perception, or safety
concerns could limit the commercial appeal of an L4 truck.
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The significant TAM has attracted competitors in the U.S., China, and Europe, which
will create pressure for internal talent and external partnerships. Several of the newer
competitors in freight have crossed over from passenger AV development with more
resources and experience with automated driving systems.
Shares of TSP will likely exhibit above average volatility considering it is a pre-
revenue company and there is a relatively small amount of catalysts in the near term.
The level of investor interest and hence valuation for these business models can
fluctuate significantly depending on interest rates and risk appetite in the broader
financial market.
U.S. Xpress Enterprises, Inc. (Neutral; Price Target: $7.00)

Investment Thesis
We believe USX is a self-help story with the company pursuing structural
improvements to both operations and technology that should help drive OR gains
after an unsuccessful attempt to improve efficiency in a strong freight market in
2018. Successful conversion of the company’s underperforming trucks across the
fleet as part of the digital transformation could yield significant OR benefits.
Management has unveiled a similar strategy for the brokerage division in order to
lower the cost per load and complete transaction with fewer touchpoints. For both
these strategies, it is difficult to quantify the earnings accretion and it will take some
proof of concept and proven execution to win over investors.
Valuation
Our December 2022 price target reflects our 2023E EPS and an 8x target multiple,
which represents a discount to the peer group. The company's strategic initiatives, if
successful, could drive earnings higher in 2023 vs. peak earnings for the rest of the
industry in 2022. USX could command a higher multiple if it de-levers versus peers
while also making progress on its strategic initiatives.

U.S. Xpress’s significant insider ownership lowers the amount of shares outstanding
publicly traded to below 40%. A low float can inhibit active trading, which may
reduce investor activity and cause the stock to underperform as a result of perceived
illiquidity. While a high degree of family control is standard for a trucking company,
it could also manifest in a discount to peers if insider interests are deemed contrarian
to those of outside shareholders. The company also has significant financial leverage
compared to its peers, which could negatively affect cash flow and balance sheet
metrics if managed inefficiently.
The company also recently underwent a significant overhaul of its management suite
and has changed technological systems for load matching. Company operations and
performance depend on the successful rollout of these programs and implementation
of new management strategies. Difficulty integrating the aforementioned could
negatively affect margins. Conversely, if U.S. Xpress can execute on its strategy to
implement greater efficiency gains, its margin profile could beat expectations.
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Union Pacific Corporation (Overweight; Price Target: $264.00)

Investment Thesis
Union Pacific has progressed through its operating improvement program to reach
the point where it will “pivot to growth” and rely on a more balanced approach than
prior years fueled by pricing and productivity. The company’s relative operating ratio
gap with BNSF should help lessen the competitive impact often felt in intermodal
and coal. UP has recently highlighted wins in service sensitive end markets for the
first time in recent memory on the basis of improved operational consistency and
efficiency. Labor productivity gains reached an all-time record and UP has also
begun to recognize fuel efficiency gains in 2021 which still remains a potential
source of upside. Truckload conversion is a significant opportunity which the
company will be targeting on a more regular basis with additional service products in
addition to other emerging end markets such as renewable diesel.
Valuation
Our December 2022 price target is based on our 2023 EPS estimate and a 20x target
multiple, which is 1.5x above the five-year average. UP has made operating gains
since embarking on the UP 2020 program but has faced volume volatility during the
pandemic. We believe UNP could merit a premium if the network can sustainably
improve fuel efficiency and begin to convert more truckload freight.

Downside risks include: 1) high exposure to automotive markets can drive volatility
if production falls short of expectations; 2) coal volumes continue declining due to
pressures from natural gas, unsupportive weather trends, or incremental retirements;
3) sustained mix shift to lower RPU commodities lasts longer than expected; 4)
continued competition from BNSF in coal and intermodal end markets.
United Parcel Service (Overweight; Price Target: $243.00)

Investment Thesis
UPS’s outlook for the next several years in its largest segment, U.S. Domestic, is
contingent on monetizing investments in new facilities, improving productivity, and
structurally lowering costs while offsetting mix pressure from B2C volume growth.
Amazon remains the largest customer at 21% of U.S. revenue, but in the near term it
has limited capacity options for significant growth beyond UPS. The company has
executed well on expanding capacity, improving efficiency, and leveraging the
consolidated network. Additionally, recent pricing initiatives, as well as a focus on
being “better, not bigger” by CEO Carol Tome, are encouraging and represent an
important milestone toward further value creation. The company appears well
positioned to expand Domestic margins through a combination of yield
improvement, lower costs, and capital discipline to manage e-commerce growth.
UPS also continues to lead the industry in improving pricing power, which has been
structurally absent over the last several years.
Valuation
Our Dec 2022 price target is based on our 2023 EPS estimate and an 18x target
multiple, which is a premium to the stock’s five-year average of 15.5x. We believe a
premium is warranted considering the CEO’s focus on improving price, capital, and
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cost discipline at UPS in addition to favorable industry pricing dynamics. The

company’s improving FCF profile could also merit a higher valuation over time.

The company’s largest customer is Amazon at 13.3% of revenue; it crossed the 10%
reportable threshold after UPS benefited from a spike in Next Day Air volume as
Amazon unveiled one-day Prime shipping. Amazon is building its own air hub in
2021 and could begin to take some of its volume back from UPS with its private fleet
or other third-party carriers.
The significant growth of lightweight, short zone deliveries could present a challenge
for UPS to maintain pricing discipline in order to secure an appropriate return on its
investments.
UPS’s small package operation in the U.S. has a labor agreement expiring July 31,
2023, which could create uncertainty around the cost increase tied to the next five-
year agreement and any potential work stoppages. The last contract negotiation was
not approved by the majority of the membership, which creates the potential risk for
similar challenges in the upcoming round of negotiations.
Werner Enterprises Inc (Underweight; Price Target: $44.00)

Investment Thesis
Werner’s strategy to replace tractors off-cycle, aggressive recruiting of drivers, and
significant investment growing the dedicated fleet represents a focus on growth
through the cycle. The dedicated business should provide greater stability long-term,
although some operations can still require support from a stronger freight market to
maximize backhauls. Start-up costs and part shortages also recently impaired the
profitability within dedicated. Recent investments in technology and a focus on
improving the cost structure should also help Werner navigate through a down cycle.
M&A provides another way to grow the business when it is difficult to expand
organically, let alone maintain the current fleet size in a challenging driver market.
Valuation
Our December 2022 price target reflects our 2022E EPS and a 12x multiple, which
represents a trough multiple applied to peak earnings. Improving earnings power and
profitability have helped the stock trough at a slightly higher range than the last
truckload rate cycles. We expect Werner can continue to expand its operations
through the recent regional carrier acquisition and the company has room to pursue
further bolt-on M&A.

Although we expect a moderating N.A. truckload market in 2022, if any of the
underlying dynamics strengthen faster than expected, Werner’s dedicated business
could secure more backhaul and grow volumes ahead of our forecast.
Recent driver and independent contractor pay increases are adding inflationary
pressure. Werner’s decision to maintain a lower than average fleet age while
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operating driving schools could improve the driver turnover rate and result in greater
than expected margins versus our expectations.
XPO Logistics, Inc. (Overweight; Price Target: $92.00)

Investment Thesis
XPO Logistics recently spun-off GXO, its contract logistics segment, in a tax-free
transaction after pursuing a number of strategic alternatives over the last several
years in order to address the long standing sum of the parts discount. The company’s
current operations in less-than-truckload, truckload brokerage, and final mile
delivery of heavy home goods are attractive on a stand-alone basis given XPO’s
position and market dynamics. LTL is in an increasingly consolidated group, which
is likely to maintain price discipline while XPO works to improve its operations and
expand capacity. TL brokerage has been a very strong performer relative to the
industry with market share gains and increasing margins over the last several years.
Investor interest in final mile delivery of heavy home goods picked up during the
pandemic, but this operation is still relative small with a modest margin profile given
it is an asset-light model. We expect the GXO spin should help XPO set the stage to
close the valuation gap with peers but a full realization could still take time after the
recent misstep in LTL which could put the $1B EBITDA target in 2022 at risk.
Valuation
Our December 2022 price target is based on our 2023E EBITDA and a discounted
valuation to peers within LTL, brokerage and last mile delivery of heavy home
goods. The 9.6x target multiple is a -25% discount to the peers SAIA, CHRW, and
JBHT weighted by segment profitability we estimate is roughly 2/3 North American
LTL and 1/3 brokerage and final mile. We believe a discount is merited considering
XPO’s weaker than expected LTL operating ratio performance during the pandemic
and during the recent freight market strength. In addition, the company’s
significantly higher financial leverage also merits a modest discount to its investment
grade peers and note that XPO is targeting 1-2x leverage by the first half of 2023.

XPO might need to pursue another strategic transaction to unlock the discount
relative to peers, which remains at this point even after the GXO spin-off. There are
no guarantees that the company could find a suitable consolidation partner in the
preferred time frame or at the preferred valuation if it chooses to go that route.
The company’s LTL operations were viewed as trailing peers into and out of the
pandemic, and while XPO incurred additional costs to support employees, we do not
think adjusting for these items changes the market’s viewpoint. Reaching the 2022
adjusted EBITDA target is the first step in closing that gap along with improving
operating ratio ex-land sales, which could be more challenging in softer freight
markets.
XPO’s pursuit of an investment grade rating is a key strategic priority with a current
target of before 1H23. We expect the majority of the company’s progress on this
front will be via growth of the underlying business, not divestments or dilution, so
the IG objective could be subject to freight market conditions, which appear to be
reaching a peak in 2022.
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C.H. Robinson: Summary of Financials

Income Statement - Annual FY19A FY20A FY21E FY22E FY23E Income Statement - Quarterly 1Q21A 2Q21A 3Q21A 4Q21E
Revenue 15,310 16,207 22,948 22,628 20,184 Revenue 4,804A 5,533A 6,264A 6,348
COGS (12,723) (13,795) (19,774) (19,383) (17,129) COGS (4,101)A (4,784)A (5,420)A (5,470)
Gross profit 2,586 2,412 3,174 3,245 3,056 Gross profit 702A 749A 844A 878
SG&A (504) (496) (550) (621) (539) SG&A (118)A (126)A (134)A (173)
Adj. EBITDA 885 775 1,225 1,227 1,020 Adj. EBITDA 247A 284A 333A 361
D&A (100) (102) (99) (114) (26) D&A (23)A (23)A (22)A (31)
Adj. EBIT 784 673 1,126 1,114 994 Adj. EBIT 223A 261A 311A 331
Net Interest (48) (45) (60) (74) (129) Net Interest (11)A (13)A (17)A (18)
Adj. PBT 736 628 1,066 1,040 865 Adj. PBT 212A 247A 294A 312
Tax (170) (122) (205) (218) (182) Tax (39)A (53)A (47)A (66)
Minority Interest - - - - - Minority Interest - - - -
Adj. Net Income 567 506 861 822 683 Adj. Net Income 173A 194A 247A 247
Reported EPS 4.13 3.71 6.42 6.30 5.35 Reported EPS 1.28A 1.44A 1.85A 1.87
Adj. EPS 4.11 3.71 6.42 6.30 5.35 Adj. EPS 1.28A 1.44A 1.85A 1.87
DPS 2.01 2.04 2.07 2.16 2.26 DPS 0.51A 0.51A 0.51A 0.53
Payout ratio 48.7% 55.1% 32.2% 34.3% 42.2% Payout ratio 40.3%A 35.8%A 27.5%A 28.4%
Shares outstanding 138 136 134 130 128 Shares outstanding 136A 135A 133A 132
Balance Sheet & Cash Flow Statement FY19A FY20A FY21E FY22E FY23E Ratio Analysis FY19A FY20A FY21E FY22E FY23E
Cash and cash equivalents 448 244 729 1,188 1,420 Gross margin 16.9% 14.9% 13.8% 14.3% 15.1%
Accounts receivable 1,974 2,450 3,047 2,645 2,454 EBITDA margin 5.8% 4.8% 5.3% 5.4% 5.1%
Inventories - - - - - EBIT margin 5.1% 4.2% 4.9% 4.9% 4.9%
Other current assets 218 248 317 276 256 Net profit margin 3.7% 3.1% 3.8% 3.6% 3.4%
Current assets 2,640 2,942 4,094 4,109 4,130
PP&E 208 179 172 172 166 ROE 34.7% 28.5% 43.8% 37.3% 28.3%
LT investments - - - - - ROA 12.5% 10.4% 15.1% 13.1% 10.9%
Other non current assets 1,793 2,024 1,995 1,995 1,995 ROCE 19.4% 16.1% 24.3% 21.1% 17.9%
Total assets 4,641 5,144 6,260 6,275 6,290 SG&A/Sales 3.3% 3.1% 2.4% 2.7% 2.7%
Net debt/equity 0.7 0.7 0.6 0.3 0.2
Short term borrowings 267 221 629 629 629
Payables 985 1,283 1,504 1,308 1,215 P/E (x) 26.3 29.1 16.8 17.1 20.2
Other short term liabilities 305 336 668 590 553 P/BV (x) 8.9 7.8 7.0 6.0 5.5
Current liabilities 1,556 1,840 2,802 2,527 2,397 EV/EBITDA (x) 17.7 20.4 12.8 12.4 14.7
Long-term debt 1,352 1,362 1,343 1,343 1,343 Dividend Yield 1.9% 1.9% 1.9% 2.0% 2.1%
Other long term liabilities 62 63 60 60 60
Total liabilities 2,970 3,264 4,205 3,930 3,801 Sales/Assets (x) 3.4 3.3 4.0 3.6 3.2
Shareholders' equity 1,671 1,880 2,055 2,345 2,490 Interest cover (x) 18.5 17.2 20.5 16.6 7.9
Minority interests - - - - - Operating leverage 176.4% (241.2%) 161.5% 74.5% 99.6%
Total liabilities & equity 4,641 5,144 6,260 6,275 6,290
BVPS 12.12 13.78 15.33 17.98 19.51 Revenue y/y Growth (7.9%) 5.9% 41.6% (1.4%) (10.8%)
y/y Growth 6.6% 13.6% 11.3% 17.3% 8.5% EBITDA y/y Growth (12.3%) (12.4%) 58.1% 0.2% (16.9%)
Net debt/(cash) 1,171 1,339 1,242 784 552 Tax rate 23.1% 19.4% 19.2% 21.0% 21.0%
Adj. Net Income y/y Growth (14.7%) (10.6%) 70.0% (4.6%) (16.8%)
Cash flow from operating activities 835 499 713 1,104 872 EPS y/y Growth (13.2%) (9.7%) 73.1% (1.9%) (15.0%)
o/w Depreciation & amortization 100 102 99 114 107 DPS y/y Growth 6.4% 1.6% 1.2% 4.5% 4.5%
o/w Changes in working capital 128 (135) (324) 169 81
Cash flow from investing activities (113) (272) (93) (113) (101)
o/w Capital expenditure (36) (23) (52) (113) (101)
as % of sales 0.2% 0.1% 0.2% 0.5% 0.5%
Cash flow from financing activities (651) (441) (132) (532) (538)
o/w Dividends paid (278) (210) (279) (282) (288)
o/w Net debt issued/(repaid) (22) (143) 630 0 0
Net change in cash 69 (204) 486 459 232
Adj. Free cash flow to firm 836 512 710 1,049 873
y/y Growth 8.3% (38.7%) 38.5% 47.8% (16.8%)
Source: Company reports and J.P. Morgan estimates.
Note: $ in millions (except per-share data).Fiscal year ends Dec. o/w - out of which
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CSX: Summary of Financials

Income Statement - Annual FY18A FY19A FY20A FY21E FY22E Income Statement - Quarterly 1Q21A 2Q21A 3Q21A 4Q21E
Adj. EBITDA 6,200 6,314 5,745 6,723 7,395 Adj. EBITDA 1,446A 1,690A 1,803A 1,784
D&A (1,331) (1,349) (1,383) (1,425) (1,485) D&A (345)A (348)A (367)A (365)
Adj. EBIT 4,869 4,965 4,362 5,298 5,910 Adj. EBIT 1,101A 1,342A 1,436A 1,419
Adj. PBT 4,304 4,316 3,675 4,649 5,245 Adj. PBT 937A 1,181A 1,279A 1,252
Tax (995) (985) (873) (1,120) (1,285) Tax (231)A (271)A (311)A (307)
Adj. Net Income 3,309 3,331 2,802 3,529 3,960 Adj. Net Income 706A 910A 968A 946
DPS 0.29 0.32 0.35 0.37 0.39 DPS 0.09A 0.09A 0.09A 0.09
Shares outstanding 2,582 2,396 2,305 2,253 2,135 Shares outstanding 2,286A 2,275A 2,242A 2,210
.
Balance Sheet & Cash Flow Statement FY18A FY19A FY20A FY21E FY22E Ratio Analysis FY18A FY19A FY20A FY21E FY22E
Cash and cash equivalents 1,111 1,954 3,131 2,487 2,065 EBITDA margin 50.6% 52.9% 54.3% 53.9% 53.2%
Accounts receivable 1,010 986 912 1,147 1,200 EBIT margin 39.7% 41.6% 41.2% 42.5% 42.5%
Inventories 263 261 302 332 343 Net profit margin 27.0% 27.9% 26.5% 28.3% 28.5%
Other current assets 181 77 96 89 89
Current assets 2,565 3,278 4,441 4,056 3,697 ROE 24.2% 27.3% 22.4% 27.0% 31.0%
PP&E 31,998 32,168 32,444 32,924 33,239 ROA 9.1% 8.9% 7.2% 8.8% 9.8%
LT investments 943 982 1,025 1,025 1,025 ROCE 27.4% 31.0% 26.0% 30.1% 34.4%
Other non current assets 1,223 1,829 1,883 2,393 2,393 Net debt/equity NM NM NM NM NM
Total assets 36,729 38,257 39,793 40,398 40,354
P/E (x) 28.3 26.1 29.9 23.2 19.6
Short term borrowings 18 245 401 211 211 P/BV (x) 7.5 7.3 6.4 6.3 6.2
Payables 949 1,043 809 1,056 1,090 EV/EBITDA (x) 13.3 12.9 14.0 12.0 11.0
Other short term liabilities 948 863 809 1,085 1,085 Dividend Yield 0.8% 0.9% 1.0% 1.0% 1.1%
Current liabilities 1,915 2,151 2,019 2,352 2,386
Long-term debt - - - - - Sales/Assets (x) 0.3 0.3 0.3 0.3 0.3
Other long term liabilities 22,234 24,243 24,664 25,033 25,426 Interest cover (x) 9.7 8.6 7.6 9.2 9.9
Total liabilities 24,149 26,394 26,683 27,385 27,812 Operating leverage 384.7% (77.2%) 107.1% 120.3% 100.0%
Shareholders' equity 12,580 11,863 13,110 13,012 12,542
Minority interests - - - - - Revenue y/y Growth 7.9% (2.6%) (11.3%) 17.8% 11.6%
Total liabilities & equity 36,729 38,257 39,793 40,398 40,354 EBITDA y/y Growth 22.9% 1.8% (9.0%) 17.0% 10.0%
BVPS 4.87 4.95 5.69 5.77 5.87 Tax rate 23.1% 22.8% 23.8% 24.1% 24.5%
y/y Growth (9.3%) 1.7% 14.9% 1.5% 1.7% Adj. Net Income y/y Growth 64.0% 0.7% (15.9%) 25.9% 12.2%
Net debt/(cash) (1,093) (1,709) (2,730) (2,276) (1,854) EPS y/y Growth 74.1% 8.5% (12.6%) 28.8% 18.4%
DPS y/y Growth 12.6% 9.5% 8.6% 7.6% 4.6%
Cash flow from operating activities 4,641 4,850 4,263 5,457 5,809
o/w Depreciation & amortization 1,331 1,349 1,383 1,425 1,485
o/w Changes in working capital 8 117 2 456 (30)
Cash flow from investing activities (1,684) (2,102) (649) (1,938) (1,800)
o/w Capital expenditure (1,745) (1,657) (1,626) (1,695) (1,800)
as % of sales 14.2% 13.9% 15.4% 13.6% 12.9%
Cash flow from financing activities (2,500) (2,648) (1,443) (4,161) (4,430)
o/w Net debt issued/(repaid) 2,981 1,482 255 (140) 0
Net change in cash 457 100 2,171 (642) (421)
Adj. Free cash flow to firm 2,896 3,193 2,637 3,762 4,009
y/y Growth 102.2% 10.3% (17.4%) 42.7% 6.6%
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GXO Logistics: Summary of Financials

Revenue - - - 7,703 8,567 Revenue 1,822A 1,882A 1,974A 2,025
Adj. EBITDA - - - 629 729 Adj. EBITDA 143A 161A 163A 162
D&A - - - (334) (330) D&A (79)A (95)A (85)A (75)
Adj. EBIT - - - 160 379 Adj. EBIT 30A 22A 36A 72
Net Interest - - - (22) (22) Net Interest (5)A (6)A (5)A (6)
Adj. PBT - - - 154 376 Adj. PBT 26A 15A 42A 71
Tax - - - 3 (102) Tax (9)A (1)A 31A (18)
Minority Interest - - - (7) 0 Minority Interest (3)A (3)A (1)A 0
Adj. Net Income - - - 224 319 Adj. Net Income 40A 46A 65A 73
Reported EPS - - - 1.30 2.37 Reported EPS 0.12A 0.10A 0.62A 0.46
Adj. EPS - - - 1.94 2.75 Adj. EPS 0.35A 0.40A 0.56A 0.63
DPS - - - - - DPS - - - -
Payout ratio - - - - - Payout ratio - - - -
Shares outstanding - - - 116 116 Shares outstanding 115A 115A 116A 116
.
Cash and cash equivalents - - - 282 508 EBITDA margin - - - 8.2% 8.5%
Accounts receivable - - - 1,434 1,542 EBIT margin - - - 2.1% 4.4%
Inventories - - - - - Net profit margin - - - 2.9% 3.7%
Other current assets - - - 292 292
Current assets - - - 2,007 2,342 ROE - - - 19.1% 12.8%
PP&E - - - 858 919 ROA - - - 6.3% 4.3%
LT investments - - - - - ROCE - - - 9.4% 8.0%
Other non current assets - - - 4,308 4,248 Net debt/equity - - - 0.3 0.2
Total assets - - - 7,173 7,509
P/E (x) - - - 44.7 31.6
Short term borrowings - - - 40 40 P/BV (x) - - - 4.2 3.8
Payables - - - 500 578 EV/EBITDA (x) - - - 15.3 12.9
Other short term liabilities - - - 1,717 1,823 Dividend Yield - - - - -
Current liabilities - - - 2,257 2,442
Long-term debt - - - 934 934 Sales/Assets (x) - - - 2.1 1.2
Other long term liabilities - - - 1,592 1,468 Interest cover (x) - - - 29.1 32.4
Total liabilities - - - 4,783 4,843 Operating leverage - - - - 1220.0%
Shareholders' equity - - - 2,349 2,624
Minority interests - - - 41 41 Revenue y/y Growth - - - - 11.2%
Total liabilities & equity - - - 7,173 7,509 EBITDA y/y Growth - - - - 15.9%
BVPS - - - 20.70 22.98 Tax rate - - - 2.1% 27.0%
y/y Growth - - - - 11.0% Adj. Net Income y/y Growth - - - - 42.0%
Net debt/(cash) - - - 692 466 EPS y/y Growth - - - - 41.4%
DPS y/y Growth - - - - -
Cash flow from operating activities - - - 323 557
o/w Depreciation & amortization - - - 334 330
o/w Changes in working capital - - - (107) 76
Cash flow from investing activities - - - (206) (331)
o/w Capital expenditure - - - (251) (343)
as % of sales - - - 3.3% 4.0%
Cash flow from financing activities - - - (165) 0
o/w Dividends paid - - - 0 0
o/w Net debt issued/(repaid) - - - 730 0
Net change in cash - - - (46) 226
Adj. Free cash flow to firm - - - 107 243
y/y Growth - - - - 127.4%
61
(1-212) 622-1023 12 January 2022
Heartland Express: Summary of Financials

Revenue 611 597 645 609 611 Revenue 152A 154A 153A 150
Adj. EBITDA 190 194 203 208 213 Adj. EBITDA 45A 53A 59A 51
D&A (101) (100) (110) (103) (112) D&A (27)A (26)A (25)A (25)
Adj. EBIT 90 94 93 105 101 Adj. EBIT 18A 27A 33A 26
Net Interest 2 3 1 1 1 Net Interest 0A 0A 0A 0
Adj. PBT 92 97 94 106 101 Adj. PBT 18A 28A 33A 26
Tax (21) (24) (23) (27) (24) Tax (5)A (7)A (9)A (6)
DPS 0.08 0.08 0.00 0.58 0.58 DPS 0.02A 0.02A 0.52A 0.02
.
Cash and cash equivalents 161 77 114 127 252 EBITDA margin 31.2% 32.6% 31.5% 34.2% 34.8%
Accounts receivable 49 57 56 53 54 EBIT margin 14.7% 15.8% 14.5% 17.2% 16.5%
Inventories - - - - - Net profit margin 11.6% 12.2% 11.0% 13.0% 12.7%
Current assets 233 152 193 204 329 ROE 11.9% 11.2% 10.1% 11.2% 11.0%
PP&E 403 526 539 484 394 ROA 8.9% 8.6% 7.7% 8.5% 8.5%
LT investments 0 0 0 0 0 ROCE 11.7% 10.9% 10.0% 11.1% 10.9%
Other non current assets 171 221 219 209 209 Net debt/equity NM NM NM NM NM
Total assets 806 899 951 897 932
P/E (x) 18.9 18.3 18.7 16.4 16.6
Payables 11 11 13 7 7 EV/EBITDA (x) 5.9 6.3 5.8 5.6 4.9
Other short term liabilities 54 54 58 62 62 Dividend Yield 0.5% 0.5% 0.0% 3.6% 3.6%
Current liabilities 65 65 71 68 69
Long-term debt 0 0 0 0 0 Sales/Assets (x) 0.8 0.7 0.7 0.7 0.7
Other long term liabilities 126 151 156 142 146 Interest cover (x) NM NM NM NM NM
Total liabilities 190 216 227 211 215 Operating leverage 7198.6% (216.9%) (11.2%) (222.4%) (1424.4%)
Shareholders' equity 616 685 724 686 718
Minority interests - - - - - Revenue y/y Growth 0.6% (2.3%) 8.1% (5.6%) 0.3%
Total liabilities & equity 806 901 951 897 933 EBITDA y/y Growth 13.8% 2.2% 4.6% 2.4% 2.1%
BVPS 7.47 8.35 8.89 8.62 9.11 Tax rate 22.7% 24.9% 24.9% 25.3% 23.8%
y/y Growth 8.4% 11.7% 6.6% (3.1%) 5.7% Adj. Net Income y/y Growth 67.6% 2.7% (3.0%) 11.5% (2.0%)
Net debt/(cash) (161) (77) (114) (127) (252) EPS y/y Growth 69.5% 3.2% (2.3%) 14.1% (1.0%)
DPS y/y Growth 0.0% 0.0% (100.0%) - 0.0%
Cash flow from operating activities 147 147 179 104 192
o/w Depreciation & amortization 101 101 110 103 112
o/w Changes in working capital (6) (6) 2 (53) (1)
as % of sales 27.7% 28.4% 31.7% 23.2% 20.0%
o/w Net debt issued/(repaid) 0 (101) 0 0 0
Adj. Free cash flow to firm 106 106 67 91 169
y/y Growth 47.4% (0.5%) (36.7%) 35.2% 86.8%
62
(1-212) 622-1023 12 January 2022
Hub Group: Summary of Financials

Revenue 3,668 3,496 4,187 5,012 5,230 Revenue 920A 981A 1,075A 1,211
COGS (3,144) (3,070) (3,624) (4,323) (4,518) COGS (811)A (861)A (918)A (1,035)
Gross profit 524 425 562 689 712 Gross profit 109A 121A 158A 176
SG&A (335) (288) (339) (416) (453) SG&A (76)A (75)A (89)A (99)
D&A (117) (124) (132) (150) (157) D&A (32)A (32)A (32)A (36)
Tax (39) (23) (44) (58) (54) Tax (5)A (8)A (15)A (16)
DPS - - - - - DPS - - - -
Cash and cash equivalents 169 125 188 316 451 Gross margin 14.3% 12.2% 13.4% 13.7% 13.6%
Accounts receivable 444 519 552 612 633 EBITDA margin 7.6% 6.6% 7.7% 7.8% 7.3%
Other current assets 28 29 34 38 39 Net profit margin 3.1% 2.1% 3.3% 3.5% 3.1%
Current assets 640 673 774 966 1,123
PP&E 663 671 698 748 787 ROE 11.0% 6.6% 11.2% 12.5% 10.4%
LT investments - - - - - ROA 5.8% 3.6% 6.4% 7.4% 6.4%
Other non current assets 688 761 749 749 749 ROCE 8.9% 5.8% 9.8% 11.2% 9.5%
Total assets 1,992 2,105 2,221 2,463 2,660 SG&A/Sales 9.1% 8.2% 8.1% 8.3% 8.7%
Net debt/equity 0.1 0.1 0.0 NM NM
Payables 257 285 329 367 382 P/E (x) 23.5 36.3 19.5 15.3 16.0
Current liabilities 507 529 499 555 602 EV/EBITDA (x) 10.5 12.9 8.7 6.9 6.7
Long-term debt 187 177 185 185 159 Dividend Yield - - - - -
Total liabilities 916 947 915 983 1,017 Sales/Assets (x) 1.9 1.7 1.9 2.1 2.0
Shareholders' equity 1,075 1,158 1,306 1,480 1,643 Interest cover (x) 31.2 24.6 44.9 62.9 62.5
Minority interests - - - - - Operating leverage (125.0%) 728.3% 397.4% 132.2% (144.2%)
Total liabilities & equity 1,992 2,105 2,221 2,463 2,660
BVPS 32.12 34.52 38.58 44.21 50.27 Revenue y/y Growth (13.2%) (4.7%) 19.8% 19.7% 4.4%
y/y Growth 9.9% 7.5% 11.7% 14.6% 13.7% EBITDA y/y Growth 25.1% (17.4%) 40.0% 20.9% (2.2%)
Net debt/(cash) 125 158 9 (119) (254) Tax rate 25.5% 23.5% 24.0% 25.0% 25.0%
Adj. Net Income y/y Growth 16.2% (35.2%) 87.4% 26.3% (6.4%)
Cash flow from operating activities 255 175 282 329 331 EPS y/y Growth 16.5% (35.3%) 85.7% 27.7% (4.1%)
o/w Depreciation & amortization 117 124 132 150 157 DPS y/y Growth - - - - -
o/w Changes in working capital 20 (51) 14 (8) (1)
as % of sales 2.6% 3.3% 3.7% 4.0% 3.8%
Cash flow from financing activities (81) (22) (92) 0 0
o/w Dividends paid - - - - -
o/w Net debt issued/(repaid) (49) (11) (12) 0 0
y/y Growth 524.9% (60.2%) 129.5% (17.4%) 4.8%
63
(1-212) 622-1023 12 January 2022
J.B. Hunt: Summary of Financials

Adj. EBITDA 1,293 1,289 1,249 1,576 1,783 Adj. EBITDA 345A 381A 413A 437
D&A (439) (491) (527) (556) (575) D&A (138)A (139)A (139)A (140)
Adj. EBIT 854 798 721 1,020 1,208 Adj. EBIT 208A 242A 274A 297
Adj. PBT 814 745 674 972 1,159 Adj. PBT 196A 229A 262A 285
Tax (191) (181) (162) (236) (284) Tax (49)A (57)A (62)A (68)
DPS - - - - - DPS - - - -
.
Accounts receivable 1,052 1,012 1,124 1,498 1,758 EBIT margin 9.9% 8.7% 7.5% 8.4% 9.0%
PP&E 3,445 3,621 3,689 4,142 4,575 ROA 13.0% 10.7% 9.0% 11.3% 12.0%
LT investments - - - - - ROCE 21.2% 17.7% 14.7% 17.7% 18.6%
Other non current assets 144 369 397 393 393 Net debt/equity 0.5 0.6 0.4 0.4 0.3
Total assets 5,092 5,471 5,947 7,128 7,449
P/E (x) 35.3 38.2 41.5 28.8 24.0
Other short term liabilities 392 433 539 398 411 Dividend Yield - - - - -
Long-term debt 898 1,296 1,305 1,399 1,045 Sales/Assets (x) 1.8 1.7 1.7 1.8 1.8
Other long term liabilities 740 872 915 1,021 1,101 Interest cover (x) 32.2 24.4 26.5 32.9 36.4
Total liabilities 2,990 3,204 3,347 4,068 3,838 Operating leverage 145.6% (102.6%) (186.9%) 163.5% 163.9%
Minority interests - - - - - Revenue y/y Growth 19.8% 6.4% 5.1% 25.3% 11.3%
Total liabilities & equity 5,092 5,471 5,947 7,128 7,449 EBITDA y/y Growth 23.6% (0.3%) (3.2%) 26.2% 13.2%
BVPS 19.03 20.93 24.35 28.72 34.24 Tax rate 23.4% 24.3% 24.1% 24.3% 24.5%
y/y Growth 14.9% 10.0% 16.4% 17.9% 19.2% Adj. Net Income y/y Growth 61.1% (9.5%) (9.2%) 43.7% 18.9%
Net debt/(cash) 1,142 1,261 992 1,204 1,240 EPS y/y Growth 62.0% (7.7%) (7.9%) 44.0% 20.2%
o/w Changes in working capital 1 (79) (15) (397) (234)
Cash flow from investing activities (887) (804) (613) (939) (1,007)
o/w Capital expenditure (996) (854) (739) (1,026) (1,107)
as % of sales 11.6% 9.3% 7.7% 8.5% 8.2%
Cash flow from financing activities (208) (267) (232) 129 (678)
o/w Net debt issued/(repaid) 67 137 2 452 (354)
Net change in cash (7) 27 278 232 (390)
y/y Growth (35.6%) 93.1% 23.9% (74.9%) 131.9%
64
(1-212) 622-1023 12 January 2022
Knight-Swift: Summary of Financials

Adj. EBITDA 1,005 928 1,089 1,516 1,690 Adj. EBITDA 295A 328A 422A 471
D&A (388) (420) (461) (518) (553) D&A (120)A (124)A (139)A (136)
Adj. EBIT 617 508 629 998 1,137 Adj. EBIT 175A 205A 283A 335
Adj. PBT 600 495 624 1,019 1,118 Adj. PBT 188A 218A 281A 331
Tax (143) (123) (166) (255) (291) Tax (49)A (55)A (64)A (87)
Minority Interest (1) (1) (1) (1) (1) Minority Interest (0)A (0)A 0A (0)
DPS 0.24 0.24 0.32 0.38 0.40 DPS 0.08A 0.08A 0.10A 0.10
.
Current assets 907 890 923 1,355 1,866 ROE 8.5% 6.7% 7.9% 12.3% 12.0%
PP&E 2,613 2,851 2,993 3,665 3,990 ROA 5.8% 4.6% 5.5% 8.0% 7.6%
Other non current assets 4,392 4,541 4,552 5,494 5,494 Net debt/equity 0.1 0.1 0.1 0.3 0.2
Total assets 7,912 8,282 8,468 10,514 11,351
P/E (x) 22.6 26.9 21.5 12.7 11.7
Long-term debt 870 541 647 2,025 2,025 Sales/Assets (x) 0.7 0.6 0.6 0.6 0.6
Other long term liabilities 964 1,079 1,109 1,172 1,172 Interest cover (x) 37.3 36.3 70.8 73.0 55.5
Total liabilities 2,449 2,613 2,596 3,981 4,059 Operating leverage 451.9% 188.3% (673.5%) 231.6% 67.8%
Minority interests 2 2 2 13 13 Revenue y/y Growth 21.9% (9.4%) (3.5%) 25.4% 20.4%
Total liabilities & equity 7,912 8,282 8,468 10,514 11,351 EBITDA y/y Growth 52.5% (7.6%) 17.3% 39.2% 11.4%
BVPS 30.68 32.89 34.43 38.97 43.56 Tax rate 23.8% 24.9% 26.6% 25.0% 26.0%
y/y Growth (6.5%) 7.2% 4.7% 13.2% 11.8% Adj. Net Income y/y Growth 147.4% (18.7%) 23.5% 66.7% 8.3%
Net debt/(cash) 800 798 765 1,866 1,481 EPS y/y Growth 122.0% (16.0%) 24.8% 69.9% 8.4%
DPS y/y Growth 33.3% 0.0% 33.3% 18.8% 5.3%
Cash flow from operating activities 882 840 920 1,033 1,339
o/w Changes in working capital (2) 46 (85) (209) (31)
Cash flow from investing activities (647) (584) (481) (2,030) (886)
o/w Capital expenditure (756) (830) (521) (2,081) (1,059)
as % of sales 14.1% 17.1% 11.1% 35.5% 15.0%
Cash flow from financing activities (255) (185) (444) 1,073 (67)
o/w Net debt issued/(repaid) 23 (67) (209) 1,091 0
Net change in cash (21) 71 (5) 76 385
Adj. Free cash flow to firm 372 289 543 (855) 483
y/y Growth 3211.0% (22.4%) 87.9% (257.5%) (156.4%)
65
(1-212) 622-1023 12 January 2022
Norfolk Southern: Summary of Financials

D&A (1,102) (1,138) (1,154) (1,178) (1,180) D&A (292)A (294)A (297)A (295)
Adj. PBT 3,469 3,491 3,014 3,882 4,391 Adj. PBT 866A 1,041A 986A 989
Tax (803) (788) (639) (885) (1,054) Tax (193)A (222)A (233)A (237)
Adj. Net Income 2,666 2,703 2,375 2,997 3,337 Adj. Net Income 673A 819A 753A 752
DPS 3.01 3.57 3.74 4.15 4.58 DPS 0.99A 0.99A 1.09A 1.09
.
Cash and cash equivalents 358 580 1,115 984 624 EBITDA margin 44.2% 45.4% 47.4% 50.8% 51.6%
Accounts receivable 1,009 920 848 1,060 1,123 EBIT margin 34.6% 35.3% 35.6% 40.2% 41.7%
PP&E 31,091 31,614 31,345 31,684 32,304 ROA 7.4% 7.3% 6.3% 7.8% 8.6%
Total assets 36,239 37,923 37,962 38,456 38,788
P/E (x) 30.1 28.1 30.9 23.7 20.5
Payables 1,505 1,428 1,016 1,259 1,304 EV/EBITDA (x) 16.0 15.9 17.5 14.6 13.4
Long-term debt 10,560 11,880 12,102 13,052 13,052 Sales/Assets (x) 0.3 0.3 0.3 0.3 0.3
BVPS 54.80 57.17 57.69 55.71 58.14 Tax rate 23.1% 22.6% 21.2% 22.8% 24.0%
y/y Growth (2.7%) 4.3% 0.9% (3.4%) 4.4% Adj. Net Income y/y Growth 40.9% 1.4% (12.1%) 26.2% 11.4%
Net debt/(cash) 10,787 11,616 11,566 12,647 13,007 EPS y/y Growth 45.9% 7.0% (9.0%) 30.4% 15.8%
DPS y/y Growth 24.3% 18.7% 4.8% 10.8% 10.3%
o/w Changes in working capital (46) (257) (117) 91 (26)
Cash flow from investing activities (1,658) (1,764) (1,175) (1,397) (1,800)
as % of sales 17.0% 17.9% 15.3% 14.2% 15.1%
o/w Dividends paid (844) (949) (960) (1,029) (1,092)
o/w Net debt issued/(repaid) 1,273 1,004 403 899 0
Net change in cash (244) 134 535 (131) (359)
y/y Growth 16.0% 5.5% 14.4% 31.8% 3.9%
66
(1-212) 622-1023 12 January 2022
Ryder System, Inc.: Summary of Financials

Adj. EBITDA 1,947 2,078 2,160 2,623 2,755 Adj. EBITDA 586A 702A 680A 654
D&A (1,395) (1,879) (2,027) (1,778) (1,893) D&A (461)A (444)A (444)A (428)
Adj. PBT 374 (42) (129) 642 701 Adj. PBT 70A 204A 183A 185
Tax (98) 19 16 (166) (182) Tax (19)A (54)A (45)A (49)
Minority Interest (1) (1) (0) (1) (1) Minority Interest (0)A 0A (1)A (0)
Adj. Net Income 306 53 (14) 460 524 Adj. Net Income 58A 129A 136A 138
Reported EPS 5.16 (0.46) (2.51) 8.82 9.58 Reported EPS 0.95A 2.77A 2.57A 2.53
Adj. EPS 5.78 1.01 (0.28) 8.60 9.70 Adj. EPS 1.08A 2.40A 2.55A 2.56
DPS 2.12 2.22 2.24 2.30 2.32 DPS 0.56A 0.58A 0.58A 0.58
Payout ratio 41.1% NM NM 26.1% 24.2% Payout ratio 59.2%A 20.9%A 22.6%A 22.9%
.
Inventories 79 81 61 85 93 Net profit margin 3.6% 0.6% (0.2%) 4.9% 5.2%
Current assets 1,568 1,562 1,596 1,887 1,713 ROE 10.6% 2.0% (0.6%) 18.9% 18.8%
PP&E 10,342 11,345 9,704 9,414 10,115 ROA 2.5% 0.4% (0.1%) 3.6% 4.0%
Total assets 13,051 14,475 12,932 12,966 13,432
P/E (x) 13.5 77.6 NM 9.1 8.0
Short term borrowings 630 876 989 1,066 1,066 P/BV (x) 1.4 1.7 1.8 1.6 1.4
Other short term liabilities 930 1,155 517 1,355 1,355 Dividend Yield 2.7% 2.8% 2.9% 2.9% 3.0%
Minority interests - - - - - Revenue y/y Growth 14.9% 6.1% (5.7%) 11.4% 7.1%
Total liabilities & equity 13,051 14,475 12,932 12,966 13,432 EBITDA y/y Growth 13.9% 6.7% 4.0% 21.4% 5.1%
BVPS 55.12 47.26 42.88 48.91 54.94 Tax rate 26.3% (44.9%) (12.8%) 25.9% 26.0%
y/y Growth 3.1% (14.3%) (9.3%) 14.1% 12.3% Adj. Net Income y/y Growth 27.2% (82.6%) (125.8%) (3457.3%) 13.8%
Net debt/(cash) 6,256 7,573 6,932 5,354 5,632 EPS y/y Growth 27.9% (82.6%) (128.0%) (3155.3%) 12.9%
DPS y/y Growth 17.8% 4.7% 0.9% 2.7% 0.9%
o/w Changes in working capital (241) (136) (64) (116) (45)
Cash flow from investing activities (2,746) (3,217) (601) (1,265) (2,404)
as % of sales 36.3% 41.8% 13.6% 21.3% 30.0%
Cash flow from financing activities 1,093 1,084 (1,507) (799) (169)
o/w Net debt issued/(repaid) - - - - -
Net change in cash (13) 3 78 197 (277)
Adj. Free cash flow to firm (887) (727) 1,882 1,137 (48)
y/y Growth (2155.2%) (18.1%) (358.9%) (39.6%) (104.2%)
67
(1-212) 622-1023 12 January 2022
Schneider: Summary of Financials

D&A (291) (293) (291) (299) (362) D&A (73)A (73)A (74)A (78)
Tax (97) (73) (75) (125) (140) Tax (18)A (31)A (38)A (38)
DPS 0.23 0.24 0.25 0.28 0.28 DPS 0.07A 0.07A 0.07A 0.07
.
PP&E 1,922 1,852 1,832 1,934 2,163 ROA 7.9% 5.8% 6.2% 10.0% 10.0%
Total assets 3,624 3,660 3,516 3,975 4,359
P/E (x) 16.8 22.1 20.9 12.5 11.1
Other long term liabilities 610 653 660 648 648 Interest cover (x) 54.0 72.3 57.4 79.7 102.1
Total liabilities 1,492 1,424 1,461 1,559 1,574 Operating leverage 267.4% 512.2% (64.3%) 316.2% 135.3%
Total liabilities & equity 3,625 3,660 3,516 3,960 4,345 EBITDA y/y Growth 20.4% (13.2%) 0.9% 37.3% 15.2%
BVPS 12.03 12.61 11.58 13.50 15.57 Tax rate 26.1% 25.7% 25.2% 25.0% 25.0%
y/y Growth 9.1% 4.8% (8.2%) 16.6% 15.3% Adj. Net Income y/y Growth 70.8% (23.6%) 5.6% 68.4% 12.0%
Net debt/(cash) 33 0 0 0 0 EPS y/y Growth 65.1% (23.7%) 5.4% 68.1% 12.0%
DPS y/y Growth 15.0% 4.3% 4.2% 12.0% 0.0%
o/w Changes in working capital (69) 166 105 (222) (19)
as % of sales 10.3% 9.8% 9.2% 8.4% 10.5%
o/w Net debt issued/(repaid) 0 0 0 0 0
Net change in cash 140 173 (156) 79 121
y/y Growth 121.7% (7.5%) 6.9% (42.0%) (8.8%)
68
(1-212) 622-1023 12 January 2022
TFI International: Summary of Financials

Adj. EBITDA 704 769 634 1,073 1,141 Adj. EBITDA 157A 380A 269A 267
D&A (273) (290) (218) (299) (365) D&A (56)A (70)A (76)A (98)
Tax (90) (77) (87) (140) (176) Tax (20)A (43)A (39)A (38)
DPS 0.87 0.98 1.00 0.99 1.09 DPS 0.23A 0.26A 0.23A 0.27
.
Current assets 709 684 653 1,217 1,590 ROE 21.5% 16.5% 18.2% 23.5% 23.3%
PP&E 1,396 1,462 1,074 2,118 2,189 ROA 8.3% 5.9% 7.2% 9.9% 9.5%
Total assets 4,050 4,557 3,849 5,508 5,666
P/E (x) 28.3 33.6 30.2 20.6 17.5
Current liabilities 656 633 654 1,202 1,146
Long-term debt 1,462 1,691 830 1,293 1,293 Sales/Assets (x) 1.3 1.1 0.9 1.5 1.5
BVPS 17.39 17.63 19.74 22.63 25.85 Tax rate 23.6% 23.9% 24.0% 19.9% 25.0%
y/y Growth 14.3% 1.4% 12.0% 14.7% 14.2% Adj. Net Income y/y Growth 67.6% (20.6%) 18.0% 54.2% 14.2%
Net debt/(cash) 1,599 1,751 872 1,295 955 EPS y/y Growth 71.9% (15.7%) 11.2% 46.9% 17.9%
DPS y/y Growth 11.5% 12.6% 1.7% (0.7%) 10.5%
Cash flow from operating activities 544 649 611 1,000 977
o/w Changes in working capital 13 20 31 36 (88)
Cash flow from investing activities (362) (403) (378) (1,110) (336)
as % of sales 6.1% 7.1% 3.8% 3.8% 5.3%
o/w Net debt issued/(repaid) 25 173 (486) 889 0
Net change in cash 0 0 4 245 340
y/y Growth 83.0% 28.3% 26.0% 57.8% (21.7%)
69
(1-212) 622-1023 12 January 2022
TuSimple: Summary of Financials

Revenue 1 2 6 39 149 Revenue 1A 1A 2A 2
COGS (2) (5) (14) (60) (203) COGS (2)A (3)A (3)A (6)
Gross profit (1) (3) (8) (21) (54) Gross profit (1)A (2)A (2)A (4)
SG&A (22) (25) (49) (68) (82) SG&A (11)A (15)A (7)A (15)
Adj. EBITDA (82) (121) (273) (348) (423) Adj. EBITDA (51)A (65)A (81)A (76)
D&A (6) (7) (11) (14) (39) D&A (2)A (4)A (3)A (2)
Adj. EBIT (87) (174) (416) (529) (707) Adj. EBIT (59)A (121)A (116)A (120)
Net Interest 0 0 0 0 0 Net Interest 0A 0A 0A 0
Adj. PBT (85) (178) (727) (529) (707) Adj. PBT (385)A (117)A (115)A (110)
Tax 0 0 0 0 0 Tax 0A 0A 0A 0
Adj. Net Income (85) (199) (731) (529) (707) Adj. Net Income (389)A (117)A (115)A (110)
Reported EPS (0.46) (0.97) (3.42) (2.49) (3.32) Reported EPS (6.36)A (0.64)A (0.54)A (0.52)
Adj. EPS (0.46) (1.08) (3.44) (2.49) (3.32) Adj. EPS (6.43)A (0.64)A (0.54)A (0.52)
DPS - - - - - DPS - - - -
Cash and cash equivalents 64 312 1,474 1,119 1,035 Gross margin (124.6%) (187.2%) (133.0%) (53.2%) (36.1%)
Accounts receivable 0 1 2 6 22 EBITDA margin (11509.2%) (6581.6%) (4398.2%) (883.3%) (284.0%)
Inventories - - - - - EBIT margin (12293.0%) (9444.6%) (6693.4%) (1342.5%) (475.1%)
Other current assets 6 6 5 24 10 Net profit margin (11983.7%) (10788.3%) (11769.2%) (1342.5%) (475.1%)
Current assets 70 319 1,481 1,149 1,067
PP&E 22 22 29 56 150 ROE (228.8%) (119.2%) (84.7%) (41.1%) (65.8%)
LT investments - - - - - ROA (176.3%) (89.7%) (78.5%) (38.8%) (58.1%)
Other non current assets 4 5 6 6 6 ROCE (217.8%) (99.4%) (47.1%) (39.8%) (60.1%)
Total assets 97 347 1,516 1,211 1,223 SG&A/Sales 3093.2% 1372.8% 785.0% 171.7% 54.9%
Net debt/equity NM NM NM NM NM
Payables 0 5 5 12 8 P/E (x) NM NM NM NM NM
Current liabilities 17 81 18 45 27 EV/EBITDA (x) NM NM NM NM NM
Long-term debt 0 0 0 0 0 Dividend Yield - - - - -
Total liabilities 22 87 49 106 179 Sales/Assets (x) 0.0 0.0 0.0 0.0 0.1
Shareholders' equity 74 259 1,467 1,105 1,043 Interest cover (x) - - - - -
Minority interests - - - - - Operating leverage - 62.3% 58.6% 5.1% 12.1%
Total liabilities & equity 97 347 1,516 1,211 1,223
BVPS 0.40 1.41 6.90 5.19 4.90 Revenue y/y Growth - 159.6% 237.0% 534.4% 277.7%
y/y Growth - 248.7% 390.0% (24.7%) (5.6%) EBITDA y/y Growth - 48.4% 125.2% 27.4% 21.4%
Net debt/(cash) (58) (302) (1,445) (1,062) (885) Tax rate 0.0% 0.0% 0.0% 0.0% 0.0%
Adj. Net Income y/y Growth - 133.7% 267.6% (27.6%) 33.7%
Cash flow from operating activities (76) (104) (147) (347) (455) EPS y/y Growth - 133.7% 218.4% (27.6%) 33.7%
o/w Depreciation & amortization 6 8 9 10 28 DPS y/y Growth - - - - -
o/w Changes in working capital 2 17 (9) 5 (21)
Cash flow from investing activities (10) (4) 8 (8) (30)
as % of sales 1454.6% 233.5% 272.4% 57.0% 27.5%
Cash flow from financing activities 52 356 1,299 0 400
o/w Dividends paid - - - - -
Net change in cash (35) 248 1,161 (355) (85)
Adj. Free cash flow to firm (87) (108) (163) (370) (496)
y/y Growth - 24.8% 51.2% 126.0% 34.2%
70
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U.S. Xpress: Summary of Financials

Revenue 1,805 1,707 1,742 1,921 1,994 Revenue 451A 475A 491A 504
D&A (98) (94) (103) (85) (82) D&A (22)A (23)A (20)A (20)
Tax (11) (1) (5) (4) (13) Tax (2)A (1)A 0A (1)
Minority Interest (1) (1) 0 0 0 Minority Interest 0A 0A 0A 0
Reported EPS 1.31 (0.02) 0.36 0.39 0.69 Reported EPS 0.05A 0.37A (0.11)A 0.07
DPS - - - - - DPS - - - -
.
PP&E 519 492 502 567 642 ROA 5.6% 0.6% 1.7% 1.1% 2.6%
Total assets 910 1,140 1,180 1,314 1,408
P/E (x) 3.2 44.9 13.4 19.4 7.7
Short term borrowings - - - - - P/BV (x) 0.6 1.1 1.0 1.0 0.8
Other short term liabilities 87 237 276 272 276 Dividend Yield - - - - -
Total liabilities 672 909 919 1,028 1,087 Operating leverage 1468.8% 1275.3% 2258.5% (231.8%) 2714.4%
Shareholders' equity 235 230 259 284 319
Minority interests 3 1 1 1 1 Revenue y/y Growth 16.0% (5.4%) 2.0% 10.3% 3.8%
Total liabilities & equity 910 1,140 1,180 1,314 1,408 EBITDA y/y Growth 59.0% (36.0%) 17.9% (19.1%) 26.0%
BVPS 8.21 4.72 5.14 5.56 6.32 Tax rate 18.8% 18.7% 20.5% 21.9% 27.0%
y/y Growth (230.7%) (42.5%) 9.0% 8.2% 13.5% Adj. Net Income y/y Growth (1286.3%) (88.0%) 246.4% (30.1%) 150.4%
Net debt/(cash) 415 309 249 273 297 EPS y/y Growth (364.8%) (93.0%) 235.0% (31.1%) 153.1%
o/w Changes in working capital (10) 5 26 42 (1)
as % of sales 12.4% 8.9% 10.7% 12.6% 12.5%
Cash flow from financing activities 66 (38) (39) 11 35
o/w Dividends paid 0 0 0 0 0
o/w Net debt issued/(repaid) (33) 1 (1) 28 0
Net change in cash 1 (16) (0) 10 11
Adj. Free cash flow to firm (28) 48 61 14 3
y/y Growth (14.4%) (270.5%) 28.6% (77.4%) (80.5%)
71
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Union Pacific: Summary of Financials

D&A (2,191) (2,216) (2,210) (2,207) (2,240) D&A (549)A (550)A (553)A (555)
Net Interest (870) (1,050) (1,141) (1,158) (1,252) Net Interest (290)A (282)A (290)A (296)
Adj. PBT 7,826 7,643 7,258 8,350 9,444 Adj. PBT 1,754A 2,266A 2,180A 2,150
Tax (1,795) (1,804) (1,700) (1,979) (2,267) Tax (413)A (554)A (507)A (505)
Adj. Net Income 6,031 5,839 5,558 6,371 7,177 Adj. Net Income 1,341A 1,713A 1,673A 1,645
DPS 3.06 3.70 3.88 4.18 4.07 DPS 0.97A 1.07A 1.07A 1.07
.
Cash and cash equivalents 1,273 831 1,859 1,375 2,063 EBITDA margin 46.9% 49.3% 52.8% 53.2% 54.1%
PP&E 52,679 53,916 54,161 54,757 55,717 ROA 10.3% 9.7% 9.0% 10.2% 11.3%
LT investments 1,912 2,050 2,164 2,273 2,273 ROCE 15.5% 15.0% 14.3% 16.3% 18.2%
Other non current assets 393 2,248 1,859 1,915 1,915 Net debt/equity 1.0 1.3 1.5 2.1 2.5
Total assets 59,147 61,673 62,398 62,497 64,276
P/E (x) 30.8 29.8 30.1 25.4 21.5
Short term borrowings 1,466 1,257 1,069 1,069 1,069 P/BV (x) 9.1 9.6 9.9 12.1 12.6
Other short term liabilities 2,288 2,345 2,492 2,593 2,593 Dividend Yield 1.2% 1.5% 1.6% 1.7% 1.7%
Total liabilities 38,724 43,545 45,440 49,156 52,069 Operating leverage 115.8% 8.8% 43.3% 136.4% 146.2%
Minority interests 0 0 0 0 0 Revenue y/y Growth 7.5% (4.9%) (10.0%) 10.7% 9.0%
Total liabilities & equity 59,147 61,673 62,398 62,497 64,276 EBITDA y/y Growth 7.7% (0.1%) (3.5%) 11.5% 10.9%
BVPS 27.08 25.67 24.97 20.35 19.49 Tax rate 22.9% 23.6% 23.4% 23.7% 24.0%
y/y Growth (12.7%) (5.2%) (2.7%) (18.5%) (4.2%) Adj. Net Income y/y Growth 30.5% (3.2%) (4.8%) 14.6% 12.7%
Net debt/(cash) 21,118 24,369 24,870 28,520 30,332 EPS y/y Growth 38.7% 3.4% (1.0%) 18.8% 17.9%
DPS y/y Growth 23.4% 20.9% 4.9% 7.7% (2.5%)
o/w Changes in working capital (126) (170) 266 448 (96)
as % of sales 15.1% 15.9% 15.0% 13.4% 13.6%
o/w Dividends paid (2,299) (2,598) (2,626) (2,732) (2,552)
o/w Net debt issued/(repaid) 5,350 3,163 1,824 3,406 2,500
Net change in cash 53 (472) 962 (556) 688
y/y Growth 27.3% (1.9%) 13.3% 12.0% (1.0%)
72
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United Parcel Service: Summary of Financials

D&A (2,207) (2,360) (2,698) (3,026) (3,800) D&A (722)A (739)A (738)A (827)
Adj. PBT 8,006 8,391 9,362 13,269 13,937 Adj. PBT 3,098A 3,451A 3,067A 3,653
Tax (1,705) (1,848) (2,196) (2,993) (3,275) Tax (668)A (764)A (684)A (877)
Adj. Net Income 6,301 6,543 7,166 10,277 10,662 Adj. Net Income 2,430A 2,687A 2,383A 2,777
DPS 3.64 3.84 4.04 4.04 5.00 DPS 1.01A 1.01A 1.01A 1.01
.
Cash and cash equivalents 4,225 5,238 5,910 9,015 10,035 EBITDA margin 13.3% 14.2% 13.5% 16.2% 16.8%
Other current assets 3,027 2,313 3,640 3,105 3,161
PP&E 26,576 30,482 32,254 33,686 34,978 ROA 13.2% 12.1% 11.9% 15.8% 15.5%
Total assets 50,016 57,857 62,492 67,974 70,028
P/E (x) 29.2 28.1 25.7 18.0 17.2
Short term borrowings 2,805 3,420 2,623 1,564 1,564 P/BV (x) 60.8 56.2 248.4 14.3 10.3
Payables 5,188 5,555 6,455 6,254 6,373 EV/EBITDA (x) 21.8 20.1 18.4 13.0 11.7
Other short term liabilities 6,094 6,438 7,938 9,291 9,349 Dividend Yield 1.7% 1.8% 1.9% 1.9% 2.4%
Total liabilities 46,979 54,574 61,739 55,024 52,258 Operating leverage (18.3%) 333.8% 49.0% 310.9% 101.1%
Shareholders' equity 3,021 3,267 741 12,934 17,753
Minority interests 16 16 12 16 16 Revenue y/y Growth 9.1% 3.1% 14.2% 14.7% 4.9%
Total liabilities & equity 50,016 57,857 62,492 67,973 70,027 EBITDA y/y Growth (2.0%) 9.6% 8.6% 37.8% 8.9%
BVPS 3.47 3.76 0.85 14.75 20.44 Tax rate 21.3% 22.0% 23.5% 22.6% 23.5%
y/y Growth 202.9% 8.2% (77.4%) 1634.0% 38.6% Adj. Net Income y/y Growth 20.3% 3.8% 9.5% 43.4% 3.7%
Net debt/(cash) 18,511 20,000 18,744 13,091 9,529 EPS y/y Growth 20.6% 3.9% 9.3% 42.5% 4.8%
DPS y/y Growth 9.6% 5.5% 5.2% 0.0% 23.8%
o/w Depreciation & amortization 2,207 2,360 712 3,026 3,800
o/w Changes in working capital 2,058 156 1,060 1,670 515
as % of sales 8.7% 8.6% 6.4% 4.4% 5.0%
o/w Dividends paid (3,011) (3,194) (3,374) (3,462) (4,342)
o/w Net debt issued/(repaid) (1,685) 2,109 1,611 (2,909) (2,542)
Net change in cash 598 871 672 3,104 1,020
y/y Growth (302.7%) (59.2%) 98.5% 100.5% (12.5%)
73
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Werner Enterprises: Summary of Financials

Revenue 2,458 2,464 2,372 2,684 2,880 Revenue 616A 650A 703A 715
D&A (230) (249) (256) (264) (271) D&A (64)A (64)A (69)A (68)
Net Interest 0 (4) (3) (3) (5) Net Interest (1)A (0)A (1)A (1)
Tax (59) (55) (59) (76) (87) Tax (15)A (20)A (18)A (22)
Minority Interest - - - (3) (6) Minority Interest - - (2)A (2)
DPS 0.34 0.36 0.36 0.46 0.48 DPS 0.10A 0.12A 0.12A 0.12
.
PP&E 1,488 1,526 1,543 1,629 1,661 ROA 8.8% 7.9% 8.3% 9.5% 9.3%
Total assets 2,084 2,144 2,157 2,564 2,788
P/E (x) 19.3 19.4 17.8 14.0 12.6
Other long term liabilities 458 499 513 531 531 Interest cover (x) NM 134.1 192.3 170.5 115.3
Total liabilities 819 1,033 962 1,163 1,172 Operating leverage 374.7% (1161.2%) (197.6%) 206.1% 179.2%
Minority interests - - - 37 37 Revenue y/y Growth 16.1% 0.2% (3.7%) 13.1% 7.3%
Total liabilities & equity 2,084 2,144 2,157 2,564 2,788 EBITDA y/y Growth 27.5% 2.6% 4.9% 14.8% 8.3%
BVPS 17.57 15.88 17.22 20.04 23.28 Tax rate 25.6% 24.9% 24.7% 25.0% 25.5%
y/y Growth 7.5% (9.6%) 8.4% 16.3% 16.2% Adj. Net Income y/y Growth 90.6% (3.2%) 8.1% 24.8% 10.7%
Net debt/(cash) 91 274 171 204 28 EPS y/y Growth 91.9% (0.4%) 9.0% 27.2% 11.2%
DPS y/y Growth 25.9% 5.9% 0.0% 27.8% 5.0%
o/w Changes in working capital (22) (4) 9 (10) (7)
as % of sales 21.2% 17.1% 17.4% 14.5% 14.0%
Net change in cash 19 (0) (4) 117 176
y/y Growth (16.0%) 110.3% 24.9% 11.3% 5.1%
74
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XPO Logistics: Summary of Financials

COGS (8,069) (7,675) (10,092) (10,936) (11,282) COGS (2,258)A (2,515)A (2,672)A (2,647)
Gross profit 2,524 2,590 2,531 Gross profit 598A 607
SG&A (1,314) (1,580) (1,501) (1,239) (1,179) SG&A (413)A (432)A (339)A (317)
Adj. EBITDA 1,091 852 1,216 1,319 1,398 Adj. EBITDA 280A 331A 307A 298
D&A (739) (766) (478) (505) (504) D&A (192)A (47)A (118)A (121)
Adj. PBT 291 (50) 379 631 711 Adj. PBT 81A 134A 32A 132
Tax (61) 27 (91) (151) (171) Tax (14)A (30)A (11)A (36)
Minority Interest (22) (23) (1) 0 0 Minority Interest 0A (1)A 0A 0
Reported EPS 1.96 (0.45) 1.83 4.13 4.66 Reported EPS 0.60A 0.91A (0.49)A 0.83
DPS 0.00 0.00 0.00 DPS 0.00A 0.00
Payout ratio - - 0.0% 0.0% 0.0% Payout ratio - - 0.0%A 0.0%
Cash and cash equivalents 294 797 1,431 Gross margin - 24.7% 20.4% 18.8% -
Accounts receivable 2,083 2,240 2,298 EBITDA margin 10.2% 8.4% 9.6% 9.8% 10.1%
Other current assets - - 309 309 309 Net profit margin 2.9% 1.0% 3.7% 4.1% 4.4%
Current assets - - 2,686 3,345 4,037
PP&E 1,843 1,682 1,533 ROE 17.4% - 84.1% 40.6% 32.8%
LT investments - - - - - ROA 5.0% - 10.8% 6.1% 6.4%
Other non current assets - - 4,162 4,162 4,162 ROCE 10.0% - 18.9% 12.1% 12.1%
Total assets - - 8,691 9,189 9,732 SG&A/Sales 12.3% 15.5% 11.8% 9.2% 8.5%
Net debt/equity - - 2.9 1.7 1.0
Short term borrowings 56 56 56
Payables 925 829 852 P/E (x) 24.4 67.4 17.3 14.9 13.4
Other short term liabilities - - 1,605 1,713 1,686 P/BV (x) - - 7.3 5.2 3.8
Current liabilities - - 2,586 2,598 2,594 EV/EBITDA (x) - 9.7 9.5 8.4 -
Long-term debt 3,515 3,515 3,515 Dividend Yield - - 0.0% 0.0% 0.0%
Other long term liabilities - - 1,478 1,484 1,491
Total liabilities - - 7,579 7,597 7,600 Sales/Assets (x) 1.7 - 2.9 1.5 1.5
Shareholders' equity 1,112 1,592 2,132 Interest cover (x) 3.8 3.1 4.8 7.4 7.8
Minority interests 0 0 0 Operating leverage 51.8% 1500.0% 933.7% 554.3% 376.0%
Total liabilities & equity - - 8,691 9,189 9,732
BVPS 9.73 13.72 18.38 Revenue y/y Growth (38.2%) (4.6%) 24.3% 6.2% 2.7%
y/y Growth - - - 41.0% 33.9% EBITDA y/y Growth (30.1%) (21.9%) 42.7% 8.5% 6.0%
Net debt/(cash) - - 3,277 2,774 2,140 Tax rate 21.0% (54.0%) 23.9% 24.0% 24.0%
Adj. Net Income y/y Growth (28.8%) (65.1%) 337.0% 17.5% 11.1%
Cash flow from operating activities - - - 806 949 EPS y/y Growth (9.3%) (63.8%) 290.1% 15.7% 11.1%
o/w Depreciation & amortization 505 504 DPS y/y Growth - - - - -
o/w Changes in working capital (145) (62)
Cash flow from investing activities - - - (304) (315)
o/w Capital expenditure (404) (415)
as % of sales - - - 3.0% 3.0%
Cash flow from financing activities - - - 0 0
o/w Dividends paid 0 0
o/w Net debt issued/(repaid) - - - 0 0
Net change in cash - - - 502 634
y/y Growth (68.2%) 86.1% (54.4%) 176.7% 24.5%
75
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Coverage Universe: Ossenbeck, Brian P: C.H. Robinson (CHRW), CSX (CSX), Canadian National Railway (CNR.TO), Canadian
Pacific Railway (CP.TO), FedEx Corporation (FDX), GXO Logistics (GXO), Heartland Express (HTLD), Hub Group (HUBG), J.B. Hunt
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(TSP), U.S. Xpress (USX), Union Pacific (UNP), United Parcel Service (UPS), Werner Enterprises (WERN), XPO Logistics (XPO)
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North America Equity Research

Transportation & Logistics

 Growing risk that inventory re-stocking ends earlier than expected. We

Figure 1: Summary of JPM earnings estimates and variance versus consensus

Figure 2: North America Transportation and Logistics Comp Sheet

Source: Bloomberg Finance L.P., J.P. Morgan estimates

Equity Ratings and Price Targets

Adj. EPS Estimate Changes

Focus Topics for 4Q21 Earnings

Snapshot of sentiment/positioning and investor FAQs

Brokers Rails Logistics Parcels Intermodal LTL Truckload

Key variables to determine the pace of de-congestion

Source: J.P. Morgan research

Battleground stocks in 4Q21

Expectations for 2022 Outlooks and Guidance

Supply Chain Congestion Update – The Slog Continues

We recently published a comprehensive update in our Supply Chain Congestion

Initiatives to boost supply chain fluidity continue to make headlines

 December 30, 2021: LA to levy fee on long-dwelling empty containers.

 January 4, 2022: LA-LB brace for COVID-related labor shortage.

 January 4, 2022: Stoughton expanding chassis production to Texas.

 January 5, 2022: Ningbo ports in lockdown after COVID outbreak.

 January 9, 2022: NY/NJ port struggling amid labor concerns.

Source: Marine Data Exchange

Source: Wabtec Port Optimizer

Source: Port of Long Beach

Terminal throughput and container dwell time holding steady

Source: Port of Long Beach

Source: Port of Long Beach

Source: Port of Los Angeles

Source: Pool of Pools

Source: Pool of Pools

Source: Pool of Pools

Source: Pool of Pools

Source: Pool of Pools

Figure 17: Chicago Rail Ramp Dwell Times

2018 2019 2020 2021

Figure 18: Phoenix Truckload Wait Times

Figure 19: Port of New York/New Jersey Wait Time

Risk Skewed to Inventory Re-Stocking Ending Early

Source: Logistics Manager’s Index

Composite LMI is signaling truckload rates are approaching a peak

Retail trade industries - Nominal Retail trade industries - Real

Source: Bureau of Economic Analysis

Impact of Rising Interest Rates on Transports

Rising U.S. interest rates hinder the sector’s ability to outperform

Updated Group Views and Analysis for 4Q21

Source: U.S. Census Bureau

 …but expect a more back-half weighted guide in 2022. Expectations have

Railroads = Positive stance on the group

+10% 3Q21 includes

CP CNR CSX KSU NSC UNP

Topic Background Key Issue Potential Timeline JPM View

Source: STB, J.P. Morgan estimates

Intermodal = Neutral stance on the group

 Intermodal likely a “de-congestion" winner before becoming a loser. As

HUBG Intermodal Rate per Load ATA Revenue per Load

 Waiting for accessorials to reset but it won’t be this quarter. A significant

Figure 47: JBHT continues to trade at a record premium to truckload stocks

Source: Company reports, J.P. Morgan estimates

Source: Company reports, J.P. Morgan estimates

Truckload = Neutral stance on the group

Source: Company reports, J.P. Morgan estimates

2018 2019 2020 2021 2022