Modern Freight Brokerage in the US

Right Price: Modern Freight Brokerage in the U.S.

September, 2015

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The modern freight brokerage/Domestic Transportation Management (DTM) segment of the U.S. Third-Party Logistics (3PL) Market looks very different from the original "one man with a desk and phone" model. The evolution of freight brokerage to DTM and its core offering--modern, IT based freight brokerage with a host of value-added services-- stems from the federal deregulation of brokerage licenses. Governmental control of freight brokerage licenses eased dramatically in 1980 as part of motor carrier deregulation. There were 14 freight brokerage licenses before deregulation. After deregulation, the only major constraint to obtaining a license was the requirement for a $10,000 surety bond.

The number of licenses issued grew dramatically and reached a peak in the late 1990s with more than twice the current total of ≈15,500. The surety bond minimum was raised to $75,000 at the start of 2013. The number of license holders dropped to the current level after years of slow change as freight brokerage consolidated and major companies developed into third-party logistics DTMs (domestic transportation managers).

Of the remaining licensed freight brokers, there are about 50 who have net revenue (gross revenue or turnover minus purchased transportation) exceeding $20 million. Armstrong & Associates, Inc. (A&A) estimates that there are another 250 freight brokers having gross revenue of over $20 million. The top 40 account for over two-thirds of freight brokerage/DTM gross revenue and more than 70% of net revenue.

Figure 1. North American DTM/Freight Brokerage Market Reality

There are approximately 1,500 freight brokers with fairly sophisticated skills, but with revenues of less than $20 million.

Modern, large freight brokers have evolved quickly, developing sophisticated DTM skills based on human capital, IT support, and process management capabilities. Freight

brokers handle thousands of truckload (TL) and less-than-truckload (LTL) shipments daily relying primarily on electronic communications with shippers and carriers.

Most of the top freight brokers/DTMs have tight, quality-controlled operations split between carrier procurement and account management. Before carriers are utilized by a freight broker, they are qualified by providing insurance, operating authorities and other basic company information. Rates for desired traffic lanes are often furnished.

Freight brokers/DTMs maintain individual carrier files, shipment lane histories, and large electronic rate libraries. Most orders are received electronically from shippers (via electronic data interchange (EDI), systems integrations, email, web portals, etc.). Shipments are then electronically tendered to carriers who are given a short time window to accept them. Once accepted, all parties are notified. Shipments are then picked up and delivered. Exceptions are dealt with electronically and, as a last resort, by phone.

Large customers of DTMs—“enterprise accounts”--are often treated separately from smaller more transactional customers. Enterprise accounts tender large volumes of orders daily to the DTMs to manage transportation for multiple locations in their networks. Generally, DTMs optimize the daily order tenders from major shippers using a TMS (transportation management system) consolidating LTL shipments into truckloads and performing end-to-end truckload matches to develop best cost/service routes. These network transportation management shipment transactions often follow repetitive contractual patterns. Pure spot market transactions without either pre- negotiated carrier or customer rates are a small part of the total.

Figure 2. DTM/TMS Optimization Process Flow

ORDER/SHIPMENT INPUT

STRIPOUT/FILTER SHIPMENTS Rail box cars, UPS, expedited loads, etc.

RUN CONSOLIDATION ROUTINE Package to LTL, LTL to TL Using real rates (mode shifting optimization)

RUN MATHEMATICAL RUN MIXED NETWORK FLOW INTEGER PROGRAM To isolate TL carriers by available capacity To find end-to-end “best routes”

EXPORT RESULTS For logistics engineer review

According to research done by William Greene's team at Morgan Stanley, 48% of large shippers use two to five freight brokers, and 38% of large shippers use six or more

freight brokers. Freight brokers now handle an estimated 15% of all LTL and TL shipments in North America. Large shippers look to them more often to increase their options, especially during periods of tight trucking capacity. Trucking demand exceeds supply on a periodic basis in the U.S., especially during peaks in late summer and fall. During these times, shippers are increasingly choosing reliable freight brokerage DTMs to cover transportation needs. Many shippers have added brokers to their core carrier list to ensure ongoing capacity.

In the U.S. there are approximately 50,000 companies utilizing DTM/Freight Broker services. Of those, an estimated 520 of the largest shippers have total transportation spends of more than $100 million, the next 675 have spends of $30 - $100 million, the smaller 15,000 shippers have spends of $15 - $29.9 million, and the remaining 33,000+ shippers have total transportation spends less than $15 million.

Figure 3. Transportation Spends of Domestic Shippers

The American Trucking Associations (ATA) estimates that there is a shortage of 35- 40,000 truck drivers in the U.S., which in turn creates a tractor capacity shortage. Despite pay increases and better scheduling, this capacity limitation continues from year to year. Shippers see the need for DTM relationships that will protect them during tight trucking capacity times. As a result, closer relationships are formed. Modern freight brokerage/DTM, with its greater transparency based on IT capabilities and improved operational performance, provides customers with better service and differentiates major DTMs from smaller freight brokers with less efficient business models and limited carrier capacity. Freight brokers/DTMs are careful to provide capacity for their large clients first. Coyote Logistics differentiates itself further with a guaranteed on-time service at the contracted service price, even if it has to take a loss on the shipment because of increased carrier charges due to strong demand.

With a strengthening U.S. economy, tight carrier capacity, and the expansion of modern transportation management skills, U.S. 3PL DTM segment gross revenue reached $56.8 billion in 2014 and net revenue grew 20.5% from 2013 to $8.5 billion in 2014. DTM segment growth rates should exceed 10% per year for the foreseeable future.

Figure 4. Trends in Trucking vs. DTM Gross Revenues (US$ Billions) $1,000 $100

$800 $80 Hire Revenue -

$600 $60

$400 $40

$200 $20 U.S. 3PL Revenue DTM Gross Segment

Transportation, Trucking, and For Transportation, Trucking, $0 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Transportation Trucking For- Hire DTM

The current DTM/Freight brokerage market is dominated by truckload dry van shipments. Truckload accounts for 85% of revenue. Less-than-truckload and intermodal have grown to 9% and 6% respectively.

Figure 5. 2014 DTM/Freight Brokerage Revenue by Mode

6% 9%

Truckload Less-than-truckload Intermodal

85%

Sources: Armstrong & Associates, Inc., ATA, Morgan Stanley Research

Dry van traffic accounts for 72% of truckload revenue. Refrigerated is 22%. Flatbed and bulk are smaller segments covered by specialized operations.

Figure 6. 2014 DTM/Freight Brokerage Truckload Revenue by Equipment Type 4% 2%

22% Dry Freight Refrigerated Flatbed/Platform Bulk 72%

Sources: Armstrong & Associates, Inc., ATA, Morgan Stanley Research

Special Aspects of Freight Brokerage in the U.S.

A&A’s Top 100 U.S. DTM/Freight Brokers (shown in Appendix A) vary greatly in size.

C.H. Robinson continues to be the dominant DTM/Freight Broker. For 2014, C.H. Robinson had domestic transportation (includes Truckload, Less-than-truckload, Intermodal and Other Logistics Services; excludes Ocean, Air and Customs) net revenue of $1,551 million accounting for 18.2% of the total U.S. 3PL DTM segment net revenues of $8,522 million. Increased competition and tighter trucking capacity are taking its toll on C.H. Robinson and have driven its net revenue market share of the DTM segment from 21.5% in 2009 to 18.2% in 2014. C.H. Robinson has also seen pressure on its transportation gross margin declining from 20.2% in 2009 to 15.8% in 2014. The overall DTM segment has also been impacted with average gross margin for all 3PLs declining from 16.4% in 2009 to 15% in 2014. Interestingly, 15% has been a long standing gross margin target for freight brokers. Especially aggressive and fast growing DTM competitors include Total Quality Logistics (TQL), Coyote Logistics and Echo Global Logistics.

Table 1. Comparative DTM Net Revenue Growth 2013-2014 (US$ Millions) 2014 Growth Provider Net Revenue 2013 vs. 2014 C.H. Robinson¹ 1,551 10.7% TQL 351 38.2% Coyote Logistics 255 29.0% Echo Global Logistics 208 33.3% ¹ Includes Truckload, Less-than-truckload, Intermodal and Other Logistics Services; excludes Ocean, Air and Customs.

The smallest companies on A&A’s Top 100 U.S. DTM/Freight Broker List have less than $4 million in net revenue. These providers tend to be entrepreneurial. Most of the

major brokers are stand-alone companies. However, many, like J.B. Hunt Integrated Capacity Solutions, are owned by large trucking companies.

Stand-alone freight brokers/DTMs have “coopetition” relationships with major truckers. Competition is direct for the same customers, while the carriers regularly supply capacity to brokers. As pointed out, most major shippers now use two or more freight broker/DTM companies. Often these freight brokers/DTMs are included as “core carriers” by shippers. Shippers need to ensure that they have available capacity during high demand periods and often turn to freight brokers/DTMs to ensure coverage. As a result, freight brokers/DTMs now control the tendering, routing and delivery of 15% of LTL and TL shipments in North America.

Regulatory barriers of entry into freight brokerage are minimal. A $300 application is filed with the Federal Motor Carrier Safety Administration (FMCSA) via its website to secure operating authority and the applicant must have a $75,000 surety bond. However to be successful, freight brokers/DTMs must have a threshold level of competence to participate in the current competitive market.

Companies like Logistics Plus are relatively small but very competitive. Logistics Plus has $120 million in gross revenue, $24 million in net revenue and 380 employees. Like many mid-sized freight brokers/DTMs, it uses a proprietary system for transportation management.

IT solutions are relatively inexpensive. MercuryGate is a leading transportation management system (TMS) used by Comprehensive Logistics, Trinity Logistics and many others, can be purchased for a base price of $30,000 and $3.40 per transaction. There are no installation fees with MercuryGate.

While modern freight brokers/DTMs need to have threshold levels of sophistication to participate, none have the ability to control pricing monopolistically. For the U.S., of course, prices are adjusted as demand dictates. Also, major constraints on raising prices too high are the long memories of customers. The constant competition between freight brokers/DTMs and their regular “coopetition” with truckers dampens prices.

Most freight brokers/DTMs have about 30% of their employees involved in sales (account management) and 50-60% involved in carrier procurement (sourcing carrier capacity). Typically, freight brokers/DTMs operate in desirable major cities for new college graduates like Chicago, Illinois and form recruiting relationships with multiple colleges and universities. Newly hired graduates are normally paid $35-45,000 a year in base salary, but can make significantly more through variable compensation tied to sales efforts. New hires usually receive four to six weeks of initial training and then receive ongoing sales and market training throughout their careers.

Most companies encourage very cooperative, youth oriented cultures for college graduates. Hiring and training are ongoing processes in most companies and the flow of applicants is steady. There is no need for companies to pirate regular account management employees.

Major Freight Brokerage/DTM Operating Models

Modern freight brokerage/DTM can be grouped into three operating models: systems based network transportation management, transactional, and pure spot market. Systems based DTM (Model 1), grew out of the merger of freight bill payment and transportation routing optimization with carrier procurement. Companies in this space are IT heavy with robust TMS. Most communications are electronic. Phones are used to handle exceptions to standard systematic process flows. The basic services are defined contractually between shippers and DTMs. Contracts are normally for one to three years.

Figure 7. 2015 Freight Brokerage/DTM Operating Models

Network Transportation Managers - Systems Based DTMs receive large volumes of orders daily from shippers. These DTMs optimize the orders and consolidate them into larger LTL shipments and truckloads using least cost/best service carrier rate and performance information and develop optimal carrier routings. Electronically, DTMs send shipment information/load tenders to carriers. Carriers respond within short time frames accepting or declining load tenders. Tender rejects are a key carrier performance metric tracked by DTMs.

The minority of shipments not systematically routed and tenders to carriers are handled by email and phone to overcome rate and capacity issues.

Once agreement is reached for a shipment and the tender is accepted, the shipment is picked up and delivered. Performance failures in the physical handling of shipments,

such as carrier equipment breakdowns in route, are dealt with by customer service personnel. Detailed reporting and measurement of activities are standard for systems based DTMs.

In some cases, large shippers negotiate contracts directly with carriers using their volume clout. DTMs then are engaged to manage the daily transportation planning and execution, typically for a management fee. DTMs often charge 5-7% of gross margin for these services. Some DTMs also allow shippers direct access to their transportation management systems. In those situations, lower management fees are charged (2-4%). However, exceptions are charged for under separate fee schedules. In the end, shippers usually find it easier to let the DTM manage the daily transportation planning and execution. The relationships under this systems centric DTM model are often referred to as FUM (Freight Under Management).

Table 2. Freight Under Management Characteristics Primarily systematic network transportation management relationships

Shipper holds contracts with core carriers

Shipper contracts with a 3PL which gets a management fee

Significant network TM providers: C.H. Robinson’s TMC Division, Menlo Logistics, Penske Logistics, Ryder SCS, Transplace

Model 2 involves modern transactional freight brokerage. IT is used for support purposes. Shippers and DTMs usually have pre-approved simpler contract agreements. DTMs have a base of pre-approved carriers. Pre-approval is based on operating authority and insurance possession, credit worthiness and ongoing performance measurement. Key Performance Indicators (KPIs) like on-time pickup and delivery, tender rejects, and damage claims metrics are tracked.

Shippers notify the freight broker/DTM of shipments available by EDI, email, fax, or phone. Many carriers have account management teams which actively solicit loads normally by email or phone. Freight broker/DTMs like Coyote and Echo have separated account management from carrier capacity/procurement in a split “Buy/Sell” business model. Account management gets the shipment (“sell”) and carrier procurement supplies the truck (“buy”) - usually as an electronic (email, messaging) process.

Figure 8. The Split Buy/Sell Freight Brokerage Model

Other freight brokers like TQL and C.H. Robinson branches have teams or individuals handling both account management and carrier procurement using a more traditional “Eat what you Kill” business model.

Due to labor specialization, the Buy/Sell side freight brokerage business model is more scalable and can generate more loads per person per day versus the traditional “Eat what you Kill” approach. Buy/Sell side models typically staff more brokers on the buy side securing carrier capacity and can generate up to 15 truckloads per person per day. The traditional “Eat what you Kill” brokerage model where one person is working both the buy and sell sides usually caps out a 5-6 truckloads per person per day.

Model 3 is the pure spot market. Spot market activity is basic freight brokerage. It matches an available load to an available truck. Spot market activity is engaged in by every freight broker/DTM in Model 2 and on targeted basis in Model 1. It is what you do when you don’t have other capacity options.

DAT, Internet Truckstop and other systems providers have developed load boards at truck stops and via the internet. They provide freight brokers/DTMs and trucking companies an IT platform for matching carrier capacity supply and demand. Many Freight broker/DTMs have also built individual load posting boards within their own websites to help resolve more difficult lane and rate matches.

Pricing in the spot market operating model is very efficient and follows demand closely. When capacity can be very limited, such as during produce season in Florida or California, prices escalate. The table below details the various DTM/Freight Broker customer and carrier relationships and related gross profit margin risks due to marketplace changes in carrier capacity.

Table 3. Types of Traditional DTM/Freight Broker Customer and Carrier Relationships

Pricing Relationship Gross Profit Margin Market Risk Type Shipper Carrier

Transactional Spot Market Spot Market Efficient – Daily Supply & Demand

Spot Market Contractual Increasing Carrier Capacity

Enterprise Contractual Spot Market Tightening Carrier Capacity

Contractual Contractual Significant Carrier Capacity Shifts

• Generally enterprise business provides volume and lane density, transactional customers drive margins.

Given the different DTM/Freight Brokerage models and variability in customer volumes and operating sophistication, larger DTM Enterprise customers having large order/shipment volumes and good IT capabilities can often be automated. Given their size and sophistication, the resulting gross margins for these Enterprise accounts are less than those of smaller, more transactional customers. The typical gross margins we see by customer size are shown in the table below. The gross margins are also impacted by the modal mix used to manage a customer’s transportation. Use of more intermodal lowers gross margins and higher-touch truckload and LTL increase gross margins.

Table 4. Typical DTM Gross Margins by Customer Size Typical Gross Margin Customer Rank Ranges Top 500 5% to 12% 501-1,000 10% to 16% 1,001-2,000 12% to 18% 2,001+ 15% to 25%

U.S. DTM/Freight Broker Trends and Winning Business Practices

Progressive DTMs/Freight Brokers have learned that compensation programs and "work hard/play hard" cultures can drive the right behavior for success. New college graduates placed in these DTMs/Freight Brokers often excel in these “fraternity” types of cultures and enjoy working in an industry where a growing number of companies have installed beer taps for Friday after-hour’s comradery.

Usually, new freight brokerage hires are paid a base salary of $35,000 to $45,000 with significant bonuses for customer and carrier selling success. Typical first year salaries run $50,000. The most successful account managers can make $250,000 or more after two to three years on the job and will become team leaders/managers. Hours are long, cell- phone coverage on off times is a necessity, and luck has to be on your side. Burnout rates are often 25-30%.

New employees usually receive four to six weeks of classroom instruction for customer/carrier sales and ongoing "on the team" and in some cases targeted sales training. Most freight brokers start in carrier sales (procurement) and move into customer account management once they are acclimated to the business and trained in sales. Normally, offices are located in attractive places that fit young college graduate lifestyles. Chicago, Illinois has been a mecca for C.H. Robinson, Echo, Coyote, and others.

Increasingly, there has been a split between load generation and carrier capacity procurement. This labor specialization usually produces significant productivity gains as measured daily on a per load per employee basis. Customer service and back office personnel for tracking and tracing, claims processing, accounts receivable and accounts payable are separated out.

DTMs that can operate under Model 1 split their business internally into TMS Enterprise account and freight brokerage/DTM transactional operations. Mixes that are about 40% Enterprise and 60% transactional business produce solid gross profit margins. The Enterprise shipments provide lane density and greater predictability; the transactional business traditionally produces higher gross profit margins (>15%).

Having robust IT/TMS is an absolute necessity for efficiency and effectiveness. The trend with large companies is to use proprietary TMS. Smaller companies have been drawn strongly to MercuryGate and McLeod which provide low-cost solutions. EDI and mode optimization for LTL to truckload consolidation are becoming more standard. The levels of visibility make end-to-end load matching easier.

DTM/freight brokerage can produce large margins. Good operators have EBIT/net revenue margins of 30% or more. Return On Investment Capital (ROIC) and Return on Equity (ROE) tend to be high. As a result, private equity companies and strategic buyers have been actively pursuing DTMs. Earnings before interest, tax, depreciation and

amortization (EBITDA) purchase price multiples for sizable DTM acquisitions run at 10 times or more.

The big players have developed skills with multiple transportation modes - LTL, intermodal and private fleets. Refrigerated, flatbed and specialized shipments can also be covered. Large players have the ability to reengineer/redesign multifaceted domestic transportation networks. Along with the breath of modes handled, the ability to systematically optimize transportation via a TMS tends to be a competitive differentiator.

Big Deals – 3PL/DTM Mergers and Acquisitions Activity

The last 18 months have been a time of large, strategic acquisitions. In the U.S. and Europe, XPO Logistics has again led the way with its purchases of Con-way, New Breed Logistics, Norbert Dentressangle and UX Specialized Logistics.

In September, XPO Logistics announced that it will be acquiring Con-way, Inc. for $3 billion, or a low 5.7 times EBITDA (given the asset-intensive nature of the deal). The acquisition is expected to close in October and includes Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal. Once closed, this deal will push XPO's 3PL revenues (not including the Con-way trucking operations) to approximately $10 billion based on 2014 revenues and make XPO the 6th largest global 3PL. Brad Jacobs and his team will make 2015 the largest 3PL M&A year for deals over $100 million at 10, since we began tracking activity in 1999.

Figure 9. 3PL Acquisitions Over $100 Million 1999 – September 9, 2015 12 10 10 9

8 6 6 5 5 5 5 5 5 4 4 3 3 3 2 2 1 1 0 0

YEAR

Menlo had 2014 gross revenue of $1.7 billion, net revenue of $748 million, and manages a warehousing network of 138 warehouses totaling 21 million square feet. It has significantly grown its China and Southeast Asia network, which will be a nice addition for XPO. Menlo has also done very well in expanding its European operations. Both regions have added significant pieces of business with marquee customers such as Amazon and Triumph in Europe, and Puma and Starbucks in Asia.

XPO will benefit from Menlo Logistics lean management approach and capabilities, which should help operationally with the recently acquired Norbert Dentressangle operations and position XPO to develop more business.

Menlo has growing DTM operations. Con-way Multimodal is a top 30 DTM/Freight broker and Menlo is a prime contractor for the U.S. Transportation Command’s Defense Transportation Coordination Initiative and the lead logistics provider for truck manufacturer Navistar. Menlo is also a key 3PL for BP, HP, GM, and Dow.

The New Breed deal had a multiple of 8 times EBITDA which has gotten to be in the acceptable range for a Value-Added Warehousing and Distribution (VAWD) 3PL. This deal reflects a successful private equity venture for previous owner Warburg Pincus. Warburg made an investment in New Breed in 2005, held it for 10 years and sold it for a high multiple.

The Norbert Dentressangle purchase for $3.5 billion was a major step for XPO. Dentressangle has large European operations and had recently expanded in the U.S. by acquiring Jacobson Companies. The Jacobson multiple was 9.8 times EBITDA and reflective of the 3PLs’ mixed operations.

While skeptics point out that XPO still has not turned a profit, it is getting closer and the Con-way acquisition will push it into the black. Either way, the accumulated losses do not seem to deter conservative investors. The Ontario Teachers’ Pension Plan, Canada's Public Sector Pension Investment Board and GIC, Singapore's sovereign wealth fund and 12 institutional investors have increased their holdings.

The largest problem for XPO in Europe may be maturity and lack of growth in most large economies. However, Menlo Logistics has overcome these challenges, in part, by concentrating on developing Eastern European economies and targeting of high-value industries and customers.

In July, UPS announced it will pay $1.8 billion in a combination of debt and cash for Coyote Logistics. The purchase price makes the estimated multiple a lofty 15-18 times EBITDA. Both companies are Top 50 global 3PLs. UPS SCS is a very solid Value-Added Warehousing & Distribution 3PL with a nice integrated small package and international transportation management offering. With the addition of Coyote, it would have significant non-asset based domestic transportation management capabilities in the U.S.

Since being founded in 2006, Coyote Logistics has grown to $2.1 billion in gross revenue. The combination makes UPS SCS (assuming Coyote would be part of the 3PL operation) the 8th largest 3PL globally based upon 2014 gross revenues. The question is how well the cultures will blend. UPS is an established “big brown machine” and Coyote is a young “work hard, play hard” entrepreneurial company. Hopefully, UPS will let Coyote flourish and won’t disrupt its culture.

Coyote Logistics was founded in 2006 by Jeff Silver and provides domestic transportation management services to customers in North America. Jeff was part of the very successful management team that founded and grew American Backhaulers, Inc. Backhaulers was sold to C.H. Robinson Worldwide at the end of 1999 for $100 million in cash and $36 million in stock.

Coyote received a significant investment by Warburg Pincus in 2007 and has been growing very rapidly using a split sales and operations domestic transportation management/freight brokerage model. The split model allows Coyote to arrange transportation for more shipments per employee versus traditional “Eat what you Kill” brokerage operations. In traditional operations, the person who secures a shipment from a customer, also finds a carrier to cover the load. In the split model, sales staff focus on securing shipments and carrier capacity staff focus on securing carrier capacity to transport the shipments. Coyote has also been a leader in terms of service performance and has helped position non-asset based domestic transportation managers as being as reliable if not more reliable than working directly with carriers in securing capacity.

Coyote has also developed transportation planning functionality within its proprietary transportation management system “Bazooka” which allows it to optimize transportation modes and routes. This is a competitive differentiator versus less technically savvy freight brokers.

Coyote grew its revenue at a compound annual growth rate of 473% from 2007 to 2010. This growth includes its February 2008 acquisition of Integra Logistics LLC, which mainly provided intermodal rail transportation management services and its 2009 merger with General Freight Services, a North American truck and intermodal services provider. In March 2014, Coyote completed its merger with Access America Transport. The combined company has run rate revenues of more than $2 billion, 2,000 employees and 17 locations in North America.

Kuehne + Nagel’s purchase of ReTrans indicates the high level of interest by major companies in being part of the expanding Transportation Management (TM) segment. The Americas have been Kuehne + Nagel’s bright spot growth area for 2014-2015. Some business segments, such as Overland in Europe, have done poorly. The A&A estimated

purchase price of $180 million is appropriate given DTM multiples of 10 to 11 times EBITDA and growth potential.

ReTrans was founded in 2002, had 300 employees, and $500 million in yearly gross revenue. It ranks 18th on A&A’s Top 100 Freight Broker/DTMs. The purchase also reflects a trend in which the largest 3PLs are adding to their skill sets and ability to fill expanded customer opportunities. That also sets the stage for more competition among major 3PLs. For example, Kuehne + Nagel now adds DTM to its traditional International Transportation Management (ITM) and Value-Added Warehousing and Distribution (VAWD) businesses. C.H. Robinson added ITM with its purchase of Phoenix International and has successful European TM operations.

Another large, U.S./Europe based acquisition is FedEx's pending purchase of TNT Express. While not a true 3PL purchase, this deal has significant impact because of the dramatic expansion FedEx will be making in Europe where TNT is still a major package player despite a rash of management missteps over the last decade. European regulators need to be realists and realize that TNT has run its course and approve this deal.

Closer to home, FedEx purchased GENCO, the high quality VAWD 3PL. The multiple was a lofty 9.8 times EBITDA. This move gives FedEx a major expansion into VAWD making it more competitive on a combined service basis. It provides a strong competitive answer to UPS SCS and DHL Supply Chain.

Echo Global Logistics continued to expand through acquisitions. It made another small, bolt-on acquisition – Xpress Solutions. Then it bought fellow Chicago freight broker, Command Transportation. Command’s owner and CEO, Paul Loeb, will remain as a key player in the combined operation. Loeb was part of American Backhaulers with Jeff Silver, CEO of Coyote Logistics. Loeb and Silver left when C.H. Robinson acquired American Backhaulers in 1999. The multiple was 10.5 times EBIT. Command had revenues of $561 million with an EBITDA of $37 million. The multiple was 11.4 times EBITDA. Command’s operations are more traditional truckload brokerage. There should be significant synergies between these two operations.

While the last year was a time of cashing out for private equity investors, Greenbriar Equity Group LLC, the major owner of Transplace, made a large investment in transportation manager SEKO Logistics. SEKO has been around for over 20 years but has never really been able to become a mainstream 3PL. Greenbriar has a history of getting challenged 3PLs oriented -- expect to hear more from SEKO.

Other major consolidation moves can be expected.

A&A’s list of 3PL acquisitions since August 2014 (including pending deals) is provided in Table 5.

Table 5. Select M&A Activity (August 2014 – September 2015)

Target Target Target Company Company EBIT* or Company Acquisition Yearly EBIT or EBITDA** Entity Acquirer Target Company Date Purchase Price Revenue EBITDA Multiplier Type Roadrunner Transportation Active Aero Group 8/27/2014 115 265 14.4 8** Private Systems Norbert Dentressangle Jacobson Companies 8/29/2014 750 800 76 9.8** Private XPO Logistics New Breed Holding Company 9/2/2014 615 597 77 8** Private C.H. Robinson Worldwide Freightquote.com 1/5/2015 365 623 34 10.7** Private FedEx Corporation GENCO 1/30/2015 2,000 1,600 208 9.8** Private XPO Logistics UX Specialized Logistics 2/9/2015 59 113.2 8.2 7.2** Private Radiant Logistics Wheels Group 4/2/2015 79.8 333 6.3 12.7** Public Japan Post Holdings Toll Holdings Limited 5/28/2015 5,069 6,872 554 9.1** Public Kintetsu World Express APL Logistics 5/29/2015 1,200 1,586 80 15** Public Echo Global Logistics Command Transportation 6/1/2015 420 561 37 11.4** Private XPO Logistics Bridge Terminal Transport Services 6/1/2015 100 232 12.4 8.1** Private XPO Logistics Norbert Dentressangle 6/8/2015 3,530 5,500 388 9.1** Public Radiant Logistics Service By Air 6/8/2015 12 130.7 2.5 4.5** Private Roadrunner Transportation Stagecoach Cartage and 35 (plus an earn 7/28/2015 34 7 5** Private Systems Distribution out cap $5M) Kuehne + Nagel ReTrans Pending 180 500 18 10** Private Geodis OHL (Ozburn-Hessey Logistics) Pending 800 1,305 80 10** Private Pending United Parcel Service Coyote Logistics 1,800 2,100 120 15** Private 3Q15 3,000 (includes Pending XPO Logistics Con-way $290M of net 5,800 528 5.7** Public 3Q15 debt) Pending 4,300 (less net FedEx TNT Express 7,360 178 24** Private 2Q16 cash)

Source: Primary, Company Information; Secondary, A&A Estimates

Appendix A: A&A’s Top 100 U.S. DTM/Freight Broker List Ranked by 2014 Gross Revenue Primary Headquarters City, Additional DTM Net Revenue Gross Revenue Brokerage Rank Company Name Website Headquarters Address State, Zip Offices (US$ Millions) (US$ Millions) Type Employees Founded Parent Company Reefer TL, 14701 Charlson Rd., Eden Prairie, MN 1 C.H. Robinson www.chrobinson.com 140 US, 8 CN, 5 MX 1,879.0 11,921.0 Dry Van, 11,521 1905 Publicly Held NASDAQ: CHRW Suite 1170 55347 LTL, IMC Hub Group (Mode listed 2 www.hubgroup.com 2000 Clearwater Dr. Oak Brook, IL 60523 5 US, 1 CN, 1 MX 370.0 3,571.0 IMC, TL 2,540 1971 Publicly Held NASDAQ: HUBG separately below.)

3 Total Quality Logistics www.tql.com 4289 Ivy Pointe Blvd. Cincinnati, OH 45245 32 US 351.0 2,142.0 TL 3,131 1997 Same

5 Greenwich Office 4 XPO Logistics www.xpologistics.com Greenwich, CT 06831 16 US, 3 CN 438.0 2,140.0 TL 10,200 1989 Publicly Held NYSE: XPO Park TL, Dry 2545 W. Diversey Ave., 5 Coyote Logistics www.coyote.com Chicago, IL 60647 15 US 255.0 2,100.0 Van, LTL, 1,998 2006 Same 3rd Fl. Reefer TL, Dry 13410 Sutton Park Dr. 6 Landstar System www.landstar.com Jacksonville, FL 32224 1 US, 1 CN 245.0 1,400.0 Van, 550 1995 Publicly Held NASDAQ: LSTR S. Flatbed TL, 600 W. Chicago Ave., 7 Echo Global Logistics www.echo.com Chicago, IL 60654 30 US 208.0 1,173.0 Enterprise 1,734 2005 Publicly Held NASDAQ: ECHO Suite 725 TMS 17330 Preston Rd., 8 Mode Transportation www.modetransportation.com Dallas, TX 75252 100 US 109.0 931.0 LTL 125 1989 Hub Group Suite 200C

Yusen Logistics IM (50%); 9 www.us.yusen-logistics.com 300 Lighting Way Secaucus, NJ 07094 13 US, 1 CN, 1 MX 98.0 760.0 650 1955 Yusen Logistics (Americas) TL (30%)

615 J.B. Hunt Corporate 10 J.B. Hunt ICS www.jbhunt.com Lowell, AR 72745 29 US 93.0 718.0 TL 582 1992 J.B. Hunt Transport Services Dr.

3010 Gaylord Pkwy., Systems 11 Transplace www.transplace.com Frisco, TX 75034 6 US, 3 CN, 2 MX 75.0 633.0 700 2000 Greenbriar Equity Group Suite 200 TM

12 Freightquote.com www.freightquote.com 16025 W. 113th St. Lenexa, KS 66212 -- 124.0 623.0 LTL/Web 1,000 1998 C.H. Robinson Worldwide

Primary Headquarters City, Additional DTM Net Revenue Gross Revenue Brokerage Rank Company Name Website Headquarters Address State, Zip Offices (US$ Millions) (US$ Millions) Type Employees Founded Parent Company Flower Mound, TX 1600 Lakeside Pkwy., 13 BNSF Logistics www.bnsflogistics.com 75028 (Global); 18 US, 4 CN 83.0 610.0 TL 401 2002 Burlington Northern Santa Fe Suite 100 Springdale, AR (US) Command 14 www.commandtransportation.com 7500 Frontage Rd. Skokie, IL 60077 3 US 102.0 561.0 TL 572 1997 Echo Global Logistics Transportation

2323 Victory Ave, 15 Worldwide Express www.wwex.com Dallas, TX 75219 -- 68.0 550.0 LTL/Parcel 1,200 1995 Same Suite 1600 TL, Pure 2595 Dallas Pkwy., 16 TTS www.tts-us.com Frisco, TX 75034 80 US 63.0 522.0 Agent 98 2006 Same Suite 300 Model 3120 Unionville Rd., Cranberry Township, 17 PLS Logistics Services www.plslogistics.com 5 US 45.0 515.0 Flatbed TL 545 1991 Blue Line Advisors Bldg. 110, Suite 100 PA 16066 Some Canadian Cross- ReTrans (Kuehne + 855 Ridge Lake Blvd., Border, 18 www.re-trans.com Memphis, TN 38120 39 US, 1 CN 75.0 500.0 300 2002 Kuehne + Nagel Nagel) Suite 500 Intermodal and Few Sales Agents 4529 Angeles Crest Lund Family Owned and 19 Allen Lund www.allenlund.com La Canada, CA 91011 30 US 58.0 474.0 Reefer TL 400 1976 Hwy., Suite 300 Dominated TL, IMC, 1855 Gateway Blvd., 20 Matson Logistics www.matson.com Concord, CA 94520 20 US 43.0 436.0 Internation 324 1987 Matson Suite 550 al Unishippers Global 746 East Winchester Salt Lake City, UT 21 www.unishippers.com 290 US (franchises) 90.0 426.0 LTL/Parcel 46 1987 Unishippers Holdings Logistics St., Suite #200 84107

5415 E. High St., 22 GlobalTranz Enterprises www.globaltranz.com Phoenix, AZ 85054 2 US 75.0 408.0 LTL 567 2003 Leto Family Suite 460

6413 Congress Ave., 100 (within US and 23 SUNTECK www.suntecktransportgroup.com Boca Raton, FL 33487 83.0 400.0 TL 105 1997 AutoInfo/Comvest Partners Suite 260 CN)

24 Werner Enterprises VAS www.werner.com 14507 Frontier Rd. Omaha, NE 68138 3 US 52.0 391.0 TL 300 1992 Werner Enterprises

Salt Lake City, UT 25 England Logistics www.englandlogistics.com 1325 South 4700 West 4 US 85.0 349.0 TL 350 1994 C.R. England 84104

FLS Transportation 333 Decarie Blvd., Montreal, QC H4N 26 www.flstransport.com 4 US, 6 CN 50.0 322.0 TL 320 1987 Same Services Suite 250 3M9

TL, LTL, 27 Trinity Logistics www.trinitylogistics.com 50 Fallon Ave. Seaford, DE 19973 5 US 46.0 315.0 250 1979 Banning Family Intermodal

Roadrunner 4900 S Pennsylvania 28 www.rrts.com Cudahy, WI 53110 10 US 82.0 311.0 TL 700 1984 Publicly Held NYSE: RRTS Transportation Systems Ave.

UTi Transport Solutions/ UTi Worldwide (NASDAQ: 29 www.uti-ts.com 3525 Excel Dr. Medford, OR 97504 7 US 42.0 310.0 Flatbed TL 225 1977 Concentrek UTIW) Automotiv Youngstown, OH 30 Comprehensive Logistics www.complog.com 4944 Belmont Ave. -- 223.5 254.1 e TL, Milk 1,132 1995 Same 44505 Runs M33 Integrated 31 www.m33integrated.com 329 Battleground Ave. Greensboro, NC 27401 1 US 50.0 250.0 TL and LTL 200 1998 TranSource Solutions TL and LTL Redwood Logistics 1765 N. Elston Ave., 31 www.redwoodlogistics.com Chicago, IL 60642 6 US 37.5 250.0 (RT&T 409 2001 Same (formerly TSE) Suite 216 Logistics) John J. Jerue Truck 3200 Flightline Dr., 31 www.jerue.com Lakeland, FL 33811 10 US 35.0 250.0 TL and LTL 340 1957 Family Owned Broker Suite 202

3211 Internet Blvd., 31 Con-way Multimodal www.con-way.com/en Frisco, TX 75034 4 US 28.0 250.0 TL 157 1990 Con-way Suite 100 IMC & Rail Car, TL 3250 Players Club 32 Cornerstone Systems www.cornerstone-systems.com Memphis, TN 38125 16 US 28.0 248.0 emphasis 147 1997 ESOP Pkwy. on Wine & Spirits

Primary Headquarters City, Additional DTM Net Revenue Gross Revenue Brokerage Rank Company Name Website Headquarters Address State, Zip Offices (US$ Millions) (US$ Millions) Type Employees Founded Parent Company TL, 33 AFN www.loadafn.com 7230 N. Caldwell Ave. Niles, IL 60714 -- 37.0 239.0 184 2003 Same Intermodal

34 ATS Logistics Services www.ats-sureway.com 725 Opportunity Dr. St. Cloud, MN 56301 -- 33.0 234.0 TL 100 1989 Anderson Trucking Service

11501 Outlook St., Overland Park, KS 35 MIQ Logistics www.miq.com 15 US, 1 CN, 1 MX 14.0 233.0 TL 1,000 2002 Austin Ventures Suite 500 66211 Reefer and

36 Choptank Transport www.choptanktransport.com 3601 Choptank Rd. Preston, MD 21655 6 US 34.0 225.0 Dry Van TL 250 2003 Same and LTL

37 Knight Transportation www.knighttrans.com 5601 W. Buckeye Rd. Phoenix, AZ 85043 29 US 32.0 210.0 TL 167 2005 Publicly Held NYSE: KNX

Norbert Dentressangle 38 www.norbert-dentressangle.com 1275 NW 128th St. Clive, IA 50325 11 US, 1 MX 93.0 198.0 TL 620 1979 XPO Logistics US

USA Truck Strategic 39 www.usa-truck.com 3200 Industrial Park Rd. Van Buren, AR 72956 11 US 27.0 179.0 TL 180 1986 USA Truck Capacity Solutions

Flatbed, 40 Strive Logistics www.strivelogistics.com 3008 N. Lincoln Ave. Chicago, IL 60657 1 TX 26.0 176.2 124 1995 Same LTL

6201 Rogers Ave., 41 ABF Logistics www.abfs.com Fort Smith, AR 72903 1 US 27.0 153.0 TL 180 1923 ArcBest Suite J

Bear Transportation 5340 Legacy Dr., Little Rock Transportation 42 www.beartrans.com Plano, TX 75024 1 US 25.0 138.0 TL 248 1982 Services Suite 200 Services

Diversified LTL, Trade 43 www.dtsone.com 19829 Hamilton Ave. Torrance, CA 90502 5 US 20.0 130.0 167 1990 Same Transportation Services Shows, 3PL Perishable, Temp- 201 Rte. 17 N., Robert Goldstein 43 Genpro www.genproinc.com Rutherford, NJ 07080 5 US 14.0 130.0 Controlled, 70 1989 Suite 900 (Owner/President) Dry Van, LTL

Source: Primary, Company Information; Secondary, A&A Estimates © Copyright 2015 Armstrong & Associates, Inc. 22 | Page Primary Headquarters City, Additional DTM Net Revenue Gross Revenue Brokerage Rank Company Name Website Headquarters Address State, Zip Offices (US$ Millions) (US$ Millions) Type Employees Founded Parent Company Dry Van TL,

44 Celadon Group www.celadontrucking.com 9503 East 33rd St. Indianapolis, IN 46235 8 US, 1 CA, 1 MX 19.0 127.0 LTL, 95 1985 Publicly Held NYSE: CGI Flatbed 2037 Old Candler Rd., 45 Syfan Logistics www.syfanlogistics.com Gainesville, GA 30507 -- 20.0 125.0 Reefer 170 2011 Same Suite A

Reefer TL 46 Patterson Companies www.pattersoncos.com 2400 Roberts Ranch Rd. Plant City, FL 33566 18 US 14.0 121.0 117 1985 Same and LTL

47 Logistics Plus www.logisticsplus.net 1406 Peach St. Erie, PA 16501 18 US, 1 CN, 4 MX 24.0 120.0 TL 380 1996 Same

6622 Southpoint Dr. S., TL/LTL Back 48 Network FOB www.networkfob.com Jacksonville, FL 32216 10 US 20.0 110.0 200 1971 Rising Sun Systems Suite 210 Office

30 US, 10 MX 49 Swift Transportation www.swifttrans.com 2200 S. 75th Ave. Phoenix, AZ 85043 15.0 100.0 TL 5,700 1990 Publicly Held NYSE: SWFT (terminals)

Lewis Center, OH 49 Triple T Transport www.triplettransport.com 704 Radio Dr. 3 US 15.0 100.0 Reefer 92 1988 ESOP 43035

TL/Port Cowan Systems (Family 50 Cowan Logistics www.cowansystems.com 4555 Hollins Ferry Rd. Baltimore, MD 21227 40 US 13.0 80.0 85 1994 Operations Owned)

Champion Logistics TL, Show 51 www.champlog.com 200 Champion Pkwy. Northlake, IL 60164 6 US 27.0 71.0 130 1980 Same Group Support TL, Dry Johanson Transportation 52 www.johansontrans.com P.O. Box 55003 Fresno, CA 93747 6 US 10.0 69.0 Van, IMC, 86 1971 Family Owned Service Reefer

53 Scott Logistics www.scottlogistics.com P.O. Box 391 Rome, GA 30162 9 US 30.0 68.0 TL 187 1995 Diane L. Manis

LTL, Dry

54 Averitt Express www.averittexpress.com 1415 Neal St. Cookeville, TN 38502 -- 38.0 66.0 Van and 233 1990 Owned by Gary Sasser Reefer TL 35715 U.S. Hwy. 40, Reefer TL 55 RMX Global Logistics www.rmxglobal.com Evergreen, CO 80439 9 US 10.0 65.1 60 1983 Same Building B and LTL

Source: Primary, Company Information; Secondary, A&A Estimates © Copyright 2015 Armstrong & Associates, Inc. 23 | Page Primary Headquarters City, Additional DTM Net Revenue Gross Revenue Brokerage Rank Company Name Website Headquarters Address State, Zip Offices (US$ Millions) (US$ Millions) Type Employees Founded Parent Company Dry Van, Co-owned by Michael Sullivan 56 M2 Logistics www.m2logistics.com 2413 Hazelwood Ln. Green Bay, WI 54304 5 US 8.0 65.0 Reefer, 47 2001 and Paul Anderson Flatbed

57 Marten Transport www.marten.com 129 Marten St. Mondovi, WI 54755 14 US (terminals) 8.0 57.0 TL 27 1946 Publicly Held NASDAQ: MRTN

East Dubuque, IL Flatbed TL 58 Rockfarm Logistics www.rockfarm.com 18353 U.S. Hwy 20 W. -- 7.0 55.0 20 2008 Same 61025 and LTL

59 GTO 2000 www.gto2000.com P.O. Box 2819 Gainesville, GA 30503 1 US 8.0 54.0 Dry Van TL 54 1975 Same

16415 Addison Rd., Food, TL, 60 Addison Transportation www.addtrans.com Addison, TX 75001 -- 10.0 53.0 100 1998 Addison Foods Suite 135 LTL

61 Freight All Kinds www.freightallkinds.com 10885 E 51st Ave. Denver, CO 80239 60 US 7.5 52.0 Intermodal 60 1983 Family Owned

Dupre Logistics Strategic 201 Energy Parkway, Chemicals, 61 www.duprelogistics.com Lafayette, LA 70508 50 US 6.0 52.0 40 1980 Dupre Logistics Capacity Services Suite 500 Bulk, TL Flatbed, 4627 Town N' Country 62 Dedicated Carriers www.dedicatedcarriers.com Tampa, FL 33615 -- 8.0 50.0 Stepdecks, 43 1993 Same Blvd. Dry Van Dry Brampton, ON, Vincent Roti, Spencer 62 ISG Transportation www.isgtransport.com 7965 Goreway Dr., #2 1 US 7.5 50.0 Van/Direct 50 1991 Canada L6T 5T5 McKone, and Vito Ierullo Drive Santa Teresa, NM 62 J.H. Rose Logistics www.jhrose.com 4950 Avenida Creel 13 US 7.5 50.0 TL 28 1998 Same 88008

5347 William Flynn 63 Knichel Logistics LP www.knichellogistics.com Gibsonia, PA 15044 -- 3.8 43.2 IMC 39 2003 Same Hwy., 2nd Floor

TL, LTL, and 64 Logistic Dynamics www.logisticdynamics.com 1140 Wehrle Dr. Amherst, NY 14221 -- 8.0 40.0 25 2003 Same Intermodal

Blakeman Fort Worth, TX 76164- Reefer and 64 www.blakemantrans.com 2350 Cold Springs Rd. -- 7.0 40.0 52 1987 Family Owned Transportation 0340 Dry Van TL

Source: Primary, Company Information; Secondary, A&A Estimates © Copyright 2015 Armstrong & Associates, Inc. 24 | Page Primary Headquarters City, Additional DTM Net Revenue Gross Revenue Brokerage Rank Company Name Website Headquarters Address State, Zip Offices (US$ Millions) (US$ Millions) Type Employees Founded Parent Company 25 Northpointe Bob Closs, William Wilcox, 65 Fetch Logistics www.fetchlogistics.com Amherst, NY 14228 -- 7.0 36.0 TL and LTL 80 1997 Parkway, Suite 200 Bob Atwater, and Dave Bryk

I C C I, International Flatbed, 65 www.icci.us 2090 Commerce Dr. Medford, OR 97504 1 US 6.0 36.0 100 1993 Same Commodity Carriers Reefer

66 Corporate Traffic www.corporate-traffic.com 2002 Southside Blvd. Jacksonville, FL 32216 2 US 4.8 32.0 TL Dry Van 40 1992 Family Owned

Global Transport Owned by Anthony 67 www.gtli.net 11 Harristown Rd. Glen Rock, NJ 07452 -- 15.0 30.0 LTL 30 1990 Logistics Matarazzo

Advance Transportation 1125 Glendale-Milford LTL, 67 www.atslogistics.com Cincinnati, OH 45215 -- 6.0 30.0 22 1980 Family Owned Systems Rd. Flatbed Reefer, Tucker Company 900 Dudley Ave., Third Generation, Family 67 www.tuckerco.com Cherry Hill, NJ 08002 1 US 5.9 30.0 Flatbed, 30 1961 Worldwide Suite 200 Owned Dry Van

67 All States Transportation www.astinc.com P.O. Box 80029 Springfield, MA 01138 -- 5.0 30.0 Dry Van TL 21 1985 Billy Kingston

Owned by Jeff Campbell, Jim 67 Bridge Logistics www.bridgelogisticsinc.com 9770 Inter-Ocean Dr. Cincinnati, OH 45246 1 US 4.0 30.0 Dry Van 30 2003 Campbell, and Paul Lanham

67 USA Logistics www.usalog.com 1801 Technology Dr. Chesterton, IN 46304 -- 3.0 30.0 Dry Van 12 1993 John Ameling

5050 Poplar Ave., 68 Pathmark Transportation www.pathmarktrans.com Memphis, TN 38157 -- 3.5 28.0 TL, LTL 50 1983 Wesley Kraker Suite 900

Flynn Transportation 69 www.flynntrans.com 2400 Executive St. Charlotte, NC 28208 2 US 4.0 27.0 TL and LTL 40 1985 Same Services

5100 Poplar Ave., 15th Systems 70 CTSI Global www.ctsi-global.com Memphis, TN 38137 -- 25.0 25.0 200 1955 Luen Thai Holdings Limited Fl. TM

2925 Huntleigh Dr., Food, 70 L & M Transportation www.lmts.com Raleigh, NC 27604 5 US 5.0 25.0 50 1977 L&M #104 Reefer

Source: Primary, Company Information; Secondary, A&A Estimates © Copyright 2015 Armstrong & Associates, Inc. 25 | Page Primary Headquarters City, Additional DTM Net Revenue Gross Revenue Brokerage Rank Company Name Website Headquarters Address State, Zip Offices (US$ Millions) (US$ Millions) Type Employees Founded Parent Company 600 Meijer Dr., 70 Legion Logistics www.jointhelegion.com Florence, KY 41042 -- 3.0 25.0 TL 60 2009 Same Suite 304 4704 W. Irving Park Rd., Greg LaBonar and Paul 71 J&A Freight Systems www.jandafreight.com Chicago, IL 60641 1 US 4.0 24.0 LTL and TL 25 1986 Suite 8 Webster 3631 Mt. Vernon Rd., Reefer, Dry Rickey Tatum and Gary 71 Overdrive Logistics www.overdrivelogistics.com Gainesville, GA 30503 2 US 3.5 24.0 25 1998 Suite 201 Van Culburtson 2034 South Saint Aubin Flatbed, Refrigerated Food Express - 72 Pioneer Transfer www.pioneertransfer.com Sioux City, IA 51106 -- 3.9 23.0 12 1988 St. Dry Van RFX Covenant Transportation 400 Birmingham Chattanooga, TN 73 www.covenanttransport.com -- 3.0 21.2 Dry Van TL 125 1986 Publicly Held NASDAQ: CVTI Group Highway 37419 Glen Rose Reefer, Dry 74 Transportation www.grtminc.com 1601 Texas Dr. Glen Rose, TX 76043 -- 3.2 20.0 23 1986 Family Owned Van Management Minnetonka, MN 74 K.T.I. www.ktitrans.com 10301 Wayzata Blvd. -- 3.0 20.0 TL and LTL 30 1997 Same 55305 Drayage 74 Taylor Logistics www.taylorlogistics.com 2875 E. Sharon Rd. Cincinnati, OH 45241 -- 3.0 20.0 55 2002 Same Distribution Des Moines Truck 75 www.dmtb.com P.O. Box 337 Norwalk, IA 50211 -- 3.0 18.0 Reefer, TL 17 1969 Owned by Jimmy DeMatteis Brokers 212 W. 10th St., TL, LTL, 76 Direct Connect Logistix www.dclogistix.com Indianapolis, IN 46202 -- 2.0 13.2 22 2009 Greg Humrichouser Suite D-405 Intermodal Dry Van/ American Transportation 2775 Cruse Rd., Lawrenceville, GA Container, 77 www.american transportation.com 10 US 2.5 10.0 15 1986 Family Owned Systems Suite 401 30044 Flatbed, and Reefer

77 B-LAK Logistic Services www.b-lak.com 4401 Sarah St. Jonesboro, AR 72401 1 US 2.0 10.0 Dry Van TL 26 1996 Laura and David Kennon TL, LTL, 78 Dart Advantage Logistics www.dartadvlogistics.com 800 Lone Oak Rd. Eagen, MN 55121 7 US 0.5 2.0 11 1996 Dart Transit Company Intermodal Atlantic Transportation 79 www.atlantictransportation.com 17 Fontanta Ln., #209 Baltimore, MD 21237 -- 0.2 1.6 TL and LTL 8 1982 Same Services