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MORGAN STANLEY RESEARCH

April 16, 2010

Research North America Transportation

Freight Transportation: Parcel Returns 14 Shipper Survey

William J. Greene, CFA [email protected] (212)-761-8017 Adam Longson, CFA, CPA [email protected] +1 212 761-4061

Parcel Returns Survey

Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. Customers of Morgan Stanley in the US can receive independent, third-party research on companies covered in Morgan Stanley Research, at no cost to them, where such research is available. Customers can access this independent research at www.morganstanley.com/equityresearch or can call 1-800-624-2063 to request a copy of this research.

For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Returns 14: Shippers Suggest Recovery Just Getting Started

Hard to ignore improving data points: Results from our survey of over 300

parcel shippers are consistent with many key themes of our freight thesis and reinforce that recovery is underway. We continue to believe EPS estimates are too low across freight as both volume and operating leverage are likely to surprise. In parcel, we admit a fair amount of good news is now in the stocks, particularly regarding int'l airfreight. However, if margins at FDX and UPS can return to prior peak levels within the next few

years, there is still notable upside in the shares from current levels. Key Conclusions from our Survey: 1) Shippers indicate pricing is on the mend, but may be growing at a more modest rate than bulls expect. Large shippers have more moderate rate expectations than small shippers. 2) Shippers expect international parcel volumes will remain strong, while restocking trends appear to be supportive of better ground volumes in the second half. 3) The recovery in premium products will be slow ­ which is consistent with what UPS saw in its most recent results. The shift toward B2C shipping continues. 4) According to respondents, when they have switched carriers, FedEx seems to be winning share. 5) Perceptions of service in the parcel industry remain at very high levels despite a rebound in volume. Still constructive on freight, prefer heavy-asset plays. We expect freight volumes will continue to surprise to the upside, even after large 1Q10 EPS revisions. Given that, we recommend clients stay long heavy-asset transports like rails and parcel. Our shipper survey suggests that while trends in international air shipping should stay strong, domestic has yet to show a pick up. As confidence in the recovery grows and shippers begin to restock inventories in a more material way, we believe this trend will start to reverse. We would be positioned in surface transport stocks, especially the rails, for the upcoming restocking

William J. Greene, CFA, (212) 761-8017, [email protected]

Table of Contents

Page

Key Conclusions . . . . . . . . . . . . . . . . . . . . . . . . 4 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Thesis Summary . . . . . . . . . . . . . . . . . . . . . . . 12 About the Survey . . . . . . . . . . . . . . . . . . . . . .16 Volume Trends . . . . . . . . . . . . . . . . . . . . . . . . 21 Pricing Trends . . . . . . . . . . . . . . . . . . . . . . . . . 43 Service & Value Trends . . . . . . . . . . . . . . . . . 63 Historical Valuation . . . . . . . . . . . . . . . . . . . . . 72 Comp Sheets . . . . . . . . . . . . . . . . . . . . . . . . . 78

2

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Returns: Survey Highlights

Parcel Survey Highlights

William J. Greene, CFA, (212) 761-8017, [email protected]

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MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Returns Survey: Key Takeaways 1. Pricing

Shippers indicate parcel pricing is on the mend, but is recovering more slowly at largest customers

2. Parcel Volumes

Shippers see cont'd strength in int'l; restocking of inventories likely to drive growth in ground

3. Product Mix

Recovery in premium products may be slower. B2C shift still ongoing.

4. Share Shift

FDX appears to be gaining share according to respondents

5. Service & Value

Carriers maintaining or improving service and value rankings even as volumes rebound

William J. Greene, CFA, (212) 761-8017, [email protected]

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MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

1. Shipper Survey Suggests Parcel Pricing On The Mend

3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% Mar-07 Sep-07 Apr-08 Oct-08 Apr-09 Sep-09 Apr-10

Includes All responses, equally-weighted. Source: Morgan Stanley AlphaWise

More 10 Aggressive

All Shippers: Average Base Rate Expectations "Over the Next 6 Months" vs. Same Period Last Year Air Ground Int'l

On average, respondents expect parcel pricing to rise over the next 6 months, but at a rate slightly less than historical averages. Largest shippers (>$20MM spend) expect rates to be flat to 50bps increase Weighted average rate change <1% for all products

More Rational Pricing Returning: Signs That Carrier Yield Management Efforts Are Gaining Traction: Aggressive Tactic Rankings Continue to Fall List Rate Discounts Have Come Off Last Survey Peaks Shippers Expect Accessorial Charges to Rise Even Faster Than Rates

Less Aggressive

9 8 7 6 5 4 3 2 1

6.3

Parcel Shippers' Rankings of Carriers' "Aggressiveness" in Trying to Win Business Over Past Six Months

6.5 6.7 6.2 6.5

Oct-08 Apr-09 Sep-09 Apr-10

5.9

6.4

6.1

FDX

William J. Greene, CFA, (212) 761-8017, [email protected]

UPS

5

Includes All responses, equally-weighted. Source: Morgan Stanley AlphaWise

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

2. Shippers Expect Ground and International to Lead the Recovery

5% 4% 3% 2% 1% 0% -1% -2%

May-02 Jan-02 Jan-03 Jun-03

All Shippers Volume Growth Expectations "Over the Next 6 Months" vs. Same Period Last Year Air Ground Int'l

Shippers expect a fairly robust rebound in international volumes, reflecting an even greater shift to just-in-time inventory management, in our view Shippers expect domestic growth to be strong, as well But, the recovery in domestic premium air products is more anemic, perhaps reflecting continued sensitivity to parcel shipping costs.

First increase in air in 4 surveys

Oct-08 Apr-05 Apr-08 Apr-09 Mar-04 Mar-06 Sep-04 Sep-05 Sep-06 Mar-07 Sep-07 Sep-09 Apr-10

-3%

Large shippers more bullish on international

Spend Expectations by Service and Size Large Shipper Small Shipper

Majority of shippers expect increases in every product group

Shipper Spend Expectations by Service

3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

Air

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

3.0%

% of Respondents

2.9%

2.8%

1.2%

1.3%

1.5%

Ground

Int'l

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Increase

57%

65%

57%

Decrease

23% 20% Air

14% 18% 18% Ground 29% Int'l

6

No Change

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

3. Secular Themes of Premium Trade-down and B2C Shift Still Ongoing

Shift in Use of Services

100% 90% % of Respondents 80% 70% 60% 50% 40% 30% 20% 10% 0% Overnight / Deferred / 2- Ground / Consolidators Next Day Day Priority Mail

6%

2% 13%

1% 4%

0% 4% 20%

Significantly smaller portion Slightly smaller portion Slightly larger portion

Shippers indicate a desire to limit spending on premium air products, consistent with past behavior early in a rebound. We expect the tepid volume outlook for domestic air express to improve as shippers gain confidence in the economic trends. But, a sustained trade-down could weigh on domestic margin recovery

27% 23% 13% 1% 1%

37%

4%

6% 72%

Significantly larger portion No change

53%

61%

52%

Y/Y Change in B2C as % of Total 100% 90% % of Respondents 80% 70% 60% 50% 40% 30% 20% 10% 0% All Shippers Large Shippers Small Shippers 45% 38% 8% 0% 9% 1% 52% 37% 38% 8% 0% 10% 14% 5%

Significantly larger portion Slightly larger portion Slightly smaller portion Significantly smaller portion No change

Even with cyclical rebound, 52% of large shippers expect B2C to grow as a % of total spend Other Indicators of ongoing shift: Consolidators received highest value rankings 34% of large shippers want to increase consolidator share of spend

35%

B2C shift could limit margin and EPS recovery

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

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MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

4. FDX Appears to Be Gaining Share

FDX seems to be the most popular choice for shippers when switching carriers, particularly for domestic and international air According to responses from large shippers in our survey, FDX seems to be winning a disproportionate share This may reflect the fact that UPS is already the dominant player in the US domestic parcel market

Current primary carrier for those switching carriers in the past 6 months

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Other, 12% USPS, 4% Other, 10% USPS, 12% FDX, 36% FDX, 62% FDX, 41% UPS, 43% UPS, 23% UPS, 22% Other, 4% DHL, 26% USPS, 7%

4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

Weighted Avg Change in Spend by Primary Carrier FDX 4.0% UPS 3.3% 2.2% 1.7% 1.0% 0.8%

Air

Ground

Int'l

Shippers expect FDX Ground to continue growing faster than the market FDX Air could modestly outpace UPS Air according to our survey Both UPS and FDX are taking share on international

Air

Ground Primary Carrier

Int'l

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

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MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

5. Volume Recovery Not Weighing on Service or Value

Excellent 10

Service Reliability

8.9 8.7 8.6 8.7 8.5 8.5 8.1 8.3 7.3 7.2

Sep-09 Apr-10

9 8 7 6 5 4 3 2 1 Poor

7.1 7.1

Strong volume rebound has not impacted service or value perceptions, which remain virtually unchanged from our last survey

UPS Ground

FDX Ground

UPS Air

FDX Air

Consolidators

US Postal

Excellent 10

Price of Services

7.8 8.0 7.7 7.8

Sep-09 Apr-10

9 8 7

7.6 7.5

7.3 7.4

7.2 7.3

7.5

7.0

Ground and consolidators still viewed as better value than air express That is not all bad news for FDX and UPS, as both operate consolidator operations (FedEx SmartPost and UPS Basic)

Poor

6 5 4 3 2

Consolidators UPS Ground UPS Air FDX Air FDX Ground US Postal

9

1

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Other Interesting Data Points and Observations

Volume

Small shippers expect greater volume growth at UPS, especially in air. Large shippers appear more interested in growing with FDX, esp. with regard to international shipments Consultants and 3PLs are the most bearish on the outlook for air volumes Among large shippers, respondents indicated that most carrier switching is price driven domestically, but service and other considerations have more influence on carrier choice in the international market

Pricing

Large shippers expect greater rate hikes from UPS, most notably in air and int'l Small shippers expect greater rate hikes from FDX on international ~50% of respondents expect accessorial charges to rise as a % of total spend Discounts off list rates are still above historical norms but appear to be backing off the highs we saw last fall

Service & Value

UPS Ground value of services slipping according to shippers; it's unclear if this is a bigger trend in service perception, but if so, it could limit success of yield initiatives Consolidators: service reliability ranked higher than direct use of USPS. More important, value of service rating for consolidators was the highest of all products, suggesting our concerns about interproduct competition are valid; this could limit pricing gains in ground shipping even with DHL's exit.

10

William J. Greene, CFA, (212) 761-8017, [email protected]tanley.com

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Appendix

Appendix

William J. Greene, CFA, (212) 761-8017, [email protected]

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MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Summary of Contents

Part 1: Freight Industry Thesis Summary

Thesis Summary

Part 2: Risk-Reward View

About the Survey

Volume Trends

Pricing Trends

Service & Value Rankings

William J. Greene, CFA, (212) 761-8017, [email protected]

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MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Attractive on Freight Transportation

Freight Transportation Industry View: Attractive

Our attractive view on freight is based on freight transports' early cycle qualities and clear signs of a volume recovery. Y/Y comps are will be easiest in 2Q10. Moreover, with inventories still low across the economy, restocking should provide additional volume upside, especially for surface transports which have lagged air volumes. Within the context of a surprising recovery, we prefer names with greater leverage to volumes, namely rails and parcel. We see the greatest opportunity for volume recovery and surprises in the industrial sector, which favors rails. Finally, we expect the recovery to be characterized by higher fuel prices, which also play to the strengths of rails and intermodal.

Parcel

1 2 We are warming up to parcel stocks. The freight recovery is on track and parcel stocks offer plenty of operating leverage. A return to peak margins in the next few years would produce notable upside. EPS revisions could lift the stocks in 2010 as consensus remains too low. If yield management efforts are successful or businesses begin to restock inventories, there could be additional upside to our estimates That said, the next leg of recovery is likely to benefit slower surface-based modes more. Some negative secular trends also temper our enthusiasm. 1) The return of merit pay and volume related costs; 2) Faster growth in B2C could create density challenges; 3) Possible cannibalization of premium products could limit pricing power and density; 4) Higher fuel could reduce shippers' appetite for expedited shipping.

3

Source: Morgan Stanley Research William J. Greene, CFA, (212) 761-8017, [email protected]

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MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

FDX (Equal-weight): EPS Revisions Offer Add'l Upside, but Stock Not Cheap

$ 140

Bull Case $120

16.5x Bull Case CY2011e EPS of $7.26*

Assumptions

Express Pkg Express Margin Ground Pkg Freight - Wt/Day Op. Margin EPS YoY % Chg

120 100 80 $ 95.62

$120 (+25%) $98 (+2%)

$68 (-29%) 60 40 20 0 Apr-08 Oct-08 Base Case (Dec-10)

Rapid return to new peak. Vshaped recovery. Cost cutting holds with add'l fuel economy gains. Currency benefits offset any returning costs. LTL consolidation supports rapid margin expansion. EPS matches prior peak by FY11 with a new peak in FY12.

F2008A F2009A F2010E F2011E F2012E

4.0% 7.8% 6.8% 2.4% 7.8% $5.83 -12.3% -4.6% 4.7% 6.3% -7.6% 5.5% $3.76 -35.5% 3.9% 6.0% 13.1% 10.0% 6.4% $4.25 13.0% 5.5% 8.3% 9.4% 10.4% 8.6% $6.34 49.2% 2.9% 9.8% 6.5% 4.1% 9.9% $7.92 24.9%

Base Case $98

Strong int'l recovery, Modest domestic rebound. Strong int'l growth and currency more than offset loss of DHL benefits. Op leverage drives large EPS growth, but recovery in premium products is more muted. LTL rates rise mid-single digits in FY11/12

16.1x Base Case CY2011e EPS of $6.08*

Assumptions

Express Pkg Express Margin Ground Pkg Freight - Wt/Day Op. Margin EPS YoY % Chg

F2008A F2009A F2010E F2011E F2012E

4.0% 7.8% 6.8% 2.4% 7.8% $5.83 -12.3% -4.6% 4.7% 6.3% -7.6% 5.5% $3.76 -35.5% 3.1% 5.6% 12.5% 6.5% 5.9% $3.81 1.1% 3.4% 7.6% 5.9% 7.4% 7.6% $5.32 39.7% 2.6% 9.0% 4.9% 4.1% 8.9% $6.63 24.8%

Apr-09 Oct-09 Apr-10 Oct-10 Historical Stock Performance Current Stock Price

Source: FactSet, Company Data, Morgan Stanley Research

Investment Thesis

FDX is a levered play on recovery with int'l growth and a weaker US$ as tailwinds. With retail inventories low, any uptick in demand should be a positive for air express. The exit of DHL and LTL consolidation are possible catalysts for pricing. Consensus is too low and we think the cycle trade can probably work for FDX, but the company will need material beats to continue to outperform, in our view.

Bear Case $68

Longer road to recovery. Trade down limits recovery in premium products. Higher fuel prices weigh on air pricing. Return of temporary cost initiatives limits op. leverage. Fuel efficiency gains offset by higher capex and depreciation.

14.9x Bear Case CY2011e EPS of $4.56*

Assumptions

Express Pkg Express Margin Ground Pkg Freight - Wt/Day Op. Margin EPS YoY % Chg

F2008A F2009A F2010E F2011E F2012E

4.0% 7.8% 6.8% 2.4% 7.8% $5.83 -12.3% -4.6% 4.7% 6.3% -7.6% 5.5% $3.76 -35.5% 2.5% 5.2% 11.9% 5.8% 5.5% $3.54 -5.9% 0.6% 6.0% 3.1% 4.4% 6.0% $3.97 12.1% 2.4% 7.2% 6.3% 3.1% 7.2% $4.98 25.4%

Investment Positives

1. Consensus is too low, as FDX is highly levered to recovering parcel volumes. 2. Large Asia presence and currency benefits from weaker dollar are growth tailwinds 3. DHL's US exit and LTL consolidation could drive better pricing trends in 2010 and beyond 4. Cost cutting efforts in downturn should mean substantial pos. op. leverage as vol. recovers

*Calendar earnings; E = Morgan Stanley Research Estimates; Source: Company Data, Morgan Stanley Research

Investment Risks

1. Bullish sentiment suggests FDX will need to produce large upside surprises 2. Reversal of temporary cost cutting + higher pension expense could mute op. leverage 3. Higher growth of lower contribution B2C shipments could result in slower EPS recovery. 4. Rising fuel prices could weigh on earnings by negatively affecting high margin air express.

Valuation Methodology

Our FDX YE10 fair value of $98.00 per share is derived from a residual income analysis assuming a required return of 10.00% (we assume a 4.50% equity risk premium on top of the company's 5.50% average cost of debt). This valuation implies a 16.1X P/E multiple on our calendar 2011 EPS estimate of $6.08.

William J. Greene, CFA, (212) 761-8017, [email protected]

14

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

UPS (Underweight): Historically more defensive, but signs of op. leverage emerging

$ 90

80 70 60 50 40 30 20 10 0 Apr-08 Oct-08 Base Case (Dec-10)

$ 68.89

$85 (+23%) $78 (+13%)

Bull Case $85

Back to peak package margins. V-shaped recovery and productivity produce 2011 EPS well above prior peak. Cost cutting holds with add'l fuel economy gains. Domestic margins back near peak levels by 2012 w/ Int'l margins in highteens.

18.0x Bull Case 2011e EPS of $4.72

Assumptions

Dom Pkg Growth Int'l Pkg Growth Op. Margin EPS YoY % Chg

2008A 2009A 2010E 2011E 2012E

-2.0% -3.9% 3.7% 2.6% 11.6% 8.8% $3.50 $2.31 -14.8% -34.1% 3.9% 16.0% 11.7% $3.66 58.5% 4.5% 9.0% 13.6% $4.72 29.2% 2.8% 6.3% 15.0% $5.65 19.5%

$57 (-17%)

Base Case $78

Back to peak earnings in 2011. Strong int'l growth and currency more than offset loss of DHL benefits. Domestic recovers more in 2H/10 and '11. Op leverage drives large EPS growth, but recovery in premium products more muted.

18.5x Base Case 2011e EPS of $4.21

Assumptions

Dom Pkg Growth Int'l Pkg Growth Op. Margin EPS YoY % Chg

2008A 2009A 2010E 2011E 2012E

-2.0% -3.9% 3.7% 2.6% 11.6% 8.8% $3.50 $2.31 -14.8% -34.1% 2.5% 13.8% 11.3% $3.40 47.3% 3.2% 5.8% 12.9% $4.21 23.8% 2.8% 5.6% 14.1% $4.95 17.8%

Apr-09 Oct-09 Apr-10 Oct-10 Historical Stock Performance WARNINGDONOTEDIT_RRS4RL~UPS.N~ Current Stock Price

Source: FactSet, Company Data, Morgan Stanley Research

Investment Thesis

We are warming to the UPS story as fundamentals are clearly improving. We like heavy-assets as a recovery play, but we've kept an Underweight rating on UPS over a concern that the company is a better defensive than offensive play in heavy-asset transportation. However, we admit the leverage UPS is demonstrating is impressive. If margins can return to prior peak levels in the next few years, there is notable upside.

Bear Case $57

Recovery stalls in 2011. Removal of fed easing halts rapid volume recovery. Trade down in premium products slow to reverse. Higher fuel prices weigh on air pricing. Lower density, faster B2C growth, & return of merit pay weigh on margin recovery.

17.0x Bear Case 2011e EPS of $3.35

Assumptions

Dom Pkg Growth Int'l Pkg Growth Op. Margin EPS YoY % Chg

2008A 2009A 2010E 2011E 2012E

-2.0% -3.9% 3.7% 2.6% 11.6% 8.8% $3.50 $2.31 -14.8% -34.1% 0.4% 10.4% 10.4% $3.00 29.8% 0.8% 2.4% 11.2% $3.35 11.8% 4.3% 7.1% 12.8% $4.15 23.9%

Investment Positives

1. Consensus likely to still be too low if volumes continue to surprise on upside. 2. Signs of op. leverage emerging, & Teamsters contract may add more savings as volumes rebound

3. Yield mgmt initiatives and DHL's US exit could drive better pricing trends in 2010+ 4. Elimination of Saturday service by USPS could offer market share and pricing oppty.

Investment Risks

1. Historically less op. leverage than peers. Adding back merit pay may limit leverage again 2. Higher growth of lower contribution B2C shipments vs. B2B could limit EPS recovery. 3. Strength in airfreight mostly known, surface transport likely to see the next leg of recovery. 4. 50% of international revenue comes from slower growing European markets.

*Calendar earnings; E = Morgan Stanley Research Estimates; Source: Company Data, Morgan Stanley Research

Valuation Methodology

Our UPS YE10 fair value of $78.00 per share is derived from a residual income analysis assuming a required return of 8.5% (we assume a 4.50% equity risk premium on top of the company's 4.00% average cost of debt). This valuation implies a 18.5X P/E multiple on our calendar 2011 EPS estimate of $4.21.

William J. Greene, CFA, (212) 761-8017, [email protected]

15

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Summary of Contents

Part 2: About the Survey

Thesis Summary

1. 2. Respondent Profile: Industry and Spend Sample Market Share

About the Survey

Volume Trends

Pricing Trends

Service & Value Rankings

William J. Greene, CFA, (212) 761-8017, [email protected]

16

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

About Our Parcel Returns Survey

Insights from Over 300 US Express/Parcel Shippers

This presentation discusses the results from our 18th semi-annual parcel shipper survey, the 12th conducted with Parcel Magazine. We canvassed over 300 US and global express/parcel shippers of all sizes who primarily use UPS, FedEx, DHL, and the US Postal Service and collectively influence more than $2 billion in annual spending on express/parcel services.

Respondents' Parcel Spend Over $20 Million, 17% $0 to $100,000, 20%

40% 30%

37%

Respondents' Primary Business

20% 20% 10% 16% 14% 7% 7%

Manufacturing

$1 Million to $5 Million, 18%

$500,000 to $1 Million, 9%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

3PL Provider

17

Retail

Other

Wholesale / Distribution

Consultant

$5 Million to $20 Million, 20%

$100,000 to $500,000, 16%

0%

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Respondent Profile: Company Sales and Parcels Shipped

Company Sales ($MM)

$0-10, 18% $1,000+, 32%

$11-25, 8%

Parcels Shipped 1-5 million, 19%

$26-$50, 9% $100$1,000, 23% $51-$100, 8%

>5 million, 10%

Source: Morgan Stanley AlphaWise

500,000999,999, 14% Less than 100,000, 38%

100,000499,999, 20%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

18

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Market Share of Respondents Roughly Inline with the Market

100% Dollar-weighted % of respondents Other, 2% USPS, 5% Other, 5% USPS, 7% Other, 5% DHL, 11% USPS, 5% FDX, 50% 60% FDX, 37% FDX, 45%

80%

Shipper Responses to Primary Parcel Carrier ­ Weighted by Spend

40% UPS, 51% UPS, 34%

20%

UPS, 44%

0% Air Ground Int'l

110% Other, 3% USPS, 5% Other, 4% USPS, 9% Other, 5% DHL, 15% USPS, 8% 70% FDX, 47% FDX, 33% FDX, 39%

90% % of respondents

Shipper Responses to Primary Parcel Carrier ­ Average of All Responses

50%

30% UPS, 45% 10% Air

UPS, 54% UPS, 33%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

-10%

Ground

Int'l

19

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Market Share of Respondents: Large Shippers vs. Small Shippers

Large Shippers - Primary Carrier by Service 100% 90% % of Respondents 80% 70% 60% 50% 40% 30% 20% 10% 0% Air Ground Int'l 46%

FDX

2% 3%

5% 7%

5%

Other

17% 5%

DHL

48%

35% 40%

USPS

Shipper Responses to Primary Parcel Carrier ­ Segmented by Large and Small Shippers

53% 33%

UPS

Small Shippers - Primary Carrier by Service 100% 90% % of Respondents 80% 70% 60% 50% 40% 30% 20% 10% 0% Air Ground Int'l

20

3% 6%

4% 12%

5% 14% 10%

Other

DHL

47%

31% 39%

USPS

FDX

43%

53% 32%

UPS

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Summary of Contents

Part 3: Volume Trends & Share Shift

Thesis Summary

1. 2. 3. 4. 5. Volume Outlook Expectations for Total Parcel Spend Product Usage (e.g. Air vs. Ground) B2B vs. B2C Changes in Primary Carrier

About the Survey

Volume Trends

Pricing Trends

Service & Value Rankings

William J. Greene, CFA, (212) 761-8017, [email protected]

21

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Volume Outlook Over the Next 6 Months

Average vs. Weighted Average

Y/Y Change

4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0%

Average change Weighted Average

Shipper Volume Growth Expectations "Over the Next 6 Months" vs. Same Period Last Year

3.3% 2.9%

2.6% 2.0%

0.7%

Large vs. Small

3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Air Ground Int'l 0.9% 2.5%2.5%

Large Customers Small Customers

3.2%3.2%

-0.6%

Air Ground Int'l

% of shippers expecting:

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Increase

45% 60%

47%

Decrease

0.1%

23% 15% 32% Air

11%

42% 25% Ground Int'l

No Change

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

22

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Historical Volume Growth Expectations: Air vs. Ground

4% 3% 2% 1% 0% -1% -0.5% -2% May-02 Sep-04 Sep-05 Sep-06 Sep-07 Oct-08 Sep-09 Apr-05 Apr-08 Apr-09 Jan-02 Jan-03 Jun-03 Mar-04 Mar-06 Mar-07 Apr-10 -3% -2.1% -2.2% -2.4% 2.9% 2.8% 2.3% 2.3%2.1% 1.9% 1.5% 1.5% 1.0% 1.0% 0.7% 0.6%

Avg. Air Volume Growth 0.8%

0.7%

Air Volume Growth Has Trailed Ground

4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% May-02 Jan-02 Jan-03 Jun-03 2.9%

3.6% 3.0%3.1%2.9%3.1% 3.1% 2.6%

Avg. Ground Volume Growth 2.5%

3.3%

2.3% 2.1% 1.9% 1.3%

2.3%

1.5%1.6% 1.1%

Ground Service Improvements & Lower Cost Have Boosted Share

Oct-08

Apr-05

Apr-08

Apr-09

Sep-04

Sep-05

Sep-06

Sep-07

Sep-09

Mar-04

Mar-06

Mar-07

Apr-10

0.0%

Includes All responses, equally-weighted. Source: Morgan Stanley AlphaWise 23

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

International Volume Growth Trends: All Shippers

Shipper Volume Growth Expectations "Over the Next 6 Months" vs. Same Period Last Year

3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% Oct-08 -0.6% 1.4%

Avg. Int'l Volume Growth 1%

2.6%

0.5%

Sep-09

Apr-09

Includes All responses, equally-weighted. Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Apr-10

-1.0%

24

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Volume Trends by Product: Large vs. Small Shipper

4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% Mar-07 Sep-07 Apr-08 Oct-08 Apr-09 Sep-09 Apr-10

Small Shipper Volume Growth Expectations "Over the Next 6 Months" vs. Same Period Last Year Air Ground Int'l

Large Shipper Volume Growth Expectations "Over the Next 6 Months" vs. Same Period Last Year Air Ground Int'l

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0%

Mar-07

Sep-07

Apr-08

Oct-08

Apr-09

Sep-09

Apr-10

25

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Volume Response Skew ­ All Shippers

Ground: Y/Y Volume Expectation by Range

Shipper Volume Growth Expectations "Over the Next 6 Months" vs. Same Period Last Year

35% 30% 25% 20%

Average Ground

28% 25% 17% 9% 7% 4% 4%

Air: Y/Y Volume Expectation by Range 40% 35% 30% 25% 20% 15% 10% 5% 0%

-25%+ -25% -15% -10% -5% No +0% +5% +10% +15% 25%+ to Change to to to to to to to +5% +10% +15% +25% -15% -10% -5% 0%

15% 10%

Average Air

32% 28%

5% 0% 0%

1%

3%

3%

-25%+ -25% -15% -10% -5% No +0% +5% +10% +15% 25%+ to to to to Change to to to to -15% -10% -5% 0% +5% +10% +15% +25%

5% 1% 1%

7%

8%

9% 5% 2% 1%

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

International: Y/Y Volume Expectation by Range Average Int'l 42%

20% 15% 3% 4% 5% 5%

1%

1%

1%

2%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

-25%+ -25% -15% -10% -5% No +0% +5% +10% +15% 25%+ to to to to Change to to to to -15% -10% -5% 0% +5% +10% +15% +25%

26

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Volume Growth Outlook by Shipper Spend

4.5% 4.0% 3.5% 3.0% 2.5% 2.9% 3.2% 2.9% 2.5% 2.9% Ground - Avg Change by Spend 4.2% 3.6%

2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% 0.1%

Air - Avg Change by Spend 1.8% 1.3% 1.7%

2.0% 1.5% 1.0% 0.5% 0.0%

$100,000 to $500,000 $500,000 to $1 Million $0 to $100,000 Over $20 Million $1 Million to $5 Million $5 Million to $20 Million Weighted Avg Response

0.0% -0.6% -1.5%

$1 Million to $5 Million $5 Million to $20 Million $100,000 to $500,000 $500,000 to $1 Million $0 to $100,000 Over $20 Million Weighted Avg Response

5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

International - Avg Change by Spend 4.3% 3.6%

2.0%

2.3% 2.0% 1.5%

2.0%

$1 Million to $5 Million

$5 Million to $20 Million

$100,000 to $500,000

$500,000 to $1 Million

Over $20 Million

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Weighted Avg Response

$0 to $100,000

27

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Volume Growth Outlook by Industry

5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Ground - Avg Change by Industry 4.7% 3.8% 3.2% 2.7% 1.6% 1.0%

1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0%

1.3%

Air - Avg Change by Industry

3PL Provider

Retail

Consultant

Manufacturing

-0.7%

-1.9%

Retail 3PL Provider Consultant Manufacturing Wholesale / Distribution Other

-2.5%

4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

International - Avg Change by Industry 3.7% 3.3% 3.0% 2.2% 1.2%

Wholesale / Distribution

0.9%

3PL Provider

Retail

Manufacturing

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Wholesale / Distribution

Consultant

Other

Other

0.0%

0.2%

0.1%

28

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Volume Growth Outlook by Company Size

Ground - Avg Change by Company Size 8.0% 7.0% 6.0% 6.8%

Air - Avg Change by Company Size 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0%

$0-10 $11-25 $26-$50 $51-$100 $100$1,000 $1,000+

5.0% 4.0% 3.8% 2.4% 3.4% 2.4% 2.6%

3.8%

3.0% 2.0% 1.0%

1.0%

1.0% 0.4% 0.1%

0.0%

$0-10 $11-25 $26-$50 $51-$100 $100$1,000 $1,000+

Company Sales (millions)

International - Avg Change by Company Size 6.0% 5.0% 4.0% 3.0% 3.0% 2.0% 1.0% 0.0%

$0-10 $11-25 $26-$50 $51-$100 $100$1,000 $1,000+

-0.9%

5.4%

Company Sales (millions)

3.3% 2.9%

1.8% 1.1%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Company Sales (millions)

29

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Volume Growth Outlook by Listed Primary Carrier

5.0% 4.0% 3.1% 3.0%

Air - Avg Volume Change by Primary Carrier

Ground - Avg Volume Change by Primary Carrier 4.7% 3.4%

2.0% 1.0%

1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5%

1.2% 0.5% 0.0%

0.0% 0.0% -1.0%

UPS FDX USPS DHL

-0.2%

Other

Primary Carrier

-0.8%

4.0% International - Avg Volume Chg by Primary Carrier 3.4% 2.8% 2.6% 2.5%

-1.5% -2.0%

UPS FDX USPS DHL Other

3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0%

Primary Carrier

-2.5%

UPS FDX USPS DHL Other

30

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Primary Carrier

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Volume Growth Outlook by Listed Primary Carrier: Large vs. Small Shippers

Ground - Volume by Primary Carrier & Size

Large Shipper Small Shipper

4.0% 3.5% 3.0%

Air - Volume by Primary Carrier & Size

Large Shipper Small Shipper

3.8% 3.3% 2.7% 3.1%

2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

UPS FDX

3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -0.1%

UPS FDX

2.4%

0.4% 0.1%

International - Volume by Primary Carrier & Size

Large Shipper Small Shipper

4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

UPS

3.8% 2.8% 1.9% 1.8%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

FDX

31

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Total Spend Outlook by Product: Large vs. Small Shippers

Spend Expectations by Service and Size

Large Shipper Small Shipper

3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

Air Ground Int'l

3.0%

2.9%

2.8%

1.2%

1.3%

1.5%

Shipper Spend Expectations by Service 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Increase

% of Respondents

57%

65%

57%

Decrease

23% 20% Air

14% 18% 18% Ground 29% Int'l

No Change

Source: Morgan Stanley AlphaWise 32

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Total Spend Outlook by Listed Primary Carrier: Large vs. Small Shippers

Ground - Avg Change in Spend by Primary Carrier

Large Shippers Small Shippers

Air - Avg Change in Spend by Primary Carrier

Large Shippers Small Shippers

4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% UPS Primary Carrier 2.3% 3.2%

4.1%

2.8%

2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%

1.9% 1.6% 1.2% 0.8%

FDX

UPS Primary Carrier

FDX

Int'l - Avg Change in Spend by Primary Carrier

Large Shippers Small Shippers

3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

3.3% 2.7% 1.9%

0.8%

UPS

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

FDX Primary Carrier

33

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Expected Shift in Product Usage: All Shippers

Question: How will your usage of the following products change as a proportion of your total parcel shipment budget (on a year-over-year basis) over the next 6 months?

Shift in Use of Services

100% 90% % of Respondents 80% 70% 60% 50% 40% 30% 20% 10% 0%

Source: Morgan Stanley AlphaWise

6%

2% 13%

1% 4%

0% 4% 20%

Significantly smaller portion Slightly smaller portion Slightly larger portion

27% 23% 13% 1% 1%

37%

4%

6% 72%

53%

61%

52%

Significantly larger portion No change

Overnight / Deferred / 2- Ground / Consolidators Next Day Day Priority Mail

34

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Historical Expected Change in Use of Air Products

Overnight / Next Day

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 34% 26% 23% 23% 23% 30% 16% 18% 11% 10% 7% 7% 61% 54% 61% 59% 65% 59% 52% 40% 45% 53% 15% 33%

Question:

Smaller

41%

40% 53%

5% 21%

14% Larger

How will your usage of the following products change as a proportion of your total parcel shipment budget (on a year-over-year basis) over the next 6 months?

No Change

Sep- Mar- Sep- Mar- Sep- Apr- Oct- Apr- Sep- Apr05 06 06 07 07 08 08 09 09 10

Deferred / 2-Day

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

13% 18% 16% 13% 13% 22% 20% 27% 22% 15% 20% 20% 23% 24% 19% 21% 27% 25% 28% 27%

Smaller

Larger 67% 55% 59% 67% 63% 59% 60% 61% No Change

46% 50%

Sep- Mar- Sep- Mar- Sep- Apr- Oct- Apr- Sep- Apr05 06 06 07 07 08 08 09 09 10

35

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Historical Expected Change in Use of Ground and Consolidators

Ground

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sep- Mar- Sep- Mar- Sep- Apr- Oct- Apr- Sep- Apr05 06 06 07 07 08 08 09 09 10 65% 55% 60% 59% 59% 53% 53% 48% 47% 52% 4% 32% 5% 41% 3% 36% 9% 7% 5% 5% 7% 8% 5%

Question:

Smaller

33% 34% 42% 43%

46% 45% 43%

Larger

How will your usage of the following products change as a proportion of your total parcel shipment budget (on a year-over-year basis) over the next 6 months?

No Change

Consolidators

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

5% 28%

2%

4% Smaller

24% 24%

Larger 67% 74% 72% No Change Sep- Mar- Sep- Mar- Sep- Apr- Oct- Apr- Sep- Apr05 06 06 07 07 08 08 09 09 10

36

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Expected Trends in B2C vs. B2B

Y/Y Change in B2C as % of Total 100% 90% % of Respondents 80% 70% 60% 50% 40% 30% 20% 10% 0% All Shippers Large Shippers Small Shippers 45% 38% 8% 0% 9% 1% 52% 37% 38% 8% 0% 10% 14% 5%

Significantly larger portion Slightly larger portion Slightly smaller portion Significantly smaller portion No change

35%

B2C growth has far outpaced B2B and may represent a mix challenge headwind for parcel carriers B2C shipments using traditional shipping services (e.g., ground) tend to have lower margins than B2B given lower delivery densities and a higher cost to deliver Products that use the US Postal Service for final mile delivery have better margins but can be lower contribution per package

% of Respondents Indicating Increase in B2C Shipping as % of Total

UPS 60% 50% 40% 30% 20% 10% 0% All Shippers Large Shippers Small Shippers

William J. Greene, CFA, (212) 761-8017, [email protected]

FDX

Total

49%

53% 52% 53% 44% 46%

48% 36% 40%

Source: Morgan Stanley AlphaWise 37

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Shipper Receptiveness to USPS Volume Discounts

Have you been approached by the USPS regarding volume discounts?

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 5% Oct-08 6% Apr-09 5% Sep-09 7% Apr-10 Don't Know 69% 59% 56% 54% No 26% Yes 36% 39% 40%

Would a volume discount cause you to shift more volume to the postal service?

100% 90% 80% 70% 60% 50% 40% 30%

Source: Morgan Stanley AlphaWise

21%

27%

26%

26%

Yes / Already Switched

50%

46%

51%

48%

No

20% 10% 0%

29%

27%

23%

27%

Don't Know

Oct-08

Apr-09

Sep-09

Apr-10

38

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Air Switching: Reasons for Switch and Primary Carrier

Air Reason for switch

Price, 47% Did not switch carriers, 90% Service, 6%

Switched carriers, 10% Other, 6% Product offering, 0%

Price & service, 41%

Air: Current primary carrier for those who switched carriers in the past 6 months USPS, 4%

Proxy for which carriers are winning share

FDX, 62%

DHL, 0% Other, 12%

UPS, 23%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

39

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Ground Switching: Reasons for Switch and Primary Carrier

Ground Reason for switch

Price, 44% Service, 8% Switched carriers, 16% Other, 2% Product offering, 6% Price & service, 40%

Did not switch carriers, 84%

Proxy for which carriers are winning share

Ground: Current primary carrier for those who switched carriers in the past 6 months USPS, 12% FDX, 36% DHL, 0% Other, 10%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

UPS, 43%

40

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

International Switching: Reasons for Switch and Primary Carrier

International Reason for switch

Price, 37% Did not switch carriers, 88% Switched carriers, 12% Other, 6% Product offering, 3% Service, 11%

Price & service, 43%

International: Current primary carrier for those who switched carriers in the past 6 months FDX, 41% USPS, 7%

Proxy for which carriers are winning share

DHL, 26% UPS, 22% Other, 4%

41

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Reasons for Switching Carriers: Price vs. Service

Large Shippers - Reason for Switch

Pricing related decision Service related decision

100% % of Respondents 80% 60% 40% 20% 0%

92%

86% 67% 46% 50% 47%

Air

Ground

Int'l

Small Shippers - Reason for Switch

Pricing related decision Service related decision

120% % of Respondents 100% 80% 60% 40% 20% 0%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

93%

95%

100%

47%

48%

50%

Air

Ground

Int'l

42

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Summary of Contents

Part 4: Pricing Trends

Thesis Summary

1. 2. 3. 4. Outlook for Parcel Base Rates Measures of Aggressiveness Trends in List Rate Discounts Accessorial Charges

About the Survey

Volume Trends

Pricing Trends

Service & Value Rankings

William J. Greene, CFA, (212) 761-8017, [email protected]

43

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Pricing Outlook Over the Next 6 Months

Average vs. Weighted Average Y/Y Change

Average change Weighted Average

Shipper Expectations for Changes in Base Rates (excluding fuel) "Over the Next 6 Months" vs. Same Period Last Year

1.4% 1.2% 1.0% 0.8% 0.6%

1.3%

1.1%

1.1% 0.9%

0.6%

0.6%

Large vs. Small

1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Air Ground Int'l

Large Customers Small Customers

0.4%

1.3% 1.2% 1.1% 1.1%

0.2% 0.0% Air Ground Int'l

1.1% 1.0%

% of shippers expecting:

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Increase

56%

57%

53%

Decrease

11% 33% Air

12% 32% Ground

8% 38%

No Change

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Int'l

44

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Historical Pricing Expectations: Air vs. Ground

3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.5% 0.0% Oct-08 Apr-08 Apr-09 Mar-07 Sep-07 Sep-09 Apr-10 -0.5% -0.2% 1.3% 1.7% 1.8% 1.1% 2.7%

Avg. Air Change 1.3%

AIR: Expected Change in Base Rates

3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Sep-07 Oct-08 1.5% 1.6% 1.8% 1.0% 2.9%

Avg. Ground Change 1.4%

1.1%

GROUND: Expected Change in Base Rates

Sep-09

Apr-08

Apr-09

Mar-07

Apr-10

-0.5%

-0.1%

Includes All responses, equally-weighted. Source: Morgan Stanley AlphaWise 45

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

International Base Rate Trends: All Shippers

Shipper Expectations for Changes in Base Rates (excluding fuel) "Over the Next 6 Months" vs. Same Period Last Year

1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 0.8%

Avg. Int'l Change 0.7%

1.3%

Sep-09

Apr-09

Apr-10

Includes All responses, equally-weighted. Source: Morgan Stanley AlphaWise

-0.2%

0.0%

William J. Greene, CFA, (212) 761-8017, [email protected]

46

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Pricing Trends by Product: Large vs. Small Shipper

3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5%

Large Shipper Base Rate Expectations "Over the Next 6 Months" vs. Same Period Last Year Air Ground Int'l

Mar-07

Sep-07

Apr-08

Oct-08

Apr-09

Sep-09

Apr-10

4.5% 3.5% 2.5% 1.5% 0.5% -0.5% -1.5%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Small Shipper Base Rate Expectations "Over the Next 6 Months" vs. Same Period Last Year Air Ground Int'l

Mar-07

Sep-07

Apr-08

Oct-08

Apr-09

Sep-09

Apr-10

47

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Base Rate Response Skew ­ All Shippers

Ground: Y/Y Base Rate Expectation by Range 40% 35% Average Ground

32%

30% 21%

Shipper Volume Growth Expectations "Over the Next 6 Months" vs. Same Period Last Year

Air: Y/Y Base Rate Expectation by Range 40% 35% 30% 25% 20% 15% 10% 5% 0%

-15%+ -15% -10% -5% to to to -10% -5% -2% -2% No 0% +2% +5% +10% 15%+ to Change to to to to 0% +2% +5% +10% +15%

30% 25% 20% 15% 10% 5% 4% 0% 0% 1% 6% 4% 0% 1%

Average Air

33%

31%

0%

-15%+ -15% -10% -5% to to to -10% -5% -2% 0% +2% +5% +10% 15%+ -2% No to to to to Change to +2% +5% +10% +15% 0%

19%

45%

2% 3% 5% 5% 0% 0%

40% 35% 30% 25% 20% 15% 10% 5% 0%

International: Y/Y Base Rate Expectation by Range Average 38% Int'l 29%

1%

0%

17% 7% 1% 0% 2% 2% 2% 1% 0%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

-15%+ -15% -10% -5% to to to -10% -5% -2%

0% +2% +5% +10% 15%+ -2% No to to to to Change to +2% +5% +10% +15% 0%

48

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Pricing Outlook by Scale of Shipper Spend

2.5% 2.0% 1.5%

Air - Avg Base Rate Change by Spend 2.1% 2.0% 1.5% 1.0% 0.5% 0.0%

$100,000 to $500,000 $0 to $100,000 Over $20 Million $500,000 to $1 Million $1 Million to $5 Million Weighted Avg Response $5 Million to $20 Million

Ground - Avg Base Rate Change by Spend 2.1% 1.7% 1.2% 0.9% 0.7% 0.6%

1.0% 0.5% 0.0%

2.5%

1.4%

-0.5%

$1 Million to $5 Million $5 Million to $20 Million $0 to $100,000 $100,000 to $500,000

-0.1%

Over $20 Million $500,000 to $1 Million Weighted Avg Response

0.7%

0.8%

0.7% 0.4%

0.6%

2.5% 2.0% 1.5% 1.0%

International - Avg Base Rate Change by Spend 2.1%

1.3%

1.4% 1.2% 0.9% 0.6%

0.5% 0.0% 0.0%

$1 Million to $5 Million $5 Million to $20 Million $100,000 to $500,000 $500,000 to $1 Million $0 to $100,000 Over $20 Million Weighted Avg Response

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

49

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Pricing Outlook by Industry

Ground - Avg Base Rate Change by Industry 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1.5% 1.5% 1.4% 1.2% 1.0% 0.8%

Air - Avg Base Rate Change by Industry 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1.6% 1.4% 1.3% 1.2%

3PL Provider

Retail

Consultant

Manufacturing

0.8%

0.8%

3PL Provider

Retail

Consultant

Manufacturing

Source: Morgan Stanley AlphaWise

Wholesale / Distribution

Other

2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%

International - Avg Base Rate Change by Industry 1.8% 1.6% 1.3% 0.9% 1.2% 1.3%

3PL Provider

Retail

Consultant

Manufacturing

Wholesale / Distribution

Other

Wholesale / Distribution

Other

William J. Greene, CFA, (212) 761-8017, [email protected]

50

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Pricing Outlook by Company Size

2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Ground - Avg Base Rate Change by Company Size 1.8% 1.5% 1.3% 0.9% 0.6% 0.4%

2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

Air - Avg Base Rate Change by Company Size 2.3%

1.3% 0.9% 0.7% 0.4% 0.3%

$0-10

$11-25

$26-$50

$51-$100

$100$1,000

$1,000+

Company Sales (millions)

2.5%

$0-10 $11-25 $26-$50 $51-$100 $100$1,000 $1,000+

2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0%

International - Avg Base Rate Change by Company Size 2.0% 1.8% 1.1% 0.9% 1.0%

Company Sales (millions)

-0.5%

$0-10 $11-25 $26-$50 $51-$100 $100$1,000 $1,000+

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Company Sales (millions)

51

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Pricing Outlook by Listed Primary Carrier

Ground - Avg Rate Change by Primary Carrier 1.6% 1.4% 1.2% 1.0%

Air - Avg Rate Change by Primary Carrier 3.0% 2.5% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 0.0% -0.5%

UPS FDX

1.3% 1.1%

1.4%

0.8% 0.6% 0.4% 0.6%

1.3% 1.0%

0.2% 0.0%

UPS FDX USPS

0.0%

DHL Other

Primary Carrier

International - Avg Rate Change by Primary Carrier 1.4% 1.4% 1.3% 1.2%

2.0%

-0.2%

USPS DHL Other

1.5% 1.0% 0.5% 0.0% -0.5%

Primary Carrier

-0.6% -1.0%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

UPS

FDX

USPS

DHL

Other

52

Primary Carrier

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Pricing Outlook by Listed Primary Carrier: Large vs. Small Shippers

Ground - Base Rate by Primary Carrier & Size

Large Shipper Small Shipper

1.3% 1.2% 1.2% 1.2% 1.2%

1.2%

Air - Base Rate by Primary Carrier & Size

Large Shipper Small Shipper

1.1% 1.1% 1.0% 1.0% 1.0%

1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%

1.5%

0.9% 0.8%

1.0%

0.9%

UPS FDX

International - Base Rate by Primary Carrier & Size

Large Shipper Small Shipper

UPS

FDX

2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0%

1.8% 1.7%

1.1% 0.7%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

UPS

FDX

53

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Level of Aggressiveness in Trying to Win New Business

More 10 Aggressive

9 8 7 6 5 4 3 2

Less Aggressive

Parcel Shippers' Rankings of Carriers' "Aggressiveness" in Trying to Win Business Over Past Six Months

6.3 6.5 6.7 6.2 6.5

Oct-08 Apr-09 Sep-09 Apr-10

5.9

6.4

6.1

1 FDX UPS

FDX UPS 6.6 5.9 6.7 6.1

More 10 Aggressive

Average Ranking by Shipper Spend

9 8 7 6 5 4 3 2

Less Aggressive

5.7

5.9 5.3 5.2 5.3

6.4 6.5 5.4

7.0 6.2

1

$0 to $100,000 $100,000 $500,000 $1 Million to $500,000 to $1 Million to $5 Million $5 Million to $20 Million Over $20 Million Weighted Average

Source: Morgan Stanley AlphaWise 54

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

List Rate Increases: UPS Leads on Ground; FDX Leads on Air

7.0% 6.0% List Rate Increase 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

Ground List Rate Increase

UPS FDX

Air List Rate Increase

6.0% 5.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UPS FDX

List Rate Increase

4.0% 3.0% 2.0% 1.0% 0.0%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: Company data, Morgan Stanley Research

William J. Greene, CFA, (212) 761-8017, [email protected]

55

2010

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Percentage Discount Off of List Rates

Average List Rate Discount

Apr-08 Oct-08 Apr-09 Sep-09 Apr-10

28% 31% Ground 25% 25% 27% 39% 42% 36% 37% 38% 0% 10% 20% 30% 40%

Question: What is your percentage discount off of listed parcel rates?

Air

Average Discount by Carrier and Product

45% FDX Ground UPS Ground FDX Air UPS Air

40% Discount Off List Rates

35%

30%

25%

20%

15%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Apr- Sep- Mar- Sep- Mar- Sep- Apr- Oct- Apr- Sep- Apr05 05 06 06 07 07 08 08 09 09 10

56

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Air Express List Rate Discounts

What is your percentage discount off of listed parcel rates for air express?

60% 50% 40% 30% 20% 10% 0%

$500,000 to $1 Million $1 Million to $5 Million $100,000 to $500,000 $5 Million to $20 Million $0 to $100,000 Over $20 Million Weighted Avg Response

FedEx - Air List Rate Discount by Spend 54% 51% 50% 49% 36% 23% 38%

UPS - Air List Rate Discount by Spend 60% 50% 50% 40% 31% 30% 20% 10% 0%

$100,000 to $500,000 Over $20 Million $500,000 to $1 Million $1 Million to $5 Million Weighted Avg Response

57

43% 37%

45% 40%

18%

$0 to $100,000

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

$5 Million to $20 Million

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Ground List Rate Discounts

What is your percentage discount off of listed parcel rates for ground?

40% 35% 30% 25% 20% 15% 10% 5% 0%

$100,000 to $500,000 $500,000 to $1 Million $1 Million to $5 Million $5 Million to $20 Million $0 to $100,000 Over $20 Million Weighted Avg Response

FedEx - Ground List Rate Discount by Spend 36% 36% 35% 33% 31% 24% 20%

40% 35% 30% 25% 20% 15% 10% 5% 0% 13%

UPS - Ground List Rate Discount by Spend 36% 36% 33% 33% 30% 22%

$100,000 to $500,000

$5 Million to $20 Million

Over $20 Million

$500,000 to $1 Million

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

$1 Million to $5 Million

Weighted Avg Response

58

$0 to $100,000

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

List Rate Discounts by Industry

What is your percentage discount off of listed parcel rates ?

FedEx - Air List Rate Discount by Industry 60% 50% 40% 30% 20% 10%

3PL Provider Consultant Retail Manufacturing Wholesale / Distribution Other

UPS - Air List Rate Discount by Industry 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 42% 37% 25% 36% 30% 43%

49% 43% 36% 38% 42%

21%

3PL Provider

Consultant

Retail

Manufacturing

FedEx - Ground List Rate Discount by Industry 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 38% 29% 23% 25% 28%

UPS - Ground List Rate Discount by Industry 40% 35% 30% 25% 20% 18% 15% 10% 5%

3PL Provider Retail Consultant Manufacturing

Wholesale / Distribution

34% 26% 23%

35%

20%

12%

3PL Provider

Manufacturing

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Wholesale / Distribution

Wholesale / Distribution

Retail

Consultant

Other

Other

0%

Other

0%

59

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Accessorials Are an Underappreciated Source of Pricing and Value for FDX/UPS

Accessorial as % of Parcel Spend 30% 25% 20% 15% 10% 5% 0%

26% 23% 18%

B2B

B2C

Total Spend

35% 30% 25% 20% 15% 10% 5% 0% Accessorial as % of Parcel Spend - by Shipper Size 33% Large Shippers Small Shippers

23% 23% 16%

21%

23%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

B2B

B2C

Total Spend

60

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Shipper Expectations for Year-over-year Change in B2C & Accessorial Charges

Y/Y Change in Accessorial Charges 100% 90% % of Respondents 80% 70% 60% 50% 40% 30% 20% 10% 0% B2B Accessorials B2C Accessorials Total Accessorials

No change

3%

8%

4%

Significantly larger portion Slightly larger portion Slightly smaller portion Significantly smaller portion

37%

33% 6% 0%

45%

7% 0%

6% 0%

53%

52%

45%

Y/Y Change in B2C as % of Total 100% 90% % of Respondents 80% 70% 60% 50% 40% 30% 20% 10% 0% 45% 38% 8% 0% 9% 1% 52% 37% 38% 8% 0% 10% 14% 5%

Significantly larger portion Slightly larger portion Slightly smaller portion Significantly smaller portion No change

35%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

All Shippers

Large Shippers

Small Shippers

61

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Accessorials as % of Total Spend by Expenditure and Industry

45% 40% 35% 30% 25% 20% 15% 10% 5%

$0 to $100,000 Over $20 Million $100,000 to $500,000 $500,000 to $1 Million $1 Million to $5 Million $5 Million to $20 Million Weighted Avg Response

Accessorial % of Total Spend by Expenditure 42%

29% 26% 23% 23% 23% 23%

0%

Accessorial % of Total Spend by Industry 40% 35% 30% 25% 20% 15% 10% 5%

3PL Provider Retail Consultant Manufacturing Wholesale / Distribution Other

62

35% 31% 23% 18% 20% 26%

0%

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Summary of Contents

Part 5: Service & Value Trends

Thesis Summary

1. 2. Service Reliability Rankings Value of Service Rankings

About the Survey

Volume Trends

Pricing Trends

Service & Value Rankings

William J. Greene, CFA, (212) 761-8017, [email protected]

63

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Value and Service Rankings Summary

Excellent

10 9 8 7 6 5 4 3 2

FDX Air UPS Ground FDX Ground Consolidators UPS Air US Postal

Service Reliability

8.6 8.7 8.5 8.5 8.1 8.3 7.3 7.2

Sep-09 Apr-10

8.9 8.7

7.1 7.1

1

Poor

Excellent 10

9 8 7 6 5 4 3 2

FDX Ground

Price of Services

7.8 8.0 7.7 7.8

Sep-09 Apr-10

7.6 7.5

7.3 7.4

7.2 7.3

7.5

7.0

UPS Ground

Consolidators

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

US Postal

64

UPS Air

FDX Air

1 Poor

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Service Reliability Rankings: Historical Trends

Excellent

9.0 8.8 8.6 8.4 8.2 8.0 7.8 7.6 7.4 7.2 Apr-05 Apr-08 Apr-09 May-02 Jan-02 Jan-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-09 Jun-03 Mar-04 Mar-06 Mar-07 Apr-10 Oct-08 7.0 FDX Air UPS Air

Air Express: Service Reliability

Poor

Excellent

9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5

FDX Ground

UPS Ground

US Postal

Consolidators

Ground: Service Reliability

Apr-05

Apr-08

Apr-09

May-02

Sep-04

Sep-05

Sep-06

Sep-07

Poor

Sep-09

Jan-02

Jan-03

Jun-03

Mar-04

Mar-06

Mar-07

Apr-10

Oct-08

5.0

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

65

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Service Reliability Rankings by Spend: Air Express

Excellent

8.9 8.9 8.8 8.8 8.7 8.7 8.6 8.6 8.5 8.5 8.4

Service Rankings: FedEx Air / Deferred

8.8 8.8 8.6 8.6 8.6 8.8 8.8

$100,000 to $500,000

$500,000 to $1 Million

$0 to $100,000

Over $20 Million

$1 Million to $5 Million

Poor

$5 Million to $20 Million

Weighted Avg Response

$1 Million to $5 Million

$5 Million to $20 Million

$100,000 to $500,000

$500,000 to $1 Million

Over $20 Million

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Weighted Avg Response

$0 to $100,000

Excellent 8.9 8.8 8.7 8.6 8.5 8.4 8.3 8.2 8.1 8.0 7.9 Poor

Service Rankings: UPS Air / Deferred

8.8

8.5

8.5 8.3

8.5 8.4 8.4

66

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Service Reliability Rankings by Spend: Ground

Excellent 8.7 8.6 8.5 8.4 8.3 8.2 8.1 8.0 7.9 7.8 Poor

Service Rankings: FedEx Ground / Home Delivery 8.6

8.5 8.5

8.1

8.1

8.1

8.2

$500,000 to $1 Million

$1 Million to $5 Million

$5 Million to $20 Million

$0 to $100,000

Over $20 Million

$100,000 to $500,000

Weighted Avg Response

Excellent 8.9

8.8 8.7 8.6 8.5 8.4 8.3 8.6

Service Rankings: UPS Ground

8.8 8.8 8.7 8.6 8.4 8.6

$1 Million to $5 Million

$5 Million to $20 Million

$100,000 to $500,000

$500,000 to $1 Million

Over $20 Million

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Weighted Avg Response

67

$0 to $100,000

8.2 Poor

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Price of Service Rankings: Historical Trends

Excellent

8.0 7.8 7.6 7.4 7.2 7.0 6.8 6.6 6.4 6.2 Apr-05 Apr-08 Apr-09 May-01 May-02 Jun-03 Sep-04 Sep-05 Sep-06 Sep-07 FDX Air UPS Air

Air Express: Value of Service

Poor Excellent

9.0 8.5 8.0 7.5 7.0 6.5 6.0

FDX Ground

UPS Ground

US Postal

Consolidators

Sep-09

Jan-02

Jan-03

Mar-04

Mar-06

Mar-07

Apr-10

Oct-08

6.0

Ground: Value of Service

Apr-05

Apr-08

Apr-09

May-02

Jan-02

Jan-03

Jun-03

Sep-04

Sep-05

Sep-06

Sep-07

Poor

Sep-09

Mar-04

Mar-06

Mar-07

Apr-10

Oct-08

Source: Morgan Stanley AlphaWise 68

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Value Rankings by Spend: Air Express

Excellent 8.0

7.8 7.6 7.4 7.2 7.0 6.8

Over $20 Million $100,000 to $500,000 $500,000 to $1 Million $1 Million to $5 Million $5 Million to $20 Million Weighted Avg Response $0 to $100,000

Value Rankings: FedEx Air / Deferred

7.9 7.7 7.5 7.3 7.2 7.1 7.6

6.6

Poor

Excellent 7.8

7.6 7.4 7.2 7.0 6.8 6.6 6.4 6.2 6.9

Value Rankings: UPS Air / Deferred

7.6 7.5 7.5 7.5

7.0 6.8

$1 Million to $5 Million

$5 Million to $20 Million

$100,000 to $500,000

$500,000 to $1 Million

$0 to $100,000

Over $20 Million

Poor

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Weighted Avg Response

69

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Value Rankings by Spend: Ground

Value Rankings: FedEx Ground / Home Excellent Delivery 8.2 8.1 8.1 8.0 8.0 7.9 7.8 7.9 7.8 7.8 7.7 7.7 7.6 7.6 7.5 7.4 7.3

$1 Million to $5 Million $5 Million to $20 Million $0 to $100,000 Over $20 Million $100,000 to $500,000

Poor

$500,000 to $1 Million

Weighted Avg Response

$1 Million to $5 Million

$5 Million to $20 Million

$100,000 to $500,000

$500,000 to $1 Million

$0 to $100,000

Over $20 Million

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

Weighted Avg Response

Excellent 8.2 8.0 7.8 7.6 7.4 7.2 7.0 6.8 6.6 6.4 6.2 Poor

Value Rankings: UPS Ground

8.0 7.6 7.2 7.1 6.8 7.9 7.8

70

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Value and Service Rankings by Spend: US Postal Service

Excellent 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Poor

Service Rankings: USPS

8.1 5.9 7.6 5.6 7.0 7.2 7.1

$1 Million to $5 Million

$5 Million to $20 Million

Over $20 Million

$100,000 to $500,000

$500,000 to $1 Million

Weighted Avg Response

$0 to $100,000

Excellent 7.6

7.4 7.2 7.0 6.8 6.6 6.4 7.0 6.9

Value Rankings: USPS

7.4

7.1

7.0

7.1

6.6

$1 Million to $5 Million

$5 Million to $20 Million

$0 to $100,000

Over $20 Million

$100,000 to $500,000

Source: Morgan Stanley AlphaWise

William J. Greene, CFA, (212) 761-8017, [email protected]

$500,000 to $1 Million

Weighted Avg Response

71

6.2 Poor

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Historical Trading Multiples

Historical Valuation

William J. Greene, CFA, (212) 761-8017, [email protected]

72

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Parcel Historical Trading Ranges

Parcel Ticker FedEx FDX UPS UPS Deutsche Post DPWN TNT TNT Industry Average S&P 500 SPX Current 19.3 20.8 12.7 13.6 16.6 16.9 Price-to-earnings 10-Yr Hist. Avg. Absolute Trough Avg. Peak 9.9 17.1 23.6 12.1 21.1 27.3 6.7 11.2 17.3 7.2 13.1 25.4 9.0 15.6 23.4 10.2 16.9 24.1 Price-to-Book 10-Yr Hist. Avg. Absolute Trough Avg. Peak 0.86 2.38 3.37 4.38 5.98 8.97 Current 133% 144% 88% 94% 115% Relative P/E 10-Yr Hist. Avg. Absolute Trough Avg. Peak 61% 104% 158% 88% 127% 174% 50% 70% 156% 53% 77% 111% 63% 94% 150% Current 6.5 10.4 8.5 8.5 EV / EBITDA 10-Yr Hist. Avg. Absolute Trough Avg. Peak 3.3 6.0 7.8 6.5 10.2 14.1 4.1 4.6 7.4 7.9 12.8 11.6

Parcel Ticker FedEx FDX UPS UPS Deutsche Post DPWN TNT TNT Industry Average

Current 0.82 1.51 1.09 1.14

EV / Sales 10-Yr Hist. Avg. Absolute Trough Avg. Peak 0.37 0.80 1.06 0.98 1.81 2.40 0.49 0.62 1.00 1.20 1.95 1.80

Current 2.08 8.97

5.53

2.62

4.18

6.17

Parcel Ticker FedEx FDX UPS UPS Deutsche Post DPWN TNT TNT Industry Average

Current 33.7 24.8 22.3 27.0

EV / FCF 10-Yr Hist. Avg. Absolute Trough Avg. Peak 16.8 31.2 44.3 11.5 22.5 47.9 9.6 12.6 19.4 24.4 27.0 39.8

Current 2.9% 4.4% 5.2% 5.0% 4.4%

FCF Yield 10-Yr Hist. Avg. Absolute Trough Avg. Peak 0.5% 2.7% 4.1% 0.9% 4.6% 10.4% 0.3% 7.9% 16.2% 5.0% 8.3% 13.9% 1.7% 5.9% 11.2%

Source: FactSet, Morgan Stanley Research

William J. Greene, CFA, (212) 761-8017, [email protected]

73

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

P/E: FDX and UPS vs. S&P500 and Real GDP, 1997-2010E

34 32 Absolute P/E Ratio on 12-Month Forward Earnings 30 28 26 24 22 20 18 16 14 12 10 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 8 -2% -4% -6% -8% 2% 0%

Real GDP Growth (right axis) FDX TMF P/E MS GDP Forecast (right axis) S&P 500 TMF P/E UPS TMF P/E

10% 8% Change in Real GDP

74

6% 4%

Source: FactSet, Morgan Stanley Research

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

EV/EBITDA: FDX and UPS vs. Real GDP, 1997-2010E

16 EV/EBITDA on 12-Month Forward Consensus EBITDA 14 12 10 8 0% 6 4 2 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 0 -2% -4% -6% -8%

Real GDP Growth (right axis) UPS TMF EV-EBITDA MS GDP Forecast (right axis) FDX TMF EV-EBITDA

10% 8% 6% 4% 2% Change in Real GDP

75

Source: FactSet, Morgan Stanley Research

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

EV/Sales: FDX and UPS vs. Real GDP, 1997-2010E

3.0 2.5 6% 2.0 1.5 0% 1.0 0.5 -6% Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 0.0 -8% -2% -4% 4% 2% Change in Real GDP

76

Real GDP Growth (right axis) UPS TMF EV-Sales

MS GDP Forecast (right axis) FDX TMF EV-Sales

10% 8%

Source: FactSet, Morgan Stanley Research

William J. Greene, CFA, (212) 761-8017, [email protected]

EV/Sales on 12-Month Forward Consensus Sales

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Price-to-Book: FDX and UPS vs. Real GDP, 1997-2010E

10.0 9.0 8.0 7.0 Price-to-Book 6.0 5.0 4.0 3.0 2.0 1.0 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 0.0 0% -2% -4% -6% -8%

Real GDP Growth (right axis) MS GDP Forecast (right axis) UPS PB FDX PB

10% 8% 6% 4% 2% Change in Real GDP

77

Source: FactSet, Morgan Stanley Research

William J. Greene, CFA, (212) 761-8017, [email protected]

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

Freight Transportation Comp Sheets

Comp Sheets

William J. Greene, CFA, (212) 761-8017, [email protected]

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April 16, 2010 Freight Transportation

Freight Transport Comps on Consensus Estimates

4/15/2010 10-Yr Hist. Avg. P/E on 12-Month Fwrd EPS* 2011E 14.8 14.8 13.5 19.5 20.4 14.9 13.7 14.9 14.6 Trough 8.6 8.1 7.6 5.7 8.5 7.7 8.5 8.1 Avg. 13.2 13.4 13.8 14.9 20.6 13.9 14.0 13.7 Peak 17.2 17.3 19.0 22.9 36.4 20.0 19.5 18.6

EPS Estimates* Ticker RAILROADS Canadian National Canadian Pacific CSX Corp. Genesee Wyoming Kansas City Southern Norfolk Southern Rail America Union Pacific Average (ex. KSU, RA, GWR) EXPRESS/PARCEL FedEx (Calendarized) UPS Average CNI CP CSX GWR KSU NSC RA UNP Stock Rating E E O E E E O O Market Cap-$B $29.8 $9.9 $21.7 $1.5 $3.8 $22.4 $0.7 $38.9 $128.8 15-Apr Price $63 $59 $55 $37 $39 $61 $13 $77 2009E $3.09 $2.63 $2.87 $1.54 $0.61 $2.76 $0.41 $3.75 2010E $3.67 $3.32 $3.44 $1.56 $1.50 $3.38 $0.71 $4.36 12-Mo. Fwrd. $3.83 $3.49 $3.60 $1.64 $1.60 $3.55 $0.77 $4.56 2011E $4.28 $3.98 $4.10 $1.90 $1.91 $4.07 $0.95 $5.17 2010E 17.2 17.7 16.1 23.9 26.1 17.9 18.4 17.7 17.3

P/E Ratio* 12-Mo. Fwrd. 16.6 16.9 15.3 22.6 24.4 17.1 16.9 16.9 16.5

EV/EBITDA** 2010E 10.0 8.9 7.9 11.1 10.3 8.8 7.1 8.5 8.8 2011E 9.1 8.0 7.1 10.0 9.2 7.8 6.5 7.5 7.9 Dividend Yield 1.6% 1.7% 1.6% 0.0% 0.0% 2.2% 0.0% 1.4% 1.7%

FCF Yield 2010E 3.4% 2.2% 3.9% 4.7% 3.4% 2.8% 8.5% 2.4% 2.9%

FDX UPS

E U

$29.9 $68.5 $98.4

$96 $69

$3.75 $2.31

$4.30 $3.09

$5.34 $3.25

$5.53 $3.73

22.3 22.3 22.3

17.9 21.2 19.5

17.3 18.5 17.9

9.9 12.1 11.0

17.0 21.2 19.1

23.6 27.3 25.4

7.1 10.9 9.0

6.0 9.4 7.7

0.5% 2.6% 1.6%

2.2% 4.3% 3.2%

FREIGHT FORWARDING/LOGISTICS C.H. Robinson Worldwide Inc. CHRW Expeditors International EXPD UTIW UTIW Forward Air Corp. FWRD Hub Group Inc HUBG Pacer International Inc PACR Atlas Air Worldwide Hldg Inc AAWW Average

E U E NC NC NC E

$9.8 $8.4 $1.7 $0.8 $1.2 $0.2 $1.5 $24.1

$59 $40 $17 $28 $32 $7 $59

$2.13 $1.11 $0.54 $0.48 $0.91 -$0.38 $3.16

$2.26 $1.28 $0.74 $0.82 $1.09 -$0.03 $4.04

$2.35 $1.33 $0.79 $0.89 $1.18 $0.05 $4.32

$2.63 $1.48 $0.92 $1.08 $1.45 $0.28 $5.15

26.1 31.2 23.2 33.8 29.3 14.6 27.0

25.1 30.1 21.9 31.3 27.1 13.6 25.1

22.4 27.0 18.7 25.8 22.1 24.3 11.4 21.2

19.1 19.1 8.8 13.7 11.0 3.1 4.0 13.4

26.2 29.6 21.2 22.6 19.4 32.9 11.2 25.2

34.9 45.3 38.0 35.5 24.4 1,693.4 15.4 242.0

14.9 15.5 9.8 13.3 15.4 28.6 6.8 14.5

13.0 13.3 8.1 11.2 12.1 10.4 5.1 10.1

1.7% 1.0% 0.3% 1.0% 0.0% 0.0% 0.0% 0.5%

3.1% 2.8% 4.0% 2.2% 3.3% 5.0% 3.0%

*Estimates are based on Factset consensus. Freight Forwarding, Trucks and Railroad actuals taken from S&P Compustat library. Source: Company data, Morgan Stanley Research, and First Call. NC = Not Covered

William J. Greene, CFA, (212) 761-8017, [email protected]

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Freight Transport Comps on Consensus Estimates (cont.)

4/15/2010 EPS Estimates* Ticker TRUCKLOAD (TL) Covenant Transport Inc. Heartland Express Inc. J.B. Hunt Transport Services Knight Transportation Inc. Werner Enterprises Inc. Marten Transport Ltd P.A.M. Transportation Svcs Usa Truck Inc Landstar System Inc Celadon Group Inc Average CVTI HTLD JBHT KNX WERN MRTN PTSI USAK LSTR CLDN Stock Rating NC E O E U NC NC NC NC NC Market Cap-$B $0.1 $1.5 $4.8 $1.8 $1.7 $0.5 $0.1 $0.2 $2.3 $0.3 $13.3 15-Apr Price $7 $16 $38 $21 $24 $21 $15 $18 $45 $15 2009E -$0.96 $0.62 $1.05 $0.60 $0.79 $0.74 -$1.15 -$0.70 $1.37 $0.17 2010E -$0.17 $0.59 $1.45 $0.73 $0.99 $0.89 $0.05 -$0.01 $1.81 $0.42 12-Mo. Fwrd. -$0.12 $0.63 $1.55 $0.77 $1.05 $0.98 $0.16 $0.13 $1.91 $0.66 2011E $0.06 $0.76 $1.88 $0.92 $1.23 $1.23 $0.49 $0.55 $2.22 $0.72 2010E P/E Ratio* 12-Mo. Fwrd. 2011E 128.5 21.5 20.1 23.2 19.5 17.2 29.7 32.0 20.5 21.0 30.3 10-Yr Hist. Avg. P/E on 12-Month Fwrd EPS* Trough #N/A 12.2 10.5 11.0 9.2 #N/A Avg. #N/A 19.8 16.7 21.3 16.3 #N/A Peak #N/A 29.6 26.5 31.6 22.7 #N/A EV/EBITDA** 2010E 4.2 10.0 10.2 9.7 5.8 5.4 4.3 5.2 13.3 7.3 6.9 2011E 3.8 8.6 8.6 8.3 5.3 4.6 3.5 4.4 11.4 5.8 5.8 Dividend Yield 0.0% 0.5% 1.2% 0.9% 0.8% 0.0% 0.0% 0.0% 0.4% 0.0% 0.3% FCF Yield 2010E

27.6 26.1 29.3 24.3 23.9

25.8 24.3 27.5 22.9 21.8

5.5% 3.1% 2.4% 6.0% 4.2%

25.2 36.5 24.1

23.8 22.9 21.1

7.6 9.2 #N/A

18.3 19.7 #N/A

26.3 31.6 #N/A

4.0% 10.4% 4.4%

LESS THAN TRUCKLOAD (LTL) Arkansas Best Corp. ABFS Old Dominion Freight Line ODFL Saia Inc. SAIA Vitran Corp Inc VTNC YRC Worldwide Inc. YRCW Average S&P 500 SPX

NC NC NC NC NC

$0.8 $1.4 $0.2 $0.2 $0.1 $2.7

$30 $37 $16 $14 $1

-$2.46 $0.94 -$0.67 -$0.28 -$10.26

-$0.87 $1.28 -$0.15 $0.37 -$1.65

-$0.42 $1.45 $0.15 $0.50 -$1.44

$0.93 $1.98 $1.05 $0.91 -$0.82

-34.8 29.2 38.3 10.9

-72.3 25.7 27.9 -6.2 14.9 12-Mo. Fwrd. 16.5 22.9 17.9

32.4 18.8 14.7 15.4 20.3 12.7

4.5 4.1 6.1 4.1 5.4 4.9 10.2

12.0 13.0 18.1 11.8 9.7 12.9 16.8

32.7 23.1 336.5 16.1 102.1 24.1

12.3 8.9 7.7 9.7 -76.7 -7.6

5.6 7.2 4.3 7.4 4.9 5.9

1.6% 0.0% 0.0% 0.0% 0.0% 0.3%

3.1% 3.7% 7.6% 5.7% 5.0%

1,211 Stock Rating E NR E Market Cap-$B $1.7 $0.3 $29.9 15-Apr Price $17 $15 $96

$55.59

$76.51

$81.24 12-Mo. Fwrd. $1.05 $0.66 $5.34

$95.44

15.8

Fiscal Year Est. UTIW (ends Jan) Celadon Group (ends June) FDX Corp. (ends May)

Ticker UTIW CLDN FDX

FY10 $0.74 $0.23 $3.74

FY11 $0.92 $0.60 $5.07

FY12 $1.41 $0.84 $6.16

FY11 18.7 25.2 18.9

FY12 12.3 18.0 15.5

Trough 8.8 9.2 9.9

Avg. 21.2 19.7 17.0

Peak 38.0 31.6 23.6

FY11 8.1 6.4 6.4

FY12 6.0 5.2 5.6

Div Yld 0.3% 0.0% 0.5%

FY11 6.3% 12.5% 3.1%

*Estimates are based on Factset consensus. Freight Forwarding, Trucks and Railroad actuals taken from S&P Compustat library. Source: Company data, Morgan Stanley Research, and First Call. NC = Not Covered

William J. Greene, CFA, (212) 761-8017, [email protected]

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Disclosure Section

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As of March 31, 2010, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: C.H. Robinson Worldwide Inc., CSX Corporation, Expeditors International of Washington I, FedEx Corporation, UTi Wordwide. As of March 31, 2010, Morgan Stanley held a net long or short position of US$1 million or more of the debt securities of the following issuers covered in Morgan Stanley Research (including where guarantor of the securities): Canadian National Railway Co., Canadian Pacific Railway Ltd., CSX Corporation, FedEx Corporation, J.B. Hunt Transport Services Inc., Kansas City Southern, Norfolk Southern Corp., Railamerica, Inc., Union Pacific Corp., United Parcel Service. Within the last 12 months, Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of Atlas Air Worldwide Holdings, Canadian Pacific Railway Ltd., Echo Global Logistics Inc, Railamerica, Inc.. 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Hunt Transport Services Inc., Kansas City Southern, Knight Transportation Inc., Norfolk Southern Corp., Railamerica, Inc., Union Pacific Corp., United Parcel Service, UTi Wordwide, Werner Enterprises. The equity research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. The fixed income research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality, accuracy and value of research, firm profitability or revenues (which include fixed income trading and capital markets profitability or revenues), client feedback and competitive factors. 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Disclosure Section (cont.)

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Coverage Universe % of Total Investment Banking Clients (IBC) % of Total IBC % of Rating Category

Stock Rating Category

Count

Count

Overweight/Buy Equalweight/Hold Not-Rated/Hold Underweight/Sell Total

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41% 43% 1% 15%

325 348 4 87 764

43% 46% 1% 11%

31% 32% 27% 23%

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Disclosure Section (cont.)

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William J. Greene, CFA, (212) 761-8017, [email protected]

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April 16, 2010 Freight Transportation

Disclosure Section (cont.)

The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (DIFC Branch), regulated by the Dubai Financial Services Authority (the DFSA), and is directed at Professional Clients only, as defined by the DFSA. The financial products or financial services to which this research relates will only be made available to a customer who we are satisfied meets the regulatory criteria to be a Professional Client. The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (QFC Branch), regulated by the Qatar Financial Centre Regulatory Authority (the QFCRA), and is directed at business customers and market counterparties only and is not intended for Retail Customers as defined by the QFCRA. As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment advisory activity. Investment advisory service is provided in accordance with a contract of engagement on investment advisory concluded between brokerage houses, portfolio management companies, non-deposit banks and clients. Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely to this information stated here may not bring about outcomes that fit your expectations. The trademarks and service marks contained in Morgan Stanley Research are the property of their respective owners. Third-party data providers make no warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages of any kind relating to such data. The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property of MSCI and S&P. Morgan Stanley Research, or any portion thereof may not be reprinted, sold or redistributed without the written consent of Morgan Stanley. Morgan Stanley Research is disseminated and available primarily electronically, and, in some cases, in printed form.

Additional information on recommended securities/instruments is available on request.

William J. Greene, CFA, (212) 761-8017, [email protected]

84

MORGAN STANLEY RESEARCH

April 16, 2010 Freight Transportation

The Americas 1585 Broadway New York, NY 10036-8293 United States Tel: +1 (1)212 761 4000

Europe 20 Bank Street, Canary Wharf London E14 4AD United Kingdom Tel: +44 (0)20 7425 8000

Japan 4-20-3 Ebisu, Shibuya-ku Tokyo 150-6008 Japan Tel: +81 (0) 3 5424 5000

Asia/Pacific Three Exchange Square Central Hong Kong Tel: +852 2848 5200

Industry Coverage:Freight Transportation

Company (Ticker) William J. Greene, CFA Atlas Air Worldwide Holdings (AAWW.O) C.H. Robinson Worldwide Inc. (CHRW.O) CSX Corporation (CSX.N) Canadian National Railway Co. (CNI.N) Canadian Pacific Railway Ltd. (CP.N) Echo Global Logistics Inc (ECHO.O) Expeditors International of Washington I (EXPD.O) FedEx Corporation (FDX.N) Genesee & Wyoming Inc. (GWR.N) Heartland Express Inc. (HTLD.O) J.B. Hunt Transport Services Inc. (JBHT.O) Kansas City Southern (KSU.N) Knight Transportation Inc. (KNX.N) Norfolk Southern Corp. (NSC.N) Railamerica, Inc. (RA.N) UTi Wordwide (UTIW.O) Union Pacific Corp. (UNP.N) United Parcel Service (UPS.N) Werner Enterprises (WERN.O) Rating (as of) Price* (04/15/2010)

E (03/19/2010) E (06/11/2009) O (06/11/2009) E (10/31/2008) E (03/09/2010) O (11/11/2009) U (03/22/2010) E (07/30/2008) E (11/23/2009) E (06/11/2009) O (06/11/2009) E (03/09/2010) E (06/11/2009) E (01/15/2008) O (11/23/2009) E (03/22/2010) O (05/07/2007) U (01/28/2009) U (06/11/2009)

$58.87 $58.93 $55.25 $63.35 $58.84 $13.57 $39.85 $95.62 $37.19 $16.33 $37.69 $39.07 $21.32 $60.61 $13.01 $17.28 $77.11 $68.89 $23.95

Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

©2010 Morgan Stanley

William J. Greene, CFA, (212) 761-8017, [email protected]

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