The document provides an analysis of the intermodal freight market in 2017. It summarizes 2016 intermodal volume trends, forecasts growth in 2017 and 2018, and discusses factors influencing the market such as regulations, e-commerce, and industry consolidation. International intermodal movements declined 3.3% in 2016 while domestic volumes fell 0.8%, but activity increased in the fourth quarter and early 2017. Tighter truck capacity from new regulations is expected to boost domestic intermodal growth starting in late 2017. Near term forecasts predict total intermodal growth of 4.3% in 2017 and 4% in 2018.

1. INTERMODAL: WHEN WILL
THE MARKET TURN?
Journal of Commerce
Trans Pacific Maritime
Conference
February 2017
Partner
FTR
lgross@ftrintel.com
516-455-8988
Larry Gross
President
Gross Transportation Consulting
ljgross@optonline.net
@Intermodalist
For Slides: www.ftrintel.com/TPM

2. 22
DISCUSSION POINTS
 My forecast scorecard
 Status Report: A tough 2016 ended on a better note
 International Review: ISO IPI movements are
down….why and will it continue?
 Domestic Review: The tide is turning
 Fearless Forecast
 Ruminations on Trump, E-Commerce and other macro
concerns.

3. 33
WHAT I SAID LAST YEAR
 Strong dollar and consumer spending
led to strong International growth, but this
will fade
 USWC diversion reduced but some will
stick
 Domestic growth is sagging due to
multiple headwinds
 Regulatory driven truck capacity shortage
is still a year or more away
 Domestic growth will have to be
generated the old fashioned way – By
earning it!
2016 Forecast
International +0.7%
Domestic +2.9%
Domestic
Container
+4.9%
Total +1.8%

4. 44
INTERMODAL GROWTH HAS BEEN
SLOWING AND CAME TO A HALT IN 2016
Source: IANA ETSO, Gross Transportation Consulting
2016 vs. 2015
International -3.3%
Domestic -0.7%
Domestic
Container
+4.1%
Trailer -22.1%
Total -2.5%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
IANA ETSO Volume Y/Y % Change
Total International Domestic

5. 55
IN BETTER NEWS, ACTIVITY BEGAN TO
ACCELERATE LATE IN THE YEAR
Source: IANA ETSO, Gross Transportation Consulting
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Total Intermodal: Year/Year % Change
International Domestic Total
650
675
700
725
750
775
800
825
850
1,200
1,250
1,300
1,350
1,400
1,450
1,500
1,550
1,600
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Seasonally Adjusted Rev. Moves (000)
Current 12 Months
Domestic
(right) International (right)
Total (left)

6. 66
NEW “VOLUME PER WORKING DAY”
ANALYSIS SHOWS TRENDS MORE CLEARLY
Source: IANA ETSO, Gross Transportation Consulting
650
675
700
725
750
775
1,300
1,350
1,400
1,450
1,500
1,550
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Intermodal: Rev. Moves - Actual (000)
Domestic (right)
International
(right)
Total (left)
28
30
32
34
36
38
58
60
62
64
66
68
70
72
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Rev. Moves per Average Working
Day (000)
Domestic (right)
International (right)
Total (left)

7. 77
AAR WEEKLY VOLUMES INDICATE 2017 IS
OFF TO A GOOD START
Source: AAR, Gross Transportation Consulting
-15%
-10%
-5%
0%
5%
10%
15%
280
290
300
310
320
330
340
350
1/30/16
2/20/16
3/12/16
4/2/16
4/23/16
5/14/16
6/4/16
6/25/16
7/16/16
8/6/16
8/27/16
9/17/16
10/8/16
10/29/16
11/19/16
12/10/16
12/31/16
1/21/17
Thousands
AAR Weekly Intermodal Loadings
(North American 4 Week Rolling Average)
Y/Y% Change North America
-15%
-10%
-5%
0%
5%
10%
15%
62
64
66
68
70
72
74
1/30/16
2/20/16
3/12/16
4/2/16
4/23/16
5/14/16
6/4/16
6/25/16
7/16/16
8/6/16
8/27/16
9/17/16
10/8/16
10/29/16
11/19/16
12/10/16
12/31/16
1/21/17
Thousands
AAR Intermodal Loadings per Workday
(North American 4 Week Rolling Average)
Y/Y% Change North America

8. 88
INTERMODAL SHARE GAINS HAVE SLOWED
Sources: GTC, FTR, IANA ETSO Data
9.0%
9.5%
10.0%
10.5%
11.0%
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
Market Share Domestic Intermodal
Sources:
GTC, FTR, ETSO
Report
17.0%
17.5%
18.0%
18.5%
19.0%
19.5%
20.0%
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
Market Share of Total Intermodal
Sources:
GTC, FTR, ETSO
Report

9. 99
LENGTH OF HAUL DATA REVEALS
INTERMODAL HEADWINDS
1,400
1,420
1,440
1,460
1,480
1,500
1,520
1,540
1,560
1,580
1,600
2011.4
2012.2
2012.4
2013.2
2013.4
2014.2
2014.4
2015.2
2015.4
2016.2
2016.4
Miles
Miles
Average LOH - Int'l vs Domestic
International Domestic Int'l 4Q Moving Avg. Dom 4 Q Moving Avg.
Sources:
IANA, GTC, FTR
Sources: GTC, FTR, IANA ETSO Data

10. 1010
IMPORTS ENDED 2016 ON A STRONG
NOTE
1,500
1,575
1,650
1,725
1,800
1,875
1,950
2,025
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Thousands
Seasonally Adjusted U.S. Imports
SA M/M Change (Left)
SA Import TEU's (Right)
3 per. Mov. Avg. (SA Import TEU's (Right))
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
U.S. Total Loaded TEU's - Y/Y Change
Total Imports Exports
Sources: IHS PIERS; Port Reports

11. 1111
INTERNATIONAL INTERMODAL MOVEMENTS
ARE DOWN VERSUS IMPORTS
2016 Performance
International
Intermodal
-3.3%
U.S. Import
TEUs
+3.5%
Source: IANA ETSO, PIERS, Gross Transportation Consulting
0.64
0.65
0.66
0.67
0.68
0.69
0.70
0.71
0.72
0.73
0.74
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
International Intermodal Revenue TEUs vs. Import TEUs
Sources:
GTC, FTR, ETSO Report

12. 1212
SOUTHERN CAL. TRANSLOADING IS
INCREASING IN IMPORTANCE
40%
45%
50%
55%
60%
Calif. Intact vs. Estimated Transload
28%
30%
32%
34%
36%
38%
40%
42%
44%
46%
48%
60%
65%
70%
75%
80%
85%
% of Cal. Import TEU's Emerging via
Intermodal
Total Intermodal % Intact % Transload %
Source: IANA ETSO, PIERS, Gross Transportation Consulting

13. 1313
REGIONAL IMPORT SHARE TRENDS
EAST VS. WEST HAS STABILIZED
Source: PIERS, Gross Transportation Consulting
40%
41%
42%
43%
44%
45%
46%
47%
48%
U.S. West Coast Import TEU's - NA
Share
Market Share
3 per. Mov. Avg. (Market Share)
40%
41%
42%
43%
44%
45%
46%
47%
48%
49%
50%
U.S. East/Gulf Coast Import TEU's - NA
Share
Market Share
3 per. Mov. Avg. (Market Share)

14. 1414
WHERE ARE THE BIG IPI CHANGES
OCCURRING?
Source: PIERS, IANA ETSO, Gross Transportation Consulting
24
10
20
82
(75)
(18)
(23)
(26)
(28)
(36)
(54)
(163)
(200) (100) - 100
All Other Lanes with Increases
South Central-Northwest
Intra Eastern Canada
Northeast-Midwest
All Other Lanes with Declines
Southeast-Southwest
Midwest-Western Canada
Intra Western Canada
Eastern Canada-Western…
Intra Mexico
Midwest-Southwest
South Central-Southwest
Thousands
2016 International Changes by Lane
+136K
-424K
-288K
95
100
105
110
115
120
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Thousands
Seasonally Adjusted Gulf Coast Imports
SA M/M Change (Left)
SA Import TEU's (Right)
3 per. Mov. Avg. (SA Import TEU's (Right))
96,000 more import TEUs in 2016

15. 1515
WHAT ABOUT THE “NEW” PANAMA
CANAL?
 Freight will only shift to the extent that steamship line rates to the East
Coast – already at rock bottom – decline further
 Nothing will happen until Bayonne Bridge in NY is raised – late this year at
the earliest
 Other ports still working to get ready.
 East Coast ports may suffer congestion issues as more big ships call.
 Some Ohio Valley freight may be in play, but not Chicago.
 Bottom line – probably not that big a deal.

16. 1616
CONTAINER SECTOR
TRANSFORMED
 Sector remains under immense financial pressure due
to chronic over-capacity
 Hanjin bankruptcy sent a wake-up call
 Consolidation of the industry now underway
 Alliances being re-formed and scrambled
 Uncertainty for the foreseeable future

17. 1717
Hanjin
CONSOLIDATION, CASUALTIES AND
ALLIANCE SHUFFLING
2015 April 2016
2M Maersk MSC 2M Maersk + Hamburg Sud
MSC
G6 NOL/APL Hapag Lloyd
HMM MOL
NYK OOCL
Ocean CMA/CGM + NOL/APL
CSC/Cosco
Evergreen
OOCL
CYKHE Cosco K Line
Yang Ming Hanjin
Evergreen
Oceans 3 CSC
CMA CGM UASC
THE K Line + NYK + MOL
Yang Ming
Hapag Lloyd (+ UASC)
HMM Hyundai
Hamburg Sud
The potential for disruption during the early stages of implementation is high.

18. 1818
IPI DECLINE - SUMMARY
 Slide in IPI share has multiple causes, not clear yet if
stabilizing
 Transloading playing a larger role
 “Intermodal-unfriendly” west-to-east routing shift likely
not a factor going forward
 Gulf Coast vs. intermodal battle for resin traffic
 Some volume has evidently migrated back to highway

19. 1919
LONG TERM FORECAST - INTERNATIONAL
 The days of Imports growing faster than GDP are
probably over
 Major off-shoring wave has crested, limited reversal has
begun.
 Trump administration injects substantial uncertainty,
downside risk
 Rising overseas labor costs, growth of local production,
3-D printing etc. will help reduce imports long term

20. 2020
KEY TRUCKING REGULATORY ITEMS
 ELD mandate takes effect 12/16/17
 Speed limiter rule poorly received, probably not before
2020 if then
 Drug and Alcohol Clearinghouse will happen
 DOT Truck Size and Weight Study a non-issue
 Safety Fitness Determination still subject of debate

21. 21
SUBSTANTIAL NUMBERS OF NEW DRIVERS WILL NEED
TO BE HIRED IN THE COMING MONTHS/YEARS
Source: FTR Associates
(80,000)
(60,000)
(40,000)
(20,000)
-
20,000
40,000
60,000
80,000
100,000
120,000
Additional Quarterly Driver Hires Required By Regulation
Other
Speed Limiters
Training Provisions
Drug & Alcohol Data
Base/Hair testing
HOS
ELD
Health Regulations
and Treatment
CSA

22. 2222
FORECAST ITEMS - DOMESTIC
 Tighter truck capacity due to
regulatory pressure will result in
faster domestic intermodal growth
 This will kick in later in 2017 and
last through 2020
 Dependent on continued slow
economic growth and no significant
delays or changes in regulatory
pipeline
 Thereafter autonomous trucks will
put increasing pressure on
intermodal volume and economics.
90%
92%
94%
96%
98%
100%
2015.01
2015.03
2015.05
2015.07
2015.09
2015.11
2016.01
2016.03
2016.05
2016.07
2016.09
2016.11
2017.01
2017.03
2017.05
2017.07
2017.09
2017.11
Active Truck Utilization (%)

23. 2323
NEAR TERM FORECAST
2016 2017 2018
Total -2.1% 4.3% 4.0%
International -3.3% 2.5% 3.0%
Domestic -0.8% 6.2% 5.0%
Trailer -25.2% 4.2% 2.3%
Domestic
Container
4.1% 6.2% 5.0%
Source: FTR Transportation Intelligence

24. 2424
SOME THOUGHTS ON E-COMMERCE
 Inventory levels elevated – two
parallel supply chains (E-
commerce vs. brick-and-mortar)
– for now.
 Forward deployment of
inventory implies more DC’s
dispersed & closer to the
customer
 Higher velocity and more
responsive service needed
 Intermodal still has a role into
the DC
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
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
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
MonthsofInventory
Business Inventory/Sales Ratio
Retail
Manufacturing
Wholesale
Source: Census Bureau

25. 2525
IMPLICATIONS? NO ONE REALLY KNOWS
From an Intermodal Perspective, more downside than
upside?
• Economy has plenty of momentum going into 2017. But
it can be slowed in less time than it takes to speed up.
• Short-term stimulus likely, will lead to higher deficits and
higher interest rates – possible hard landing in 2018?
• Major trade disruption possible – NAFTA, China, also
“Destination-based cash flow corporate tax with border
adjustments”.
• Infrastructure package – Federal funding will require
Tea Party support (unlikely), so more likely tax credit
and private funding = lots more toll roads.
• Lots of instability and uncertainty

26. 2626
MACRO TRENDS TO WATCH
 Recession not likely in 2017 but then increasingly likely thereafter
 OTR truck tightening if no recession and no regulatory delay
 Advances in fracking costs and speed will put an effective cap on oil
prices….no matter what OPEC says (barring a war)
 The days of trade growing faster than GDP are over
 Shipment size decreasing, LOH decreasing, speed & reliability
requirements tightening
 Autonomous trucks will become a factor sooner than current
conventional wisdom expects
 Volume challenge to conventional rail carload will mandate
unconventional response – so far not in evidence

27. INTERMODAL BRIEFING
Journal of Commerce
Trans Pacific Maritime
Conference
February 2017
Partner
FTR
516-455-8988
lgross@ftrintel.com
Larry Gross: President
Gross Transportation Consulting
516-455-8988
ljgross@optonline.net
For Slides: www.ftrintel.com/TPM@Intermodalist
Thanks!