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Union Pacific (UNP), Norfolk Southern (NSC), CSX (CSX) and Kansas City Southern (KSU) Are Buy Rated By Citi Investment Analyst; Read The Exclusive Interview With Senior Transportation Analyst

67 WALL STREET, New York - December 20, 2011 - The Wall Street Transcript has just published its Transportation and Logistics Report offering a timely review of the sector to serious investors and industry executives. This Transportation and Logistics report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: FMCSA CSA Regulations - Capacity Constraints Result in Pricing Power - Truckload, LTL, Parcel, Rail and Intermodal - Retail and Industrial Transportation Demand

Companies include: C.H. Robinson (CHRW); CP Rail (CP); CSX (CSX); Expeditors (EXPD); Hub Group (HUBG); J.B. Hunt (JBHT); Kansas City Southern (KSU); Kirby Corporation (KEX); Knight Transportation (KNX); Old Dominion Freight Line (ODFL); Pacer (PACR); Roadrunner (RRTS); StealthGas (GASS); Swift (SWFT); Union Pacific (UNP); Werner Enterprises (WERN) and many more.

In the following brief excerpt from the Transportation and Logistics report, analysts discuss the outlook for the sector and for investors.

Christian Wetherbee is a Senior Analyst in the industrials group at Citi Investment Research & Analysis covering airfreight, surface and marine transportation. He has more than 12 years of Wall Street experience, including six years covering the transportation sector. Before joining Citi in 2010, Mr. Wetherbee was the Senior Transportation Analyst at FBR Capital Markets & Co., which he joined after 10 years at Merrill Lynch holding numerous positions, including the past five as a Publishing Analyst on the Bank of America/Merrill Lynch equity research team. Mr. Wetherbee received his B.A. from the University of Maryland and completed his MBA in finance and accounting with honors at the Fordham University Graduate School of Business.

TWST: Who are your favorite names in your coverage right now and why?

Mr. Wetherbee: Within the coverage universe in general, I think we probably are still most positive on the railroads than on the other areas. Like I said, U.S. GDP is going to be positive. Industrial production will be good. They have some secular benefits. They are taking business off of the road and on to the rail because fuel prices are high and the rails are more fuel efficient, their service continues to get better, pricing is very solid, so everything is working well for them right now. I think the fundamentals of the railroad industry are very, very solid, so we like that group.

The stocks are trading below their historical average but I think the group is in the neighborhood of about 12.5 times, and it's been moving nicely and has had another nice strong day to the upside today. So we're trading still about a turn below their historical averages on earnings multiples next year, and so we feel like that's probably one of the more interesting and attractive places to put capital these days. We have "buys" on Union Pacific (UNP), Norfolk Southern (NSC), CSX (CSX) and Kansas City Southern (KSU). Those are the four names in the space that we have "buys" on out of the seven that we cover.

Outside of that, we actually like package, which we haven't talked at all about. We like the names like FedEx (FDX) and UPS (UPS). We have "buys" on both of those names. We think that they've had more headwinds because of the weakness in international freight flows, but they have a strong pricing dynamic in that business. FedEx, in particular, is fairly cheap, and we think that volumes are going to be OK enough to continue to drive some modest margin expansion in the business. There are a lot of things going on, specifically at FedEx, that we like and we think in general, earnings should continue to grow at a decent pace - I should say, relative to the valuation of the stock.

TWST: As you said, we haven't addressed packaging yet. In general, what is your outlook on that subsector?

Mr. Wetherbee: We like packaging. FedEx is a name that we've talked quite a bit about. We have a "buy" on UPS too. They're the same basic business, although they are slightly different ways to think about the business.

Let me give you a quick summary on packages. You have the ground business here in the U.S., which is when you order something online or you have business-to-business shipments, boxes, small package effectively moving, and UPS moves it and FedEx moves it. That is a pretty good business right now. It's a very rational business because a few years ago, DHL, which used to provide that service here in the U.S., pulled out of the market. So the domestic business got one less competitor. You really have FedEx and UPS and the postal service as competitors in the space now, and we all know the postal service is struggling. Their service has certainly deteriorated to some extent and are likely to have to pull back some of their service offerings, whether it be Saturday delivery or other potential aspects, because effectively they are insolvent - or would be if they had to make all of their mandated retirement payments. So it's a good competitive dynamic and pricing for UPS and Fedex is positive.

Volumes for the industry typically are near somewhere between GDP and industrial production in the business, so they've been positive. Globally, it's an interesting business because the package guys are really a good link for world trade. They are a good way to ship certain types of things. If you look historically over the last 20 years, world trade is roughly running at about double world GDP. And world trade is continuing to expand. Asia obviously is the manufacturing center for the world right now, and that continues to be the case in linking up those regions, so this is something that UPS and FedEx do relatively well. They're a little bit more sensitive to macro concerns, particularly the overall macro, because I think they're seen, and maybe rightfully so, as bellwethers for the overall global economy. Their volumes are going to ebb and flow with the overall economy, but pricing has been very solid, and I think that they've done some things on the cost side which have been pretty beneficial too. I think that's the way to think about the business of package and airfreight in general.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This Transportation and Logistics report is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

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