EFTA01371102

31 October 2017 Railroads Canadian Rails the course of a trip. In general, cargo includes almost everything under the sun, from electronics to food to furniture. In both the U.S. and Canada, retail sales is generally the best gauge for prospective movements in intermodal volumes. Figure 41: YoY change in U.S. Intermodal volumes and U.S. retail sales 15% 30% 10% a. 20% 5% 10% 0% 0% (5%) (10%) (10%) (20%) Correlation: 83% (15%) (30%) in 8 2 CO 2 9 71 N M 'e in '4 wow U.S. Intermodal Volumes —U.S. Retail Sales San. paean. Bank MR. feaSie I Figure 42: YoY change in Canadian Into/modal volumes (RHS) and CA retail sales (LHS) 10% 30% Correlation: 88% (10%) (30%) IA LO r. co cn 0 et N M to . ... mum CA Intermodal Volumes —CA Retail Sales Semi CAtasS AAA feetSAt Since 2000, U.S. and Canadian Intermodal volumes have increased at a 2.4% and 3.4% CAGR, respectively (vs. 2016) with growth averaging roughly 5% from 2011-2014 as railroad customers made significant investments in capacity and improved service. Volumes were also positively impacted in 2013-2014 in part by tighter trucking capacity (which drives spill-over effect to rails) and higher fuel costs given rail's significant fuel efficiency advantage. Intermodal volumes came under pressure in late-2015 due to the collapse in fuel prices, looser truck capacity, and a stronger USD. To that point, NA intermodal volumes declined 1.5% yoy in 2016. Year-to-date, however, intermodal volume growth has returned (up 5% yoy through 30) due to a modestly tighter truckload market and a weaker USD (reviving international trade). [ Figure 43: Avg. weekly U.S. Intermodal volumes and YoY changes (2000-'17 30) . . . . - . . . - . . . . - . . . - . . . . - . . . . - . . . . - . . . . - . . . - . . . . - . . . - . . . - . . . - . . . . 300,000 250,000 200,000 150,000 100,000 50,000 0 8 '4 O . 0 r4; 0 IN CM tA to C 3 C 3 m fit —, re Intermodal Volumes —YoY a 30% 20% 10% 0% (10%) (20%) (30%) / _.._..._..._.._._._._._._._.._.._._ Figure 44: Avg. weekly CA Intermodal volumes and Yee changes (2000-'17 30) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 m 0 IN M to to O 0 3 3 re Q Al ‘.0 0 9 o 9 o e e e —, Intermodal Volumes --YoY Sarre Deiasche Bank MR J Sago. Ouse. Sink AM Page 24 30% 20% 10% 0% (10%) (20%) (30%) Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0064294 CONFIDENTIAL SDNY_GM_00210478 EFTA01371102