EQU

ITY

RESE

ARC

H RBC Dominion Securities Inc.Walter Spracklin, CFA (Analyst)(416) 842-7877walter.spracklin@rbccm.com

Erin Lytollis, CFA (Associate)(416) 842-7862erin.lytollis@rbccm.com

July 8, 2014

RBC CompassPotential inflection point emerging in Canadian trucking sectorIncreasing estimates for the Canadian trucking sector. We are raising our estimates for the Canadiantrucking companies in our coverage space on evidence we have uncovered that points to improvingindustry fundamentals, strengthening our earnings expectations for 2015 and beyond. Our optimisticoutlook reflects positive indications provided in recent discussions with senior executives of privatetrucking companies regarding the three pillars of profitability for this industry: volume, capacity, andprice. Put simply, we believe the industry is approaching an inflection point where demand (via highervolumes) is beginning to overtake supply (through tighter capacity), affording carriers greater pricingpower (in the form of higher freight rates) that should translate into improved financial results goingforward.

Recommend investors overweight trucks in advance of inflection point. With industry fundamentalsimproving, we expect the market to reward trucking shares with higher multiples as investors gainconfidence in the sector’s longer-term earnings potential. As a result, we have increased our valuationmultiples on the trucking companies and we recommend that investors shift funds into the truckingspace in advance of this inflection point. The higher valuation multiples combined with our positiveestimate revisions drive up our price targets for the group:

• CSS – Outperform: Target to $17 (from $15); multiple to 7.0x (from 6.5x). Raised 2015E EBITDA to$89MM (from $86MM) by increasing our transportation revenue growth assumption to +7%Y/Y (from+5%Y/Y). Maintaining Outperform on the +20% implied return to new target.

• TFI – Outperform: Target to $29 (from $27); multiple to 7.6x (from 7.5x). Increased 2015E EBITDAto $511MM (from $447MM) to account for improved sector fundamentals and the anticipatedcontribution of recent acquisitions. Our Outperform rating reflects the strong implied return to ournew target (+20%).

• TMA – Outperform: Target to $8 (from $7); multiple to 5.5x (from 5.0x). Lifted 2015E EBITDAto $60MM (from $58MM) by raising our revenue growth assumption to +5%Y/Y (from +3%Y/Y).Reiterating Outperform rating based on the +28% all-in implied return to our new target.

TFI and CSS are best-positioned to profit from improving sector fundamentals, in our view. As thelargest carrier in Canada, TFI, we believe, is well positioned to benefit from strengthening volume,capacity, and price trends in the truck industry. Moreover, we see significant earnings upside from theintegration of recent acquisitions (particularly in P&C and LTL) and our earnings outlook for TFI is notablyabove consensus. We also believe that CSS has an edge as industry conditions improve in the near futurebecause the truckload market typically leads a recovery in the overall trucking sector. Furthermore, weconsider CSS to be best-in-class from an execution perspective and we expect the company to capitalizeon operating efficiencies afforded by higher volumes. As a result, we see strong upside to our revenueand margin assumptions for CSS going forward.

Priced as of prior trading day's market close, EST (unless otherwise noted).All values in CAD unless otherwise noted.

For Required Non-U.S. Analyst and Conflicts Disclosures, see page 10.

Private carrier survey points to inflection point in Canadian trucking sector Increasing estimates for the Canadian trucking sector. We are raising our estimates for the Canadian trucking companies in our coverage space as we believe improving industry fundamentals have strengthened carriers’ earnings potential in 2015 and beyond (Exhibit 1). Our optimistic outlook reflects positive indications provided in recent discussions with senior executives of private trucking companies regarding the three pillars of profitability for this industry: volume, capacity, and price. Put simply, we believe the industry is approaching an inflection point where demand (higher volumes) is beginning to overtake supply (tighter capacity) affording carriers with greater pricing power (higher freight rates) that should translate into improved financial results going forward.

Stronger sector fundamentals support higher multiples. With industry fundamentals improving, we expect the market to reward trucking shares with higher multiples as investors gain confidence in the sector’s longer-term earnings potential. As a result, we have increased our valuation multiples on the trucking companies in our coverage space, which, combined with our positive estimate revisions, drive up our price targets for the group (Exhibit 1).

In this report, we review the implications of key themes from recent channel check discussions on our trucking investment thesis. Our analysis focuses on trends related to: 1) volume demand; 2) industry capacity; and 3) the pricing environment. We also illustrate how the labour market is both a risk and an opportunity for the trucking industry going forward. Lastly, we outline how developing trends relate to our investment thesis and earnings outlook for each trucking company in our coverage space.

Exhibit 1: Increasing price targets and 2015 estimates across the Canadian trucking sector

2015E EBITDA ($MM) Target Mulitple Price Target Share Price Dividend Implied Total

Prior Current Prior Current Prior Current (07/08/14) (2014E) Return RatingCSS $86 $89 6.5x 7.0x $15.00 $17.00 $14.72 $0.60 20% OutperformTFI $447 $511 7.5x 7.6x $27.00 $29.00 $24.59 $0.59 20% OutperformTMA $58 $60 5.0x 5.5x $7.00 $8.00 $6.48 $0.29 28% Outperform

Source: RBC Capital Markets estimates, Thomson ONE; Priced as of market close on July 7, 2014

RBC Compass

July 8, 2014 2

Volume: Freight demand is on the rise Mixed views (with a positive bias) on current demand environment. In our conversations with private trucking companies, all executives characterized the current volume environment as “stable” or “strong”. Private carriers’ assessment of freight activity today is noteworthy because it contrasts with public carriers’ more neutral to pessimistic perspective on the current volume environment. According to the publicly traded carriers, the sluggish economy continues to depress overall freight demand across the country. In our view, this discrepancy may partly reflect a level of conservatism that is characteristic of public company commentary in this uncertain economy as we believe executives are reluctant to share positive observations on volume demand for fear of inflating market expectations. Moreover, we see the positive commentary from the private carriers as a precursor to what we believe will be a formal shift in guidance by public company executives, possibly as early as this quarter.

Consensus calls for +1–2% volume growth over next 12 months. The most important takeaway from our discussions on volume with private carriers is that demand forecasts for the next 12 months are unanimously positive. While these executives are projecting only a +1–2% pick-up in freight activity, this level of organic growth compares favourably to the “flat” volume environment forecasted by most truck companies in our coverage space. Accordingly, our channel check findings reinforce the view that public company guidance is conservative and suggest that there is upside to the volume outlook of each truck company in our coverage space. We refer investors to our report on RBC’s 2014 Canadian Trucking Investor Day for a summary of each covered company’s guidance for 2014.

Spot volume data supports positive outlook. Industry statistics support our view that trucking demand across Canada is improving as spot volumes—an important leading indicator for contract carriers—are up between +30% and 60%Y/Y in the first five months of the year, according to TransCore Link Logistics’ Canadian Freight Index. While the recent surge in Canadian exports to the U.S. may be partly fueled by CAD depreciation, domestic spot traffic is up more than +30%Y/Y through May, which indicates that overall freight demand is on the rise (Exhibit 2). With the spot market taking off, we expect shippers to start entering contracts to secure available truck capacity, which should fuel volume growth for the carriers in our coverage space going forward.

Exhibit 2: Volume gains in 2014 are led by a surge in Canadian exports to the U.S.

Canadian Spot Freight Traffic Growth

(40%)

(20%)

-

20%

40%

60%

2013 2014

Y/Y Change M/M Change

Canadian Spot Freight Traffic Growth by Geography

-

20%

40%

60%

80%

100%

Jan-14 Feb-14 Mar-14 Apr-14 May-14

Y/Y

Ch

ange

Canada - U.S. U.S. - Canada Intra-Canada

Spot volumes are up

more than +30%Y/Y

year-to-date

Source: TransCore Link Logistics

RBC Compass

July 8, 2014 3

Capacity: Demand is set to exceed supply Supply-demand is largely balanced today. Private carriers agree that there is adequate (or even excess) capacity in most trucking markets across Canada today. This view aligns with commentary from public trucking companies as most executives point to industry overcapacity as the main restraint on price and volume growth in recent years. The only exceptions to weak top-line trends caused by surplus trucking supply have occurred in geographies and sectors that are fueled by external variables, namely weather, commodity prices, and currency fluctuations. For example, TMA did not have enough labour and equipment to meet a surge in U.S. chemicals demand triggered by extreme cold temperatures and a weakening Canadian dollar in Q1/14. We believe these pockets of tight truck capacity are offset by surplus supply in other markets across Canada, resulting in balanced supply-demand conditions overall.

Trend is toward tighter capacity. The critical insight that we gained from our conversations with private carriers on capacity is that recent trends and near-term expectations point to a tightening environment. While some trucking executives believe that the market is balanced today or expect supply-demand to be stable going forward, none of our channel checks called for looser capacity in the near term. This finding is important because it heightens our confidence in the view that the trucking industry’s earnings potential is improving after several years of significant margin pressure due to price competition caused by surplus capacity.

Spot market data points to a tightening capacity environment. Spot market capacity has meaningfully contracted this year as TransCore Link Logistics’ Equipment to Loads ratio has fallen from more than 2.0x throughout most of 2013 to below 1.5x in the first five months of 2014 (Exhibit 3). We partly attribute tighter supply-demand to the harsh weather conditions that impeded freight operations in the first quarter. However, we believe strengthening demand is the main driver of tightening truck capacity this year as spot volumes are up more than +30%Y/Y through May. Accordingly, we expect a diminishing surplus of ground transportation services to motivate shippers to secure truck capacity in contracts, which should enable the carriers in our coverage space to fill available fleet capacity and realize greater economies of scale.

Exhibit 3: Industry capacity has tightened materially in 2014

Canadian Spot Trucking Market

Equipment Posting (M/M Change)

(20%)

(10%)

-

10%

20%

Jan-13 May-13 Sep-13 Jan-14 May-14

Canadian Spot Trucking Market

Equipment:Loads Ratio

0.00

0.75

1.50

2.25

3.00

Jan-13 May-13 Sep-13 Jan-14 May-14

Equipment : Loads ratio

has held below 1.5x

throughout 2014

Source: TransCore Link Logistics; data current as of May 2014

RBC Compass

July 8, 2014 4

Price: Rate increases are on the horizon Mixed opinions (with a negative bias) on the current pricing environment. In our channel check discussions, private carriers did not provide a uniform view on pricing conditions in the Canadian trucking industry today; however, all executives characterized the current environment as either “stable” or “weak”. The negative bias in our conversations on current freight rates aligns with recent commentary from most companies in our coverage space that cite overcapacity as the main cause of weak pricing conditions across traditional trucking markets today. In our view, lackluster demand coupled with excess trucking supply throughout the recession forced many small trucking operations to compete for business on the basis of price in order to avoid bankruptcy.

Private carriers see positive price trends developing. Based on our channel checks, the private trucking sector expects the pricing environment to improve in the near term as executives are forecasting rate increases of either +1–2% or +3–4% over the next 12 months. These findings compare favourably to the results of our 2014 Shipper Survey published in November 2013, as almost half (48%) of respondents projected flat truck rates in 2014 while another large group (37%) called for rates to rise +1–3% and only 11% anticipated price increases above +4%. We attribute the positive shift in carriers’ freight rate expectations to improving industry fundamentals, namely strengthening volume demand and tightening truck capacity.

Spot market data points to a recovering rate environment. According to Nulogx, spot base rates in Canada’s LTL and TL markets have tracked above prior-year levels (on a 4-month moving average basis) since November 2013, with the strongest year-over-year gain posted in April 2014 at +3.4%Y/Y (Exhibit 4). Furthermore, Nulogx’s base rate index moved steadily higher from August 2013 to March 2014, tempering only -0.3%M/M in April as marginal growth in cross-border TL rates was offset by lower prices for cross-border LTL and domestic truck services (Exhibit 4). We see a direct correlation between continued strength in cross-border TL rates and the recent surge in Canadian exports to the U.S., which reinforces our thesis that tightening truck capacity will drive up freight rates. In this context, we believe that contract carriers will be able to implement rate increases across their customer portfolio in upcoming negotiations, as our channel checks suggest that supply-demand fundamentals will continue to shift in truck companies’ favour.

Exhibit 4: Spot rates reached a recent high in March following eight consecutive months of positive sequential growth

Base Rate Index (4-month moving average)

1,000

1,020

1,040

1,060

1,080

1,100

2013 2014

Change in Base Rate Index

(3%)

(2%)

(1%)

+0%

+1%

+2%

+3%

+4%

2013 2014Y/Y Change M/M Change

Freight rates are up on a Y/Y and

M/M basis through most of 2014

Source: Nulogx; data is current through April 2014

RBC Compass

July 8, 2014 5

Driver shortage: A constraint for some, a windfall for others Market for skilled truck drivers is tight. Carriers agree that there is a shortage of skilled drivers in the trucking industry today. “Skilled” is an important qualifier, as many executives note that labour constraints are acute in markets where drivers need extra qualifications to operate specialized equipment (e.g., oilfield services). Outside of these unique markets, carriers believe that the sluggish economy has masked the urgency of the driver shortage in recent years; however, an uptick in freight activity is expected to reveal widespread capacity constraints. This commentary reaffirms our view that driver availability is a critical issue in the trucking industry today, and we believe that volume demand is reaching an inflection point that will bring this issue to the forefront.

Higher wages needed to attract young talent to trucking industry. The trucking sector faces labour constraints on two fronts: 1) a mass exodus of drivers due to attrition; and 2) a short supply of new entrants. Private carriers agree that inadequate pay is the main deterrent to pursuing a driving career today as younger generations believe that current rates do not compensate for the skills and demands of this profession (e.g., extended time away from home). In this highly fragmented industry, we believe that most small carriers were not able to increase driver compensation throughout the recession as rate concessions and anemic demand weighed on margins and weakened balance sheets. With the economic recovery unfolding at a sluggish pace, we do not believe that freight activity has picked up enough to repair the finances of smaller players in the trucking industry. Accordingly, we see very few trucking companies in Canada with the resources to raise driver pay today. In the short term, this environment bodes well for the companies in our coverage space, as all have healthy balance sheets and can increase wages to recruit existing drivers. That said, we believe we need to see a sector-wide increase in driver compensation before the rate of new entrants to the truck industry catches up with attrition and volume growth. We are optimistic that the compensation issue will remedy itself over time as supply constraints materialize that enable all carriers to meaningfully increase freight rates and in turn driver wages.

Driver supply is key to survival and long-term success. While the developing driver shortage is a headwind for the entire trucking industry in the long run, it may be a short-term windfall for carriers that have a full roster and are able to capitalize on competitors’ capacity constraints. In our view, truck companies with a fully seated fleet can profit in three ways from tightening labour supply and strengthening freight demand in the near future:

1. Higher volumes (by meeting demand for transportation services that competitors cannot satisfy)

2. Improved yields (by charging higher rates to reflect tight supply-demand conditions) 3. Greater efficiency (from increased density on lanes due to higher volume demand)

With higher profits, these fully-staffed carriers can afford to increase driver pay and recruit additional drivers away from their competitors. To this end, our channel check discussions revealed that many private carriers plan to increase driver wages within the coming year and we believe that the trucking companies in our coverage space can also afford to keep their fleets fully seated going forward. As a result, we are not concerned about recruitment and retention for these carriers; however, we see driver supply as an issue for the smaller players in the industry.

RBC Compass

July 8, 2014 6

Increasing estimates to reflect positive fundamental trends We have increased our long-term forecasts for the trucking companies in our coverage space to reflect the industry’s strengthening earnings potential based on favourable price, volume, and capacity trends. We have also lifted our valuation multiples as we expect the sector to benefit from a positive multiple re-rating as investors gain confidence in the truck industry’s long-term earnings potential. We summarize our new estimates and price targets below:

CSS: Raising price target to $17 (from $15); reiterating Outperform. As a leading provider of truckload services to niche markets, CSS, we believe, is well positioned to benefit from strengthening price, volume, and capacity trends in Canada’s trucking industry as the truckload market typically leads the recovery in the overall sector. As a result, we have lifted our 2015 transportation revenue growth assumption to +7%Y/Y (from +5%Y/Y), which brings our EBITDA forecast to $89MM (from $86MM). We have also raised our valuation multiple to 7.0x (from 6.5x) 2015E EV/EBITDA as we expect the shares to be rewarded with a higher multiple as investor confidence in the trucking sector improves. The combined impact of the positive estimate and valuation multiple revisions brings our price target to $17 (from $15). With a +20% implied return to our new target, we reiterate our Outperform rating on CSS shares.

TFI: Raising price target to $29 (from $27); reiterating Outperform. As the largest carrier in Canada, TFI, in our view, has the most to gain of all companies in our coverage space from strengthening volume, capacity, and price trends in the truck industry. We have updated our assumptions to reflect improved longer-term prospects in traditional trucking markets and the anticipated contribution of recent acquisitions (Transport America and Veolia Solid Waste Canada), and we are increasing our EBITDA forecasts to $408MM (from $382MM) for 2014 and to $511MM (from $447MM) for 2015. We have also lifted our LTL and TL multiples within our sum-of-the-parts valuation to 7.0x (from 6.5x) 2015E EV/EBITDA on the expectation for the sector to experience a positive re-valuation; however, our consolidated target multiple is largely unchanged at 7.6x due to mix. Despite the significant upward revision to our estimates, our price target only increases to $29 (from $27) on account of the debt TFI has assumed in connection with the recent transactions. TFI remains our preferred name in the Canadian trucking sector as we see material earnings upside from the integration of recent acquisitions and the company is also poised to benefit from operating leverage as the economy rebounds. With a +20% implied return to our new target, we reiterate our Outperforming rating on TFI shares. Furthermore, we see incremental upside in TFI shares in a sale-of-the-parts scenario and we refer investors to our company note (Sector trends and acquisitions reinforce thesis on TFI) also published today for details on potential valuation if TFI were to divest its individual operating divisions.

TMA: Raising price target to $8 (from $7); reiterating Outperform. We upgraded TMA shares to Outperform on March 11 based on the company’s strong prospects due to its advantageous commodity exposure and concentration of operations in Western Canada. Our favourable thesis on TMA is unchanged and our outlook is strengthened by positive trends in the broader trucking industry. As a result, we have lifted our 2015 revenue growth assumption to +5%Y/Y (from +3%Y/Y), which brings our EBITDA forecast to $60MM (from $58MM). We have also increased our valuation multiple to 5.5x (from 5.0x) 2015E EV/EBITDA, as we expect improving fundamentals to drive sector multiples higher; however, we continue to value TMA at a discount to the group due to the stock’s low liquidity. The positive revisions to our long-term estimates and valuation multiple lift our price target to $8 (from $7). We maintain our Outperform rating on TMA based on the +28% implied return to our new target.

RBC Compass

July 8, 2014 7

Appendix 1: Truck comparables

RBCCM Research Estimates Shares Mkt Net

Sym. Invest 12-Mo Implied Price O/S Cap Debt EV Current EBITDA EV/EBITDA EPS P/E

Rating3 Target Return ($/sh) (MM) ($MM) ($MM) ($MM) Yield '13 '14E '15E '13 '14E '15E '13 '14E '15E '13 '14E '15E

Trucking (Canadian)

Contrans Group Inc. CSS O 17.00 20% 14.72 34 500 55 555 4.1% 79 82 89 7.0x 6.8x 6.2x 0.87 1.01 1.17 16.9x 14.6x 12.5x

TransForce Inc. TFI O 29.00 20% 24.59 96 2,361 936 3,297 2.4% 336 408 511 9.8x 8.1x 6.5x 1.29 1.71 2.27 19.0x 14.4x 10.8x

Trimac Transportation Ltd. TMA O 8.00 28% 6.48 28 183 107 289 4.3% 49 54 60 5.9x 5.4x 4.8x 0.48 0.62 0.70 13.6x 10.4x 9.3x

Airfreight and Logistics (Canadian)

Cargojet Inc. CJT TP 25.00 22% 21.12 8 169 53 222 4.1% 16 19 39 13.9x 11.5x 5.7x 0.42 0.28 1.99 50.7x 75.2x 10.6x

Comparable Companies 1,2

Diversified Trucking YIELD

Conway CNW-US n.r. n.r. 50.79 57 2,898 352 3,250 0.8% 444 508 584 7.3x 6.4x 5.6x 1.65 2.18 2.86 30.8x 23.3x 17.8x

JB Hunt JBHT-US n.r. n.r. 74.24 117 8,705 728 9,433 1.1% 835 918 1,063 11.3x 10.3x 8.9x 2.89 3.16 3.82 25.7x 23.5x 19.4x

Saia SAIA-US n.r. n.r. 45.00 25 1,110 79 1,189 0.0% 126 157 182 9.4x 7.6x 6.5x 1.70 2.21 2.75 26.5x 20.3x 16.4x

Werner WERN-US n.r. n.r. 26.39 72 1,910 (16) 1,894 0.8% 309 332 368 6.1x 5.7x 5.1x 1.17 1.28 1.54 22.6x 20.6x 17.2x

Yellow Roadway YRCW-US n.r. n.r. 28.80 31 881 1,064 1,946 0.0% 224 265 352 8.7x 7.3x 5.5x (11.26) (2.89) 0.80 nm nm 36.1xAverage (Diversified) 3,101 0.5% 8.6x 7.5x 6.3x 26.4x 21.9x 21.4x

Less-Than-Truckload (LTL)

Old Dominion Freight Line ODFL-US n.r. n.r. 63.41 86 5,464 139 5,603 0.0% 472 557 637 11.9x 10.1x 8.8x 2.43 2.85 3.32 26.1x 22.3x 19.1x

Truckload (TL)

Celadon CGI-US n.r. n.r. 21.26 23 499 298 797 0.4% 104 116 129 7.7x 6.9x 6.2x 1.11 1.18 1.52 19.1x 18.0x 14.0x

Covenant CVTI-US n.r. n.r. 13.19 15 22 216 238 0.0% 62 75 82 3.9x 3.2x 2.9x 0.33 0.53 0.83 39.7x 24.9x 16.0x

Heartland HTLD-US n.r. n.r. 21.55 88 1,890 45 1,935 0.4% 182 235 268 10.6x 8.2x 7.2x 0.85 0.93 1.14 25.4x 23.1x 18.9x

Universal Trucking Srvcs UACL-US n.r. n.r. 25.22 30 759 220 980 1.1% 105 115 133 9.3x 8.5x 7.3x 1.70 1.61 1.99 14.8x 15.7x 12.7x

Average (TL) 494 0.5% 7.9x 6.7x 5.9x 24.7x 20.4x 15.4x

Bulk/ Specialized

Knight Transportation KNX-US n.r. n.r. 24.05 81 1,942 3 1,946 1.0% 200 229 253 9.7x 8.5x 7.7x 0.85 1.04 1.18 28.2x 23.1x 20.5x

Marten Transport MRTN-US n.r. n.r. 22.28 33 743 (19) 724 0.4% 118 127 146 6.1x 5.7x 5.0x 0.93 1.05 1.31 23.9x 21.2x 17.0x

Quality Distribution, Inc QLTY-US n.r. n.r. 15.27 27 418 381 799 0.0% 84 86 99 9.5x 9.3x 8.0x 0.70 0.77 1.10 22.0x 19.8x 13.9x

Average (Bulk/Specialized) 1,035 0.5% 8.4x 7.8x 6.9x 24.7x 21.4x nm

Airfreight & Logistics

FedEx Corporation FDX-US n.r. n.r. 151.68 318 48,234 1,829 50,063 0.5% 5,773 6,513 7,514 8.7x 7.7x 6.7x 6.49 7.86 9.82 23.4x 19.3x 15.4x

United Parcel Services Inc. UPS-US n.r. n.r. 103.24 919 94,878 5,062 99,940 2.6% 8,985 9,588 10,506 11.1x 10.4x 9.5x 4.57 5.08 5.85 22.6x 20.3x 17.6x

Atlas Air Worldwide Holdings AAWW-US n.r. n.r. 36.61 25 921 1,830 2,751 0.0% 285 311 313 9.7x 8.8x 8.8x 3.55 3.23 3.46 10.3x 11.3x 10.6x

Average (Airfreight & Logistics) 48,011 1.0% 9.8x 9.0x 8.3x 18.8x 17.0x 14.6x

1 Thomson ONE 3 Investment ratings: Top Pick (TP), Outperform (O), Sector Perform (SP), Underperform (U)

2 USD

Source: Company reports, RBC Capital Markets estimates, Thomson ONE Analytics, Thomson ONE; Priced as of market close on July 7, 2014

RBC Compass

July 8, 2014 8

Appendix 2: Justifications & impediments

Company (Symbol) Valuation Target Price Impediments

Cargojet

(TSX: CJT)

We value the CJT shares on an EV/EBITDA basis by applying a 7.0x target multiple to our 2016E

EBITDA (reflective of the full annual impact of the Purolator contract). This gives us a valuation of $27

per share, which we then discount back to 2015 utilizing a WACC of 8%, providing us with a target

price target at $25. We rate CJT shares Top Pick.

Impediments include: an unexpected decline in overall economic activity; loss of key contracts;

negative regulatory rulings; customer push-back as a result of fuel surcharges; and dependence on key

personnel.

Contrans Group

(TSX: CSS)

Our price target is based on an EV/EBITDA multiple of 7.0x our 2015 estimates. Our 7.0x target

multiple is slightly above the historical trading range, but in-line with the peer group average. We rate

CSS shares Outperform.

Impediments include freight competition increases, changes to transportation regulations, failure of

its acquisition strategy to achieve anticipated results, further rises in costs that cannot be passed on to

customers and the renegotiation of labour agreements. Further risks to CSS include key person risk

relating to the CEO position.

TransForce Inc.

(TSX: TFI)

Our fundamental price target is derived using a sum-of-the-parts valuation approach that yields a

consolidated EV/EBITDA multiple of 7.6x by applying the following multiples to our 2015 forecasts:

Less-than-truckload (7.0x); Truckload (7.0x); Package & Courier (8.0x); Energy (6.0x); and Waste (9.0x).

Our target multiples are based on comparables within TFI's North American peer group.

We also consider TFI's individual operating segments as strong candidates for divestiture or to be spun-

out as stand-alone entities due to the high quality nature of these assets and the considerable scale

that TFI has amassed in each division. In a sale-of-the-parts scenario, we value TFI shares at $37 based

on a consolidated EV/EBITDA multiple of 9.1x applied to our 2015 estimates. Our sale-of-the-parts

valuation incorporates the following multiples for each segment: Less-than-truckload (8.0x); Truckload

(8.0x); Package & Courier (10.0x); Energy (6.5x); and Waste (11.0x). These multiples are based on

recent transactions within the North American transportation industry.

Impediments include freight competition increases, changes to transportation regulations, failure of

its acquisition strategy to achieve anticipated results, further rises in costs that cannot be passed on to

customers, and the renegotiation of labour agreements.

Trimac Transportation

(TMA)

Our price target is based on an EV/EBITDA multiple of 5.5x our 2015 estimates. Our target multiple of

5.5x represents a discount to TMA's peer group on the basis of low liquidity. We rate TMA shares

Outperform.

Impediments include shifts in demand for bulk trucking services, freight competition increases,

changes to transportation regulations, failure to integrate acquisitions, further rises in costs that

cannot be passed on to customers and the renegotiation of labour agreements.

Source: RBC Capital Markets

RBC Compass

July 8, 2014 9

Required disclosuresNon-U.S. analyst disclosureWalter Spracklin and Erin Lytollis (i) are not registered/qualified as research analysts with the NYSE and/or FINRA and (ii) maynot be associated persons of the RBC Capital Markets, LLC and therefore may not be subject to FINRA Rule 2711 and NYSE Rule472 restrictions on communications with a subject company, public appearances and trading securities held by a research analystaccount.

Conflicts disclosuresThe analyst(s) responsible for preparing this research report received compensation that is based upon various factors, includingtotal revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generatedby investment banking activities of the member companies of RBC Capital Markets and its affiliates.

Please note that current conflicts disclosures may differ from those as of the publication date on, and as set forth in,this report. To access current conflicts disclosures, clients should refer to https://www.rbccm.com/GLDisclosure/PublicWeb/DisclosureLookup.aspx?entityId=1 or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza,29th Floor, South Tower, Toronto, Ontario M5J 2W7.

A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities forCargojet Inc. in the past 12 months.

A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services fromCargojet Inc. in the past 12 months.

A member company of RBC Capital Markets or one of its affiliates expects to receive or intends to seek compensation forinvestment banking services from Cargojet Inc. in the next three months.

RBC Dominion Securities Inc. makes a market in the securities of Cargojet Inc..

A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other thaninvestment banking services from Cargojet Inc. during the past 12 months. During this time, a member company of RBC CapitalMarkets or one of its affiliates provided non-securities services to Cargojet Inc..

RBC Capital Markets is currently providing Cargojet Inc. with investment banking services.

RBC Capital Markets is currently providing Cargojet Inc. with non-securities services.

RBC Capital Markets has provided Cargojet Inc. with investment banking services in the past 12 months.

RBC Capital Markets has provided Cargojet Inc. with non-securities services in the past 12 months.

The common shares of Cargojet Inc. are variable voting shares.

RBC Dominion Securities Inc. makes a market in the securities of Contrans Group Inc..

The common shares of Contrans Group Inc. are subordinate voting shares.

A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other thaninvestment banking services from Contrans Group Inc. during the past 12 months. During this time, a member company of RBCCapital Markets or one of its affiliates provided non-securities services to Contrans Group Inc..

RBC Capital Markets is currently providing Contrans Group Inc. with non-securities services.

RBC Capital Markets has provided Contrans Group Inc. with non-securities services in the past 12 months.

A member company of RBC Capital Markets or one of its affiliates expects to receive or intends to seek compensation forinvestment banking services from TransForce Inc. in the next three months.

A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other thaninvestment banking services from TransForce Inc. during the past 12 months. During this time, a member company of RBC CapitalMarkets or one of its affiliates provided non-securities services to TransForce Inc..

RBC Capital Markets is currently providing TransForce Inc. with investment banking services.

RBC Capital Markets is currently providing TransForce Inc. with non-securities services.

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RBC Capital Markets has provided TransForce Inc. with non-securities services in the past 12 months.

RBC Dominion Securities Inc. makes a market in the securities of Trimac Transportation Ltd..

The author is employed by RBC Dominion Securities Inc., a securities broker-dealer with principal offices located in Toronto,Canada.

Explanation of RBC Capital Markets Equity rating systemAn analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assignedto a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative tothe analyst's sector average. Although RBC Capital Markets' ratings of Top Pick (TP)/Outperform (O), Sector Perform (SP), andUnderperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same becauseour ratings are determined on a relative basis.RatingsTop Pick (TP): Represents analyst's best idea in the sector; expected to provide significant absolute total return over 12 monthswith a favorable risk-reward ratio.Outperform (O): Expected to materially outperform sector average over 12 months.Sector Perform (SP): Returns expected to be in line with sector average over 12 months.Underperform (U): Returns expected to be materially below sector average over 12 months.Risk RatingAs of March 31, 2013, RBC Capital Markets suspends its Average and Above Average risk ratings. The Speculative risk rating reflectsa security's lower level of financial or operating predictability, illiquid share trading volumes, high balance sheet leverage, or limitedoperating history that result in a higher expectation of financial and/or stock price volatility.

Distribution of ratingsFor the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories- Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick(TP)/Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively,the meanings are not the same because our ratings are determined on a relative basis (as described below).

Distribution of ratings

RBC Capital Markets, Equity Research

As of 30-Jun-2014

Investment Banking

Serv./Past 12 Mos.

Rating Count Percent Count Percent

BUY [Top Pick & Outperform] 845 53.24 299 35.38

HOLD [Sector Perform] 658 41.46 159 24.16

SELL [Underperform] 84 5.29 10 11.90

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References to a Recommended List in the recommendation history chart may include one or more recommended lists or modelportfolios maintained by RBC Wealth Management or one of its affiliates. RBC Wealth Management recommended lists includea former list called the Prime Opportunity List (RL 3), the Guided Portfolio: Prime Income (RL 6), the Guided Portfolio: Large Cap(RL 7), the Guided Portfolio: Dividend Growth (RL 8), the Guided Portfolio: Midcap 111 (RL 9), the Guided Portfolio: ADR (RL 10),and the Guided Portfolio: Global Equity (U.S.) (RL 11). RBC Capital Markets recommended lists include the Strategy Focus Listand the Fundamental Equity Weightings (FEW) portfolios. The abbreviation 'RL On' means the date a security was placed on aRecommended List. The abbreviation 'RL Off' means the date a security was removed from a Recommended List.

Equity valuation and risksFor valuation methods used to determine, and risks that may impede achievement of, price targets for covered companies, pleasesee the most recent company-specific research report at https://www.rbcinsight.com or send a request to RBC Capital MarketsResearch Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7.

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Conflicts policyRBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request.To access our current policy, clients should refer tohttps://www.rbccm.com/global/file-414164.pdfor send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, SouthTower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

Dissemination of research and short-term trade ideasRBC Capital Markets endeavours to make all reasonable efforts to provide research simultaneously to all eligible clients, havingregard to local time zones in overseas jurisdictions. Subject to any applicable regulatory considerations, "eligible clients" mayinclude RBC Capital Markets institutional clients globally, the retail divisions of RBC Dominion Securities Inc. and RBC CapitalMarkets LLC, and affiliates. RBC Capital Markets' equity research is posted to our proprietary websites to ensure eligible clientsreceive coverage initiations and changes in rating, targets and opinions in a timely manner. Additional distribution may be doneby the sales personnel via email, fax or regular mail. Clients may also receive our research via third party vendors. Please contactyour investment advisor or institutional salesperson for more information regarding RBC Capital Markets research. RBC CapitalMarkets also provides eligible clients with access to SPARC on its proprietary INSIGHT website. SPARC contains market color andcommentary, and may also contain Short-Term Trade Ideas regarding the securities of subject companies discussed in this orother research reports. SPARC may be accessed via the following hyperlink: https://www.rbcinsight.com. A Short-Term Trade Ideareflects the research analyst's directional view regarding the price of the security of a subject company in the coming days or weeks,based on market and trading events. A Short-Term Trade Idea may differ from the price targets and/or recommendations in ourpublished research reports reflecting the research analyst's views of the longer-term (one year) prospects of the subject company,as a result of the differing time horizons, methodologies and/or other factors. Thus, it is possible that the security of a subjectcompany that is considered a long-term 'Sector Perform' or even an 'Underperform' might be a short-term buying opportunityas a result of temporary selling pressure in the market; conversely, the security of a subject company that is rated a long-term'Outperform' could be considered susceptible to a short-term downward price correction. Short-Term Trade Ideas are not ratings,nor are they part of any ratings system, and RBC Capital Markets generally does not intend, nor undertakes any obligation, tomaintain or update Short-Term Trade Ideas. Short-Term Trade Ideas discussed in SPARC may not be suitable for all investors andhave not been tailored to individual investor circumstances and objectives, and investors should make their own independentdecisions regarding any Short-Term Trade Ideas discussed therein.

Analyst certificationAll of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all ofthe subject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly orindirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s Financial ServicesLLC (“S&P”) and is licensed for use by RBC. Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or impliedwarranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warrantiesof originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing,in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special,punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Disclaimer

RBC Capital Markets is the business name used by certain branches and subsidiaries of the Royal Bank of Canada, including RBC Dominion Securities Inc., RBCCapital Markets, LLC, RBC Europe Limited, RBC Capital Markets (Hong Kong) Limited, Royal Bank of Canada, Hong Kong Branch and Royal Bank of Canada, SydneyBranch. The information contained in this report has been compiled by RBC Capital Markets from sources believed to be reliable, but no representation or warranty,express or implied, is made by Royal Bank of Canada, RBC Capital Markets, its affiliates or any other person as to its accuracy, completeness or correctness. Allopinions and estimates contained in this report constitute RBC Capital Markets' judgement as of the date of this report, are subject to change without notice andare provided in good faith but without legal responsibility. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investmentadvice. This material is prepared for general circulation to clients and has been prepared without regard to the individual financial circumstances and objectives ofpersons who receive it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independentinvestment advisor if you are in doubt about the suitability of such investments or services. This report is not an offer to sell or a solicitation of an offer to buyany securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. RBC CapitalMarkets research analyst compensation is based in part on the overall profitability of RBC Capital Markets, which includes profits attributable to investment bankingrevenues. Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating the types of securities and otherinvestment products which may be offered to their residents, as well as the process for doing so. As a result, the securities discussed in this report may not be

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eligible for sale in some jurisdictions. RBC Capital Markets may be restricted from publishing research reports, from time to time, due to regulatory restrictions and/or internal compliance policies. If this is the case, the latest published research reports available to clients may not reflect recent material changes in the applicableindustry and/or applicable subject companies. RBC Capital Markets research reports are current only as of the date set forth on the research reports. This report isnot, and under no circumstances should be construed as, a solicitation to act as securities broker or dealer in any jurisdiction by any person or company that is notlegally permitted to carry on the business of a securities broker or dealer in that jurisdiction. To the full extent permitted by law neither RBC Capital Markets norany of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the informationcontained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of RBC Capital Markets.

Additional information is available on request.

To U.S. Residents:This publication has been approved by RBC Capital Markets, LLC (member FINRA, NYSE, SIPC), which is a U.S. registered broker-dealer and which acceptsresponsibility for this report and its dissemination in the United States. Any U.S. recipient of this report that is not a registered broker-dealer or a bank acting ina broker or dealer capacity and that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report, shouldcontact and place orders with RBC Capital Markets, LLC.To Canadian Residents:This publication has been approved by RBC Dominion Securities Inc.(member IIROC). Any Canadian recipient of this report that is not a Designated Institution inOntario, an Accredited Investor in British Columbia or Alberta or a Sophisticated Purchaser in Quebec (or similar permitted purchaser in any other province) andthat wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report should contact and place orders with RBCDominion Securities Inc., which, without in any way limiting the foregoing, accepts responsibility for this report and its dissemination in Canada.To U.K. Residents:This publication has been approved by RBC Europe Limited ('RBCEL') which is authorized by the Prudential Regulation Authority and regulated by the FinancialConduct Authority ('FCA') and the Prudential Regulation Authority, in connection with its distribution in the United Kingdom. This material is not for generaldistribution in the United Kingdom to retail clients, as defined under the rules of the FCA. However, targeted distribution may be made to selected retail clients ofRBC and its affiliates. RBCEL accepts responsibility for this report and its dissemination in the United Kingdom.To Persons Receiving This Advice in Australia:This material has been distributed in Australia by Royal Bank of Canada - Sydney Branch (ABN 86 076 940 880, AFSL No. 246521). This material has been preparedfor general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, any recipient should, before acting onthis material, consider the appropriateness of this material having regard to their objectives, financial situation and needs. If this material relates to the acquisitionor possible acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that productand consider that document before making any decision about whether to acquire the product. This research report is not for retail investors as defined in section761G of the Corporations Act.To Hong Kong Residents:This publication is distributed in Hong Kong by RBC Investment Services (Asia) Limited, RBC Investment Management (Asia) Limited and RBC Capital Markets (HongKong) Limited, licensed corporations under the Securities and Futures Ordinance or, by the Royal Bank of Canada, Hong Kong Branch, a registered institution underthe Securities and Futures Ordinance. This material has been prepared for general circulation and does not take into account the objectives, financial situation,or needs of any recipient. Hong Kong persons wishing to obtain further information on any of the securities mentioned in this publication should contact RBCInvestment Services (Asia) Limited, RBC Investment Management (Asia) Limited, RBC Capital Markets (Hong Kong) Limited or Royal Bank of Canada, Hong KongBranch at 17/Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong (telephone number is 2848-1388).To Singapore Residents:This publication is distributed in Singapore by the Royal Bank of Canada, Singapore Branch and Royal Bank of Canada (Asia) Limited, registered entities grantedoffshore bank and merchant bank status by the Monetary Authority of Singapore, respectively. This material has been prepared for general circulation and doesnot take into account the objectives, financial situation, or needs of any recipient. You are advised to seek independent advice from a financial adviser beforepurchasing any product. If you do not obtain independent advice, you should consider whether the product is suitable for you. Past performance is not indicativeof future performance. If you have any questions related to this publication, please contact the Royal Bank of Canada, Singapore Branch or Royal Bank of Canada(Asia) Limited.To Japanese Residents:Unless otherwise exempted by Japanese law, this publication is distributed in Japan by or through RBC Capital Markets (Japan) Ltd., a registered type one financialinstruments firm and/or Royal Bank of Canada, Tokyo Branch, a licensed foreign bank.

.® Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license.Copyright © RBC Capital Markets, LLC 2014 - Member SIPC

Copyright © RBC Dominion Securities Inc. 2014 - Member CIPFCopyright © RBC Europe Limited 2014

Copyright © Royal Bank of Canada 2014All rights reserved

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