Hub Group Inc.

Hub Group Inc.

Chairman

www.hubgroup.com

The intermodal marketing industry has changed during the past six years from a marketing agent for the railroad intermodal carriers to a transportation provider handling not only intermodal, but also over-the-road, brokerage, logistics management, less-than-truckload, air and, for some companies, warehouse management and even carload.

This change occurred because the mergers of the late 1990s resulted in tremendous service failures that disillusioned numerous intermodal shippers, many of which did not return to rail intermodal until late 2001. Fortunately, the railroads have provided consistent service the past three years. Now, however, we are again seeing service failures in certain areas. We believe these are created primarily by the various heavy track programs that take place in the summer and fall. We do not believe the railroads have approached maximum capacity and believe this problem will be resolved as we enter 2004.

The second major change within our industry is the influx of large trucking companies in intermodal. J.B. Hunt entered first in 1990 and Schneider in the early 1990s but on a relatively small basis until the late 1990s. Of course, this occurred because the trucking industry realized that it could not compete from a cost perspective in long-haul lines as long as the railroads provided good, consistent service that was time-competitive (or even better) than single-driver service.

We expect many of the midsize to large truckers to increase their intermodal service in 2004-05. Competition is expected to increase as intermodal marketing companies continue to improve their systems and communication capabilities. Many of the smaller IMCs have fallen by the wayside but most merely changed their focus to other transportation opportunities, particularly in the area of highway brokerage. They have continued to handle small to midsize shipping companies in intermodal and truckload brokerage.