Los Angeles Transportation Club

David R. Parker, Chairman & CEOCovenant Transportation Group

DISCLOSURE STATEMENT

This presentation and discussion includes forward-looking statements within the meaning of the Private Securities Litigation reform Act of 1995. Words such as “expects,” “anticipates,” “intends,” “estimates,” or similar expressions are intended to identify these forward-looking statements. These statements are based on Covenant Transportation Group’s current plans and are not guarantees of future performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results and the company’s plans and objectives to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties are discussed further in Covenant Transportation Group’s reports and filings with the Securities and Exchange Commission.

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Topics• Company Summary• U.S. Economy

• Consumers• Industrial

• Truckload Industry Trends• Supply/Demand• Capacity• Productivity Trends• Drivers• Industry Trends

• Summary• Questions

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• Group of companies focused on targeted markets offering just-in-time and other premium transportation and logistics services including team expedited long-haul, refrigerated, regional, event, brokerage, factoring, tractor/trailer sales, and equipment leasing services

• Group operates about 2,600 tractors and trailers

• Young average tractor age (3/31/14): 2.01 years (or 24.1mos)

• Utilize 8 full size terminals and 21 drop yards

• Focused on providing exceptional service to our customers

• Fiscal 2013 Revenue, including FSC: $685 Million

• Headquarters: Chattanooga, TN

• NASDAQ GS: CVTI

CTG Company Summary

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Who/What is CTGCTG is a holding company:

• 3 Specialized Asset-Based Trucking Companies• Expedited (Covenant Transport - Chattanooga)• Regional (Star Transportation – Nashville)• Refrigerated (SRT - Texarkana)

• 1 Non-Asset Based Brokerage• Covenant Transport Solutions (Chattanooga)

• 1 Equipment Leasing Company• Transport Enterprise Leasing (Chattanooga)

• 1 Accounts Receivable Financing Company• Transport Financial Solutions (Chattanooga)

For more information, please visit: www.ctgcompanies.com

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Do You Know My Reps?Cindy West Covers CA & AZ

wescin@covenanttransport.com

Terrell Harris Covers CA, ID, OR, WAharter@southernref.com

Kent Wickman Intermodal Saleswicken@southernref.com

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U.S. Economy

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3.5%2.7%3.0%

-3%-2%-1%0%1%2%3%4%5%6%

Inventory Reduction & Weather

(quarterly, annualized rate percent change)Real Gross Domestic Product

Sources: BEA and ATA

2011 – 20142013 2014

Real GDP 1.9% 2.3%

Economy – GDP

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Sources: Department of Labor & ATA

61%

62%

63%

64%

65%

66%

67%

4%

5%

6%

7%

8%

9%

10%

11%

12%

2006 2007 2008 2009 2010 2011 2012 2013 2014

Unempl. RateLabor Participation Rate

Economy – ConsumersU.S Unemployment Rate & Civilian Participation Rate

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Sources: Department of Commerce & ATA

Consumer Spending (Annual Percent Change)Economy - Consumers

1.6%1.2%

2.6% 2.6%

3.3% 3.5%

2.9%

3.8%

0%

1%

2%

3%

4%

5%

2012 2013 2014 Est. 2015 Est.

Services Goods

9

Sources: Fed. Reserve

Personal Savings RateEconomy - Consumers

10

Source: IHS Global Insight

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20132014 Est.

Crude Oil Prices – Impact? WTI, US$ per Barrel

Economy - Consumers

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0

10

20

30

40

50

60

70Purchasing Managers’ Index

Source: Institute for Supply Management

Growth Border Line

Economy - Industrial

Data through May 2014

12

Sources: Census Bureau and ATA

1.2

1.3

1.4

1.5

1.6

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Economy - IndustrialTotal Business Inventories-to-Sales Ratio

(Includes retail, wholesale, and manufacturing; Through April 2014)

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Sources: Census Bureau & ATA

Diesel PricesEconomy - Industrial

$2.41$2.71

$2.88

$3.80

$2.46

$2.99

$3.84 $3.97 $3.92 $3.87 $3.78

$0.00$0.50$1.00$1.50$2.00$2.50$3.00$3.50$4.00$4.50$5.00

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Still high prices, but could be worse considering recent world events, Russia, Middle East, etc., but is remaining stable because for the first time the U.S. is producing more than we are importing

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0.586 0.612

0.7830.929

1.024

1.400

0.0

0.5

1.0

1.5

2010 2011 2012 2013 2014 2015

2014 will be the highest level since 2007

Sources: Census Bureau and ATA

2014 will be the highest level since 2007.

Economy – IndustrialAnnual Housing Starts – Millions of Units

Sources: ATA

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Sources: Census Bureau and ATA

2014 will be the highest level since 2007.

Economy – IndustrialNorth American Light Vehicle Production–

Millions of Units Seasonally Adjusted & Annualized

Source: Bureau of Economic Analysis

8.09.0

10.011.012.013.014.015.016.017.018.0

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Economy – IndustrialPercent Naming Region as Most Attractive Nearshoring Location

Source: Alix Partners

5%

5%

5%

5%

7%

37%

37%

0%

9%

2%

4%

0%

49%

36%

4%

2%

0%

0%

0%

63%

19%

0% 10% 20% 30% 40% 50% 60% 70%

Other

Central America

Caribbean

South America

Canada

Mexico

U.S.

2011 2012 2013

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Truckload Industry Trends

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Source: ATA based on Trucking Activity Report

TL Supply vs Demand2005 = 100

Through March 2014

TL Loads IndexTL Tractor Count Index

Oversupply

Industry Trends - Capacity

Under-capacity

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Sources: ACT Research

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.0

U.S. Class 8 TrucksAverage Age in Years

Industry Trends - Capacity

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Source: ATA

Industry Trends - Capacity% Change in the Number of Company & O/O

Tractors

0.2%

-3.5%

-9.0%-10%

-8%

-6%

-4%

-2%

0%

2%

2013Q1 YOYMar '14 vs Dec '07

Includes all types of TL carriers. 21

Source: Avondale Partners, LLC

0200400600800

1,0001,2001,400

Q1

00

Q1

01

Q1

02

Q1

03

Q1

04

Q1

05

Q1

06

Q1

07

Q1

08

Q1

09

Q1

10

Q1

11

Q1

12

Q1

13

Q1

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Q1 2014 Failures = 390 Companies equal to 10,650 trucks, more than double Q1 2013

Trucking FailuresFailures only includes fleets with at least five trucks

Industry Trends - Capacity

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Source: ATA

(Includes all types of TL carriers)

10,946

8,926 7,604

8,250 8,080 7,752 8,066 7,794

0

5,000

10,000

15,000

2007 2008 2009 2010 2011 2012 2013 Q1 2014

Industry Trends – DemandMiles Per Truck Per Month are Down too

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Refrigerated Demand

Sources: BB&TCM and ATA

Industry Trends - Demand

7.7% 6.6% 7.3%3.1% 2.6%

-4.4%1.1% 2.5%

-10.0%-5.0%0.0%5.0%10.0%

0

50

100

150

2006 2007 2008 2009 2010 2011 2012 2013

Loads Growth

• Since the end of 2006 reefer loads have grown 20.3%, but trailers are up just 3.4%• Reefer loads have grown 9 of the last 10 years• Reefer loads have averaged 3.3% annual growth since the end of 2003• Reefer FSC…

• It has to happen! Cost of Fuel HOS has reduced miles per trip per day

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Changes in For-Hire Truck Freight Volumes

Sources: ATA’s Monthly Truck Tonnage Report, Trucking Activity Report, & DAT.com

Industry Trends - Demand

2.3%

6.3%

4.5%

0.8%1.5%

2.5%2.4%3.1%

3.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2012 2013 2014

Tonnage TL Loads LTL Shipments

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TL Dry Van Carriers: Not As Many Carriers as You Might Think

Source: ATA, Federal Motor Carrier Safety Administration; Office of Motor Carriers; BB&TCM

• ~600,000 fleets with operating authority, but...• 406,000* can be eliminated due to oddball categories• 70% of the remaining 194,000 operate Class 3-7 trucks• This leaves 58,000 fleets• Approximately 30% of those are private or “not-for-hire” fleets• Of the 41,000 remaining fleets, 58% are dry van• More than half of those 24,000 fleets operate 5 or fewer trucks• About 8,000–10,000 fleets are in the dry van, for-hire market

with more than 5 trucks• Top 250 control approximately 35%–45% of the trucks

*Excludes selected categories (migrant, unspecified, US mail, exempt, government, Indian tribe, private property, private passenger bus, private non-passenger bus, road repair and “other” classifications totaling 406,000 fleets) that do not compete in the OTR truckload market

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July HOS Changes

Source: CVTI Testing

Major Concerns• 30 – Minute Break requirement• “34 Hour restart” span 2 consecutive 1 a.m. to 5 a.m. periods

Results:• Lost revenues• Increased transit times• On-time performance pressure

Other Concerns• Increased fuel consumption (more idle time)• Lost wages for drivers• Increased risk of parking lot incidents

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Source: ATA

Industry Trends – Professional DriversTL Truck Driver Turnover Rates

0%

25%

50%

75%

100%

125%

150%

2005 2006 2007 2008 2009 2010 2011 2012 2013

Large Small

CTG companies beat the trend in 2013 by reducing turnover from 111% in 2012 to 99% in 2013. However Q1-14 CTG turnover was 106% vs. 104% in Q1-13 and 107% in Q1-12.

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Industry Trends – Professional DriversConstruction Industry Competition

28.0%

2.1%

18.9%

3.3%

18.3%

4.0%

34.3%

9.4%

0%

5%

10%

15%

20%

25%

30%

35%

Housing Starts Construction Employment

2012 2013 2014 2015

Sources: Census Bureau, Department of Labor, and ATA

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Why Drivers Leave Their Jobs—It’s a Shipper Problem not Just a Carrier Problem

Source: BB&TCM (photo, analysis and survey); comments on right from BBTCM

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Other

Have Not Lef t A Trucking Job

They Were Running Me Too Hard

I Just Wanted To Make A Change

Didn't Get The Right Loads, Or Enough Loads

Didn't Get Home Enough

Lack Of Recognition & Respect

Pay

28.8%

16.5%

7.3%

13.8%

22.3%

18.3%

29.8%

38.0%

28.0%

15.9%

9.4%

10.4%

18.4%

23.8%

34.1%

42.9%

Owner-Operator Company Driver

Does the shipper value a driver’s time?Bathrooms, phonesWifi availabilityHelpful staffParking availabilityClear signsPaper work handled courteously & simply3rd Parties @ Gate-Do they share your view?3% rate hike-~1% goes to driver

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Industry Trends – Professional DriversAverage Number of New Drivers Needed Per Year Over

the Next 10 Years: 96,178

Source: ATA Benchmarking Guide for Driver Recruitment & Retention

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Capacity conclusions – Outlook for 2014• Fleets would expand fleet size if they could• Fleets need to replace a significant amount of aged tractors in the next

few years, if they can afford them (average industry age is now 6.5+ years vs. CTG at 1.9 years; and the average 2013 diesel tractor (sleeper) cost $126K)

• Government regulations have and will further limit capacity (Electronic logs, HOS, CSA, sleep apnea)• Average miles per truck for all types of TL Carriers were down 13% between

2008 and 2013• Mandatory electronic logs expected early 2016

• Driver shortage remains biggest issue regarding capacity• TL Driver turnover rates have steadily increased every year since 2009• As the housing market returns, construction industry competition for

employment of drivers is growing• Aging demographics has more drivers retiring each year than younger drivers

entering the field• Professional drivers deserve better compensation

Industry Trends - Capacity

Source: ATA

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• Many inflationary cost pressures still to overcome:• Driver wages• Equipment (tractors and trailers)• Tires, vehicle replacement parts, maintenance (particulate filters)• Health insurance (ACA-”Obamacare”)• Regulations (CSA, EOBR, HOS, California CARB)

• The combination of upward demand trends, decreasing capacity trends, and the above inflationary cost pressures is resulting in significant contract pricing pressure in 2014

Industry Trends - Pricing

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Bottom Line on Capacity

Tighter CapacityCarrier Fleet Reductions

Source: ATA

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Questions?

Thank You!

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