The following discussion should be read in conjunction with our unaudited consolidated interim financial statements for the three and six months ended June 30, 2012 and the notes thereto as included in Item 1 of this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws concerning Vitran's business, operations, and financial performance and condition.

Forward-looking statements may be generally identifiable by use of the words "believe", "anticipate", "intend", "estimate", "expect", "project", "may", "plans", "continue", "will", "focus", "should", "endeavor" or the negative of these words or other variation on these words or comparable terminology. These forward-looking statements are based on current expectations and are subject to uncertainty and changes in circumstances that may cause actual results to differ materially from those expressed or implied by such forward-looking statements.

This Quarterly Report on Form 10-Q contains forward-looking statements regarding, but not limited to, the following:

• the Company's expectation that efficiencies within the U.S. LTL business unit will reduce salaries, wages and employee benefits expense as a percentage of revenue;

• the Company's expectation that revenue per hundredweight and length of haul will increase in upcoming quarters as the freight environment improves and the LTL segment continues to cross-sell the newly acquired territory;

• the Company's expectation that it will be able to reduce maintenance expense in 2012;

• the Company's expectation that operating initiatives implemented will continue to improve productivity and service levels within the U.S. LTL business unit;

• the Company's expectation that fuel economy will continue to improve from the new tractors purchased and as a result fuel costs will decrease;

• the Company's expectation that operational improvements within the U.S. LTL business unit will have a positive impact on financial results in 2012;

• the Company's expectation that activity levels and pricing trends will improve year-over-year results;

• the Company's ability to maintain DSO below 40 days;

• the Company's intention to purchase a specified level of property and equipment and to finance such acquisitions with cash flow from operations and, if necessary, from the Company's revolving credit facilities;

• the Company's ability to generate future operating cash flows from profitability and managing working capital;

• the Company's ability to continue to improve results in the SCO segment if trends in current activity levels within the segment improve;

• the Company's expectation that the two new dedicated facilities within the SCO segment will positively impact earnings during the remainder of 2012;

• the Company's operational plan will improve service and efficiencies in the U.S. LTL business unit; and

• the Company's ability to benefit from an improvement in the economic and pricing environment.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Vitran's actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that may cause such differences include but are not limited to technological change, increase in fuel costs, regulatory change, changes in tax legislation, the general health of the economy, changes in labor relations, geographic expansion, capital requirements, availability of financing, foreign currency fluctuations, claims and insurance costs, environmental hazards, availability of qualified drivers and competitive factors. More detailed information about these and other factors is included in Item 1A - Risk Factors in the Company's 2011 Annual Report on Form 10-K. Many of these factors are beyond the Company's control; therefore, future events may vary substantially from what the Company currently foresees. You should not place undue reliance on such forward-looking statements. Vitran Corporation Inc. does not assume the obligation to revise or update these forward-looking statements after the date of this document or to revise them to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.

Unless otherwise indicated all dollar references herein are in U.S. dollars. The Company's Annual Report on Form 10-K, as well as all the Company's other required filings, may be obtained from the Company at www.vitran.com or from www.sedar.com or from www.sec.gov.

CONSOLIDATED RESULTS

The following table summarizes the Consolidated Statements of Income (Loss) for
the three and six months ended June 30:



                                                   For the three months ended June 30,                      For the six months ended June 30,
(in thousands)                                 2012                2011          2012 vs 2011           2012              2011          2012 vs 2011
Revenue                                    $    213,097        $    208,881                2.0 %     $   420,845        $ 394,269                 6.7 %

Salaries, wages and employee benefits            84,872              79,877                6.3 %         168,087          149,494                12.4 %
Purchased transportation                         31,968              34,625               (7.7 %)         63,445           64,617                (1.8 %)
Depreciation and amortization                     4,084               4,040                1.1 %           8,159            8,397                (2.8 %)
Maintenance                                      10,205               8,994               13.5 %          19,876           17,086                16.3 %
Rents and leases                                 11,768               9,175               28.3 %          23,018           17,256                33.4 %
Purchased labor and owner operators              18,671              20,259               (7.8 %)         36,656           38,584                (5.0 %)
Fuel and fuel related expenses                   35,732              36,074               (0.9 %)         72,967           66,204                10.2 %
Other operating expenses                         18,107              16,145               12.2 %          35,039           31,470                11.3 %
Other income                                       (126 )               (67 )             88.1 %             (50 )           (105 )             (52.4 %)

Total Expenses                             $    215,281        $    209,122                2.9 %     $   427,197        $ 393,003                 8.7 %

Income (loss) from continuing operations         (2,184 )              (241 )            806.2 %          (6,352 )          1,266              (601.7 %)
Interest expense, net                             1,330               1,311                1.4 %           2,641            2,653                (0.5 %)
Income tax expense                                  649                 745              (12.9 %)            986            1,134               (13.1 %)

Net loss                                   $     (4,163 )      $     (2,297 )             81.2 %     $    (9,979 )      $  (2,521 )             295.8 %

Loss per share:
Basic                                      $      (0.25 )      $      (0.14 )                        $     (0.61 )      $   (0.15 )
Diluted                                    $      (0.25 )      $      (0.14 )                        $     (0.61 )      $   (0.15 )
Operating Ratio (1)                               101.0 %             100.1 %                              101.5 %           99.7 %

Revenue increased 2.0% to $213.1 million for the second quarter of 2012 compared to $208.9 million in the second quarter of 2011. Revenue in the LTL segment increased 3.0% compared to the second quarter of 2011. Revenue in the SCO segment decreased 4.0% compared to the second quarter of 2011. Revenue for the second quarter of 2012 was negatively impacted by a weaker Canadian dollar and was partially offset by an increase in fuel surcharge revenue, resulting in a reduction of $2.2 million in consolidated revenue. Excluding the impact of fuel surcharge revenue and a weaker Canadian dollar, revenue for the comparative quarters improved 3.1%. For the six-months ended June 30, 2012, revenue increased 6.7% to $420.8 million compared to $394.3 million for the six-month period ended June 30, 2011. Consolidated revenue for the comparable six-month period was also impacted by a weaker Canadian dollar and increase in fuel surcharge revenue accounting for $2.8 million of the total revenue increase. Detailed explanations for the fluctuations in revenue are discussed below in "Segmented Results".

Salaries, wages and employee benefits increased 6.3% for the second quarter of 2012 compared to the same period a year ago. For the six-month period ended June 30, 2012, salaries, wages and employee benefits increased 12.4% compared to the same six-month period a year ago. This compares with a 9.9% increase in employee headcount compared to June 30, 2011. Headcount increased mid-way through the first quarter of 2011 resulting from the acquisition of the Milan Express Inc. ("Milan") LTL assets on February 19, 2011. The full impact of the increase in headcount is included in the first six-months of 2012 whereas it was only partially included in the first six months a year ago. Furthermore, management returned to its U.S. LTL business unit employees the 2008 5% wage reduction at 1.25% per quarter by the end of 2011, therefore, the second quarter of 2012 includes the full 5% wage increase compared to a 2.5% wage increase in the second quarter of 2011. Salary, wages and employee benefit expenses should outpace the prior year expenses, but as management improves efficiencies within the U.S. LTL business unit, it is expected to decline on a percentage of revenue basis.

Purchased transportation decreased 7.7% and 1.8% for the three-month and six-month periods ended June 30, 2012 compared to the same periods in 2011, respectively. Purchased transportation decreased 21.8% in the U.S. LTL business unit in the second quarter of 2012 compared to the same quarter a year ago. The additional tractors in 2011 received by the U.S. LTL business unit along with a concerted effort to reduce purchased miles led to the decrease in purchased transportation. Offsetting the decrease is SCO's brokerage business unit as shipments increased 8.2% in the first six-months of 2012 compared to the same period in 2011.

Depreciation and amortization expense increased 1.1% for the second quarter of 2012 compared to the same period in 2011, and is primarily attributable to the purchase of rolling stock and buildings in 2012. Depreciation and amortization expense decreased 2.8% for the six-month period ended June 30, 2012 compared to the same period in 2011, and is attributable to the sale of rolling stock and buildings throughout 2011.

Maintenance expense increased 13.5% and 16.3% for the three-month and six-month periods ended June 30, 2012 compared to the same periods in 2011, respectively. As a percentage of revenue, maintenance expense was consistent with the first quarter of 2012. The Company's U.S. LTL business unit completed a review of its tractor fleet in the second quarter of 2012 that began in the first quarter and incurred additional repair costs. The U.S. LTL business unit received 200 additional tractors in the second quarter and it is management's expectation that the Company will be able to reduce its maintenance costs as a percentage of revenue.

Rents and leases expense increased 28.3% and 33.4% for the three-month and six-month periods ended June 30, 2012 compared to the same periods in 2011. The increase is attributable to the 400 new tractors received in 2011, 150 new tractors received in 2012 and 700 new trailers received in 2012, which were all acquired by the U.S. LTL business unit. Rents and leases expense should continue to increase due to an additional 100 new trailers acquired by the U.S. LTL business unit to be delivered in the third quarter.

Purchased labor and owner operator expenses, primarily driven by the Canadian LTL business unit and the SCO segment, decreased in the comparable three-month and six-month periods ended June 30, 2012 due to a reduction in hours required and shifting some labor to full and part-time employees within the SCO segment.

Fuel and fuel-related expenses were flat for the three month period and increased 10.2% for the six-month period ended June 30, 2012 compared to the same period a year ago. The average price of diesel increased approximately 2.8% compared to the six-month period ended June 30, 2011. Furthermore, the Company's fuel consumption increased due to the increase in activity as indicated by the 3.8% increase in shipments within the U.S. LTL business unit during the quarter. The Company should continue to receive improved fuel economy from the 600 new tractors acquired in 2011 and 2012.

The Company incurred interest expense of $1.3 million in the second quarter of 2012 compared to interest expense of $1.3 million for the same quarter a year ago. The Company's total balance sheet debt net of cash at June 30, 2012 is $6.7 million greater than June 30, 2011. A majority of the increase relates to capital leases for rolling stock and equipment entered into near the end of the quarter. The average interest rate on the Company's asset-based revolving credit agreement was slightly lower than the second quarter of 2011.

In accordance with Financial Accounting Standard Board ("FASB") Accounting Standard Codification ("FASB ASC") 740-10, the Company recorded a valuation allowance for all U.S. deferred tax assets. As required by this standard, the Company increased the valuation allowance by $4.0 million, which would have been the tax recovery attributable to the Company's U.S. based companies for the six-months ended June 30, 2012. Consequently, the Company recorded a consolidated tax expense of $1.0 million for the first six-months of 2012 compared to a consolidated tax expense of $1.1 million for the first six-months of 2011.

Net loss for the 2012 second quarter was $4.2 million compared to net loss of $2.3 million for the same quarter in 2011. This resulted in a loss per share of $0.25 for the second quarter of 2012 compared to a loss per share of $0.14 for the second quarter of 2011. The weighted average number of shares for the current quarter was 16.4 million basic and diluted compared to 16.3 million basic and diluted shares in the second quarter of 2011. For the six months ended June 30, 2012, the Company posted a net loss of $10.0 million compared to a net loss of $2.5 million in the same six-month period a year ago. This resulted in a loss of $0.61 per share compared to a loss of $0.15 per share for the 2011 six-month period. The weighted average number of shares for the six-month period of 2012 was 16.4 million basic and diluted compared to 16.3 million shares basic and diluted in the six-month period of 2011.

SEGMENTED RESULTS

Less-Than-Truckload (LTL)

The table below provides summary information for the LTL segment for the three
and six months ended June 30:



                                              For the three months ended June 30,                         For the six months ended June 30,
(in thousands)                            2012                2011           2012 vs 2011            2012              2011            2012 vs 2011
Revenue                               $     183,789        $   178,362                 3.0 %      $   362,376       $   337,351                  7.4 %
Loss from operations                         (3,307 )           (1,182 )             179.8 %           (8,142 )            (256 )            3,080.5 %
Operating ratio                               101.8 %            100.7 %                                102.2 %           100.1 %

                                              For the three months ended June 30,                         For the six months ended June 30,
(in thousands)                            2012                2011           2012 vs 2011            2012              2011            2012 vs 2011
Number of shipments (2)                   1,155,476          1,114,263                 3.7 %        2,281,627         2,126,784                  7.3 %
Weight (000s of lbs) (3)                  1,707,367          1,684,381                 1.4 %        3,360,058         3,210,920                  4.6 %
Revenue per shipment (4)              $      159.06        $    160.07                (0.6 %)     $    158.82       $    158.62                  0.1 %
Revenue per hundredweight (5)         $       10.76        $     10.59                 1.6 %      $     10.78       $     10.51                  2.7 %

Revenue in the LTL segment increased 3.0% to $183.8 million in the second quarter of 2012 compared to $178.4 million in the same period a year ago. Fuel surcharge had a minimal impact on revenue in the second quarter of 2012. Revenue net of fuel surcharge for the second quarter of 2012 increased 3.3% compared to the second quarter of 2011. Furthermore, shipments and tonnage increased 3.7% and 1.4% respectively compared to the second quarter of 2011.

Revenue in the LTL segment increased 7.4% to $362.4 million for the six-month period ended June 30, 2012 compared to $337.4 million for the same six-month period a year ago. Revenue was impacted by the additional business from the Milan acquisition on February 19, 2011, which had a full impact in the first six-months of 2012 compared to only a partial impact in the first six-months of 2011. Shipments and tonnage increased 7.3% and 4.6%, respectively, in the comparable six-month period.

Shipments per day in the U.S. LTL business unit increased 3.8% for the second quarter of 2012 compared to the second quarter of 2011. This is attributable to density growth and the Company's continued success in the 5 new states acquired as part of the Milan acquisition in February 2011. On a year-over-year basis from June 2012 compared to June 2011, length of haul increased 1.3% and revenue per hundredweight increased 4.2%. Management expects the revenue per hundredweight to increase in the upcoming quarters as the pricing environment continues to favor LTL carriers and the LTL segment continues to sell into the expanded territory.

The U.S. LTL business unit did not meet management's expectation in the second quarter of 2012. During the first quarter the business unit added key personnel to important positions within the organization. It has taken some time for the new leadership to evaluate operations, evaluate personnel and begin to implement positive changes to all aspects of the business to improve operating results. Achievements have been made in improving the customer experience at the Company including the introduction of tablet technology to the pick-up and delivery team and an improved dispatch interface. Labor costs were comparatively higher in the quarter as additional costs for training were incurred during the implementation of the tablet technology. The new management team's focus continues to be on improving service, sales and operating efficiency and it is management's expectation these initiatives will have a positive impact on financial results during the remainder of 2012.

The Canadian LTL business unit posted a solid 2012 second quarter benefiting from a steady Canadian economy and a stable operation compared to the U.S. LTL business unit.

Lastly, management believes that with additional density gains, continued momentum in the North American pricing environment, combined with a continued focus on operational and personnel improvements, the LTL segment is well positioned to improve income from operations over the long term.

Supply Chain Operation (SCO)

The table below provides summary information for the Supply Chain Operation
segment for the three and six months ended June 30:



                                                     For the three months ended June 30,                          For the six months ended June 30,
(in thousands)                                  2012                2011            2012 vs 2011             2012                2011           2012 vs 2011
Revenue                                     $     29,308        $     30,519                 (4.0 %)     $     58,469        $     56,918                 2.7 %
Income from operations                             2,371               2,337                  1.5 %             4,469               4,427                 0.9 %
Operating ratio                                     91.9 %              92.3 %                                   92.4 %              92.2 %

Revenue in the SCO segment decreased 4.0% for the second quarter of 2012 compared to the second quarter 2011. Revenue for the second quarter was impacted by a weaker Canadian dollar and from long-term contract renewals. However, income from operations increased 1.5% in the second quarter of 2012 compared to the same quarter in 2011, and the SCO segment posted an operating ratio of 91.9 % in the second quarter of 2012 compared to 92.3% in the second quarter of 2011. Management opened a new dedicated facility in Tacoma, Washington during the second quarter of 2012 and opened a dedicated facility in Kansas City, Kansas in July 2012. Both dedicated facilities are expected to begin fully contributing in the third quarter. Operating results in the upcoming quarters should see continued improvement, as the aforementioned two new facilities begin fully contributing in the third quarter and activity levels improve throughout the second half of the year.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from continuing operations for the second quarter of 2012 generated $3.7 million compared to $4.1 million in the 2011 second quarter. The Company generated a net loss from operations in the second quarter of 2012; however, this was offset by the improvement in non-cash working capital. Days sales outstanding ("DSO") in the second quarter of 2012 were 38.2 days compared to DSO of 39.0 days for the second quarter of 2011.

The Company's future operating cash flows are largely dependent upon the Company's profitability and its ability to manage its working capital requirements, primarily accounts receivable, accounts payable, and wage and benefit accruals.

As at June 30, 2012, interest-bearing debt was $88.0 million consisting of $32.9 million drawn under the syndicated asset-based revolving credit facility, $44.4 million of real estate term debt, $3.3 million of term debt, and $7.4 million of capital leases. At December 31, 2011, interest-bearing debt was $73.9 million consisting of $21.9 million drawn under the syndicated asset-based revolving credit facility, $45.0 million of real estate term debt, $3.5 million of term debt, and $3.5 million of capital leases.

For the six months ended June 30, 2012, the Company repaid $0.4 million of real estate term debt, $0.3 million of term debt, $1.8 million of capital leases, and drew down $11.0 million under its revolving credit facilities. At June 30, 2012, the Company had $30.6 million of available credit facilities, net of outstanding letters of credit, to achieve its future operational and capital objectives. The Company was in compliance with all terms under its credit agreements at June 30, 2012.

The Company generated $1.6 million in proceeds on the divestiture of facilities in Springfield, MO, Louisville, KY, Toledo, OH and surplus equipment in the first six months of 2012. Capital expenditures amounted to $13.3 million for the first six months of 2012 and were funded out of the revolving credit facilities and capital leases. The majority of the capital expenditures were for a facility in Memphis, TN, construction of the Winnipeg, MB facility, rolling stock and dock equipment.

The table below sets forth the Company's capital expenditures for the three and six months ended June 30:

                                For the three months ended June 30,             For the six months ended June 30,
(in thousands of dollars)         2012                      2011                   2012                     2011
Real estate and buildings   $           3,675         $           3,217     $            4,355         $         4,620
Tractors                                4,363                       331                  4,498                     763
Trailing fleet                             -                        494                  1,906                     621
Information technology                    541                       158                    657                     321
Leasehold improvements                     70                         6                    194                      64
Other equipment                         1,211                        62                  1,678                     219

Total                       $           9,860         $           4,268     $           13,288         $         6,608

Management estimates that cash capital expenditures for the remainder of 2012 will be between $5.0 million and $10.0 million. The Company may enter into operating leases to fund the acquisition of specific equipment should the business levels exceed the current equipment capacity of the Company. The Company expects to finance its capital requirements with cash flow from operations, operating leases and, if required, its $30.6 million of unused credit facilities.

The Company has contractual obligations that include long-term debt consisting of term debt facilities, revolving credit facilities, capital leases for operating equipment and off-balance-sheet operating leases primarily consisting of tractor, trailing fleet and real estate leases. Operating leases form an integral part of the Company's financial structure and operating methodology as they provide an alternative cost-effective and flexible form of financing.

The following table summarizes our significant contractual obligations and commercial commitments as of June 30, 2012:

(in thousands of dollars)                                                   Payments due by period
Contractual Obligations                      Total         2012        2013 & 2014       2015 & 2016       Thereafter
Term credit facilities                     $   3,250     $  2,000     $       1,250     $         Nil     $        Nil
Real estate facility                          44,437          486             2,074             2,272           39,605
Revolving credit facilities                   32,890          Nil            32,890               Nil              Nil
Capital lease obligations                      7,448        1,180             2,672             2,642              954
Estimated interest payments (1)               16,000        1,769             6,415             4,145            3,671

Sub-total                                    104,025        5,435            45,301             9,059           44,230
Off-balance sheet commitments
. . .