Rail – The Intermodal Connection

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Drew Glassman, AVP Intermodal Marketing CSX Transportation

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Holistic focus on controlling supply chain costs

 Near-sourcing of manufacturing sites due to rising costs in Asia  Simplification and rebalancing of supply chain network design  Optimization software to improve efficiencies and streamline processes  Use of alternate transportation modes, including intermodal

Truck capacity is imminent concern for future

Truck Capacity Utilization to Increase, Resulting in a Shortage  Driver shortages are a threat with economic recovery —

U.S. Bureau of Labor Statistics reports driver supply is 185,000 below 2007 levels

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Turnover for Q1 2012 was 90%, the highest since 2008

2012  Driver supply impacted by many macro-factors —

CSA, HOS and other proposed regulations

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Aging driver base Recovery of housing market

3 Surplus/(Shortage) Capacity Utilization Source: FTR

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Intermodal provides scalable capacity

You Can Go Here

with Intermodal

 Coast-to-coast intermodal network with global reach — —

14 million loads moved in 2011 Access to key markets, population centers

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Connectivity to major U.S. ports

 Access to a large, growing container fleet —

Rail and carrier-owned assets

 Intermodal scales to meet supply chain needs efficiently —

One train can move the load of 280 trucks

Intermodal industry volume has steadily grown

U.S. Intermodal Volume Units in Millions Volume has increased more than four-fold 14.1M

3.1M

5 1980 1985 1990 Source: Intermodal Association of North America 1995 2000 2005 2010

Intermodal offers sustainable savings

6  Fuel efficiency and freight density drive cost savings — —

Railroads are three times more fuel efficient than trucks One train can move the load of 280 trucks

 Higher fuel efficiency means lower greenhouse emissions — —

Intermodal reduces carbon footprint Moving freight by rail, instead of truck, reduces emissions by 75%

If 10% of long haul highway freight converted to rail… Annual fuel consumption would decrease by

12 billion gallons

, and Annual greenhouse emissions would decrease by

12 million tons

Source: AAR

Intermodal conversion opportunity is substantial

7 Eastern Freight Market

(units in millions)

5,5 9,3 Intermodal Opportunity Freight length of haul > 550 miles Sources: AAR CS 54 and Global Insight’s Transearch data  Highway-to-rail conversion still in early stages  Over 9 million loads in east have conversion potential  Intermodal conversion results in additional capacity and cost savings for shippers

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Shippers achieve the value of intermodal with CSX

 Company Overview America’s first railroad —

Founded 1827, headquartered in Jacksonville, FL

 Largest rail network in east —

21,000 route miles in 23 states, serving 70 ports

 Significant resources —

Over 4,000 locomotives, 80,000 freight cars, 30,000 employees

 Ranked 226 on Fortune 500 —

$11.7 billion of revenue in 2011

 Intermodal at CSX Far-reaching, dynamic network —

Hub and spoke design provides unique service capabilities

 Aggressive capital investment —

Terminal and infrastructure development, public-private projects

 Customer and service focus —

Minimizing variability in service, while meeting customer needs

 Highway-to rail “H2R” strategy —

Conversion of over-the-road loads

The National Gateway is evolving the rail network

 Public-private investment of $850 million —

State, Federal, and CSX funded

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Support of 300+ public and private organizations and individuals

 Increases efficiency and reach of U.S. rail network —

Links Mid-Atlantic ports with Midwestern markets

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61 clearance projects and 6 intermodal terminals, including Northwest Ohio

 Clearance projects are ~50% complete to date

Northwest Ohio Hub creates a more efficient network

10 Bypass high traffic areas resulting in faster transit times Non-stop service to east and west coasts for more reliable service New lanes increase access to major population centers Effective connector, with 99% scheduled connectivity at NWOH Chicago run-through for Western interchange Hub and spoke network is a strategic differentiator

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CSX focused on highway-to-rail (H2R) strategy

   Network Design NWOH – Hub & Spoke New England Florida   Service Reliability Meeting customer commitments Minimizing variability in the service product     Channel Strategy IMC Brokers Ocean carriers Truck   BCO Education Dedicated National Accounts Team H2R Optimizer

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Highway-to-rail continues to drive industry growth

 Intermodal offers a transportation alternative with scalable capacity and sustainable savings advantages  The value of intermodal rail only beginning to be realized; great potential remains  CSX dedicated to understanding transportation needs and developing intermodal solutions

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Appendix

Public-private investments continue to grow network

15 Investment in the Rail Network 

$ 37M $ 4M $ 50M $ 1M $ 1M $ 35M $ 70M $ 46M $ 73M $117M $ 90M $ 8M $250M $ 44M $ 84M $ 70M $ 74M $515M $ 94M $ 10M $ 67M $ 3M $ 44M $ 1M $ 2M $ 2M $ 53M $ 1M $ 10M

*D.C

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$ 71M $ 2M $ 66M $385M $ 70M $ 30M

 

$ 5M

Terminal Expansions New Terminals CSX Investment in Rail Network (2011)

$105M $165M

Private-Public Investment Rail –Served Facilities (2011) In 2011, businesses and state and local agencies invested over $1.3B CSX also investing in new terminals and infrastructure throughout network Clearance projects enable double-stack capable network — —

New England National Gateway