Transcript Robert E. Martinez Norfolk Southern Corporation

Robert E. Martínez
Norfolk Southern Corporation
Indiana Logistics Summit
Indianapolis
November 14, 2006
Markets, Transportation
Markets, Market Change and
Transportation Policy;
and
The Economics of Rail
Railroads are Highly Capital
Intensive
Capex as % of Revenue
5 Yr Average
BNI
16%
UNP
15%
CSX
16%
NSC
12%
CNI
17%
CP
18%
Rail Average
16%
Truckload Average
2006E
13%
15%
18%
12%
19%
18%
16%
12%
11%
LTL Average
8%
13%
Parcel Average
7%
7%
Logistics Average
2%
1%
Source: JPMorgan Estimates and Company Reports.
Capex/Revenue in Industrial
Sectors
Sector
3 Yr Average 2006E
Auto
4.0%
4.0%
Forest Products
7.0%
6.7%
Chemicals
4.4%
4.7%
Metals and Mining
6.5%
8.4%
Source: JPMorgan Estimates and Company Reports.
The railroad industry has not
been earning its cost of capital
20%
16%
Cost of Capital
12%
8%
Return on
Investment
4%
0%
'82
'84
'86
'88
'90
'92
Source: Surface Transportation Board
'94
'96
'98
'00
'02
'04
NS Principles on Public/Private
Partnerships
 No safety degradation
 Voluntary on both sides
 Public sector pays for public or societal
benefits
 Norfolk Southern pays for railroad
benefits
 Benefits, costs and risks are shared
proportionately
NS Principles on Public/Private Partnerships
(cont’d)
 NS commits to performance standards
in return for public participation
 Planning must be coordinated among
all stakeholders to ensure prudent
investments
 Planning must be executed in a
manner consistent with rail regulatory
requirements, ownership rights, and
market conditions
 The project must produce a more
balanced transportation policy
NS Business Mix by Revenue
Q3 05 – Q2 06 Revenue: $9.107 Billion
Agriculture
11%
Coal
25%
Metals
12%
Paper
9%
Intermodal
21%
Chemicals
11%
Automotive
11%
Long Term Conventional Intermodal
Volume Growth
16,000,000
10.0%
8.0%
14,000,000
Y-T-D 2006 vs.
Y-T-D 2005
6.0%
12,000,000
4.0%
10,000,000
2.0%
8,000,000
0.0%
6,000,000
(2.0%)
4,000,000
(4.0%)
2000
2001
2002
2003
U.S. & Canada Volume
2004
% Growth
2005
2006 Jan-Oct
Intermodal Network
Chicago -Ashland
Ave. Hub
Harrisburg Rutherford Hub
Atlanta-Austell Hub
33 NS Terminals
19 Private / Port Terminals
8,300 Route Miles
Hub and Spoke Network
– how it works -
(From So-Cal)
33 NS Terminals
19 Private / Port Terminals
8,300 Route Miles
Ports of Seattle
and Tacoma
Norfolk Southern Intermodal
Transcon Network
Buffalo
Chicago
Oakland/
Richmond, CA
Detroit
Albany
New York
Cleveland
Pittsburgh
Columbus
Cincinnati
Philadelphia
Baltimore
Louisville
Los Angeles,
San Bernardino,
Ports
Clovis, NM
Norfolk
Charlotte
Memphis
Huntsville
Atlanta
Charleston
El Paso
Dallas
Savannah
Jacksonville
Union Pacific
Burlington Northern Santa Fe
Norfolk Southern
Kansas City Southern
Boston
Miami
Panama Canal
Suez Canal
East Coast Port Services
Montreal
Toronto
Detroit
Chicago
Cleveland
Elizabeth
Marine
Terminal
Pittsburgh
Columbus
Cincinnati
Kansas City
St. Louis
Norfolk / Ports of
Hampton Roads
Louisville
Memphis
Huntsville
Birmingham
Charlotte
Atlanta
Charleston
Savannah
Dallas
Jacksonville
New Orleans
Miami
The Norfolk Southern Intermodal System Map
Doublestack Clearances
Montreal
Waterville
Canada
Toronto
Minneapolis
Boston/Ayer
Albany
Buffalo
Binghamton
Detroit
Chicago
Toledo
Taylor
Cleveland
New York/New Jersey
Bethlehem
Harrisburg
Philadelphia/Morrisville
Peoria
Kansas
City
Decatur
Cincinnati
St. Louis
Louisville
Pittsburgh
Columbus
Front
Royal
Baltimore
Alexandria
Norfolk/Hampton Roads
Georgetown
Greensboro
Charlotte
Huntsville
Memphis
Atlanta
Charleston
Fully Cleared Double Stack
Routes on NS
Savannah
Dallas
Meridian
Fully Cleared Double Stack
Routes on Connecting Railroads
Jacksonville
Intermodal Routes with Restrictions
to Single Stack on Connecting
Railroads
Intermodal Routes with Restriction
to Single Stack
New Orleans
Will Be Cleared for 19’3” (Double Stack
In one High-Cube & One Low-Cube
Configuration
Terminals
Miami
Central Corridor Double-Stack Project: The current clearance envelope
through western Virginia, West Virginia and Kentucky only accommodates railcars
up to 19’1” multi-levels. No double-stack cars can be accommodated due to the
height, as well as the square profile of the conveyance.
Chicago
Cleveland
Harrisburg
Columbus
Prichard
Kenova
Roanoke
The Port
of Virginia
Heartland Corridor
The Heartland Corridor
LEGEN
D
COMPONENT
Central Corridor Double-Stack Initiative
664
(Proposed)
CIDMMA
Roanoke Region Intermodal Terminal
Rickenbacker Intermodal Terminal
To Chicago,
Detroit, & Points
West
APM
Commonwealth Railway Mainline Safety
Relocation Project (CRMSRP)
Norfolk
164
Portsmouth
OH
Columbus
664
Rickenbacker
PMT
264
264
464
Ashville
CRMSRP Project (Median Rail)
Washington, DC
WV
Portsmouth
Huntington
VA
Kenova
Prichard
Williamson
KY
NIT
CIMT
Prichard Intermodal Terminal
Welch
Richmond
Roanoke
Petersburg
Bluefield
Christiansburg
Portsmouth