Transcript Slide 1

Transportation for Tomorrow
Houston Economic Club
May 18, 2009
Matthew K. Rose
Chairman, President and CEO
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BNSF in Texas
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BNSF in Houston
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Running a railroad through
recession to recovery – Volumes
Percent change
Year over Year
6.0%
3.5% 3.3%
4.0%
2.0%
0.9%
0.9%
0.0%
-2.0%
-2.9%
-4.0%
-3.6% -3.3%
-2.2% -2.2% -2.4% -2.5%
-6.0%
-8.0%
-8.9%
-10.0%
-12.0%
-14.0%
-14.4%
-16.0%
Q1
Q2
Q3
2006
Q4
Q1
Q2
Q3
2007
Q4
Q1
Q2
Q3
2008
Q4
Q1
2009
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U.S. infrastructure supports millions of
supply chains
Miles of Supply Chain:

46,837 miles of Interstate
Highways

173,000+ miles of railroad
tracks
Daily Supply Chain Volume:
• 43 million tons of goods
Class 1 Railroads
Interstate Highways
• Valued at $29 billion
• 12 billion ton-miles
Source: U.S. Chamber of Commerce, Let’s Rebuild America
And keeps the economy running
We know the future will bring more…
2030 Growth Projections

U.S. population expected to grow to 364 million

VMT to grow by 150 percent
Freight rail to increase by 92 percent

Source: Global Insights, AASHTO, FHWA
Capacity is shrinking
US Highway and Rail Networks System Miles and Volumes
210
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
50
1980
1985
Highway - VMT
1990
Highway - Lane-miles
1995
Rail - RTM
2000
2005
Rail - Track-miles
Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007 and AAR
We have a national funding gap for all
surface transportation
Year-of-Expenditure Dollars (in Billions)
600
Cost to
Improve
500
Cost to
Maintain
Revenue
400
300
200
100
2006
2009
2012
2015
2018
Year
Source: U.S. Chamber of Commerce
2021
2024
2027
2030
Railroad Spending on Way & Structures vs. State
Highway Agency Spending
1.
2.
3.
Texas
Florida
California
Union Pacific
BNSF Railway
4. New York
5. Pennsylvania
6. Illinois
CSX
7. Michigan
8. North Carolina
9. Ohio
Norfolk Southern
10. Georgia
Total (billions)
$7.57
$5.69
$4.19
$4.17
$3.89
$3.59
$3.30
$3.30
$2.62
$2.61
$2.48
$2.14
$2.12
$1.88
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Railroads: Far More Capital Intensive
Than Other Industries
Capital Expenditures as % of Revenue: Avg. 1997-2006
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Class I RRs
All Mfrg.
Nonmet.
Min. Prod.
Computers
Paper
Plastics &
Rubber
Chemicals
Wood
Products
Motor
Vehicles
Petr. & Coal
Prod.
Sources: U.S. Census Bureau, AAR
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Capital Commitments with ROIC
$ Millions
Engineering
Expansion
Mechanical
Other
ROIC
9.5%
9.7%
9.4%
9.6%
8.8%
$2,520
7.6%
7.2%
$2,265
$2,258
6.2% 6.2%
$1,763
$1,608
1997
1998
1999
2000
2001
Locomotive
10.8%
10.7%
10.0%
$2,850
$2,670
$2,593
$2,179
$1,988
$1,726
$1,505
2002
2003
2004
2005
2006
2007
2002-2007: ROIC is restated to reflect the change in methodology for discounting operating leases.

2008
Class I RR Cost of Capital vs.
Return on Investment
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
RR Cost of Capital
RR Return on Investment
'81 '83 '85
'87 '89 '91 '93
'95 '97 '99 '01
'03 '05 '07
Note: In 2006, the Surface Transportation Board significantly changed the method by which it
calculates the rail industry cost of capital. Source: STB
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Rational regulation works
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Railroads Keep Goods Affordable for
America
7¢
6¢
Inflation-Adjusted RR Rates*
Down 54% Since 1981
5¢
4¢
3¢
2¢
'81
'83
'85
'87
'89
'91
'93
'95
'97
'99
'01
'03
'05
'07
*Average revenue per ton-mile, Class I railroads. Source: AAR
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Freight Rail Works
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Railroads reduce highway congestion

One BNSF intermodal train
removes more than 280 longhaul trucks from our nation’s
highways
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Rail is 2-5 times more fuel efficient
than trucks
Intermodal
Indust. Prod.
2.3x
4.3x
5.5x
Ag
*Based on a 1,500 mile truck haul
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Rail emits a fraction of total
U.S. greenhouse gas emissions
Rail = 2.6% of GHG emissions


Trucks = 21% of GHG emissions
In 2008, BNSF moved 4.7 million containers and trailers, reducing GHG
emissions by more than 7 million metric tons
The rail industry moved 11.5 million containers and trailers, reducing
GHG emissions by more than 17.2 million metric tons
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Call to action

Achieve a state of “good repair”

Mode neutral

Increase funding from all sources - federal, local, state
and private - to meet $225-$349 billion a year in needs

Shippers, states, federal government, all transportation
sources must work together to sustain our leadership in
surface transportation
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