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Locomotive and Freight Car Planning November 5th, 2007

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Locomotive and Freight Car Planning November 5th, 2007

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    1. Locomotive and Freight Car Planning November 5th, 2007

    2. 2 Agenda Capital Process Overview Fleet Overviews Locomotives Freight Cars Capacity Drivers Supply Demand Utilization Importance Initiatives Summary

    3. 3 The capital spending process is continuous

    4. 4 Approximately 20% of capital is dedicated to freight cars and locomotives. Infrastructure 60% Track Structures Equipment 20% Locomotives Freight cars Strategic 20% Technology Network capacity Terminal capacity

    5. Locomotive and Freight Car Fleet Overviews

    6. 6 CSX has more than 3,500 locomotives

    7. 7 Age profile of CSX locomotive fleet.

    8. 8 Composition of CSX System Freight Car Fleet CSX Freight Car Inventory Car Type # of Cars % of Total Gondolas 29,010 29% Open-top Hoppers 20,447 20% Boxcars 15,748 15% Covered Hoppers 15,256 15% Autracks 12,548 13% Flat Cars 7,282 7% Other 1,311 1% TOTAL 101,602 100% *As of Dec. 29, 2006

    9. 9 The average age of CSX�s system fleet is 30 years

    10. Capacity Drivers for Freight Cars and Locomotives

    11. 11 Drivers of Freight Car and Locomotive Planning

    12. 12 Locomotive Supply

    13. 13 Locomotive Demand

    14. 14 Freight Car Supply

    15. 15 Freight Car Demand

    16. Utilization

    17. 17 Utilization: Equipment cycle times and efficiency are a key driver in improving financial performance Improved cycle times provide the best means to provide freight car and locomotive capacity Avoid capital Avoid short & medium term leases Improve the operating ratio A fact-based utilization analysis will improve cycle times Surplus assets in storage to reduce costs Targeting areas to reduce customer and intermediate times Targeting lanes for velocity and dwell improvements

    18. 18 Locomotive utilization initiatives

    19. 19 Freight car utilization initiatives

    20. 20 When demand exceeds supply there are four major alternatives to increase fleet size. Purchase Can purchase new or used cars with wide price range dependent on car type. Repair Heavy repairs yield useful lives ranging from nine to twenty years Large portion of freight car capital each year Operating Leases Most lease terms range from three to five years Pooling Agreements (Freight Car) Paid by the hour, also assessed a mileage charge for maintenance Most rates are determined by utilization

    21. The results?

    22. 22 Locomotive strategy supports growth and reliability Locomotive strategy positions fleet for: Improved reliability Disciplined growth Targets $200 million for new locomotives annually

    23. 23 Freight car strategy prioritized by returns Nearly all car-types meet reinvestment hurdle rates Focus investment on coal and automotive fleets Targeting $100 million annually

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