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Rail Capacity & Economic Recovery. Scott D. McGregor Group Vice President Paper, Clay & Forest Products March 22 , 2011. Railway Volume 2010 Volume vs. 2009. Fourth quarter volume of 1,708,800 Increase of 141,600 units, or 9% Record Agriculture volume

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Rail capacity economic recovery l.jpg

Rail Capacity & Economic Recovery

Scott D. McGregor

Group Vice President

Paper, Clay & Forest Products

March 22, 2011


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Railway Volume2010 Volume vs. 2009

Fourth quarter volume of 1,708,800

  • Increase of 141,600 units, or 9%

  • Record Agriculture volume

  • 52-week high loadings for Agriculture, Coal & Intermodal

    2010 volume of 6,764,100

  • Increase of 806,800 units, or 14%

  • Record Agriculture volume

    Strong project growth

    Corridor initiatives

    Conversions from the highway

    Economic recovery


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Merchandise ComparisonsFourth Quarter 2010 vs. 2009

4Q 2010 Volume (000) & y-o-y Percent Change

Total Merchandise revenue of $1.2 billion, up $117 million, or 10%

Total Merchandise volume of 558,500 carloads up 16,600, or 3%

  • MetCon volume growth driven by new business & 11% increase in domestic steel production

  • Record Agriculture volume led by fertilizer and corn

  • Chemicals growth led by gains in petroleum, plastics and industrial intermediates

  • Paper volume led by newsprint, pulpboard & lumber

  • Automotive comparisons impacted by network redesign and quality holds


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Coal ComparisonsFourth Quarter 2010 vs. 2009

4Q 2010 Volume (000) & y-o-y Percent Change

Total Coal revenue of $685 million, up $105 million, or 18%

Total Coal volume of 395,300 carloads, up 40,800 or 12%

  • Utility volume increased due to stockpile re-building

  • Metallurgical volume was up due to new business & increased steel production

  • Export volume was impacted by strong 4Q 2009 comparisons


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Intermodal ComparisonsFourth Quarter 2010 vs. 2009

4Q 2010 Volume (000) & y-o-y Percent Change

Total Intermodal revenue of $471 million, up $64 million or 16%

Total Intermodal volume of 755,000 units up 84,200 or 13%

  • Domestic volume up 22%, led by highway conversions

  • International volume up 4%, driven by improving global demand

  • Premium volume up 14%, driven by gains in parcel and LTL markets



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NS 2011 Capital Improvement Budget

Total Capital Program = $2.2B in 2011

Baseline Capital Program

  • $1.7B; 19% more than 2010 total

  • Maintain Safety; Support Business Growth

  • Maintenance of Way; Facilities & Terminals; Locomotives; Technology

  • Infrastructure (Mid - America; Crescent Corridor, CREATE)

    Additional Capital Program

  • $480M

  • Freight Car Purchases – historically leased {$334M}

  • Positive Train Control – upgrades to system and track structure {$146M}

$146M

$763M

$334M

$79M

$212M


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Hot Topics in Rail Transportation: Capex

2011 – Large Rail Capex

U.S. Class I Railroad Capital Spending

($ Billions)

e - preliminary AAR estimate

Source: AAR


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NS Corridor Strategy

PanAm Southern

Corridor

Mechanicville

Ayer

Detroit

Premier Route

Bethlehem

Chicago

NY/NJ

Greencastle

Philadelphia

Columbus

Heartland

Corridor

Cincinnati

Lynchburg

Pritchard

Roanoke

Norfolk

MidAmerica Corridor

Charlotte

Memphis

Corinth

Atlanta

Birmingham

Crescent Corridor

Shreveport

Meridian

Meridian Speedway

Jacksonville

New Orleans

Titusville

Titusville


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NS has made significant progress on network investments targeting Intermodal growth

  • Meridian Speedway: $300mm

    • Complete 2010

  • Heartland Corridor: $290mm

    • Service Launched Sept. 2010

  • Pan Am Southern: $140mm

    • Complete 2010 / 2011

  • Ph I Crescent Corridor: $600mm

    • Launched 2008


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NS Infrastructure Investment targeting Intermodal growth

Northeast PA Sidings

Northeast PA Sidings

Cleveland, OH

Cleveland, OH

Dayton District

Dayton District

Croxton, NJ

Croxton, NJ

Claypool, IN

Claypool, IN

New Castle

New Castle

Harrisburg, PA

Harrisburg, PA

Illinois

Illinois

CNOTP

CNOTP

Alloy, WV

Alloy, WV

Mt. Carmel, IL

Mt. Carmel, IL

Atlanta North

Atlanta North

Charleston Corridor

Charleston Corridor

Memphis - Chattanooga

Memphis - Chattanooga

Eastern

N. Carolina

Eastern

N. Carolina

B’ham - Atlanta

B’ham - Atlanta

Savannah, GA

Savannah, GA

Burstall, AL

Burstall, AL

Macon - Jacksonville

Macon - Jacksonville

Meridian, MS

Meridian, MS

Atlanta

Atlanta

Jacksonville

Jacksonville


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The Rail Market Ahead targeting Intermodal growth

  • Complexity - multiple markets, channels, and shifting industrial production/global trade patterns

  • Motor carrier costs will continue to rise and capacity will decline or remain static

  • Approximately 80% of intercity freight tonnage originates or terminates within the NS service area

  • Highway conversions and continued yield management will be key drivers

  • Environmental advantages of rail shipping will become more prominent


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Our Goal: targeting Intermodal growthBe the safest, most customer-focused and successful transportation company in the world