So You Want to Ship by Rail?

Rail 101&

Economic Development

Grace KungRegional Economic Development Mgr

April 24, 2012

Replaced title typeand photoBNSF Railway Company

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Agenda

Industry OverviewBNSF OverviewWhy Rail?Why Economic Development?

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Rail Industry Overview

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Industry Overview

America’s Railroad Industry

U.S. railroads operate over 140,000 miles of track and earn an aggregate freight revenue of nearly $57 billion

In the United States, railroads account for more than 40%* of all freight (more than trucks, boats, barges or planes) *Measured in Ton Miles

70% of all autos produced in America move by rail 30% of all U.S. grain moves by rail 65% of the coal is moved by rail which in turn produces half of

America’s electricity U.S. Railroads move enough:

Wheat to provide every person with a loaf of bread 6 days/week Concrete to build 45 miles of new highway every day

Railroads remain the backbone of America’s freight transportation network

North American railroads form the world’s most efficient and lowest-cost freight network

Source: American Association of Railroads (AAR)

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Industry Overview A key link in the U.S. Supply Chain

71% of America's GDP is driven by the consumer

Seamless network of manufacturers, retailers, distributors, transporters, storage facilities and suppliers

Rail delivers everything Americans consume everyday:

Cars and Combines

Clothes and Shoes

Stereos and TVs

Food and Water

Lumber and Steel

Energy and Fuel

… many others, such as bread and cereal

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Industry Overview

Types of Railroads

Class I • Annual revenues in excess of $340M• Operations range from 3,200 to 32,000

miles• Typically concentrate on long-haul, high-

density intercity traffic lanes• Seven Class I railroads in North America

Regional• Operate at least 350 miles of track • Earn $40 million or more in revenues• 33 Regional railroads

Local Linehaul• Operate less than 350 miles of track• Generate less than $40M in operating

revenues• 324 local linehaul railroads

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Industry Overview

North America Rail Network

BNSFCNCPCSXNSUPFXE

Over 160,000 miles of track

Over 165,000 railroad employees

BNSF operates more than 32,000 miles of track

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ChallengesChallengesHighway Congestion

Driver Shortage

Fuel Efficiency

Rail Capacity

Environmental Solutions

Industry Overview Transportation Industry Challenges

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Industry Overview

Governing Bodies of The Rail Industry

• Association of American Railroads (AAR)

• Department of Transportation (DOT)

• Federal Railroad Administration (FRA)

• The Surface Transportation Board (STB)

• U.S. Customs

• Various State and Municipal Agencies

• Dept. of Homeland Security

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BNSF Overview

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BNSF Overview

“This is BNSF”

Video: “This is BNSF”

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Our vision is to realize

the tremendous potential of

BNSF Railway by providing

transportation services that

consistently meet our

customers' expectations.

BNSF Overview Our Vision

BNSF Overview BNSF Network

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BNSF Overview BNSF: Size and Scope

32,000 route miles in 28 states and two provinces

Approximately 5,800 locomotives and 208,000 freight cars

Employs approximately 38,000 people

Operates an average of 1,400 freight trains per day

Moves one fourth of the nation’s rail freight

Serves all major ports on the West Coast and Gulf of Mexico If stacked end-to-end, all the intermodal loads shipped with BNSF

in one year would reach from Los Angeles to Shanghai 6 times.

Leads rail industry in technological innovation

Has one of the largest computer systems in the world to manage our network operations 24 hours a day

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BNSF Overview Business Unit Breakdown

INDUSTRIAL PRODUCTS CONSUMER PRODUCTS

AGRICULTURECOAL

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BNSF Overview Industrial Products Breakdown

Building Materials

LumberWallboardBricksRoofing Materials

Plastics

PVCPolypropylenePolystyrenePolyethylene

Chemicals & Waste

AcidsIntermediatesCaustic SodaMunicipal Waste

Minerals

AggregatesCementClaySand

Food & Beverage

Beer & WineCanned GoodsFrozen Fish / Meat Vegetables

Machinery

Construction EquipmentFarm EquipmentTransformersGenerators

Metals

PipeSheetStructuralScrap

Petroleum Products

Diesel FuelBiodieselAsphaltAlcohols & Solvents

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BNSF Overview Carload Solutions – Direct Rail

Carload Service – Rail transportation for single or multiple carloads

Direct connection into supply chain

Excellent for multi-truck quantities of commodities such as canned goods, steel, lumber, paper, etc. (3+ truckloads per car)

Direct Rail - Primary access to the BNSF Network directly to/from a customer facility

Unit Train Service – Trainload movements of freight from same origin and destination carrying a single commodity

Most efficient service Achieves optimal network velocity

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BNSF Overview Carload Solutions - Transload

Value – Added Services Cross docking Storage and forward storing Load consolidation Inventory management

Transload – Access to the BNSF carload network at the most advantageous points through premium providers

Advantages Rail accessibility without a large capital

investment Access to numerous value-added services

To learn more: http://www.bnsf.com/customers/how-can-i-ship/door-to-door-transload/

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BNSF Overview Consumer Products Breakdown

Domestic and International Intermodal

ClothesShoesPersonal AccessoriesBeauty ProductsFurnitureElectronicsGroceriesHome Décor ItemsSporting Goods

Automotive

VehiclesParts

Office ProductsSeasonal ProductsPaper ProductsToysBicyclesHousehold AppliancesPet ProductsBooksSchool Supplies

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BNSF OverviewIntermodal Services

Premium Container Service

International and Domestic Sustainable solution to price sensitive shippers Averages 400-500+ miles per day* Competitive daily schedules

Expedited Trailer Service

Domestic Only Fastest intermodal service in the industry Averages 700+ miles per day* Ideal for time-sensitive freight

*Measurement derived from cutoff at origin to availability at destination

Service schedules can be found at http://www.bnsf.com/bnsf.was6/siisweb/cntrl

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BNSF Overview Ag Breakdown

Grain

WheatBarleyCornSoybeansMilo

Bulk Foods

SweetenersSyrupsAnimal ProductsStarch

Other Grain Products

OilsFeedsFlourSpecialty GrainsOilseeds & MealsMalt

EthanolFertilizer

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BNSF Overview Coal Breakdown

Coal

Low Sulfur Coal (Powder River Basin)

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Why Rail?

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Why Rail? Key Benefits

Fuel Efficiency – On average, railroads are three or more times more fuel efficient than trucks.

Highway Gridlock Reduction – A typical train takesthe freight equivalent of several hundred trucks off our highways.

Cost Efficiency – In general, shippers pay less for shipping freight via rail, rather than other forms of land transportation.

Environmental Friendliness – The EPA estimates that for every ton-mile, locomotives emit roughly one-third the amount of nitrogen oxides and particulates.

Source: AAR

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Why Rail? Fuel Efficiency

Trains move one ton of freight

an average of 495 miles on a single

gallon of diesel fuel, compared to

140 miles for a truck

Freight trains have increased their

fuel efficiency by 80 percent in the

last 25 years

If just 10 percent of the freight that currently moves by truck were diverted to rail, fuel savings would exceed one billion gallons a year

Oil Prices(WTI EST - $/BARREL)

Source: Global Insight--February 2008 Forecast and AAR

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100

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5Q1

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5Q3

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6Q1

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6Q3

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7Q1

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7Q3

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8Q1

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8Q3

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9Q1

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9Q3

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0Q1

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0Q3

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1Q1

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1Q3

Baseline Pessimistic

Why Rail? Rail is 2-8 times more fuel efficient than trucks

Coal

Ag

Indust. Prod.

Intermodal

*Based on a 1,500 mile truck haul

8.2x

5.5x

4.3x

2.3x

Why Rail?

Railroads can help reduce highway congestion

BNSF is the largest intermodal carrier in the world

Each year, BNSF moves about 4.6 million containers and trailers

One BNSF intermodal train removes more than 280 long-haul trucks from our nation’s highways

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Why Economic Development?

Economic Development:

Shipping Options: Transload Facility

Quickest Method Lease an existing track (private or rail Owned)

Timeline maybe an issue Rehab an existing track

Can be costly if a new switch is necessary New track construction

Can be an expensive project

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Economic Development:Transload Option

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Economic Development:

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Economic Development: Ship by Rail: 3 Simple Phases

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Economic Development: Ship by Rail: 3 Simple Phases

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Economic Development: Ship by Rail: 3 Simple Phases