1. Rail – The Intermodal Connection
Drew Glassman, AVP Intermodal Marketing CSX Transportation

2. Holistic focus on controlling supply chain costs
Near-sourcing of manufacturing sites due to rising costs in Asia
Simplification and rebalancing of supply chain network design
Optimization software to improve efficiencies and streamline processes
Use of alternate transportation modes, including intermodal
Journal of Commerce industry reports Gartner Supply Chain Top 25 for 2012

3. Truck capacity is imminent concern for future
Surplus/(Shortage) Capacity Utilization
Truck Capacity Utilization to Increase, Resulting in a Shortage
Driver shortages are a threat with economic recovery
U.S. Bureau of Labor Statistics reports driver supply is 185,000 below 2007 levels
Turnover for Q was 90%, the highest since 2008
Driver supply impacted by many macro-factors
CSA, HOS and other proposed regulations
Aging driver base
Recovery of housing market
Key regulations include CSA and HOS; one FTR study indicated that is all proposed regulations are passed, the driver supply would be reduced by 500,000 drivers in 2016 (includes HOS, CSA, Drug & Alcohol regulations, Training, etc.).
U.S. Bureau of Labor Statistics (JOC Article “Can Trucking Solve Its Driver Problem?” 8/17/2012)
The number of heavy-truck or tractor-trailer drivers employed in the U.S. fell 13.4 percent, or by 226,850, between 2007 and 2010, according to the latest data from the U.S. Bureau of Labor Statistics. About 42,000 truck drivers joined the payrolls last year, a 2.9 percent increase. However, that means almost 185,000 CDL-carrying truckers who earned a living on the road in 2007 have yet to return to the driver’s seat — more than twice the number of truckers in Perry’s estimated 90,000-driver shortage.
Driver turnover at large truckload carriers — which exacerbates any shortage — surged to 90 percent on average in the first quarter, its highest point since 2008, according to the American Trucking Associations.
2012
Source: FTR

4. Intermodal provides scalable capacity
Coast-to-coast intermodal network with global reach
14 million loads moved in 2011
Access to key markets, population centers
Connectivity to major U.S. ports
Access to a large, growing container fleet
Rail and carrier-owned assets
Intermodal scales to meet supply chain needs efficiently
One train can move the load of 280 trucks
You Can Go Here
with Intermodal
Animation

5. Intermodal industry volume has steadily grown
Volume has increased more than four-fold
3.1M
Source: Intermodal Association of North America

6. Intermodal offers sustainable savings
Fuel efficiency and freight density drive cost savings
Railroads are three times more fuel efficient than trucks
One train can move the load of 280 trucks
Higher fuel efficiency means lower greenhouse emissions
Intermodal reduces carbon footprint
Moving freight by rail, instead of truck, reduces emissions by 75%
If 10% of long haul highway freight converted to rail…
Annual fuel consumption would decrease by 12 billion gallons, and
Annual greenhouse emissions would decrease by 12 million tons
Source AAR
Source: AAR

7. Intermodal conversion opportunity is substantial
Highway-to-rail conversion still in early stages
Over 9 million loads in east have conversion potential
Intermodal conversion results in additional capacity and cost savings for shippers
Union Pacific stated there are over 11M potential truckload opportunities in Western Market (550 miles+) – Wolfe Trahan “Double Stacked” Report 2012
Intermodal loads reflect year end 2011 (CSX 2.3 NS 3.2) based on 10-k
Freight length of haul > 550 miles
Sources: AAR CS-54 and Global Insight’s Transearch data

8. Shippers achieve the value of intermodal with CSX
Company Overview
Intermodal at CSX
America’s first railroad
Founded 1827, headquartered in Jacksonville, FL
Largest rail network in east
21,000 route miles in 23 states, serving 70 ports
Significant resources
Over 4,000 locomotives, 80,000 freight cars, 30,000 employees
Ranked 226 on Fortune 500
$11.7 billion of revenue in 2011
Far-reaching, dynamic network
Hub and spoke design provides unique service capabilities
Aggressive capital investment
Terminal and infrastructure development, public-private projects
Customer and service focus
Minimizing variability in service, while meeting customer needs
Highway-to-rail “H2R” strategy
Conversion of over-the-road loads
Together ,businesses and state/local agencies invested over $1.3B in rail-served facilities on the CSX network during 2011
$1.3B figure as reported by customers to CSX

9. The National Gateway is evolving the rail network
Public-private investment of $850 million
State, Federal, and CSX funded
Support of 300+ public and private organizations and individuals
Increases efficiency and reach of U.S. rail network
Links Mid-Atlantic ports with Midwestern markets
61 clearance projects and 6 intermodal terminals, including Northwest Ohio
Clearance projects are ~50% complete to date
The National Gateway is $842M public-private partnership aimed at completing 61 clearance projects and 6 terminals.
The clearance work as part of the Gateway is a key part of our broader strategy to double-stack clear key portions of our network and increase intermodal terminal capacity.
CSX - $395M – 47%
States - $189M – 23%
Feds - $258 – 30%
(1) The estimated cost of the National Gateway is now $842M – up $68M from previous estimates.
(2) The cost estimates of the NG for CSX’s share has risen by $8M. CSX’s cost increases were driven by scope and cost increases in Northwest Ohio Intermodal Terminal, but largely offset deferred investments in Columbus and Charlotte.
(3) The state share has declined by $4M – which was driven by our decision to defer further investments in Charlotte.
(4) The federal share has increased by $64M – which was drive by updated cost estimates for the Virginia ave tunnel.
(3) As you can see, the states’ share is $189 (or 23%); and the federal share is $258 (or 30%); and CSX’s share is $395 (or 47%) of which $225 million has already been spent.
Keeping the cost share at about 50% has been a powerful sales tool as we have discussed this project with the public sector. It was important to us to maintain that attribute of the project. 9 9

10. Northwest Ohio Hub creates a more efficient network
Bypass high traffic areas resulting in faster transit times
Non-stop service to east and west coasts for more reliable service
New lanes increase access to major population centers
Effective connector, with 99% scheduled connectivity at NWOH
Chicago run-through for Western interchange
Hub and spoke network is a strategic differentiator

11. CSX focused on highway-to-rail (H2R) strategy
Network Design
NWOH – Hub & Spoke
New England
Florida
Service Reliability
Meeting customer commitments
Minimizing variability in the service product
Channel Strategy
IMC
Brokers
Ocean carriers
Truck
BCO Education
Dedicated National Accounts Team
H2R Optimizer
Animation

12. Highway-to-rail continues to drive industry growth
Intermodal offers a transportation alternative with scalable capacity and sustainable savings advantages
The value of intermodal rail only beginning to be realized; great potential remains
CSX dedicated to understanding transportation needs and developing intermodal solutions

14. Appendix

15. Public-private investments continue to grow network
Investment in the Rail Network
In 2011, businesses and state and local agencies invested over $1.3B
CSX also investing in new terminals and infrastructure throughout network
Clearance projects enable double-stack capable network
New England
National Gateway
$ 67M
$ 3M
$ 94M
$ 10M
$ 35M
$ 70M
$250M
$ 44M
$ 44M
$ 1M
$ 2M
$ 37M
$ 4M
$ 46M
$ 73M
$ 53M
$ 1M
$ 74M
$515M
*D.C.
$ 10M
$117M
$ 71M
$ 2M
$ 50M
$ 1M
$ 66M
$385M
$ 84M
$ 70M
$ 1M
$ 90M
$ 8M
$ 70M
$ 30M
Private-Public Investment Rail –Served Facilities (2011) = Business/State & Local Agency Investment in New or Expanded rail-served facilities on CSX or its connecting regional and short lines ($M) as reported to CSX by customers. CSX does not disclose the break-down by customers due to confidentiality.
$ 5M
Terminal Expansions
$105M
$165M
New Terminals
CSX Investment in Rail Network (2011)
Private-Public Investment Rail –Served Facilities (2011)