0. The University of Nevada Brazilian Petroleum Logistics Course
May 28, 2010

1. Agenda
Industry Overview
BNSF Overview
Why Rail?
Why BNSF?

2. Rail Industry Overview
2007 Railway Template
4/17/2017
Rail Industry Overview
Thank you for coming today and welcome.
This is our seventh year of hosting these symposiums
We are really glad to be here today. At BNSF we get a lot from these meetings and we hope you do as well
While I am saying thank you, I would like to take a minute to say thank you for your business as well. We do not say that often enough and it is important that you know that we appreciate your business and when you choose us as your carrier, we do not take that responsibility lightly.

3. Industry Overview America’s Railroad Industry
Railroads remain the backbone of America’s freight transportation network
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
North American railroads form the world’s most efficient and lowest-cost freight network
Source: American Association of Railroads (AAR)

4. 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

5. Industry Overview Types of Railroads
2007 Railway Template
Industry Overview Types of Railroads
4/17/2017
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

6. Industry Overview North America Rail Network
2007 Railway Template
Industry Overview North America Rail Network
4/17/2017
Over 160,000 miles of track
Over 165,000 railroad employees
Over 500 shortline railroads
BNSF operates more than 32,000 miles of track
KCS Missing
Route Miles
1833 – 380 miles
1860 – 30,000 miles
1916 – 254,000 miles (peak)
In the east, rail connected cities, in the west many cities were built around the rail.
Never be another Class I railroad “built”
“Porter’s model” – barriers to entry
2003 – First time ever that intermodal produced more rail revenue than coal
BNSF Network – strong west coast franchise – good for globalization and China growth.
BNSF CN CP
CSX NS UP
FXE

7. Challenges Industry Overview Transportation Industry Challenges
2007 Railway Template
4/17/2017
Fuel Efficiency
When will the growth return? No one knows for sure. However, the forces that have been stimulating growth in transportation over the years, still exist. The only thing that has changed is the slow down in the US economy, which is a temporary condition.
The external forces that have been stimulating industry growth over the years, still continue, such as: driver shortages, highway congestion, fuel prices, and rail capacity, and developing environmental solutions – among others.
Environmental Solutions
Challenges
Highway Congestion
Rail Capacity
Driver Shortage

8. Industry Overview Governing Bodies of The Rail Industry
2007 Railway Template
4/17/2017
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
Association of American Railroads (AAR)
Formed to bring unity to a large group of separately owned and managed rail companies across the United States.
Its purpose is to "protect and advance the railroad industry under private ownership and management, to enable them better to handle their own affairs on a permanent basis."
Prior to the AAR, there were over 100 local time zones around the country, and over 20 different rail gauges (the distance between rails) ranging from two to six feet.
There was also no fixed standard for the various types of freight cars owned by the many railroads.
Department of Transportation (DOT)
Created by an Act of Congress in 1966; formally activated early in 1967.
Responsible for developing a national transportation system adequate for economic growth and stability, the welfare of the people, and national security.
The Office of the Secretary of Transportation formulates overall policy, allocates resources, and proposes and coordinates legislation concerning private transportation.
Participates in negotiations with foreign governments relating to aviation and maritime matters.
Nine operating administrations report to the DOT. One is the Federal Railroad Administration (FRA).
Federal Railroad Administration (FRA)
Monitoring and enforcing arm of the DOT, as it relates to the rail industry.
Enforces all Federal rail safety regulations including, Hours of Service, mandatory FRA inspection of freight cars and locomotives, and the safe transportation of Hazardous Materials.
The Surface Transportation Board (STB)
Established January 1, 1996, the STB picked up several functions previously handled by the Interstate Commerce Commission (ICC), which was terminated on December 31, 1995.
General responsibilities include railroad rate and service issues, mergers, line sales, line construction, line abandonments and labor matters related thereto.
Also regulates trucking, ocean shipping, intercity passenger bus and certain pipeline matters.
Unlike the ICC, the STB is also more of a watchdog organization, intervening when shippers and carriers cannot resolve an issue.
US. Customs
Oldest Law Enforcement Agency in the country.
Established in 1789 as the Revenue Cutter Service and serving the only mode of transportation at the time, it was the sole collector of revenue for the new government until the inception of the Internal Revenue Service in the early 1900's.
Collect tariffs and customs duties on goods imported into the United States from overseas, as well as to enforce control over what products are allowed in the country.

9. BNSF Overview Thank you for coming today and welcome.
2007 Railway Template
4/17/2017
BNSF Overview
Thank you for coming today and welcome.
This is our seventh year of hosting these symposiums
We are really glad to be here today. At BNSF we get a lot from these meetings and we hope you do as well
While I am saying thank you, I would like to take a minute to say thank you for your business as well. We do not say that often enough and it is important that you know that we appreciate your business and when you choose us as your carrier, we do not take that responsibility lightly.

10. BNSF Overview About Us A Berkshire Hathaway Company
2007 Railway Template
BNSF Overview About Us
4/17/2017
A Berkshire Hathaway Company
Unlike other forms of freight transportation, our trains operate on an infrastructure built and financed almost entirely by the railroad
Every day, we deliver trainloads of consumer goods, agricultural products, industrial products, and coal to customers across our 32,000-mile rail network 10 10

11. BNSF Overview Our Ancestry
2007 Railway Template
4/17/2017
Some Predecessors of
Burlington Northern Santa Fe
Great Northern GN
Northern Pacific NP
Chicago, Burlington and Quincy CB&Q
Spokane, Portland and Seattle SP&S
St. Louis-San Francisco (Frisco) SLSF
Fort Worth-Denver FWD
Colorado Southern CS
Atchison Topeka and Santa Fe ATSF
CB&Q is the oldest, founded in The CB&Q – predecessor to the Burlington lines – was a pioneer in technology. CB&Q operated the first printing telegraph (1910), was the first railroad to use train radio (1915), the first to use centralized traffic control (1927), and they introduced the Pioneer Zephyr (1934) – America’s first diesel-powered streamlined passenger train.

12. BNSF Overview Our Vision
2007 Railway Template
4/17/2017
Our vision is to realize the tremendous potential of BNSF Railway by providing transportation services that consistently meet our customers' expectations.
When it comes to shipping, BNSF Railway moves you forward. No matter what you’re transporting or where you’re transporting it, you can rely on our best-in-class services to deliver your goods in the most effective, cost-efficient and environmentally friendly manner. Our vision is to realize the tremendous potential of BNSF Railway by providing transportation services that consistently meet our customers' expectations.
So no matter your product, trust in BNSF to help you exceed your shipping goals.

13. BNSF Overview BNSF Network
2007 Railway Template
BNSF Overview BNSF Network
4/17/2017
Route Miles: 32,000
Number of Employees: 40,000
Locomotives: Approx. 6,400
Average Freight Cars on System: 200,000

14. BNSF Overview BNSF: Size and Scope
2007 Railway Template
BNSF Overview BNSF: Size and Scope
4/17/2017
32,000 route miles in 28 states and two provinces
Approximately 6,400 locomotives and 200,000 freight cars
Employs approximately 40,000 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

15. BNSF Volume – 1st Quarter 2010
Total units and % change from 2009
Thousands Ag
269
+18.5%
Consumer
Products
955
-2.2%
Coal
569
-9.3%
Industrial
Products
306
+2.7%
2010 Q1 Total BNSF Volume 2, %

16. Significant Investments In Infrastructure Alone Are Not Enough
BNSF Overview $30 Billion Invested in the Last 12 Years*
Significant Investments In Infrastructure Alone Are Not Enough
In the last 12 years BNSF has spent about $30 billion on infrastructure and assets to facilitate growth. Given these investments alone are not sufficient, BNSF is also involved in several velocity-improving initiatives to ensure consistent, reliable service. *

17. BNSF Overview Business Unit Breakdown
2007 Railway Template
4/17/2017
INDUSTRIAL PRODUCTS
CONSUMER PRODUCTS
COAL
AGRICULTURE

18. BNSF Overview Industrial Products Breakdown
2007 Railway Template
4/17/2017
Building Materials
Plastics
Chemicals & Waste
Minerals
Lumber
Wallboard
Bricks
Roofing Materials
PVC
Polypropylene
Polystyrene
Polyethylene
Acids
Intermediates
Caustic Soda
Municipal Waste
Aggregates
Cement
Clay
Sand
Food & Beverage
Machinery
Metals
Petroleum Products
Beer & Wine
Canned Goods
Frozen Fish / Meat
Vegetables
Construction Equipment
Farm Equipment
Transformers
Generators
Pipe
Sheet
Structural
Scrap
Diesel Fuel
Biodiesel
Asphalt
Alcohols & Solvents

19. BNSF Overview Carload Solutions – Direct Rail
2007 Railway Template
BNSF Overview Carload Solutions – Direct Rail
4/17/2017
Direct Rail - Primary access to the BNSF Network directly to/from a customer facility
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)
Unit Train Service – Trainload movements of freight from same origin and destination carrying a single commodity
Most efficient service
Achieves optimal network velocity

20. BNSF Overview Carload Solutions - Transload
2007 Railway Template
BNSF Overview Carload Solutions - Transload
4/17/2017
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
Value – Added Services
Cross docking
Storage and forward storing
Load consolidation
Inventory management
Companies that do not have a rail line into their facilities but can handle/store large quantities at their facilities. A transload facility allows the customer to obtain the cost convenience of using carload. The carload unit goes into a transload facility (direct rail service), where it is moved from the carload into a truck (3+ per carload) and delivered to the customer.
To learn more:

21. BNSF Overview Consumer Products Breakdown
2007 Railway Template
4/17/2017
Domestic and International Intermodal
Automotive
Clothes
Shoes
Personal Accessories
Beauty Products
Furniture
Electronics
Groceries
Home Décor Items
Sporting Goods
Office Products
Seasonal Products
Paper Products Toys Bicycles Household Appliances Pet Products Books School Supplies
Vehicles
Parts

22. BNSF Overview Intermodal Services
2007 Railway Template
4/17/2017
Expedited Trailer Service
Domestic Only
Fastest intermodal service in the industry
Averages 700+ miles per day*
Ideal for time-sensitive freight
Premium Container Service
International and Domestic
Sustainable solution to price sensitive shippers
Averages miles per day*
Competitive daily schedules
*Measurement derived from cutoff at origin to availability at destination
Service schedules can be found at

23. BNSF Overview Ag Breakdown
2007 Railway Template
BNSF Overview Ag Breakdown
4/17/2017
Grain
Bulk Foods
Other Grain Products
Wheat
Barley
Corn
Soybeans
Milo
Sweeteners
Syrups
Animal Products
Starch
Oils
Feeds
Flour
Specialty Grains
Oilseeds & Meals
Malt
Fertilizer
Ethanol

24. BNSF Overview Coal Breakdown
2007 Railway Template
BNSF Overview Coal Breakdown
4/17/2017
Coal
Low Sulfur Coal (Powder River Basin)

25. Why Rail? Thank you for coming today and welcome.
2007 Railway Template
4/17/2017
Why Rail?
Thank you for coming today and welcome.
This is our seventh year of hosting these symposiums
We are really glad to be here today. At BNSF we get a lot from these meetings and we hope you do as well
While I am saying thank you, I would like to take a minute to say thank you for your business as well. We do not say that often enough and it is important that you know that we appreciate your business and when you choose us as your carrier, we do not take that responsibility lightly.

26. 2007 Railway Template
Why Rail? Key Benefits
4/17/2017
Fuel Efficiency – On average, railroads are three or more times more fuel efficient than trucks.
Highway Gridlock Reduction – A typical train takes the 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.
I often get asked the question, why should we support projects that benefit rail, either passenger or freight? And why do we, as a society need more rail? Because putting more traffic on rail is an important part in bridging the funding gap I mentioned earlier.
Railroads can provide even more significant value to our society in the future. Here’s why:
First, rail is the most environmentally friendly way to move a ton of freight, thus reducing greenhouse gasses.
Second, rail is the most fuel-efficient mode, reducing our dependence on foreign oil.
Third, rail is the most effective way to reduce congestion on our nation’s highways, thus reducing both greenhouse gasses and lowering our dependence on foreign oil.
And fourth – rail is perhaps the most cost-efficient form of land transportation available.
Source: AAR

27. Rail is 2-8 times more fuel efficient than trucks
2.3x
4.3x
5.5x
8.2x
*Based on a 1,500 mile truck haul

28. 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

29. Why Rail? Best Value for Your Shipping Dollar
Dollar-for-dollar, shippers receive the best value by using rail service:
Market pricing allows for better predictability and planning
Real savings on transportation costs vs. truck
Direct rail service allows movement of any size shipment

30. Rail emits a fraction of total U.S. green house gas (GHG) emissions
Rail = 2.6% of GHGs
Trucks = 21% of GHGs
In 2008, BNSF moved 4.7 million containers and trailers, reducing GHG emissions by more than 7 million metric tons
Rail industry moved 11.5 million containers and trailers, reducing GHG emissions by more than 17.2 million metric tons

31. Why BNSF? Thank you for coming today and welcome.
2007 Railway Template
4/17/2017
Why BNSF?
Thank you for coming today and welcome.
This is our seventh year of hosting these symposiums
We are really glad to be here today. At BNSF we get a lot from these meetings and we hope you do as well
While I am saying thank you, I would like to take a minute to say thank you for your business as well. We do not say that often enough and it is important that you know that we appreciate your business and when you choose us as your carrier, we do not take that responsibility lightly.

32. 2007 Railway Template
Why BNSF? Our Network
4/17/2017
BNSF provides the industry’s broadest network to get your shipments where they need to go – safely and efficiently.
Access to 13 of 19 major U.S. Megapolitan markets
Alliances with other carriers, enabling coast-to-coast service
“Off-road” access into capacity-constrained markets, helping to alleviate highway congestion
Transload options that allow customers to use our carload service via a network of top-quality trucking, warehousing, distribution and other service providers

33. Why BNSF? BNSF Carload Equipment – Industry’s Best
2007 Railway Template
4/17/2017
BNSF’s equipment is among the best in the industry. We possess the newest fleet of equipment with:
Great efficiency
High available capacity
Strong reliability
Broad availability
Our mission is the foundation for our Equipment strategy and it’s one the primary reasons we have among the best equipment in the industry.
If efficiency, capacity, reliability and availability are important to you, then you’ll appreciate the equipment we offer.

34. Powerful Fleet of Road Locomotives
2007 Railway Template
Why BNSF?
Powerful Fleet of Road Locomotives
4/17/2017
Year-End Fleet Inventory
5,189
5,175
5,050
5,087
4,812
4,510
4,243
3,851
Capacity Driver Number 2 is Locomotives.
At BNSF, we are also acquiring higher horsepower locomotives – almost 2 billion dollars’ worth from 2002 through the end of this year -- to handle the increased volumes.
These new locomotives are also more fuel efficient and produce less emissions.
They generate a 66 percent reduction in NOx emissions compared with the locomotives they are replacing.
For 2006, we will add 362 of these new locomotives to our fleet. 34 34

35. Why BNSF? Achievements and Awards
American Honda Motor Company
Premier Partner
1998 – 2004
Team Performance
2007, 2008
Logistics Management
Quest for Quality
Rail/Intermodal Service Providers
2006
GLOVIS America (Hyundai/KIA)
Outstanding Rail Service Award
2003, 2005
Toyota Logistics Services
Railroad Customer Service Award
2003, 2004
Excellence in Quality Performance
2005, 2006
Best Buy
Quality Partnership Award
2004
The Home Depot
Rail Partner of the Year
Only rail carrier that has received this recognition
Rail Carrier of the Year
Platinum Partner Award
2008
Wal-Mart Stores, Inc.
Rail Carrier of the Year
Only rail carrier that has received this recognition
Target
Vice President’s Award
2002
Landstar Logistics
Railroad Carrier of the Year
2004
United Parcel Service
Perfect Peak
1995, , , 2007
FedEx Ground
Quality Supplier
FedEx Supply Chain
2002, 2003, 2005
Only rail carrier that has received this
recognition
Evergreen America
Railroad Company of the Year
2003
Owens Corning
Intermodal Carrier of the Year
2006, 2007, 2008

36. Safety Procedures Security Procedures
Why BNSF? Commitment to Safety and Security
2007 Railway Template
4/17/2017
Safety Procedures
Security Procedures
Train Movement
BNSF
Design and detection of infrastructure and rolling stock
Load and Ride Solutions helps blocking and bracing
Electronic Train Management System
Certified member of C-TPAT
Tightened access to facilities/structures, including surveillance cameras and identification procedures
Action Plans in place including notice of alert level, training, and trespasser abatement
Safe freight handling with seal and carriage bolts placed on all in-gated containers and trailers
24-hour resource operations call center
- Shown here are the many initiatives we have underway to address the stress state on BNSF’s track infrastructure
Proactive Inspection:
The majority of BNSF’s heavy haul track is visually inspected on a daily basis. Our focus here includes leveraging extensive technical training to ensure that our Track & Signal Inspectors are technically competent.
We also have a comprehensive Self-Audit process to ensure compliance with our Inspection processes & Standards
Another key component of our derailment reduction initiative is our proactive detection processes
Today we will drill down on 2 of these areas:
- Rail Defect Testing
- Maintaining the optimal Track Geometry & Gage
We will also discuss how detection technology is being leveraged to maintain the optimum wheel / rail interaction
Employee
“Safe production”
Critical Path briefings – Transportation
Five Critical Decisions – Engineering
Employee participation
Fatigue countermeasures
Technical training
Rail Industry
Six task forces created relating to rail security
Contingency planning based on vulnerability, risk assessments and threat analysis
Active relationship with national intelligence community

37. BNSF Network Operations Center, Fort Worth, TX

38. Thank you for your time.
Q&A